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EXHIBIT 2.9
STOCK PURCHASE AGREEMENT
AMONG
LONE STAR MUD, INC.
AND
MARK CAMPBELL
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TABLE OF CONTENTS
Page
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ARTICLE I
POST CLOSING ACTION AND COVENANTS
SECTION 1.1 The Stock Purchase...............................................................................1
SECTION 1.2 Stock Purchase Consideration.....................................................................1
SECTION 1.3 No Further Ownership Rights in TFI Common Stock..................................................1
SECTION 1.4 Closing..........................................................................................1
SECTION 1.5 Calculation of Working Capital...................................................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LONE STAR
SECTION 2.1 Organization, Standing and Power.................................................................2
SECTION 2.2 Authority; Non-Contravention.....................................................................2
SECTION 2.3 Investment Representation........................................................................3
SECTION 2.4 Brokers..........................................................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LONE STAR
SECTION 3.1 Organization, Standing and Power.................................................................3
SECTION 3.2 Capital Structure of TFI.........................................................................3
SECTION 3.3 Ownership of TFI Common Stock....................................................................3
SECTION 3.4 Authority; Non-Contravention.....................................................................3
SECTION 3.5 Financial Statements.............................................................................4
SECTION 3.6 Absence of Material Adverse Change...............................................................4
SECTION 3.7 Taxes............................................................................................4
SECTION 3.8 Real and Personal Property; Title Thereto........................................................5
SECTION 3.9 Accounts Receivable..............................................................................5
SECTION 3.10 Liabilities......................................................................................5
SECTION 3.11 Insurance........................................................................................5
SECTION 3.12 Contracts and Other Agreements...................................................................5
SECTION 3.13 Records..........................................................................................5
SECTION 3.14 Transactions with Affiliates.....................................................................5
SECTION 3.15 Employee Benefit Plans; Employment Agreements....................................................5
SECTION 3.16 Labor Matters....................................................................................6
SECTION 3.17 Environmental Matters............................................................................6
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SECTION 3.18 Litigation........................................................................................7
SECTION 3.19 Governmental Licenses and Permits; Compliance with Law............................................7
SECTION 3.20 Brokers...........................................................................................8
SECTION 3.21 Bank Accounts.....................................................................................8
SECTION 3.22 Distributions to Stockholders of TFI..............................................................8
SECTION 3.23 Workers'Compensation Claims.......................................................................8
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 Fees and Expenses.................................................................................8
SECTION 4.2 Reasonable Best Efforts...........................................................................8
SECTION 4.3 M Campbell Indemnification........................................................................8
SECTION 4.4 Lone Star Indemnification.........................................................................8
SECTION 4.5 Limitation on Indemnification Obligations.........................................................9
SECTION 4.6 Employee Benefits.................................................................................9
ARTICLE V
CONDITIONS PRECEDENT TO THE STOCK PURCHASE
SECTION 5.1 Conditions to Each Party's Obligation to Effect the Stock Purchase................................9
SECTION 5.2 Conditions to Obligation of Shareholder to Effect the Stock Purchase..............................9
SECTION 5.3 Conditions to Obligations of Lone Star to Effect the Stock Purchase..............................11
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 Notices..........................................................................................12
SECTION 6.2 Interpretation...................................................................................13
SECTION 6.3 Counterparts.....................................................................................13
SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries...................................................13
SECTION 6.5 Governing Law....................................................................................14
SECTION 6.6 Assignment.......................................................................................14
SECTION 6.7 Severability.....................................................................................14
SECTION 6.8 Enforcement of This Agreement....................................................................14
EXHIBIT A Non-Competition Agreement - Mark Campbell
EXHIBIT B Employment Agreement - Mark Campbell
EXHIBIT C Form of Non-Competition Agreement - Key Employees
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September ___, 1998 (this
"Agreement"), among LONE STAR MUD, INC., a Texas corporation ("Lone Star")
wholly-owned by Patterson Energy, Inc., a Delaware corporation ("PEC"), and Mark
Campbell (referred to herein as "M Campbell" or "Shareholder").
WITNESSETH:
WHEREAS, M Campbell owns (beneficially and of record) all of the
outstanding common stock, par value $1.00 per share ("TFI Common Stock") of
TEJAS FLUIDS, INC., a Texas corporation ("TFI"); and
WHEREAS, Lone Star desires to purchase, and Shareholder desires to
sell, all of the outstanding TFI Common Stock (the "Stock Purchase") for the
consideration set forth and provided for herein; and
WHEREAS, Lone Star, on the one hand, and Shareholder, on the
other, desire to make certain representations, warranties and agreements in
connection with the Stock Purchase.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE STOCK PURCHASE
SECTION 1.1 The Stock Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined below) provided herein,
Lone Star shall purchase from Shareholder, and Shareholder shall sell to Lone
Star, all of the outstanding shares of TFI Common Stock.
SECTION 1.2 Stock Purchase Consideration. Lone Star agrees to pay
a total of $3.5 million in cash, subject to possible post-closing adjustment, if
any, pursuant to Section 1.6 (the "Stock Purchase Consideration"), to
Shareholder as consideration for the Stock Purchase.
SECTION 1.3 No Further Ownership Rights in TFI Common Stock. The
Stock Purchase Consideration, when paid at Closing in accordance with the terms
hereof, shall be deemed to have been paid in full satisfaction of all ownership
rights pertaining to the outstanding shares of TFI Common Stock.
SECTION 1.4 Closing. The closing of the transaction contemplated
by this Agreement (the "Closing") shall take place at the offices of Lone Star
in Midland, Texas at 10:00 a.m. local time, on the date of this Agreement or at
such other time and place as Lone Star and Shareholder shall agree.
SECTION 1.5 Calculation of Working Capital. Within 60 days after
the Closing, Lone Star will prepare and present to Shareholder a calculation of
the Net Working Capital (defined below) of TFI as of the Closing (the "Working
Capital Calculation"). The parties agree that the Working Capital Calculation
shall be prepared so that it presents fairly the Net Working Capital of TFI as
of the Closing using practices and procedures consistent with the preparation of
the TFI Financial Statements (defined below). Shareholder and an independent
certified public accountant selected and retained by Shareholder (the
"Shareholder's Auditor") shall have the right to review and copy, promptly upon
request, the work papers of Lone Star and/or its accountants utilized in
preparing the Working Capital Calculation for purposes of verifying the accuracy
thereof. The Working Capital Calculation shall be binding upon the parties
unless shareholder gives written notice of disagreement with any of the values
or amounts contained therein to Lone Star within 15 business days after receipt
of the working Capital Calculation and the work papers, specifying in reasonable
detail the nature and extent of such disagreement. If Lone Star and Shareholder
are unable to resolve any such disagreement within such period, the disagreement
shall be referred for
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final determination to an independent accounting firm of national reputation
mutually selected by Shareholder and Lone Star (the "Selected Firm"), and the
resolution of that disagreement (the "Disagreement") shall be final and binding
upon the parties for purposes of this Agreement. The working Capital Calculation
as finally agreed to or determined by the Selected Firm is referred to herein as
the "Final Working Capital Calculation." The fees and disbursements incurred in
the preparation of the Working capital Calculation, other than the expense of
Shareholder's Auditor and of the Selected Firm, shall be paid by Lone Star.
Shareholder shall pay the fees and disbursements of Shareholder's auditor, while
the fees and disbursements of the Selected firm, if any, shall be paid by the
non-prevailing party in the Disagreement. For purposes of this Agreement, "Net
Working capital" means, as of the Closing, the amount by which (a) the current
assets of TFI (exclusive of the $300,000 to be used to fund annuities for, and
to pay bonuses to, certain TFI employees) on the close of business on the last
business day immediately preceding the Closing (the "Determination Date") exceed
9b) the current liabilities of TFI on the Determination Date, with the current
assets and current liabilities to be as determined in accordance with accrual
tax basis accounting consistently applied.
SECTION 1.6 Post Closing Stock Purchase Adjustment. If the Net
Working Capital of TFI as of the Determination Date as set forth in the Final
Working capital Calculation is less than $500,000, then within five business
days after the determination of the Final Working Capital Calculation,
Shareholder shall reimburse to Lone Star the amount of such shortfall in cash in
immediately available funds by wire transfer to a bank account designated in
writing by Lone Star prior to the due date thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LONE STAR
Lone Star represents and warrants to Shareholder as follows:
SECTION 2.1 Organization, Standing and Power. Lone Star (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power and authority
to carry on its business as now being conducted, and (ii) is in good standing in
each jurisdiction where the character of its business owned or held under lease
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate, have
a Material Adverse Effect on Lone Star. "Material Adverse Change" or "Material
Adverse Effect" means, when used with respect to Lone Star or TFI, any change or
effect that is or, so far as can reasonably be determined, is likely to be
materially adverse to the assets, properties, condition (financial or
otherwise), business or results of operations of Lone Star or TFI, as the case
may be.
SECTION 2.2 Authority; Non-Contravention. Lone Star has all
requisite power and authority to enter into this Agreement and to consummate the
Stock Purchase. The execution and delivery by Lone Star of this Agreement and
the consummation by Lone Star of the Stock Purchase have been duly authorized by
all necessary corporate action on the part of Lone Star. This Agreement has been
duly executed and delivered by Lone Star and (assuming the valid authorization,
execution and delivery of this Agreement by Shareholder) constitutes a valid and
binding obligation of Lone Star enforceable against Lone Star in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not or will not, as the case may
be, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Lone Star under, any provision of (i) the Articles of Incorporation or
Bylaws of Lone Star, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Lone Star, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Lone Star or any of
its properties or assets, other than, in the case of clauses (ii) or (iii), any
such conflicts, violations, defaults, losses, liens, security interests, charges
or encumbrances that, individually or in the aggregate,
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would not have a Material Adverse Effect on Lone Star, materially impair the
ability of Lone Star to perform its obligations hereunder or prevent
consummation of the transaction contemplated hereby. No filing or registration
with, or authorization, consent or approval of, any domestic (federal and
state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal (a "Governmental Entity") is required
by or with respect to Lone Star in connection with the exercise and delivery of
this Agreement by Lone Star or is necessary for the consummation by Lone Star of
the Stock Purchase or any other transaction contemplated by this Agreement.
SECTION 2.3 Investment Representation. Lone Star is acquiring the
TFI Common Stock for investment solely for its own account and not with a view
to, or for resale in connection with, any distribution thereof and acknowledges
that Shareholder is relying upon the bona fide nature of the investment intent
of Lone Star as set forth herein. Lone Star further acknowledges that the TFI
Common Stock has not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and has not been qualified under applicable
state securities laws and that any subsequent disposition thereof must be
registered under the Securities Act and qualified under applicable state
securities laws or be exempt from such registration and qualification. Lone Star
is aware that no trading market exists for the TFI Common Stock. Lone Star has
the ability to bear the economic risk of investment in the TFI Common Stock,
including a complete loss of the investment.
SECTION 2.4 Brokers. No broker, investment banker or other person
is entitled to any broker's, finder's or similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Lone Star.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF M CAMPBELL
M Campbell represents and warrants to Lone Star as follows:
SECTION 3.1 Organization, Standing and Power. TFI (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power and authority
to carry on its business as now being conducted, (ii) is duly qualified to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified would
not individually, or in the aggregate, have a Material Adverse Effect on TFI.
TFI has no subsidiaries.
SECTION 3.2 Capital Structure of TFI. The authorized capital stock
of TFI consists of 100,000 shares of common stock with a par value of $1.00 per
share, of which 1,000 shares are issued and outstanding. All of the TFI Common
Stock are validly issued, fully paid and nonassessable and have not been issued
in violation of any preemptive rights. There are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which TFI
is a party or by which it is bound obligating TFI to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of
TFI.
SECTION 3.3 Ownership of TFI Common Stock. All of the issued and
outstanding shares of capital stock of TFI are owned of record and beneficially
by M Campbell, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), taxes, Liens
(as defined below in this Section), options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. M Campbell is not party to
(i) any option, warrant, purchase right, or other contract or commitment that
could require him to sell, transfer, or otherwise dispose of any TFI Common
Stock (other than pursuant to this Agreement) or (ii) any voting trust, proxy,
or other agreement or understanding with respect to the TFI Common Stock. For
purposes of this Agreement "Liens" means liens, mortgages, pledges, security
interests and encumbrances.
SECTION 3.4 Authority; Non-Contravention. Shareholder has all
requisite power and authority to enter into this Agreement and to consummate the
Stock Purchase. This Agreement has been duly executed and delivered by
Shareholder and (assuming the valid authorization, execution and delivery of
this Agreement by Lone Star ) constitutes a valid and binding obligation of
Shareholder enforceable against him in
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accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding or at law).
The execution and delivery of this Agreement do not, and the consummation of the
Stock Purchase and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice of lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of TFI
under, any provision of (i) the Articles of Incorporation or Bylaws of TFI (true
and complete copies of which as of the date hereof have been delivered to Lone
Star), (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to Shareholder or TFI, or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Shareholder or TFI or any of
the respective properties or assets of Shareholder or TFI, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights,
Liens or losses that, individually or in the aggregate, would not have a
Material Adverse Effect on TFI, materially impair the ability of Shareholder to
perform his obligations hereunder or prevent the consummation of the Stock
Purchase. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to Shareholder or TFI
in connection with the execution and delivery of this Agreement by Shareholder
or is necessary for the consummation by Shareholder of the Stock Purchase or any
other transaction contemplated by this Agreement.
SECTION 3.5 Financial Statements. Included in Section 3.5 of the
disclosure schedules attached to this Agreement (the "M Campbell Disclosure
Schedule") are the following unaudited financial statements (collectively, the
"TFI Financial Statements") of TFI; (i) balance sheet as of September 15, 1998;
and (ii) statement of income for the six and one-half month period ended
September 15, 1998.
Except as may be set forth in Section 3.5 of the M Campbell
Disclosure Schedule, the TFI Financial Statements (a) are complete and correct
in all material respects, (b) have been prepared in conformity with accrual tax
basis accounting consistently applied, and (c) present fairly the financial
condition of TFI at the date presented and the results of operations of TFI for
the period then ended. There does not, and there will not be at Closing, exist
any fact, event, condition or claim known to Shareholder which would cause a
Material Adverse Change in the TFI Financial Statements as presented other than
as set forth therein.
SECTION 3.6 Absence of Material Adverse Change. Except as
otherwise set forth in Section 3.6 of the M Campbell Disclosure Schedule, there
has not been any Material Adverse Change with respect to TFI since September 15,
1998.
SECTION 3.7 Taxes. Except as otherwise set forth in Section 3.7 of
the M Campbell Disclosure Schedule: (i) all Tax Returns required to be filed by
TFI have been filed or extensions have been validly obtained; (ii) Tax Returns
referred to in clause (i) are true and correct in all material respects and have
been completed in all material respects in accordance with applicable law; (iii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have been
timely paid or extensions have been duly obtained or such taxes have been
adequately provided for on TFI's balance sheet or are being timely and properly
contested; (iv) TFI has not waived any statute of limitations in respect of
Taxes of TFI; (v) neither M Campbell nor TFI has received notice that the
Internal Revenue Service or any other taxing authority has asserted against TFI
any deficiency in Taxes or claims for additional Taxes in connection with any
tax period; (vi) all deficiencies asserted or assessments made as a result of
any examination of the Tax Returns referred to in clause (i) by a taxing
authority have been paid in full or adequately provided for on TFI's balance
sheet or are being timely and properly contested; and (vii) TFI has made
available to Lone Star correct and complete copies of all federal and state
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by TFI for the prior six years. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, transfer, severance or excise tax, or
any other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty, imposed by any
governmental authority, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
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SECTION 3.8 Real and Personal Property; Title Thereto. Set forth
in Section 3.8 of the M Campbell Disclosure Schedule is a complete and accurate
schedule of (a) all real and personal property owned by TFI having an individual
fair market value in excess of $5,000, and (b) any real or personal property
held by TFI under lease. Except as set forth in Section 3.8 of the M Campbell
Disclosure Schedule, TFI has good and, with respect to real property,
indefeasible title to all of such real property and personal property, subject
to no Liens except for (i) Liens for taxes not yet delinquent or the validity of
which is being contested in good faith, and (ii) any Liens arising by operation
of law securing obligations not yet overdue. Any real or personal property held
by TFI under lease is held under valid and enforceable leases which will
continue in full force and effect immediately after the Closing Date; TFI is not
in default with respect to any such lease.
SECTION 3.9 Accounts Receivable. Set forth in Section 3.9 of the M
Campbell Disclosure Schedule is a complete and accurate schedule of the accounts
receivable of TFI as of September 15, 1998, as reflected in the balance sheet as
of that date included in the TFI Financial Statements, together with an accurate
aging of those accounts. To the knowledge of Shareholder, the accounts described
in Section 3.9 have been collected in full or are valid obligations owing to
TFI. Except as set forth in Section 3.9 of the M Campbell Disclosure Schedule,
Shareholder has no knowledge of any notice from any account debtor on such
accounts indicating such account debtor will not pay such accounts (to the
extent not yet collected).
SECTION 3.10 Liabilities. There are no liabilities of TFI of any
kind, whether contingent or fixed, other than (i) liabilities disclosed or
provided for in the balance sheet of TFI as of September 15, 1998, included in
the Lone Star Financial Statements or disclosed in Section 3.10 of the M
Campbell Disclosure Schedule, or (ii) liabilities incurred in the ordinary
course of business since September 15, 1998, none of which, either individually
or in the aggregate, may be reasonably expected to be materially adverse to the
business, assets, condition (financial or otherwise) or results of operations of
TFI.
SECTION 3.11 Insurance. Set forth in Section 3.11 of the M
Campbell Disclosure Schedule is a complete list of all policies of fire and
extended coverage, liability, worker compensation and other forms of similar
insurance or indemnity bonds held by TFI for which all premiums have been paid.
There are no claims pending under any of such policies. To the knowledge of TFI,
TFI is not in default in any material respect with respect to any provisions of
any such policy or indemnity bond and has not failed to give any notice or
present any claim thereunder in due and timely fashion, which failure would
materially adversely affect the condition (financial or otherwise), results of
operations, assets, liabilities or business of TFI.
SECTION 3.12 Contracts and Other Agreements. Except as disclosed
on Section 3.12 of the M Campbell Disclosure Schedule, TFI is not a party to or
bound by any written or oral (i) employment, agency, consulting or similar
contract which cannot be terminated upon 30 days' notice without liability to
TFI, as the case may be, (ii) lease, whether as lessor or lessee, with respect
to any real or personal property, (iii) contract or commitment involving more
than $5,000 a year, other than contracts with TFI's drilling fluids customers in
the ordinary course of business; (iv) credit agreements; (v) guarantee,
suretyship, indemnification or contribution agreement, or (vi) other contracts
not made in the ordinary course of business.
SECTION 3.13 Records. The minute books of TFI contain true and
complete records in all material respects of all actions taken at any meetings
of TFI's shareholders or Board of Directors and of all written consents executed
in lieu of holding of any such meeting.
SECTION 3.14 Transactions with Affiliates. Except as otherwise set
forth in 3.14 of the M Campbell Disclosure Schedule, no Affiliate (as
hereinafter defined) has any direct or indirect interest in or owns directly or
indirectly any asset or right used in the conduct of the business of TFI or is
party to any contract, lease, agreement, arrangement or commitment used in such
business.
"Affiliate" as used in this Section 3.14 means a person which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, TFI. For purposes of this
definition, the officers, directors and stockholders of TFI shall be deemed
Affiliates.
SECTION 3.15 Employee Benefit Plans; Employment Agreements. With
respect to all the employee benefit plans, programs and arrangements of TFI
maintained for the benefit of any current or former
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employee, officer or director of TFI (collectively, the "TFI Plans"), except as
would not, individually or in the aggregate, have a Material Adverse Effect on
TFI: (i) none of the TFI Plans is a multi-employer plan within the meaning of
ERISA; (ii) none of the TFI Plans promises or provides retiree medical or life
insurance benefits to any person, except as otherwise required by law; (iii)
each TFI Plan intended to be qualified under Section 401(k) of the Code has
received a favorable determination letter from the Internal Revenue Service that
it is so qualified and nothing has occurred since the date of such letter that
could reasonably be expected to affect the qualified status of such TFI Plan;
(iv) each TFI Plan has been operated in all material respects in accordance with
its terms and the requirements of applicable law; and (v) TFI has not incurred
any direct or indirect liability under, arising out of or by operation of Title
IV of ERISA in connection with the termination of, or withdrawal from, any TFI
Plan or other retirement plan or arrangement, and no fact or event exists that
could reasonably be expected to give rise to any such liability. The aggregate
accumulated benefit obligations of any TFI Plan subject to Title IV of ERISA do
not exceed the fair market value of the assets of such TFI Plan. Except as set
forth in Section 3.15 of the M Campbell Disclosure Schedule, TFI has no TFI
Plans or any employment or severance agreements with any of its employees.
SECTION 3.16 Labor Matters. (i) TFI is not a party to any
collective bargaining agreement or other material contract or agreement with any
labor organization or other representative of employees nor is any such contract
being negotiated; (ii) there is no material unfair labor practice charge or
complaint pending nor, to the knowledge of M Campbell, threatened, with regard
to employees of TFI; (iii) there is no labor strike, material slowdown, material
work stoppage or other material labor controversy in effect, or, to the
knowledge of M Campbell, threatened against TFI; (iv) there are no campaigns
being conducted by and/or to the employees of TFI to authorize representation by
a labor organization; (v) TFI is not party to, or is not otherwise bound by, any
consent decree with any governmental authority relating to employees or
employment practices of TFI; (vi) TFI has not incurred any liability under, and
has complied in all respects with, the Worker Adjustment Retraining Notification
Act, and no fact or event exists that could give rise to liability under such
Act; (vii) except as disclosed in Section 3.16 of the M Campbell Disclosure
Schedule, TFI is in compliance with all applicable agreements, contracts and
policies relating to employment, employment practices, wages, hours and terms
and conditions of employment of the employees and all applicable laws respecting
employment practice, except where the failure to be in compliance with each such
agreement, contract and policy would not, either singly or in the aggregate,
have a Material Adverse Effect on TFI; and (vii) no charges with respect to, or
relating to TFI are pending before the Equal Employment Opportunity Commission,
or any corresponding state agency.
SECTION 3.17 Environmental Matters.
(a) Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, would not have a Material Adverse
Effect on TFI, to the knowledge of M Campbell:
(i) TFI holds, and is in compliance with and has been in
compliance with for the last three years, all Environmental
Permits, and is otherwise in substantial compliance and has been
in substantial compliance for the last three years with, all
applicable Environmental Laws and there is no condition that is
reasonably likely to prevent or materially interfere prior to the
Closing with compliance by TFI with Environmental Laws;
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review
by, or approval of, any third party of any Environmental Permit is
required in connection with the execution or delivery of this
Agreement or the consummation by Shareholder of the transactions
contemplated hereby or the operation of the business of TFI on the
date of the Closing;
(iii) TFI has not received any Environmental Claim, nor has
any Environmental Claim been threatened against TFI;
(iv) TFI has not entered into, agreed to or is not subject
to any outstanding judgment, decree, order or consent arrangement
with any governmental authority under any Environmental Laws,
including, without limitation, those relating to compliance with
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any Environmental Laws or to the investigation, cleanup,
remediation or removal of Hazardous Materials;
(v) there are no circumstances that are reasonably likely to
give rise to liability under any agreements with any person
pursuant to which TFI would be required to defend, indemnify, hold
harmless, or otherwise be responsible for any violation by or
other liability or expense of such person, or alleged violation by
or other liability or expense of such person, arising out of any
Environmental Law; and
(vi) there are no existing conditions that are reasonably
likely to give rise to liability of TFI under any Environmental
Laws.
(b) For purposes of this Agreement, the terms below shall have
the following meanings:
"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or
arbitral proceeding by any person to TFI or any of its
subsidiaries asserting liability or potential liability
(including, without limitation, liability or potential liability
for investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damage, personal injury,
fines or penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Materials at any location,
(ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or
(iii) otherwise relating to obligations or liabilities of TFI
under any Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations
required under Environmental Laws for TFI to conduct its
operations as presently conducted.
"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders,
decrees and common law relating in any manner to pollution or
protection of the environment, to the extent and in the form that
such exist at the date hereof.
"Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including
crude oil or any fraction thereof) and petroleum products,
asbestos and asbestos-containing materials, pollutants,
contaminants and all other materials and substances, including but
not limited to radioactive materials, regulated pursuant to any
Environmental Laws.
SECTION 3.18 Litigation. Except as set forth in Section 3.18 of
the M Campbell Disclosure Schedule, there is no suit, action, investigation or
proceeding pending or, to the knowledge of Shareholder, threatened against TFI
at law or in equity before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, that would have a
Material Adverse Effect on either TFI or, with respect to such matters that are
pending or threatened as of the date hereof, materially impair the ability of
Shareholder to perform his obligations hereunder or to consummate the Stock
Purchase, and there is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, board, bureau, agency,
instrumentality or arbitrator to which Shareholder is subject that would have a
Material Adverse Effect on TFI or, with respect to such items that are
outstanding and applicable as of the date hereof, materially impair the ability
of Shareholder to perform his obligations hereunder or to consummate the Stock
Purchase.
SECTION 3.19 Governmental Licenses and Permits; Compliance with
Law. TFI has not received notice of any revocation or modification of any
federal, state, local or foreign governmental license, certification, tariff,
permit, authorization or approval, the revocation or modification of which would
have a Material
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Adverse Effect on TFI. To the knowledge of Shareholder, the conduct of the
business of TFI complies with all statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees or arbitration awards applicable thereto,
except for violations or failures to comply, if any, that, individually or in
the aggregate, would not have a Material Adverse Effect on TFI.
SECTION 3.20 Brokers. No broker, investment banker or other person
is entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Shareholder or TFI.
SECTION 3.21 Bank Accounts. A complete list of each bank account
maintained by TFI, including safe deposit boxes maintained by TFI, the account
balances and the names of the persons authorized to draw down upon or have
access thereto is set forth in Section 3.21 of the M Campbell Disclosure
Schedule.
SECTION 3.22 Distributions to Stockholders of TFI. Except as set
forth in Section 3.23 of the M Campbell Disclosure Schedule, TFI, since December
31, 1997, has not declared, set aside or paid any dividends on, or made any
other actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise made any payments to any of the stockholders of TFI
other than salaries in the ordinary course of business and bonuses accrued on
the December 31, 1997 balance sheet of TFI.
SECTION 3.23 Workers' Compensation Claims. Except as set forth in
Section 3.23 of the M Campbell Disclosure Schedule, there are no workers'
compensation claims pending or, to the knowledge of Shareholder, threatened
against TFI.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 Fees and Expenses. All costs and expenses incurred by
Lone Star in connection with this Agreement and the transactions contemplated
hereby shall be paid by Lone Star; such costs and expenses incurred by TFI up to
a maximum of $15,000 shall be paid by Lone Star and the balance, if any, shall
be paid by Shareholder.
SECTION 4.2 Reasonable Best Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
all reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Stock Purchase and
the other transactions contemplated by this Agreement and the prompt
satisfaction of the conditions hereto.
SECTION 4.3 M Campbell Indemnification. On and after the date of
Closing, Shareholder shall jointly and severally indemnify and hold Lone Star
harmless against and in respect of all actions, suits, demands, judgments, costs
and expenses (including reasonable attorneys' fees of Lone Star), arising out of
any breach of any representation, warranty, covenant or agreement on the part of
Shareholder contained in this Agreement. The indemnification provided for in
this Section 4.3 shall terminate and be of no further force and effect two years
from the date of Closing, except as to any representation or warranty as to
which a written notice of claim for indemnification has been given to M Campbell
prior to the expiration of such two-year period.
SECTION 4.4 Lone Star Indemnification.. On and after the date of
Closing, Lone Star shall indemnify and hold Shareholder harmless against and in
respect of all actions, suits, demands, judgments, costs and expenses (including
reasonable attorneys fees of Shareholder) arising out of any breach of any
representation, warranty, covenant or agreement on the part of Lone Star
contained in this Agreement and any and all liabilities arising out of or
related to the business or the operations of TFI, Lone Star or any successor
thereof to the extent the liabilities arise out of, or are based upon, facts or
events occurring after the Closing. The indemnification provided for in this
Section 4.4 shall terminate and be of no further force and effect two years from
the date of Closing, except
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as to any representation or warranty as to which a written notice of claim for
indemnification has been given to Lone Star prior to expiration of such two-year
period.
SECTION 4.5 Limitation on Indemnification Obligations. The parties
shall have no liability for indemnification under this Article IV unless the
total of the alleged costs, expenses or damages with respect to any individual
matter exceeds $5,000 or the costs, expenses or damages arising out of multiple
claims of less than $5,000 exceed $20,000 in the aggregate (the "Basket
Amount"). The indemnification obligations of the parties pursuant to this
Article IV shall (a) in no event exceed the amount of the Stock Purchase
Consideration (the "Maximum Indemnification Limitation"), and (b) except as set
forth in Section 6.8 below, be the sole and exclusive remedy of the parties with
respect to this Agreement. Notwithstanding the foregoing, neither the Basket
Amount nor the Maximum Indemnification Limitation shall be applicable in respect
of any actions, suits, demands, judgments, costs and expenses (including
reasonable attorney's fees), arising out of, or based upon, a fraudulent
representation by M Campbell or Lone Star in this Agreement or any claims for
indemnification relating to unpaid or undisclosed Tax liabilities of TFI.
SECTION 4.6 Employee Benefits. At Closing, all employee benefit
plans and programs of TFI shall terminate, and, subject to all applicable laws,
all vested rights and benefits of such benefit plans and programs shall be
distributed to the eligible recipients in accordance with the terms of such
plans.
ARTICLE V
CONDITIONS PRECEDENT TO THE STOCK PURCHASE
SECTION 5.1 Conditions to Each Party's Obligation to Effect the
Stock Purchase. The respective obligations of each party to effect the Stock
Purchase shall be subject to the fulfillment or waiver (where permissible) at or
prior to the date of Closing of each of the following conditions:
(a) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of prohibiting the Stock Purchase or any of the other transactions
contemplated hereby; provided that, in the case of any such decree, injunction
or other order, each of the parties shall have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as practicable any decree, injunction or other order that may be
entered.
(b) Non-Competition Agreement. A Non-Competition Agreement in the
form attached hereto as Exhibit A shall have been executed and delivered by PEC,
Lone Star, and M Campbell.
(c) Employment Agreement. An Employment Agreement in the form
attached hereto as Exhibit B shall have been executed and delivered by Lone Star
and M Campbell.
(d) Bonus Payment. Prior to Closing, TFI shall have paid bonuses
totaling $150,000 to Cindi Campbell, Steve Disharon and Steve Akins.
(e) Annuity. Prior to Closing, TFI shall have made provision for
an incentive compensation plan in the amount of $150,000 for the benefit of
Cindi Campbell, Steve Disharon and Steve Akins.
SECTION 5.2 Conditions to Obligation of Shareholder to Effect the
Stock Purchase. The obligation of Shareholder to effect the Stock Purchase shall
be subject to the fulfillment at or prior to the Closing of the following
additional conditions; provided that Shareholder may waive any of such
conditions in his sole discretion:
(a) Performance of Obligations; Representations and Warranties.
Lone Star shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or
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prior to the Closing, each of the representations and warranties of Lone Star
contained in this Agreement shall be true and correct on and as of the date of
Closing as if made on and as of such date.
(b) Officers' Certificate. Lone Star shall have furnished to
Shareholder a certificate, dated the Closing, signed by an appropriate officer
of Lone Star, certifying to the effect that, to his knowledge and belief, the
conditions set forth in Section 5.1 and Section 5.2(a) have been satisfied in
full.
(c) Incentive Stock Options. PEC shall have granted incentive
stock options under the Patterson Energy, Inc. 1993 Stock Incentive Plan to the
following persons in the following amounts: Steve Akins - option to purchase
3,000 shares of common stock, $.01 share ("PEC Common Stock"); Cindi Campbell -
option to acquire 1,000 shares of PEC Common Stock; Mark Campbell - option to
acquire 4,000 shares of PEC Common Stock, and Steve Disharon - option to acquire
2,000 shares of PEC Common Stock, and Lone Star shall have included Steve Akins,
Cindi Campbell and Steve Disharon as participants in the Lone Star deferred
compensation plan.
(d) Opinion of Baker & Hostetler, LLP. Shareholder shall have
received an opinion of counsel from Baker & Hostetler, L.L.P., counsel to Lone
Star, dated as of the Closing, substantially to the effect that:
(i) The incorporation, existence and good standing of Lone
Star are as stated in this Agreement.
(ii) Lone Star has full power and authority to execute,
deliver and perform this Agreement, and this Agreement has been
duly authorized, executed and delivered by Lone Star, and
(assuming the due and valid authorization, execution and delivery
by Shareholder) constitutes the legal, valid and binding agreement
of Lone Star enforceable against Lone Star in accordance with its
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating
to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and performance by Lone Star of this
Agreement will not violate the Articles of Incorporation or Bylaws
of Lone Star and, to the knowledge of such counsel, will not
violate, result in a breach of, or constitute a default under, any
material lease, mortgage, contract, agreement, instrument, law,
rule, regulation, judgment, or order or decree known to such
counsel to which Lone Star is a party or to which it or any of its
properties or assets may be bound.
(iv) The Non-Competition Agreement and Employment Agreement
dated the date of Closing among Lone Star and M Campbell
constitute the legal, valid and binding agreement of Lone Star
enforceable against Lone Star in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, or
other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect
of general principles of equity whether enforceability is
considered in a proceeding in equity or at law.
(v) To the knowledge of such counsel, no consent approval,
authorization or order of any court or governmental agency or body
which has not been obtained is required on behalf of Lone Star for
consummation of the transactions contemplated by this Agreement.
(vi) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened, against or affecting
Lone Star by any Governmental Entity which seeks to restrain,
prohibit or invalidate the transactions contemplated by the
Agreement.
In rendering such opinion, counsel for Lone Star may rely as to
matters of fact upon the representations of officers of Lone Star contained in
any certificate delivered to such counsel and certificates of
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public officials. Such opinion shall be limited to the laws of the United States
of America and the State of Texas.
(e) Delivery of Stock Purchase Consideration. Lone Star shall have
made delivery of the Stock Purchase Consideration.
SECTION 5.3 Conditions to Obligations of Lone Star to Effect the
Stock Purchase. The obligations of Lone Star to effect the Stock Purchase shall
be subject to the fulfillment at or prior to the Closing of the following
additional conditions, provided that Lone Star may waive any such conditions in
its sole discretion:
(a) Performance of Obligations; Representations and Warranties.
Shareholder shall have performed in all material respects each of his agreements
contained in this Agreement required to be performed on or prior to the Closing
and each of the respective representations and warranties of Shareholder
contained in this Agreement shall be true and correct on and as of the Closing
as if made on and as of such date.
(b) Officers' Certificate. Shareholder shall have furnished to
Lone Star a certificate, dated as of the Closing, certifying to the effect that,
to the knowledge and belief of Shareholder, the conditions set forth in Section
5.1 and Section 5.3(a) have been satisfied.
(c) Opinion of Davis, Hutchinson & Wilkerson, L.L.P. Lone Star
shall have received an opinion of counsel from Davis, Hutchinson & Wilkerson,
L.L.P., counsel to Shareholder and TFI, dated as of the Closing, substantially
to the effect that:
(i) The incorporation, existence, good standing, and
capitalization of TFI are as stated in this Agreement; the
authorized shares of TFI Common Stock are as stated in this
Agreement; all outstanding shares of TFI Common Stock are duly and
validly authorized and issued, fully paid and non-assessable.
(ii) Shareholder has full power and authority to execute,
deliver and perform this Agreement, and this Agreement has been
duly authorized, executed and delivered by Shareholder, and
(assuming the due and valid authorization, execution and delivery
by Lone Star) constitutes the legal, valid and binding agreement
of Shareholder enforceable against Shareholder in accordance with
its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating
to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and performance by Shareholder of this
Agreement will not violate the Articles of Incorporation or Bylaws
of TFI and, to the knowledge of such counsel, will not violate,
result in a breach of, or constitute a default under, any material
lease, mortgage, contract, agreement, instrument, law, rule,
regulation, judgment, order or decree known to such counsel to
which either Shareholder or TFI is a party or to which him or it
or any of his or its properties or assets may be bound.
(iv) The Non-Competition Agreement and Employment Agreement
dated the date of Closing among Lone Star and M Campbell
constitute the legal, valid and binding agreement of M Campbell
enforceable against M Campbell in accordance with its terms,
except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, or
other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect
of general principles of equity whether enforceability is
considered in a proceeding in equity or at law.
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body
which has not been obtained is
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required on behalf of either of M Campbell or TFI for consummation
of the transactions contemplated by this Agreement.
(vi) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened, against or affecting
either of M Campbell or TFI by any Governmental Entity which seeks
to restrain, prohibit or invalidate the transactions contemplated
by the Agreement.
In rendering such opinion, counsel for M Campbell and TFI may rely
as to matters of fact upon the representations of officers of TFI and M Campbell
contained in any certificate delivered to such counsel and certificates of
public officials. Such opinion shall be limited to the laws of the United States
of America and the State of Texas.
(d) Officer and Director Resignation Letters. Lone Star shall have
received a resignation letter dated the date of the Closing from each of the
directors and officers of TFI.
(e) TFI Stock Certificates. Lone Star shall have received all of
the certificates evidencing the TFI Common Stock duly endorsed to Lone Star.
(f) Evidence of Insurability. M Campbell shall have provided Lone
Star with proof that he is insurable with life insurance underwritten by
Massachusetts Mutual Life Insurance Company in the face amount of at least $2
million.
(g) Non-Competition Agreements. A Non-Competition Agreement in the
form attached hereto as Exhibit C shall have been executed and delivered by each
of the following persons: Steve Akins, Cindi Campbell and Steve Disharon.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
sent by overnight courier or telecopied (with a confirmatory copy sent by
overnight courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) to Lone Star, to:
Lone Star Mud, Inc.
415 West Wall Street, Suite 530
Midland, Texas 79701
Facsimile: (915) 684-7473
Attention: Spencer D. Armour III
President
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with copies to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Box 1416
Snyder, Texas 79550
Facsimile: (915) 537-0281
Attention: Cloyce A. Talbott
Chairman and Chief
Executive Officer
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
Facsimile: (303) 861-2307
(b) if to M Campbell, to:
Mark Campbell
6262 Weber, Suite 112
Corpus Christi, Texas 78413
Facsimile: (512) 851-8155
with copies to:
Marshall R. Wilkerson
Davis, Hutchinson & Wilkerson, L.L.P.
Frost Bank Plaza
802 N. Carancahua, Suite 1270
Corpus Christi, Texas 78470-0400
Facsimile: (512) 882-1191
SECTION 6.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof," "herein" and "hereunder" and
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" is used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 6.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that legal
counsel for the parties hereto may rely upon the representations and warranties
contained herein and in the certificates delivered pursuant to Sections 5.2(c)
and 5.3(c).
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SECTION 6.5 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 6.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 6.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 6.8 Enforcement of This Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, Lone Star and M Campbell have executed this
Agreement as of the date first written above.
LONE STAR:
LONE STAR MUD, INC.
By: /s/ SPENCER D. ARMOUR III
-----------------------------------------
Spencer D. Armour III
President
M CAMPBELL:
/s/ MARK CAMPBELL
-----------------------------------------
Mark Campbell
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EXHIBIT A
PATTERSON ENERGY, INC.,
LONE STAR MUD, INC.
AND
MARK CAMPBELL
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
day of September, 1998 (this "Agreement"), between and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), Lone Star MUD, INC., a Texas corporation
("Lone Star") wholly-owned by PEC, and MARK CAMPBELL, an individual residing in
Corpus Christi, Texas ("M Campbell").
RECITALS:
A. Simultaneously with the execution of this Agreement, (i) Lone
Star and M Campbell have consummated the transactions contemplated by that
certain Stock Purchase Agreement dated of even date herewith (the "Stock
Purchase Agreement"), among Lone Star and M Campbell providing for, among other
things, the acquisition by Lone Star from M Campbell of all of the outstanding
capital stock of Tejas Fluids, Inc. ("TFI"), a Texas corporation wholly owned by
M Campbell (the "Stock Purchase"); and (ii) Lone Star and M Campbell have
entered into an employment agreement (the "M Campbell Employment Agreement").
B. M Campbell is or was an officer, a director and a stockholder
of TFI.
C. The execution and delivery of this Agreement is a condition
to the consummation of the Stock Purchase contemplated by the Stock Purchase
Agreement, and the parties are entering into this Agreement in order to fulfill
such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement. The period of this Agreement shall
commence on the date hereof and remain in effect through the first to occur of
(a) termination of the M Campbell Employment Agreement (i) by Lone Star without
"Cause" as that term is defined in Section 10(a) of the M Campbell Employment
Agreement or (ii) by M Campbell as a result of a material breach of the M
Campbell Employment Agreement by Lone Star pursuant to Section 10(b) thereof, or
(b) December 31, 2005, unless M Campbell is still in the employ of Lone Star on
that date, in which event this Agreement shall terminate on the second
anniversary of the termination of the employment of M Campbell with Lone Star
(the "Non-Compete Period").
2. Covenant Not to Compete.
(a) M Campbell covenants and agrees that during the
Non-Compete Period, M Campbell shall not, without the prior
written consent of PEC and Lone Star, directly or indirectly, and
whether as a principal or as an agent, officer, director,
employee, consultant, or otherwise, alone or in association with
any other person, carry on, be engaged, concerned, or take part
in, render services to, or own, share in the earnings of, or
invest in the stock, bonds, or other securities of, any person
which is engaged in the drilling fluids business (the "Competitive
Business") within the states of Texas, Louisiana, New Mexico and
Oklahoma or in any other states in which Lone Star
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is conducting the Competitive Business at the time of termination
of the M Campbell Employment Agreement; provided, however, that M
Campbell may (i) invest in stock, bonds, or other securities of
any Competitive Business (but without otherwise participating in
the Competitive Business) if: (A) such stock, bonds, or other
securities are listed on any national securities exchange or are
registered under Section 12(g) of the Securities Exchange Act of
1934, as amended; (B) the investment does not exceed, in the case
of any class of capital stock of any one issuer, two percent (2%)
of the issued and outstanding shares, or, in the case of bonds or
other securities of any one issuer, two percent (2%) of the
aggregate principal amount thereof issued and outstanding; and (C)
such investment would not prevent, directly or indirectly, the
transaction of business by PEC or Lone Star or any affiliate of
PEC or Lone Star with any state, district, territory, or
possession of the United States or any governmental subdivision,
agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during
which M Campbell is prohibited from engaging in certain activities
by this Section shall be extended by the length of time during
which M Campbell is in breach of the terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by M Campbell not to enter into competition
with PEC or Lone Star as set forth in Section 2(a) hereof is an
essential element of this Agreement, the Stock Purchase Agreement
and the M Campbell Employment Agreement and that, but for the
agreement of M Campbell to comply with such covenant, Lone Star
would not have agreed to enter into this Agreement, the Stock
Purchase Agreement and the M Campbell Employment Agreement. PEC
and Lone Star on the one hand and M Campbell on the other hand
have independently consulted with their respective counsel and
have been advised in all respects concerning the reasonableness
and propriety of such covenant, with specific regard to the nature
of the business conducted by PEC and Lone Star and their
respective affiliates. M Campbell agrees that such covenant is
reasonable in scope, geographic area, and duration.
3. Restrictions on Soliciting Business of PEC and Lone Star. M
Campbell further covenants and agrees that during the Non-Compete Period, M
Campbell will not, either for himself or for any other person or entity,
directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PEC and Lone
Star:
(a) Solicit or hire any of the employees of PEC or Lone Star
or solicit or take away any of PEC's or Lone Star's customers,
lessors, or suppliers or attempt any of the foregoing;
(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory
described in Section 2 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or Lone Star has with any customer,
lessor, employee, principal or supplier.
4. Specific Performance. Without intending to limit the remedies
available to PEC or Lone Star, M Campbell acknowledges that PEC or Lone Star
will have no adequate remedies at law if M Campbell violates the terms of
Section 2 or 3, hereof. In such event, M Campbell agrees that PEC or Lone Star
shall have the right, in addition to any other rights it may have, to obtain in
any court of competent jurisdiction specific performance of such Sections of
this Agreement or injunctive relief to restrain any breach or threatened breach
thereof. Nothing herein shall be construed as prohibiting PEC or Lone Star from
pursuing any other remedies available to PEC or Lone Star (whether at law or in
equity) for such breach or threatened breach, including, without limitation, the
recovery of monetary damages from M Campbell.
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The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.
5. Attorneys Fees and Costs. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys fees, costs and necessary
expenses in addition to any other relief to which that party may be entitled.
This provision is applicable to this entire Agreement.
6. Representations and Warranties of PEC, Lone Star and M
Campbell.
(a) Representations and Warranties of PEC and Lone Star. PEC
and Lone Star hereby jointly and severally represent and warrant
to M Campbell that: (i) they have all requisite power to enter
into and perform their obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary
corporate action on the part of PEC and Lone Star; (iii) the
execution of this Agreement by PEC and Lone Star and performance
of their obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid
and binding obligation of PEC and Lone Star.
(b) Representations and Warranties of M Campbell. M Campbell
hereby represents and warrants to PEC and Lone Star that: (i) M
Campbell has the capacity and power to enter into and perform the
obligations of M Campbell under this Agreement; (ii) M Campbell
has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of M Campbell
hereunder do not require the consent or approval of any other
party; and (iv) this Agreement constitutes a valid and binding
obligation of M Campbell.
7. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government
bodies or agencies in their respective performance of their
obligations under this Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State
of Texas without reference to its conflict-of-laws principles.
This Agreement's final form resulted from review and negotiations
among the parties and their attorneys, and no part of this
Agreement should be construed against any party on the basis of
authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any
portion of this Agreement which the parties are unable to resolve
themselves, and any party brings an action against any other party
seeking a declaratory order, specific performance, damages, or any
other legal or equitable relief based on this Agreement, the
parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction,
agree that venue will be proper in such courts, and waive any
objections based on inconvenience of the forum, and further agree
that the prevailing party in any such action, as determined by the
court, shall be awarded its reasonable attorneys' fees and costs
in addition to any relief or judgment the court awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the
subject matter contained herein and supersedes any previous oral
or written communications, representations, understandings or
agreements with respect thereto. The terms of this Agreement may
be modified only in a writing, signed by authorized
representatives of both parties.
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(e) Assignability. The rights and duties of any party under
this Agreement shall not be assignable by such party except that
this Agreement and all right and obligations hereunder may be
assigned by Lone Star or PEC to, and assumed by, any corporation
or other business entity which succeeds to all or substantially
all of the assets and business of Lone Star or PEC, as the case
may be, through merger, consolidation, acquisition of assets or
other corporate reorganization.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or
default. Failure or delay by either party to enforce compliance
with any term or condition of this Agreement will not constitute a
waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity
will not affect the validity of the remaining provisions of this
Agreement, and further agree, to the extent possible, to
substitute for the invalid provision a valid provision that
approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in
writing and will be given personally, by facsimile or by mailing
the same, first-class, postage prepaid to the appropriate address
and facsimile number set forth below or to such other person or at
such other address as may hereafter be designated by like notice.
Notices by mail will be considered delivered and become effective
three days after the mailing thereof. All notices by facsimile
will be considered delivered and become effective immediately upon
the confirmed (by answer back or other tangible printed
verification or successful receipt) sending thereof.
To PEC:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
To Lone Star:
Lone Star Mud, Inc.
415 West Wall Street, Suite 530
Midland, Texas 79701
Facsimile: (915) 684-7446
Attention: Spencer D. Armour III
President
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To M Campbell:
Mark Campbell
6262 Weber, Suite 112
Corpus Christi, Texas 78413
Facsimile: (512) 851-8155
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts,
each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(k) Effective Time. This Agreement shall become effective
simultaneously with the Closing (as defined in the Stock Purchase
Agreement) of the Stock Purchase.
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.
"PEC"
PATTERSON ENERGY, INC.
By:
-------------------------------------------------
James C. Brown
Vice President and Chief Financial Officer
"LONE STAR"
LONE STAR MUD, INC.
By:
-------------------------------------------------
Spencer D. Armour III
President
"M CAMPBELL"
-------------------------------------------------
Mark Campbell
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EXHIBIT B
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
as of September __, 1998, by and between LONE STAR MUD, INC., a Texas
corporation (hereinafter referred to as "Employer") wholly owned by Patterson
Energy, Inc., a Delaware corporation ("PEC"), and MARK CAMPBELL of Corpus
Christi, Texas (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employee was employed by TEJAS FLUIDS, INC. ("TFI"), a
Texas corporation, from the inception of TFI through the consummation on this
date of the purchase by Employer from Employee of all of the outstanding capital
stock of TFI (the "Stock Purchase") pursuant to the terms of the Stock Purchase
Agreement dated of even date herewith between Employer and Employee (the "Stock
Purchase Agreement");
WHEREAS, Employer desires to continue to employ Employee.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants herein contained, Employee and Employer hereby agree as
follows:
1. Employment. Employer agrees to employ Employee as South Texas
and Texas Gulf Coast Regional Manager, subject to the terms and conditions
hereinafter set forth. Employee hereby accepts such employment and agrees that
he will, during the continuance hereof, devote his full time and attention and
abilities to the duties of employment assigned to him by the Vice President of
Operations or President of Employer.
2. Term. The term of this Agreement shall begin on the date of
this Agreement and shall end on December 31, 2003, subject to the terms and
conditions hereinafter contained.
3. Place of Employment. Employer agrees that Employee will have
his principal office at and will perform his principal duties at Employer's
field office, located in Corpus Christi, Texas. Notwithstanding the foregoing,
Employee acknowledges that it may be necessary from time to time for him in the
performance of his duties, to travel on behalf of the Company and to perform
such duties while temporarily away from his principal office.
4. Compensation. As compensation to Employee for his performance
of the services required hereunder, and for his acceptance of the
responsibilities herein contained, and for his performance of all the additional
obligations of employment, Employer agrees to pay and Employee agrees to accept
the following salary, other compensation and benefits, in addition to any other
compensation and benefits under this Agreement:
(a) Salary. Employee shall be entitled to receive a salary payable
monthly at an annual rate of $90,000.
(b) Bonus. For each year of employment of Employee with Employer
under this Agreement beginning with the year ended December 31, 1999, that the
"Incentive Goals" (as defined below) relating to sales of drilling fluids in
Region I (as defined below) are met, Lone Star will pay a cash bonus to Employee
of 33% of the "Region I Net Profit" (as defined below) up to a maximum bonus for
that year of $500,000. Such bonus, if payable for a particular year, will be
paid on or before March 31 of the following year. The calculation of the various
amounts necessary to determine whether the bonus for a particular year is
payable and, if so, the amount of the bonus, will be based on generally accepted
accounting principles. For purposes of the bonus:
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"Base Year" means the trailing 12 months ending December 31,
1998.
"Incentive Goals" means both (i) a growth in Region I Gross
Sales (as defined below) for each calendar year of at least
year,25% over the Base Year compounded annually, and (ii) a Region
I Net Profit (as defined below) of at least 15% of Region I Gross
Sales for the calendar year in question. For example, if Region I
Gross Sales for the Base Year were $1,000,000, Region I Gross
Sales for the year ending December 31, 1999 must be at least
$1,250,000, Region I Gross Sales for the year ending December 31,
2000 must be at least $1,562,500, Region I Gross Sales for the
year ending December 31, 2001 must be at least $1,953,125, Region
I Gross Sales for the year ending December 31, 2022 must be at
least $2,441,406, and Region I Gross sales for the year ending
December 31, 2003 must be at least $3,051,758.
"Region I" means the South Texas and Texas Gulf Coast region
consisting of Texas Railroad Commission Districts 1 (excluding Val
Verde, Edwards and Maverick Counties), 2, 3 and 4, and all
international sales of Ultralube II generated by Employee.
"Region I Gross Profit" means the amount determined by
subtracting day-to-day Region I operating expenses (excluding
interest, taxes and depreciation) for the current calendar year on
an accrual basis from net sales (gross sales less cost of goods
sold) of drilling fluids for that year within Region I.
"Region I Gross Sales" means all revenues received by
Employer from the sale of drilling fluids in Region I by employees
of Employer including, but not limited to, Employee.
"Region I Net Profit" means the amount determined by
subtracting the sum of the Quarterly Region I Allocable Share of
Sales Overhead and Corporate Overhead (as defined below) for a
current calendar year from Region I Gross Profit for that year.
"Quarterly Region I Allocable Share of Sales and Corporate
Overhead" means the ratio of Region I Gross Sales to Total
Regional Gross Sales, determined on a calendar quarter basis using
Region I Gross Sales and Total Regional Gross Sales for the
three-month period immediately preceding such calendar quarter,
multiplied by the sum of Sales Overhead and Corporate Overhead
using Sales Overhead and Corporate Overhead for such three-month
period.
"Total Regional Gross Sales" means the sum of all revenues
received by Lone Star from the sale of drilling fluids by
employees of Lone Star including, but not limited to, Employee, in
Region I, Midcontinent region and Permian Basin region and in any
other regions in which drilling fluids are sold by Employer.
"Sales Overhead" means expenses associated with the drilling
fluids sales operations of Employer.
"Corporate Overhead" means the expenses associated with the
day-to-day operations of Employer, including Employer's
proportionate share of the overhead of PEC, but excluding Sales
Overhead and interest, taxes and depreciation.
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(c) Further Benefits. Employee shall be entitled to
participate, as long as he is employed by Employer, in all
employee benefit plans of Employer or of PEC for employees of PEC
and subsidiaries of PEC.
5. Vacations. Employee shall be entitled each calendar year to a
vacation or vacations aggregating a total of __ working days (or a pro rata
number of working days for any period less than a calendar year) and such public
holidays as are provided by Lone Star to other employees of Employer; provided
that such number of working days for the first calendar year ending December 31,
1998, shall be reduced by the number of vacation days taken by Employee between
January 1, 1998, and the date of this Agreement. Employer and Employee shall
mutually agree as to when Employee may take his vacation or vacations. Unused
vacation time shall not be carried forward to subsequent years.
6. Expenses. Employer shall pay or reimburse Employee for
reasonable or necessary out-of-pocket expenses incurred by Employee in
conjunction with the performance of his duties hereunder; provided that such
expenses are properly documented in accordance with normal procedures of
Employer.
7. Confidentiality. Employee acknowledges that information used by
PEC and its subsidiaries, including Employer, in the conduct of their respective
business is confidential information which is the sole and exclusive property of
PEC and its subsidiaries. Employee agrees that he will not, during the term of
this Agreement or at any time after the termination hereof, disclose any of such
confidential information to any third party or use such confidential information
in any way to compete with or to act in any other way adverse to Employer and
its subsidiaries. Provisions of this paragraph shall not however apply to
information which is or which becomes available to the general public through no
fault of Employee. Upon termination of Employee's employment hereunder,
regardless of the reason for such termination, Employee agrees promptly to
deliver all tangible materials constituting confidential information and all
other property of PEC and its subsidiaries, including Employer, to PEC.
8 Enforcement. The parties agree that upon any violation of the
provisions of paragraph 7 hereof, monetary damages would be inadequate and
difficult to ascertain. The parties therefore agree that upon the existence of
any such violation or threatened violation, provided that Employer is not then
in default hereunder, Employer may obtain a temporary restraining order,
preliminary injunction or other appropriate that constitutes a felony in the
jurisdiction involved not subject to further appeal or review, if such
\conviction or plea is injurious to Employer.
9. Withholding of Appropriate Taxes. It is understood and agreed
by the parties hereto that Employer shall withhold appropriate taxes from
compensation and with respect to any other economic benefits herein provided
when such withholding is, in the reasonable judgment of Employer, required by
law or regulation.
10. Termination.
(a) By Employer. Employer may terminate this Agreement only
for Cause (as defined below) upon 30 days prior written notice to
Employee.
(i) If the written notice is issued, such notice shall
specify that termination is being made for Cause and it shall
state the basis therefor.
(ii) For purposes of this Agreement, termination for
"Cause" shall mean termination because of:
a. The continued failure by Employee to substantially
perform or the gross negligence in the performance of his
duties hereunder after the Board of Directors of
Employer has made a written demand for performance which
specifically identifies the
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manner in which it believed that Employee has not
substantially performed his duties.
b. The commission by Employee of a willful act of
dishonesty or misconduct which is injurious to Employer,
or the breach of a fiduciary duty to Employer.
c. A conviction or a plea of guilty or nolo
contendere in connection with fraud or any crime that
constitutes a felony in the jurisdiction involved not
subject to further appeal or review, if such conviction or
plea is injurious to Employer.
d. The commission by Employee of an act of substance
abuse.
(b) By Employee. Employee shall have the right to terminate
this Agreement only: (i) for cause, limited to a material breach
of this Agreement by Employer which remains uncured after
reasonable notice; or (ii) if both A. Glenn Patterson and Spencer
D. Armour cease being employees of PEC and/or Employer.
11. Miscellaneous.
(a) The rights and duties of either party under this
Agreement shall not be assignable by either party except that this
Agreement and all rights and obligations hereunder may be assigned
by Employer to, and assumed by, any corporation or other business
entity which succeeds to all or substantially all of the assets
and business of Employer through merger, consolidation,
acquisition of assets or other corporate reorganization.
(b) This Agreement shall be governed by, construed, applied
and enforced in accordance with the laws of the State of Texas
except that no doctrine of choice of law shall be used to apply
any law other than that of Texas, and no defense, counterclaim or
right of set-off given or allowed by the laws of any other state
or jurisdiction, or arising out of the enactment, modification or
repeal of any law, regulation, ordinance or decree of any foreign
jurisdiction, be interposed in any action hereon. Subject to
Section 11(c) below, Employee and Employer agree that any action
or proceeding to enforce or arising out of this Agreement may be
commenced in the courts of the state of Texas or the United States
District Courts in Dallas, Texas. Employee and the Company consent
to such jurisdiction, agree that venue will be proper in such
courts and waive any objections based upon forum non conveniens.
The choice of forum set forth in this Section 11 shall not be
deemed to preclude the enforcement of any judgment obtained in
such forum or the taking of any action under this Agreement to
enforce same in any other jurisdiction.
(c) Employee or Employer agree that any dispute between or
among the parties to this Agreement relating to or in respect of
this Agreement, its negotiation, execution, performance, subject
matter, or any course of conduct or dealing or actions under or in
respect of this Agreement, shall be submitted to, and Resolved
exclusively pursuant to arbitration in accordance with the
commercial arbitration rules of the American Arbitration
Association. Such arbitration shall take place in Dallas, Texas,
and shall be subject to the substantive law of the State of Texas.
Decisions pursuant to such arbitration shall be final, conclusive
and binding on the parties subject to confirmation, modification
or challenge pursuant to 9 U.S.C. Section 1 et. seq. Upon the
conclusion of arbitration, Employee or Employer may apply to any
court of the type described in
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Section 10(b) above to enforce the decision pursuant to such
arbitration. In connection with the foregoing, the parties hereby
waive any rights to a jury trial to resolve any disputes or claims
relating to this Agreement.
(d) This Agreement and all provisions hereof shall bind and
inure to the benefit of Employer, Employee and their respective
personal representatives, heirs, successors and assigns.
(e) This Agreement and all questions arising hereunder shall
be governed by the laws of the State of Texas.
(f) If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, such provision shall be severed
or enforced to the extent possible and such invalidity, illegality
or unenforceability shall not affect the remainder of this
Agreement.
(g) This Agreement supersedes any prior agreements or
understandings, oral or written, with respect to employment of
Employee and constitutes the entire agreement with respect
thereto. This Agreement may be amended or modified only by written
agreement subscribed to by both of the parties hereto.
(h) The waiver by either party of a breach of any provision
of this Agreement by the other shall not operate or be construed
as a waiver of any subsequent breach of the same provision or any
other provision of this Agreement.
(i) All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent
by overnight courier or telecopier (with a confirmation copy sent
by overnight courier) to the parties at the following addresses
(or at such other address for a party as shall be specified by
like notice):
(i) To Employee, to:
Mark Campbell
6262 Weber, Suite 112
Corpus Christi, , Texas 78413
Facsimile: (512) 851-8155
(ii) To Employer, to:
Lone Star Mud, Inc.
415 West Wall Street, Suite 530
Midland, Texas 79701
Facsimile: (915) 684-7446
Attention: Spencer D. Armour III
President
with copies to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Box 1416
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
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(j) This Agreement shall become effective simultaneously with
the Closing (as defined in the Stock Purchase Agreement) of the
Stock Purchase.
IN WITNESS WHEREOF, Employee and Employer have duly executed this
Agreement.
EMPLOYER:
LONE STAR MUD, INC., a Texas corporation
By:
---------------------------------------
Spencer D. Armour III
President
EMPLOYEE:
---------------------------------------
Mark Campbell
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