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As filed with Securities and Exchange Commission on October 28, 1999
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PATTERSON ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2504748
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4510 Lamesa Highway
Snyder, Texas 79549
(915) 573-1104
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
Cloyce A. Talbott
4510 Lamesa Highway
Snyder, Texas 79549
(915) 573-1104
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
======================================================================================================================
Title of each class of Proposed maximum Proposed maximum
Securities to be Amount to be offering price per aggregate offering Amount of
registered registered(1) unit(2) price(3) registration fee
- ----------------------------------------------------------------------------------------------------------------------
Debt Securities(4)
Preferred Stock,
par value $.01 per
Share(5)
Depositary Shares(6)
Warrants(7)
Common Stock,
par value $.01 per
share(8)
Total.......... $150,000,000 100% $150,000,000 $41,700
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(1) In U.S. dollars or the equivalent thereof in one or more foreign currencies,
currency units or composite currencies.
(2) The proposed maximum initial offering price per unit will be determined from
time to time by the Registrant.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering price
of all securities offered from time to time pursuant to this Registration
Statement exceed $150,000,000 or the equivalent thereof in foreign currencies.
Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(4) Subject to Footnote (3), there is being registered hereunder an
indeterminate principal amount of debt securities as may be issued from time to
time by the Registrant. If any such debt securities are issued at an original
issue discount, then the offering price shall be in such greater principal
amount as shall result in an aggregate initial offering price of up to
$150,000,000.
(5) Subject to Footnote (3), there is being registered hereunder an
indeterminate number of shares of preferred stock as may be issued from time to
time by the Registrant.
(6) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of depositary shares as may be sold from time to time by
the Registrant.
(7) Subject to Footnote (3), there is being registered hereunder an
indeterminate number of warrants to purchase debt securities, preferred stock or
common stock as may be sold from time to time by the Registrant.
(8) Subject to Footnote (3), there is being registered hereunder an
indeterminate number of shares of common stock as may be (a) issued from time to
time by the Registrant, including common stock issuable upon conversion or
exchange of debt securities or preferred stock or upon exercise of warrants; and
(b) sold by or for the account of selling stockholders.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these Securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these Securities and we are not soliciting offers to buy these
Securities in any state where the offer is not permitted.
Prospectus subject to completion, October 28, 1999
[Insert Logo]
$150,000,000
PATTERSON ENERGY, INC.
DEBT SECURITIES PREFERRED STOCK WARRANTS COMMON STOCK
DEPOSITARY SHARES
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The following are types of Securities that Patterson may offer and sell
from time to time under this prospectus:
- debt securities consisting of notes, debentures, or other
evidences of indebtedness, in one or more series which may be
senior debt securities, senior subordinated debt securities or
subordinated debt securities;
- shares of preferred stock, $.01 par value per share, in one or
more series;
- warrants to purchase debt securities, preferred stock or
common stock;
- shares of common stock, $.01 par value per share; and
- depositary shares.
We will describe the specific terms of the particular Securities being
offered in an accompanying prospectus supplement.
Also, shares of common stock may be offered from time to time by our
stockholders. Any Selling Stockholders will be identified, and the number of
shares to be offered by them will be set forth in a supplement to this
prospectus.
The common stock is traded on the Nasdaq National Market under the
symbol "PTEN." On October 26, 1999, the closing price of the common stock on the
Nasdaq National Market was $14.75 per share. Each prospectus supplement will
indicate if the Securities offered thereby will be listed on any securities
exchange.
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You should carefully review "Risk Factors" beginning on page 6 for a
discussion of matters to consider when investing in Securities of Patterson.
This prospectus may not be used to consummate sales of Securities
unless accompanied by a prospectus supplement.
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The Securities and Exchange Commission and state securities regulators
have not approved or disapproved these Securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
__________, 1999
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT, IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PATTERSON
OR ANY UNDERWRITER OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT, OR IN
THE AFFAIRS OF PATTERSON SINCE THE DATES HEREOF. THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
Page
Forward Looking Statements....................................................2
Incorporation of Certain Documents by Reference...............................3
Patterson.....................................................................5
Risk Factors..................................................................6
Use of Proceeds..............................................................11
Ratio of Earnings To Fixed Charges...........................................11
Selling Stockholders ........................................................11
Description of Debt Securities...............................................12
Description of Preferred Stock...............................................23
Description of Depositary Shares.............................................25
Description of Warrants......................................................28
Description of Capital Stock.................................................30
Plan of Distribution.........................................................33
Legal Matters................................................................35
Experts......................................................................35
Where You Can Find More Information..........................................35
FORWARD LOOKING STATEMENTS
Some statements contained in this prospectus, any accompanying
prospectus supplement, and the documents incorporated by reference are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements include, without limitation, statements relating to the drilling and
completion of wells, well operations, utilization rates of drilling rigs, oil
and natural gas prices, reserve estimates (including related future net revenue
and present value estimates), business strategies and other plans and objectives
of our management for future operations and activities and other such matters.
The words "believes," "budgeted," "plan," "plans," "estimates," "expects,"
"intends," "strategy," "project," "will," "could," "may" and similar expressions
identify forward-looking statements. Actual results could differ materially from
those expressed in the forward-looking statements. Factors that could cause such
a difference include:
- Swings in oil and natural gas prices;
- Swings in demand for contract drilling services;
- Shortages of drill pipe and other drilling equipment;
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- Shortages of qualified drilling personnel;
- Effects of competition from other drilling contractors;
- Occurrence of operating hazards and uninsured losses; and
- Governmental regulation, among others described under "Risk
Factors" below.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately by us with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that is
included directly in this document.
This prospectus includes by reference the documents listed below that
we have previously filed with the SEC and that are not included in or delivered
with this document. They contain important information about our company and its
financial condition.
(1) Patterson's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the SEC on March 31, 1998;
(2) Patterson's Current Report on Form 8-K dated March 1, 1999, filed
with the SEC on May 6, 1999;
(3) Patterson's Current Report on Form 8-K dated April 30, 1999, filed
with the SEC on April 22, 1999;
(4) Patterson's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999, filed with the SEC on May 14, 1999;
(5) Patterson's Current Report on Form 8-K dated May 24, 1999, filed
with the SEC on June 15, 1999;
(6) Patterson's Current Report on Form 8-K dated July 29, 1999, filed
with the SEC on August 31, 1999;
(7) Patterson's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999, filed with the SEC on August 16, 1999; and
(8) The description of Patterson's common stock contained in the
Registration Statement on Form 8-A filed with the SEC on November 2, 1993.
We incorporate by reference additional documents that we may file with
the SEC between the date of this prospectus and the date of the closing of this
offering. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
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Jonathan D. (Jody) Nelson
Chief Financial Officer
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Box 1416
Snyder, Texas 79550
(915) 573-1104
We have not authorized anyone to give any information or make any
representation about us that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to sell, or solicitations of offers to purchase, the
Securities offered by this document is unlawful, or if you are a person to whom
it is unlawful to direct these types of activities, then the offer presented in
this document does not extend to you. The information contained in this document
speaks only as of the date of this document, unless the information specifically
indicates that another date applies.
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PATTERSON
Patterson is one of the leading providers of domestic land drilling
services to major and independent oil and natural gas companies. Formed in 1978
and reincorporated in 1993 as a Delaware corporation, Patterson conducts
operations in Texas, New Mexico, Oklahoma, Louisiana and Utah. We have a
drilling fleet of 119 rigs, 114 of which are currently operable. We are also
engaged in the development, exploration, acquisition and production of oil and
natural gas and provide contract drilling fluid services to other oil and
natural gas operators.
The Company has established a reputation for reliable, high quality
drilling equipment and well-trained crews. We continually seek to modify and
upgrade our equipment to maximize the performance and capabilities of our
drilling rig fleet, which we believe provides us with a competitive advantage.
Additionally, we have the in-house capability to design, manufacture, repair and
modify our drilling rigs. Of our drilling rigs, 93 are capable of drilling to
depths of 10,000 feet and greater, including 25 that are capable of drilling to
15,000 feet and greater. During the first six months of 1999, we drilled 278
wells for 105 non-affiliated customers maintaining an average utilization rate
of 34%.
Our oil and natural gas activities are designed to complement our land
drilling operations and diversify our overall business strategy. These
activities are primarily focused in mature producing regions in the Austin Chalk
Trend, the Permian Basin and South Texas. Oil and natural gas operations
comprised approximately 5.9% of our consolidated operating revenues in the first
six months of 1999. At December 31, 1998, our proved developed reserves were
approximately 1.5 million BOE and had a present value (discounted at 10% before
income taxes) of estimated future net revenues of approximately $5.4 million.
Our drilling fluid services are provided to operators of oil and gas
wells located in the Company's areas of operation. Operating revenues derived
from these activities constituted approximately 8.3% of Patterson's consolidated
operating revenues for the first six months of 1999. We believe that these
services integrate well with our other core operating activities. The drilling
fluid operations were added during 1998 with our acquisition of Lone Star Mud,
Inc., during January and Tejas Drilling Fluids, Inc. in September.
Our headquarters are located at 4510 Lamesa Highway, Snyder, Texas, and
our telephone number at that address is (915) 573-1104. We also have small
offices in Austin, Houston, Midland, San Angelo, Kilgore and Corpus Christi,
Texas and Oklahoma City, Oklahoma and Hobbs, New Mexico, and 15 yard facilities
variously located in our areas of operations.
You can obtain additional information about us in the reports and other
documents incorporated by reference in this prospectus. See "Incorporation of
Certain Documents by Reference" and "Where You Can Find More Information."
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RISK FACTORS
Ownership of Securities involves certain risks. In determining whether
to purchase Securities, you should carefully consider the following risk factors
and other information contained in or incorporated by reference in this
prospectus or in any applicable prospectus supplement.
RISKS RELATED TO PATTERSON'S BUSINESS GENERALLY
PATTERSON IS DEPENDENT ON THE OIL AND NATURAL GAS INDUSTRY AND MARKET PRICES FOR
OIL AND NATURAL GAS. DECLINES IN OIL AND NATURAL GAS PRICES HAVE ADVERSELY
AFFECTED PATTERSON'S OPERATIONS.
Patterson's revenue, profitability and rate of growth are substantially
dependent upon prevailing prices for oil and natural gas. In recent years, oil
and natural gas prices and, therefore, the level of drilling, exploration,
development and production, have been extremely volatile. Prices are affected by
market supply and demand factors as well as international military, political
and economic conditions and the ability of the Organization of Petroleum
Exporting Countries to set and maintain production and prices. All of these
factors are beyond our control. Low level commodity prices beginning in the
fourth quarter of 1997 and continuing into mid-1999 have materially adversely
affected our operations. We expect oil and natural gas prices to continue to be
volatile and to effect our financial condition and operations and ability to
access sources of capital.
INDUSTRY CONDITIONS FOR CONTRACT DRILLING SERVICES HAVE BEEN POOR FOR MUCH OF
THE TIME SINCE MID-1982.
The contract drilling business experienced increased demand for
drilling services from 1995 through the third quarter of 1997 due to stronger
oil and natural gas prices. However, except for that period and other occasional
upturns, the market for onshore contract drilling services has generally been
depressed since mid-1982. Since this time and except during the occasional
upturns, there have been substantially more drilling rigs available than
necessary to meet demand in most operating and geographic segments of the
domestic drilling industry. As a result, drilling contractors have had
difficulty sustaining profit margins.
In addition to adverse effects that future declines in demand could
have on Patterson, ongoing movement of drilling rigs from region to region or
reactivation of onshore drilling rigs or new construction of drilling rigs could
adversely effect utilization rates and pricing, even in an environment of
stronger oil and natural gas prices and increased drilling activity. We cannot
predict either the future level of demand for our contract drilling services or
future conditions in the contract drilling business. Notwithstanding the
significant improvement in oil and natural gas prices over the past few months,
the demand for contract drilling services, although improving, remains
relatively weak. There can be no assurance that the demand for contract drilling
services will increase proportionally with the current higher prices or of the
duration of the higher commodity prices.
SHORTAGES OF DRILL PIPE AND OTHER DRILLING EQUIPMENT COULD ADVERSELY AFFECT
PATTERSON'S DRILLING OPERATIONS.
The increase in domestic drilling demand from mid-1995 through the
third quarter of 1997 and related increase in contract drilling activity
resulted in a shortage of drill pipe in the industry. This shortage caused the
price of drill pipe to increase significantly and required that orders for new
drill pipe be placed at least one year in advance. The price increase and delay
in delivery of drill pipe caused Patterson to substantially increase capital
expenditures in its contract drilling segment. A return to higher demand levels
for contract drilling services could reinstate the problems associated with
drill pipe
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shortages and could cause shortages in other drilling rig parts. Severe
shortages could impair Patterson's ability to obtain the equipment required for
its contract drilling operations.
THE CONTRACT DRILLING INDUSTRY IN WHICH PATTERSON OPERATES IS HIGHLY
COMPETITIVE.
The inability to compete effectively in the contract drilling industry
would adversely impact Patterson's operations. Price is generally the most
important competitive factor. Other competitive factors include the availability
of drilling equipment and experienced personnel at or near the time and place
required by customers, the reputation of the drilling contractor and its
relationship with existing customers. We believe that we compete favorably with
respect to all of these factors. Competition is usually on a regional basis,
although drilling rigs are mobile and can be moved from one region to another in
response to increased demand. An oversupply of drilling rigs in any region may
result. Demand for land drilling equipment is also dependent on the exploration
and development budgets of oil and natural gas companies, which are in turn
influenced primarily by the financial condition of such companies, by general
economic conditions, by prices of oil and natural gas, and from time to time
political considerations and policies. It is not practical to estimate the
number of contract drilling competitors of Patterson, some of which have
substantially greater resources than Patterson. Also, in recent years, many
drilling companies have consolidated or merged with other companies. Although
this consolidation has decreased the total number of competitors, Patterson
believes the competition for drilling services will continue to be intense.
There is also substantial competition for the acquisition of oil and
natural gas leases suitable for exploration and for the hiring of experienced
personnel. Patterson's competitors in the exploration, development and
production segment of its operations include major integrated oil and natural
gas companies, numerous independent oil and natural gas companies, drilling and
production purchase programs and individual producers and operators. Patterson's
ability to increase its holdings of oil and natural gas reserves in the future
is directly dependent upon its ability to select, acquire and develop suitable
prospects in competition with those companies. Many competitors have financial
resources, staff, facilities and other resources significantly greater than
those of Patterson.
LABOR SHORTAGES COULD ADVERSELY AFFECT PATTERSON'S DRILLING OPERATIONS.
The increase in domestic drilling demand from mid-1995 through the
third quarter of 1997 and related increase in contract drilling activity caused
a shortage of qualified drilling rig personnel in the industry. This increase
adversely impaired our ability to attract and retain sufficient qualified
personnel and to market and operate our drilling rigs. Further, the labor
shortages resulted in wage increases, which impacted our operating margins. A
return to higher demand levels for contract drilling services could reinstate
the problems associated with labor shortages.
PATTERSON HAS SIGNIFICANT BANK-DEBT; FAILURE TO REPAY COULD RESULT IN
FORECLOSURE ON DRILLING RIGS.
Patterson has a bank term loan with a remaining principal balance of
$51.4 million at June 30, 1999. All of Patterson's contract drilling rigs are
pledged as collateral on the loan and the remainder of its assets are subject to
a negative pledge. The loan is payable in monthly principal installments of
$714,000 until January 1, 2001, when the loan matures and the balance of the
note becomes due and payable. A decline in general economic conditions in the
oil and gas industry could adversely affect Patterson's ability to repay the
loan. Failure to repay could, at the bank's election, result in acceleration of
the maturity date of the loan and foreclosure on the drilling rigs.
Additionally, the loan agreement contains a number of covenants, including
financial covenants, the failure of which to satisfy could also cause
acceleration of the maturity date and require immediate repayment.
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CONTINUED GROWTH THROUGH RIG ACQUISITIONS IS NOT ASSURED.
Patterson substantially increased its drilling rig fleet over the
four-year period ending in the first quarter of 1998 through strategic
acquisitions. Although the land drilling industry has experienced significant
consolidation over the past couple of years, Patterson believes that significant
acquisition opportunities are still available. However, there can be no
assurance that suitable acquisitions can be found, and we are likely to continue
to face intense competition from other companies for available acquisition
opportunities.
There can be no assurance that Patterson will have sufficient capital
resources to complete acquisitions, that acquisitions can be completed on terms
acceptable to us or that any completed acquisition would improve Patterson's
financial condition, results of operation, business or prospects in any material
manner. In fact, Patterson may incur substantial indebtedness to finance future
acquisitions and also may issue equity securities or convertible securities in
connection with any such acquisitions. Additional debt service requirements
could represent a significant burden on our results of operations and financial
condition and the issuance of additional equity or convertible shares could be
dilutive to our existing stockholders. Also, continued growth could strain
Patterson's management, operations, employees and resources.
PATTERSON'S OPERATIONS ARE SUBJECT TO OPERATING HAZARDS AND UNINSURED RISKS.
Contract drilling and oil and natural gas activities are subject to a
number of risks and hazards. These could cause serious injury or death to
persons, suspension of drilling operations, serious damage to equipment or
property of others, and damage to producing formations in surrounding areas. Our
operations could also cause environment damage, particularly through oil spills,
gas leaks, discharges of toxic gases or extensive uncontrolled fires. In
addition, we could become subject to liability for reservoir damages. The
occurrence of a significant event, including pollution or environmental damage,
could materially affect our operations and financial condition.
We believe we are adequately insured or indemnified against normal and
foreseeable risks in our operations in accordance with industry standards.
However, such insurance or indemnification may not be adequate to protect
Patterson against liability from all consequences of well disasters, extensive
fire damage or damage to the environment. There is no assurance that Patterson
will be able to maintain adequate insurance in the future at rates it considers
reasonable or that any particular types of coverage will be available. In
addition to insurance, Patterson generally seeks to obtain indemnity agreements
whenever possible from its customers requiring them to hold Patterson harmless
if production or reservoir damage occurs. However, even when we are successful
in obtaining contractual indemnification, the customer may not maintain adequate
insurance to support such indemnification.
VIOLATIONS OF ENVIRONMENTAL LAWS AND REGULATIONS COULD MATERIALLY ADVERSELY
AFFECT PATTERSON'S OPERATIONS.
Patterson's operations are subject to numerous domestic laws and
regulations that relate directly or indirectly to the drilling of oil and
natural gas wells, including laws and regulations controlling the discharge of
materials into the environment, requiring removal and clean-up under certain
circumstances, or otherwise relating to the protection of the environment. Laws
and regulations protecting the environment have generally become more stringent
in recent years, and may in certain circumstances impose strict liability,
rendering a person liable for environmental damage without regard to negligence
or to the fault on the part of such person. Such laws and regulations may expose
us to liability for the
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conduct of, or conditions caused by, others, or for our acts that were in
compliance with all applicable laws at the time such acts were performed.
Although we generally have been able to obtain some degree of
contractual indemnification from our customers in most of our day rate drilling
contracts against pollution and environmental damages, there is no assurance
that Patterson will be able to enforce the indemnification in all instances,
that the customer will be financially able in all cases to comply with its
indemnity obligations, or that Patterson will be able to obtain such
indemnification agreements in the future. No such indemnification is typically
available for turnkey contracts. While we also maintain insurance coverage
against certain environmental liabilities, including pollution caused by sudden
and accidental oil spills, we cannot assure that we will continue to be able to
secure or carry this insurance or, if Patterson were able to do so, that the
coverage would be adequate to cover the liabilities.
SOME OF PATTERSON'S CONTRACT DRILLING SERVICES ARE DONE UNDER TURNKEY CONTRACTS,
WHICH ARE FINANCIALLY RISKY.
A portion of Patterson's contract drilling is done under turnkey
contracts, which involve substantial risks. Under turnkey drilling contracts,
Patterson contracts to drill a well to a contract depth under specified
conditions for a fixed price. The risks to us under these types of drilling
contracts are substantially greater than on a well drilled on a daywork basis
since we assume most of the risks associated with the drilling operations
generally assumed by the operator of the well in a daywork contract, including
risk of blowout, machinery breakdowns and abnormal drilling conditions.
Accordingly, if severe drilling problems are encountered in drilling wells under
a turnkey contract, Patterson could suffer substantial losses associated with
that contract. Generally, the weaker the demand for our drilling services, the
higher the percentage of our turnkey contracts. For the years ended December 31,
1997 and 1998, and the six months ended June 30, 1999, the percentage of our
contract drilling revenues attributable to: turnkey contracts was 3.0%, 12.0%,
and 19%, respectively.
ESTIMATES OF PATTERSON'S OIL AND NATURAL GAS RESERVES ARE UNCERTAIN.
Estimates of our proved developed reserves and future net revenues are
based on engineering reports prepared by an independent petroleum engineer based
upon a review of production histories and other geologic, economic, ownership
and engineering data provided by Patterson. These estimates are based on several
assumptions that the SEC requires oil and natural gas companies to use,
including, for example, constant oil and natural gas prices. Such estimates are
inherently imprecise indications of future net revenues. Actual future
production, revenues, taxes, production costs and development costs may vary
substantially from those assumed in the estimates. Any significant variance
could materially affect the estimates. In addition, our reserves might be
subject to upward or downward adjustment based on future production, results of
future exploration and development, prevailing oil and natural gas prices and
other factors.
RISKS RELATED TO PATTERSON'S OPERATIONS
THE LOSS OF SERVICES OF KEY OFFICERS COULD HURT PATTERSON'S OPERATIONS.
Patterson is highly dependent on its executive officers and key
employees. The unexpected loss of the services of any of these individuals,
particularly Cloyce A. Talbott or A. Glenn Patterson, Chief Executive Officer
and the President, respectively, could have a detrimental affect on Patterson.
Patterson has no employment agreements with any of its executive officers. We
maintain key man life insurance on the lives of Messrs. Talbott and Patterson in
the amount of $3 million each.
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ANTI-TAKEOVER MEASURES IN PATTERSON'S CHARTER DOCUMENTS AND UNDER STATE LAW
COULD DISCOURAGE AN ACQUISITION OF PATTERSON AND THEREBY AFFECT THE RELATED
PURCHASE PRICE.
Patterson, as a Delaware corporation, is subject to the Delaware
General Corporation Law, including Section 203, an anti-takeover law enacted in
1988. Patterson has also enacted certain anti-takeover measures, including a
stockholders rights plan. In addition, our Board of Directors has the authority
to issue up to one million shares of preferred stock and to determine the price,
rights (including voting rights), conversion ratios, preferences and privileges
of that stock without further vote or action by the holders of the common stock.
As a result of these measures and others, potential acquirers of Patterson may
find it more difficult or be discouraged from attempting to effect an
acquisition transaction with us, thereby possibly depriving holders of Patterson
securities of certain opportunities to sell or otherwise dispose of such
securities at above-market prices pursuant to their transactions.
PATTERSON HAS PAID NO DIVIDENDS ON ITS COMMON STOCK AND HAS NO PLANS TO PAY
DIVIDENDS IN THE FORESEEABLE FUTURE.
Patterson has not declared or paid cash dividends on its common stock
in the past and does not expect to declare or pay any cash dividends on its
common stock in the foreseeable future. The terms of our existing bank term loan
prohibit payment of dividends by Patterson without the prior written consent of
the bank.
THERE IS NO ASSURANCE THAT A PUBLIC MARKET WILL DEVELOP FOR CERTAIN OF THE
SECURITIES WHICH MAY BE OFFERED AND SOLD UNDER THIS PROSPECTUS.
Any debt securities, preferred stock, depository shares and warrants
sold under this prospectus will be new issues of Securities of Patterson with no
established trading market. Underwriters to whom Patterson sells any of those
Securities for public offering and sale may make a market in such Securities,
but the underwriters will not be obligated to do so and may discontinue any
market-making at any time without notice. Consequently, no assurance can be
given as to the liquidity of any secondary market for any of those Securities.
PARTICIPATION BY PATTERSON DIRECTORS AND OFFICERS IN OIL AND NATURAL GAS
PROSPECTS COULD CREATE CONFLICTS OF INTEREST.
Certain of Patterson's directors and executive officers and their
respective affiliates have participated and may continue to participate from
time to time in oil and natural gas prospects and properties in which Patterson
has an interest. Conflicts of interest may arise between such persons and
Patterson as to the advisability of conducting drilling and recompletion
activities on these properties. Of the 134 wells operated by Patterson at June
30, 1999, Patterson's directors, officers and/or their respective affiliates
were working interest owners in approximately 96 wells.
PATTERSON BOARD MAY ISSUE PREFERRED STOCK WITH RIGHTS AND PREFERENCES ADVERSE TO
COMMON STOCK.
Patterson has a class of authorized preferred stock. Patterson's Board
of Directors, without stockholder approval, may issue shares of the preferred
stock with rights and preferences adverse to the voting power or other rights of
the holders of the Common Stock. Patterson has not issued any shares of
preferred stock. However, as of June 30, 1999, an aggregate of 325,170 shares of
preferred stock had been reserved for issuance upon exercise of the Rights
described under "Description of Capital Stock-Stockholder Rights Plan," below.
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USE OF PROCEEDS
Except as may otherwise be described in the prospectus supplement
relating to an offering of Securities, we will use the net proceeds from the
sale of the Securities offered under this prospectus and the prospectus
supplement for future acquisitions and for other general corporate purposes,
including working capital, investment in subsidiaries and payment or partial
payment of existing indebtedness. We will determine any specific allocation of
the net proceeds of an offering of Securities to a specific purpose at the time
of the offering and will describe the allocation in the related prospectus
supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to
fixed charges (unaudited) for the periods shown:
Six months
Ended Year ended December 31,
---------------- ---------------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges (1) (2) .96:1 14.03:1 1.91:1 2.71:1 8.66:1
- ---------
(1) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of pretax income from continuing operations plus fixed charges
(excluding capitalized interest). "Fixed charges" represent interest
incurred (whether expensed or capitalized), amortization of debt expense,
and that portion of rental expense on operating leases deemed to be the
equivalent of interest. No preferred stock was outstanding during any of the
periods presented and, as a result, the ratio of earnings to combined fixed
charges and preferred stock dividends was the same as the ratio of earnings
to fixed charges.
(2) There was a deficiency of $10.4 million in the ratio of earnings to fixed
charges for the six months ended June 30, 1999.
SELLING STOCKHOLDERS
An unspecified number of shares of common stock may be offered and sold
under this prospectus by selling stockholders. Identification of any such
selling stockholders will be contained in the applicable prospectus supplement.
Patterson will not receive proceeds of any sale of shares by selling
stockholders.
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DESCRIPTION OF DEBT SECURITIES
The debt securities may be issued from time to time in one or more
series under an Indenture (as defined below) between Patterson, as issuer, and
the trustee specified in the applicable prospectus supplement. The following
summaries of certain provisions of the debt securities do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture applicable to a particular series of
debt securities, including the definitions therein of certain terms. A copy of
the form of the Indenture is included as an exhibit to the Registration
Statement of which this prospectus is a part. The following summary is qualified
in its entirety by reference to such exhibit. See "Where You Can Find More
Information." Article and Section references used herein are references to the
Indenture. Capitalized terms not otherwise defined in this Description of Debt
Securities will have the meaning given in the Indentures. Whenever particular
Sections, Articles or defined terms in the Indenture are referred to, it is
intended that those Sections, Articles or defined terms shall be incorporated
herein by reference.
The debt securities will constitute either indebtedness designated as
Senior Indebtedness ("Senior Debt Securities"), indebtedness designated as
Senior Subordinated Indebtedness ("Senior Subordinated Debt Securities") or
indebtedness designated as Subordinated Indebtedness ("Subordinated Debt
Securities"). Senior Debt Securities, Senior Subordinated Debt Securities and
Subordinated Debt Securities will each be issued under a separate indenture
(individually an "Indenture" and collectively the "Indentures") to be entered
into prior to the issuance of the debt securities. The Indentures will be
substantially identical, except for provisions relating to subordination. See
"--Subordination of Senior Subordinated Debt Securities and Subordinated Debt
Securities," below. There will be a separate trustee under each Indenture.
Information regarding the trustee under an Indenture will be included in any
prospectus supplement relating to the debt securities issued thereunder.
The following description sets forth certain general terms and
provisions of the debt securities to which any prospectus supplement may relate.
The particular terms of the debt securities and the extent to which such general
provisions may apply will be described in a prospectus supplement relating to
such debt securities.
GENERAL
The debt securities offered pursuant to this Prospectus will be limited
to $150,000,000 aggregate principal amount or (i) its equivalent (based on the
applicable exchange rate at the time of sale), if the debt securities are issued
with principal amounts denominated in one or more foreign currencies, composite
currencies or currency units, or (ii) such greater amount, if the debt
securities are issued at an original issue discount, as shall result in
aggregate proceeds of $150,000,000 to Patterson. The Indentures provide that
additional debt securities may be issued thereunder up to the aggregate
principal amount authorized from time to time by Patterson's Board of Directors.
So long as a single trustee is acting for the benefit of the holders of all the
debt securities offered hereby and any such additional debt securities issued
under the Indentures, the debt securities and any such additional debt
securities are herein collectively referred to as the "Indenture Securities."
The Indentures also provide that there may be more than one trustee under the
Indentures, each with respect to one or more different series of Indenture
Securities. At any time when two or more trustees are acting, each with respect
to only certain series, the term "Indenture Securities" as used herein means the
one or more series with respect to which each respective trustee is acting and
the powers and the trust obligations of each such trustee as described herein
shall extend only to the one or more series of Indenture Securities for which it
is acting as trustee. If there is more than one trustee acting for different
series of Indenture Securities, then those Indenture Securities (whether of one
or more than one series) for which each trustee is acting would be treated as if
issued under a separate Indenture.
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The applicable prospectus supplement will set forth a description of
the particular series of debt securities being offered thereby, including but
not limited to (Indentures, Section 3.1):
(1) the designation or title of such debt securities;
(2) any limit on the aggregate principal amount of such debt
securities;
(3) the percentage of their principal amount at which such debt
securities will be offered;
(4) the date or dates on which the principal of such debt securities
will be payable and on which such debt securities will mature;
(5) the rate or rates (which may be fixed or variable) at which such
debt securities shall bear interest, or the method of determination of such rate
or rates at which such debt securities shall bear interest, if any;
(6) the date or dates from which interest will accrue or the method of
determination of such date or dates, and the date or dates on which any such
interest shall be payable;
(7) whether such debt securities will be secured;
(8) the currencies or currency units in which such debt securities are
issued or payable;
(9) the terms for redemption, extension or early repayment of such debt
securities, if any;
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which such debt securities are authorized to be
issued;
(11) if applicable, the terms and conditions upon which conversion will
be effected, including the conversion price, the conversion period and other
conversion provisions;
(12) the provisions for a sinking fund, if any;
(13) whether such debt securities are issuable as a Global Security or
Securities (as defined below);
(14) any index or formula to be used to determine the amount of
payments of principal, premium, if any, and interest on such debt securities,
and any commodities, currencies, currency units or indices, or value, rate or
price, relevant to such determination;
(15) if the principal of, premium, if any, or interest on such debt
securities is to be payable, at the election of Patterson or a holder thereof,
in one or more currencies or currency units other than that or those in which
such debt securities are stated to be payable, the currencies or currency units
in which payment of the principal of, premium, if any, and interest on such debt
securities as to which election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be made;
(16) if other than the principal amount thereof, the portion of the
principal amount of such debt securities of the series which will be payable
upon acceleration of the maturity thereof;
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(17) whether such debt securities are subordinate in right of payment
to any Senior Indebtedness of Patterson and, if so, the terms and conditions of
such subordination and the aggregate principal amount of such Senior
Indebtedness outstanding as of a recent date;
(18) whether the interest, if any, on such debt securities is to be
payable in securities of Patterson and the terms and conditions applicable to
any such payment;
(19) any covenants to which Patterson may be subject with respect to
such debt securities;
(20) the applicability of the provisions described under "Defeasance
and Covenant Defeasance" below;
(21) United States income tax consequences, if any;
(22) the provisions for the payment of additional amounts with respect
to any withholding taxes in certain cases;
(23) any term or provision relating to such debt securities which is
not inconsistent with the provisions of the Indenture;
(24) the trustee; and
(25) any other special terms pertaining to such debt securities.
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will not be listed on any securities exchange. One or more
series of debt securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate which at the
time of issuance is below market rates. Any material federal income tax
consequences and other special considerations with respect to any series of debt
securities will be described in the prospectus supplement relating to any such
series of debt securities.
If the purchase price of any series of debt securities is denominated
in a foreign currency or currencies or a foreign currency unit or units or if
the principal of, premium, if any, and interest on any series of debt securities
are payable in a foreign currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax considerations, specific terms
and other information with respect to such series of debt securities will be set
forth in the applicable prospectus supplement.
Debt securities may be issued from time to time with payment terms
which are calculated by reference to the value, rate or price of one or more
commodities, currencies, currency units or indices. holders of such debt
securities may receive a principal amount (including premium, if any) on any
principal payment date, or a payment of interest on any interest payment date,
that is greater than or less than the amount of principal (including premium, if
any) or interest otherwise payable on such dates, depending upon the value, rate
or price on the applicable dates of the applicable currency, currency unit,
commodity or index. Information as to the methods for determining the amount of
principal, premium, if any, or interest payable on any date, the currencies,
currency units, commodities or indices to which the amount payable on such date
is linked and any additional tax considerations will be set forth in the
applicable prospectus supplement.
Except as may be set forth in the applicable prospectus supplement,
holders of debt securities will not have the benefit of any specific covenants
or provisions in the applicable Indenture or such debt securities in the event
that Patterson engages in or becomes the subject of a highly leveraged
transaction,
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other than the limitations on mergers, consolidations and transfers of
substantially all of Patterson's properties and assets as an entirety to any
person as described below under "--Consolidation, Merger and Sale of Assets."
Except as otherwise provided in the applicable prospectus supplement,
principal, premium, if any, and interest, if any, will be payable at an office
or agency to be maintained by Patterson in New York, New York, except that at
the option of Patterson interest may be paid by check mailed to the person
entitled thereto.
The debt securities will be issued only in fully registered form
without coupons and may be presented for the registration of transfer or
exchange at the corporate trust office of the trustee. Not all debt securities
of any one series need be issued at the same time, and, unless otherwise
provided, a series may be reopened for issuances of additional debt securities
of such series.
Since Patterson is a holding company, the rights of Patterson, and the
rights of its creditors, including the holders of the debt securities, to
participate in any distribution of the assets of any subsidiary upon its
liquidation or reorganization or otherwise are necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that Patterson may
be recognized as a creditor of the subsidiary. Generally, the debt securities
will be effectively subordinated to all existing and future indebtedness of the
operating subsidiaries of Patterson.
Unless otherwise specified in an applicable prospectus supplement, the
Indentures will not contain any provisions that limit the ability of Patterson
or any subsidiary of Patterson to incur indebtedness or that afford holders of
the debt securities protection in the event of a highly leveraged or similar
transaction involving Patterson or any of its subsidiaries.
SENIOR DEBT SECURITIES
The Senior Debt Securities will rank pari passu with all other
unsubordinated debt of Patterson and senior to the Senior Subordinated Debt
Securities and Subordinated Debt Securities.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES AND SUBORDINATED DEBT
SECURITIES
The payment of the principal of, premium, if any, and interest on the
Senior Subordinated Debt Securities and the Subordinated Debt Securities will,
to the extent set forth in the respective Indentures and Indenture Supplements
governing such Senior Subordinated Debt Securities and Subordinated Debt
Securities, be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness. (Indentures, Section 15.1.) Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshalling of
assets or any bankruptcy, insolvency or similar proceedings of Patterson, the
holders of all Senior Indebtedness will be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of the Senior
Subordinated Debt Securities or the Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if any,
or interest on such Senior Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be. In the event of the acceleration of the maturity
of any Senior Subordinated Debt Securities or Subordinated Debt Securities, the
holders of all Senior Indebtedness will be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of the Senior
Subordinated Debt Securities or Subordinated Debt Securities, as the case may
be, will be entitled to receive any payment upon the principal of, premium, if
any, or interest on such Senior Subordinated Debt Securities or Subordinated
Debt Securities, as the case may be. No payments on account of principal,
premium, if any, or interest in respect of the Senior Subordinated Debt
Securities or Subordinated Debt Securities may be made if there shall have
occurred and be continuing in
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a default in the payment of principal of, or premium, if any, or interest on any
Senior Indebtedness beyond any applicable grace period, or a default with
respect to any Senior Indebtedness permitting the holders thereof to accelerate
the maturity thereof, or if any judicial proceedings shall be pending with
respect to any such default. For purposes of the subordination provisions, the
payment, issuance or delivery of cash, property or securities (other than stock,
and certain subordinated securities, of Patterson) upon conversion or exchange
of a Senior Subordinated debt security or Subordinated debt security will be
deemed to constitute payment on account of the principal of such Senior
Subordinated debt security or Subordinated debt security, as the case may be.
By reason of such provisions, in the event of insolvency, holders of
Senior Subordinated Debt Securities and Subordinated Debt Securities may recover
less, ratably, than holders of Senior Indebtedness with respect thereto.
The term "Senior Indebtedness," when used with respect to any series of
Senior Subordinated Debt Securities or Subordinated Debt Securities, is defined
to include all amounts due on and obligations in connection with any of the
following, whether outstanding at the date of execution of the Indentures or
thereafter incurred, assumed, guaranteed or otherwise created (including,
without limitation, interest accruing on or after a bankruptcy or other similar
event, whether or not an allowed claim therein):
(a) indebtedness, obligations and other liabilities (contingent or
otherwise) of Patterson for money borrowed or evidenced by bonds, debentures,
notes or similar instruments;
(b) reimbursement obligations and other liabilities (contingent or
otherwise) of Patterson with respect to letters of credit or bankers'
acceptances issued for the account of Patterson and interest rate protection
agreements and currency exchange or purchase agreements;
(c) obligations and liabilities (contingent or otherwise) of Patterson
related to capitalized lease obligations;
(d) indebtedness, obligations and other liabilities (contingent or
otherwise) of Patterson related to agreements or arrangements designed to
protect Patterson against fluctuations in commodity prices, including without
limitation, commodity futures contracts or similar hedging instruments;
(e) indebtedness of others of the kinds described in the preceding
clauses (a) through (d) that Patterson has assumed, guaranteed or otherwise
assured the payment of, directly or indirectly;
(f) indebtedness of another person of the type described in the
preceding clauses (a) through (e) secured by any mortgage, pledge, lien or other
encumbrance on property owned or held by Patterson; and
(g) deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability
described in the preceding clauses (a) through (f) whether or not there is any
notice to or consent of the holders of such series of Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case may be; except that,
with respect to the Senior Subordinated Debt Securities, any particular
indebtedness, obligation, liability, guaranty, assumption, deferral, renewal,
extension or refunding shall not constitute "Senior Indebtedness" if it is
expressly stated in the governing terms, or in the assumption or guarantee,
thereof that the indebtedness involved is not senior in right of payment to the
Senior Subordinated Debt Securities or that such indebtedness is pari passu with
or junior to the Senior Subordinated Debt Securities and, with respect to
Subordinated Debt Securities, any particular indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal, extension or refunding shall
not constitute "Senior Indebtedness" if it is expressly stated in the governing
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terms, or in the assumption or guarantee, thereof that the indebtedness involved
is not senior in right of payment to the Subordinated Debt Securities or that
such indebtedness is pari passu with or junior to the Subordinated Debt
Securities.
In certain circumstances, such as the bankruptcy or insolvency of
Patterson, bankruptcy or insolvency legislation may be applicable and the
application of such legislation may lead to different results with respect to,
for example, payments to be made to holders of debt securities, or priorities
between holders of the debt securities and holders of Senior Indebtedness, than
those provided for in the applicable Indenture.
If this prospectus is being delivered in connection with a series of
Senior Subordinated Debt Securities or Subordinated Debt Securities, the
accompanying prospectus supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior Indebtedness
outstanding as of the end of Patterson's most recent fiscal quarter.
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable prospectus supplement, the
debt securities will be issued only in fully registered form in denominations of
U.S.$1,000 or integral multiples thereof. (Indenture, Section 3.2) Unless
otherwise indicated in the applicable prospectus supplement, payment of
principal, premium, if any, and interest on the debt securities will be payable,
and the exchange, conversion and transfer of debt securities will be
registerable, at the office or agency of Patterson maintained for such purposes.
No service charge will be made for any registration of a transfer or exchange of
the debt securities, but Patterson may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
All monies paid by Patterson to a Paying Agent for the payment of
principal of, premium, if any, or interest on any debt security which remain
unclaimed for two years after such principal, premium or interest has become due
and payable may be repaid to Patterson and thereafter the holder of such debt
security may look only to Patterson for payment thereof.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, the
following events are specified in the Indentures as Events of Default with
respect to debt securities of any series (Indentures, Section 5.1):
(a) failure to pay principal (or premium, if any) on any debt security
of that series at its maturity, whether or not such failure is a result of the
subordination provisions of the Indenture with respect to such series;
(b) failure to pay any interest on any debt security of that series
when due, continued for 30 days, whether or not such failure is a result of the
subordination provisions of the Indenture with respect to such series;
(c) failure to make any mandatory sinking fund payment, when due,
continued for 30 days, in respect of any debt security of that series;
(d) failure to perform any other covenant of Patterson in the
applicable Indenture or any other covenant to which Patterson may be subject
with respect to debt securities of that series (other than
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a covenant solely for the benefit of a series of debt securities other than that
series), continued for 90 days after written notice as provided in the
applicable Indenture;
(e) acceleration of any indebtedness for borrowed money in a principal
amount in excess of $15 million for which Patterson or any Significant
Subsidiary is liable, including debt securities of another series, or a default
by Patterson or any Significant Subsidiary in the payment at final maturity of
outstanding indebtedness for borrowed money in a principal amount in excess of
$15 million, and such acceleration or default at maturity shall not be waived,
rescinded or annulled within 30 days after written notice to Patterson thereof,
unless such acceleration or default at maturity shall be remedied or cured by
Patterson or such Significant Subsidiary or rescinded, annulled or waived by the
holders of such indebtedness, in which case such acceleration or default at
maturity shall not constitute an Event of Default under this provision;
(f) certain events of bankruptcy, insolvency or reorganization; and
(g) any other Event of Default provided with respect to the debt
securities of that series.
If an Event of Default with respect to outstanding debt securities of
any series shall occur and be continuing, either the trustee or the holders of
at least 25% in principal amount of the outstanding debt securities of that
series, by notice as provided in the applicable Indenture, may declare the
principal amount (or, if the debt securities of that series are original issue
discount securities, such portion of the principal amount as may be specified in
the terms of that series) of all debt securities of that series to be due and
payable immediately, except that upon the occurrence of an Event of Default
specified in (f) above, the principal amount (or in the case of original issue
discount securities, such portion) of all debt securities will be immediately
due and payable without notice. (Indentures, Section 5.2.) However, at any time
after a declaration of acceleration with respect to debt securities of any
series has been made, but before judgment or decree based on such acceleration
has been obtained, the holders of a majority in principal amount of the
outstanding debt securities of that series may, under certain circumstances,
rescind and annul such acceleration. For information as to waiver of defaults,
see "Modification and Waiver" below.
The Indentures will provide that, subject to the duty of the respective
trustees thereunder during an Event of Default to act with the required standard
of care, each such trustee will be under no obligation to exercise any of its
rights or powers under the respective Indentures at the request or direction of
any of the holders, unless such holders shall have offered to such trustee
reasonable security or indemnity. Subject to certain provisions, including those
requiring security or indemnification of the applicable trustee, the holders of
a majority in principal amount of the outstanding debt securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to such trustee, or to exercise any trust or
power conferred on such trustee, with respect to the debt securities of that
series.
No holder of a debt security of any series will have any right to
institute any proceeding with respect to the applicable Indenture or for any
remedy thereunder, unless (Indentures, Section 5.7):
(1) such holder shall have previously given to the applicable trustee
written notice of a continuing Event of Default;
(2) the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the same series shall have made written requests,
and offered reasonable indemnity, to such trustee to institute such proceeding
as trustee; and
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(3) the trustee shall not have received from the holders of a majority
in aggregate principal amount of the outstanding debt securities of the same
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a holder of a
debt security for enforcement of payment of the principal of, or premium, if
any, and interest, if any, on such debt security on or after the respective due
dates expressed in such debt security or the right to convert that holder's debt
security in accordance with the Indentures (if applicable).
(Indentures, Section 5.8.)
Patterson will be required to furnish to the Trustees annually a
statement as to the performance by Patterson of its obligations under the
respective Indentures and as to any default in such performance.
MODIFICATION AND WAIVER
Without the consent of any holder of outstanding debt securities,
Patterson and the trustees may amend or supplement the Indentures or the debt
securities to cure any ambiguity, defect or inconsistency, or to make any change
that does not adversely affect the rights of any holder of debt securities.
(Indentures, Section 9.1.) Other modifications and amendments of the respective
Indentures may be made by Patterson and the applicable trustee with the consent
of the holders of not less than a majority in aggregate principal amount of the
outstanding debt securities of each series affected thereby; provided, however,
that no such modification or amendment may, without the consent of the holder of
each outstanding debt security affected thereby (Indentures, Section 9.2):
(a) change the stated maturity of the principal of, or any installment
of principal of, or premium, if any, or interest on any debt security;
(b) reduce the principal amount of, the rate of interest on, or the
premium, if any, payable upon the redemption of, any debt security;
(c) reduce the amount of principal of an original issue discount
security payable upon acceleration of the maturity thereof;
(d) change the place or currency of payment of principal of, premium,
if any, or interest on any debt security;
(e) impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security on or after the stated maturity
or redemption date thereof;
(f) if applicable, modify the conversion provisions in a manner adverse
to the holders thereof;
(g) modify the subordination provisions applicable to Senior
Subordinated Debt Securities or Subordinated Debt Securities in a manner adverse
to the holders thereof;
(h) reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of the holders of which is required for
modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of the applicable Indenture or for waiver of
certain defaults; or
(i) modify any of the provisions of certain sections as specified in
the Indenture including the provisions summarized in this paragraph, except to
increase any such percentage or to designate
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additional provisions of the applicable Indenture, which, with respect to such
series, cannot be modified or waived without the consent of the holder of each
outstanding debt security affected thereby.
The holders of at least a majority in principal amount of the
outstanding debt securities of any series may, on behalf of the holders of all
debt securities of that series, waive, insofar as that series is concerned,
compliance by Patterson with certain covenants of the applicable Indenture. The
holders of not less than a majority in principal amount of the outstanding debt
securities of any series may, on behalf of the holders of all debt securities of
that series, waive any past default under the applicable Indenture with respect
to that series, except a default in the payment of the principal of, premium, if
any, or interest on, any debt security of that series or in respect of a
provision which under the applicable Indenture cannot be modified or amended
without the consent of the holder of each outstanding debt security of that
series affected. (Indentures, Section 9.8 and 5.13.)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Patterson, without the consent of any holders of any series of
outstanding debt securities, may consolidate with or merge into, or transfer or
lease its assets substantially as an entirety (treating Patterson and each of
its subsidiaries as a single consolidated entity) to, any corporation, and any
other corporation may consolidate with or merge into, or transfer or lease its
assets substantially as an entirety to, Patterson, provided that
(a) the corporation (if other than Patterson) formed by such
consolidation or into which Patterson is merged or which acquires or leases the
assets of Patterson substantially as an entirety is organized and existing under
the laws of the United States of America, a state thereof or the District of
Columbia, and assumes Patterson's obligations under each series of outstanding
debt securities and the Indentures applicable thereto;
(b) the Trustee is satisfied that the transaction will not result in
the successor being required to make any deduction or withholding on account of
certain taxes from any payments in respect of the Securities;
(c) after giving effect to such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and
(d) the trustee shall have received an officer's certificate and an
opinion of counsel with respect to compliance with the foregoing requirements.
(Indentures, Section 8.1.)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures allow Patterson to elect either (Indentures, Section 13.1):
(1) to defease and be discharged from all of its obligations with
respect to any series of debt securities including, in the case of Senior
Subordinated Debt Securities and Subordinated Debt Securities, the provisions
described under "-- Subordination of Senior Subordinated Debt Securities and
Subordinated Debt Securities" and except for the obligations to exchange or
register the transfer of such debt securities, to replace temporary, mutilated,
destroyed, lost or stolen debt securities, to maintain an office or agency in
respect of such debt securities, and to hold monies for payments in trust
("defeasance"); or
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(2) to be released from its obligations with respect to any series of
debt securities concerning the restrictions described under "--Consolidation,
Merger and Sale of Assets" and any other covenants applicable to such debt
securities including, in the case of Senior Subordinated Debt Securities and
Subordinated Debt Securities, the provisions described under "--Subordination of
Senior Subordinated Debt Securities and Subordinated Debt Securities," which are
subject to covenant defeasance ("covenant defeasance"), and the occurrence of an
event described and notice thereof in clauses (c) and (d) under "--Events of
Default" shall no longer be an Event of Default, in each case, upon the
irrevocable deposit with the trustee, in trust for such purpose, of money and
Government Obligations that, through the payment of principal and interest in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of, premium, if any, and interest, if any, on such debt securities
on the scheduled due dates therefor.
Such a trust may only be established if, among other things
(Indentures, Section 13.4),
(a) Patterson has delivered to the trustee (i) in the case of
defeasance, an opinion of counsel stating that (A) Patterson has received from,
or there has been published by, the Internal Revenue Service a ruling, or (B)
since the date of the applicable Indenture, there has been a change in the
applicable United States federal income tax law, in the case of either (A) or
(B) to the effect that the holders of such Securities will not recognize gain or
loss for United States federal income tax purposes as a result of the deposit,
defeasance and discharge to be effected with respect to such Securities and will
be subject to United States federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit, defeasance
and discharge were not to occur or (ii) in the case of covenant defeasance, an
opinion of counsel to the effect that the holders of such debt securities will
not recognize gain or loss for United States federal income tax purposes as a
result of such deposit and covenant defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such deposit and covenant defeasance
had not occurred, and
(b) no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default under the applicable
Indenture shall have occurred and be continuing on the date of such deposit, and
Patterson may exercise its defeasance option with respect to such debt
securities notwithstanding its prior exercise of its covenant defeasance option.
If Patterson exercises its defeasance option, payment of such debt securities
may not be accelerated because of an Event of Default. If Patterson exercises
its covenant defeasance option, payment of such debt securities may not be
accelerated by reference to the covenants noted under clause (2) above. If
Patterson omits to comply with its remaining obligations with respect to such
debt securities under the applicable Indenture after exercising its covenant
defeasance option, and if such debt securities are declared due and payable
because of the occurrence of any Event of Default, then the amount of money and
U.S. government obligations on deposit with the trustee may, in certain
circumstances, be insufficient to pay amounts due on such debt securities at the
time of the acceleration resulting from the Event of Default; however, Patterson
will remain liable for making such payments. (Indentures, Article 13.)
GOVERNING LAW
The Indentures and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New York. (Indentures,
Section 1.12.)
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REGARDING THE TRUSTEES
The Indentures contain certain limitations on the right of each
trustee, should it become a creditor of Patterson, to obtain payment of claims
in certain cases, or to realize for its own account on certain property received
in respect of any such claim as security or otherwise. Each Trustee will be
permitted to engage in certain other transactions with Patterson; however, if
the Trustee acquires any conflicting interest and there is a default under the
debt securities issued under the applicable Indenture, the Trustee must
eliminate such conflict or resign. (Indentures, Section 6.8.)
BOOK-ENTRY SYSTEM
The debt securities of a Series may be issued in the form of one or
more global certificates representing the debt securities (the "Global
Securities") that will be deposited with a depository (the "Depository") or with
a nominee for the Depository identified in the applicable prospectus supplement
and will be registered in the name of the Depository or a nominee thereof.
(Indentures, Section 3.1.) In such a case one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding debt securities of the series to be
represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for debt securities in definitive certificated
form, a Global Security may be transferred, in whole but not in part, only to
another nominee of the Depository for such series, or to a successor Depository
for such series selected or approved by Patterson, or to a nominee of such
successor Depository. (Indentures, Sections 2.6, 2.7 and 3.5.)
The specific depository arrangement with respect to any series of debt
securities to be represented by a Global Security will be described in the
applicable prospectus supplement. Patterson expects that the following
provisions will apply to depository arrangements.
Upon the issuance of any Global Security, and the deposit of such
Global Security with or on behalf of the Depository for such Global Security,
the Depository will credit, on its book-entry registration and transfer system,
the respective principal amounts of the debt securities represented by such
Global Security to the accounts of institutions ("participants") that have
accounts with the Depository or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
debt securities or by Patterson, if such debt securities are offered and sold
directly by Patterson. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Security will be shown on, and the transfer of such beneficial interests will be
effected only through, records maintained by the Depository for such Global
Security or by its nominee. Ownership of beneficial interests in such Global
Security by persons that hold through participants will be shown on, and the
transfer of such beneficial interests within such participants will be effected
only through, records maintained by such participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations and
such laws may impair the ability to own, pledge or transfer beneficial interests
in such Global Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the debt
securities represented by such Global Security for all purposes under the
applicable Indenture. Unless otherwise specified in the applicable prospectus
supplement and except as specified below, owners of beneficial interests in such
Global Security will not be entitled to have debt securities of the series
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of debt securities of such series in
certificated form and will not be considered
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the holders thereof for any purposes under the Indenture. Accordingly, each
person owning a beneficial interest in such Global Security must rely on the
procedures of the Depository and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture.
Patterson understands that, under existing industry practices, if
Patterson requests any action of holders or an owner of a beneficial interest in
such Global Security desires to give any notice or take any action a holder is
entitled to give or take under the Indenture, the Depository would authorize the
participants to give such notice or take such action. In that case, participants
would authorize beneficial owners owning through such participants to give such
notice or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Unless otherwise specified in the applicable prospectus supplement,
payments with respect to principal, premium, if any, and interest, if any, on
debt securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to such Depository or its nominee, as the
case may be, as the registered owner of such Global Security.
Patterson expects that the Depository for any debt securities
represented by a Global Security, upon receipt of any payment of principal,
premium or interest in respect of such Global Security, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of such Depository. Patterson also expects that payments
by participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street names," and will be the responsibility of such
participants. None of Patterson, the trustee or any agent of Patterson or the
trustee shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
If the Depository for any debt securities represented by a Global
Security is at any time unwilling or unable to continue as Depository or ceases
to be registered or in good standing under the Securities Exchange Act of 1934,
as amended, and a successor Depository is not appointed by Patterson, Patterson
will issue such debt securities in definitive certificated form in exchange for
such Global Security. In addition, Patterson may at any time and in its sole
discretion determine not to have any of the debt securities of a series
represented by one or more Global Securities and, in such event, will issue debt
securities of such series in definitive certificated form in exchange for all of
the Global Security or Securities representing such debt securities.
(Indentures, Section 2.7.)
DESCRIPTION OF PREFERRED STOCK
The following is a description of general terms and provisions of the
preferred stock. The particular terms of any series of preferred stock will be
described in the applicable prospectus supplement. If so indicated in a
prospectus supplement, the terms of any such series may differ from the terms
set forth below.
The summary of the terms of Patterson's preferred stock contained in this
Prospectus and in any prospectus supplement does not purport to be complete and
is subject to, and qualified in its entirety by, the provisions of Patterson's
Restated Certificate of Incorporation, as amended, and the certificate of
designations relating to that series of preferred stock (the "Certificate of
Designations"), which will be filed as an exhibit to or incorporated by
reference in this Prospectus at or prior to the time of issuance of any such
series of preferred stock.
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The Board of Directors of Patterson is authorized to approve the issuance
of one or more series of preferred stock without further authorization of the
stockholders and to fix the number of shares, the designations, rights,
privileges, restrictions and conditions of any such series.
The applicable prospectus supplement will set forth the number of shares,
particular designation, relative rights and preferences and the limitations of
any series of preferred stock in respect of which this Prospectus is delivered.
The particular terms of any such series will include the following:
- the maximum number of shares to constitute the series and the
designation thereof;
- the annual dividend rate, if any, on shares of the series,
whether such rate is fixed or variable or both, the date or
dates from which dividends will begin to accrue or accumulate,
whether dividends will be cumulative and whether such
dividends shall be paid in cash, common stock or otherwise;
- whether the shares of the series will be redeemable and, if
so, the price at and the terms and conditions on which the
shares of the series may be redeemed, including the time
during which shares of the series may be redeemed and any
accumulated dividends thereon that the holders of the shares
of the series shall be entitled to receive upon the redemption
thereof;
- the liquidation preference, if any, applicable to shares of
the series;
- whether the shares of the series will be subject to operation
of a retirement or sinking fund and, if so, the extent and
manner in which any such fund shall be applied to the purchase
or redemption of the shares of the series for retirement or
for other corporate purposes, and the terms and provisions
relating to the operation of such fund;
- the terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, shares
of any other class or classes of capital stock of Patterson or
any series of any other class or classes, or of any other
series of the same class, including the price or prices or the
rate or rates of conversion or exchange and the method, if
any, of adjusting the same;
- the voting rights, if any, of the shares of the series;
- the currency or units based on or relating to currencies in
which such series is denominated and/or in which payments will
or may be payable;
- the methods by which amounts payable in respect of such series
may be calculated and any commodities, currencies or indices,
or price, rate or value, relevant to such calculation;
- whether Patterson has elected to offer depositary shares; and
- any other preferences and relative, participating, optional or
other rights or qualifications, limitations or restrictions
thereof.
Patterson is a holding company and, therefore, its rights and the
rights of holders of its Securities, including the holders of preferred stock,
to participate in the distribution of assets of any subsidiary of
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Patterson upon the subsidiary's liquidation or recapitalization will be subject
to the prior claims of the subsidiary's creditors and preferred stockholders,
except to the extent that Patterson may itself be a creditor with recognized
claims against the subsidiary or a holder of preferred stock of the subsidiary.
The preferred stock will rank prior to the common stock with respect to
dividends rights and rights upon winding up and dissolution of Patterson.
The holders of preferred stock will have no preemptive rights.
Preferred stock will be fully paid and nonassessable when issued upon full
payment of the purchase price therefor. Unless otherwise specified in the
prospectus supplement relating to a particular series of preferred stock, each
series of preferred stock offered hereby will rank on a parity as to dividends
and liquidation rights in all respects with each other series of preferred
stock. The prospectus supplement will contain, if applicable, a description of
the material United States federal income tax consequences relating to the
purchase and ownership of shares of the series of preferred stock offered by the
prospectus supplement.
Transfer Agent and Registrar. The transfer agent, registrar and
dividend disbursement agent for the preferred stock will be designated in the
applicable prospectus supplement. The registrar for shares of preferred stock
will send to stockholders notices of any meeting at which holders of the
applicable series of preferred stock will have the right to elect directors of
Patterson or to vote on any other matter.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any prospectus supplement of
certain provisions of the deposit agreement (as further referenced below) and of
the depositary shares and depositary receipts does not purport to be complete
and is subject to and qualified in its entirety by reference to the forms of
deposit agreement and depositary receipts relating to each series of the
preferred stock which have been or will be filed with the SEC at or prior to the
time of the offering of such series of the preferred stock.
GENERAL
Patterson may, at its option, elect to offer fractional interests in
shares of preferred stock, rather than full shares of preferred stock. In the
event such option is exercised, Patterson will provide for the issuance by a
depositary to the public of receipts for depositary shares, each of which will
represent a fractional interest (to be set forth in the prospectus supplement
relating to a particular series of the preferred stock) in a share of a
particular series of preferred stock.
The shares of any series of the preferred stock underlying the
depositary shares will be deposited under a separate deposit agreement between
Patterson and a bank or trust company selected by Patterson having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000 (the "Depositary"). The prospectus supplement relating to a
series of depositary shares will set forth the name and address of the
Depositary. Subject to the terms of the deposit agreement, each owner of a
depositary share will be entitled, in proportion to the applicable fractional
interest in a share of preferred stock underlying such depositary shares, to all
the rights and preferences of the preferred stock underlying such depositary
share (including dividend, voting, redemption, conversion and liquidation
rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement.
Upon surrender of depositary receipts at the office of the Depositary
and upon payment of the charges provided in the deposit agreement and subject to
the terms thereof, a holder of depositary shares
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is entitled to have the Depositary deliver to such holder the whole shares of
preferred stock and any money or other property represented by the surrendered
depositary receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary shares relating to such preferred stock in proportion to the
numbers of such depositary shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of depositary receipts a fraction
of one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of depositary receipts then outstanding.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Patterson, sell such property and distribute the net proceeds from such sale to
such holders.
The deposit agreement will also contain provisions relating to the
manner in which any subscription or similar rights offered by Patterson to
holders of the preferred stock shall be made available to holders of depositary
receipts.
REDEMPTION OF DEPOSITARY SHARES
If a series of the preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the preferred stock held by the Depositary. The Depositary
will mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the depositary
receipts to be so redeemed at their respective addresses appearing in the
Depositary's books. The redemption price per depositary share will be equal to
the applicable fraction of the redemption price per share payable with respect
to such series of the preferred stock. Whenever Patterson redeems shares of
preferred stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of depositary shares relating to shares of
preferred stock so redeemed. If less than all of the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by lot on a pro
rata basis or such other equitable basis as may be determined by the Depositary
and Patterson.
After the date fixed for redemption, the depositary shares so called
for redemption will not longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such depositary shares were entitled upon such redemption upon
surrender to the Depositary of the depositary receipts evidencing such
depositary shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
preferred stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the depositary
shares relating to such preferred stock. Each record holder of such depositary
shares on the record date (which will be the same date as the record date for
the preferred stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of preferred
stock underlying such holder's depositary shares. The Depositary will endeavor,
insofar as
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practicable, to vote the number of shares of preferred stock underlying such
depositary shares in accordance with such instructions, and Patterson will agree
to take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting shares
of preferred stock to the extent it does not receive specific instructions from
the holders of depositary shares relating to such preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and the
provisions of the deposit agreement may be amended at any time by agreement
between Patterson and the Depositary. However, any amendment which materially
and aversely alters the rights of the existing holders of depositary shares will
not affect outstanding depositary receipts until 90 days after notice of the
amendment has been mailed to the record holders of outstanding depositary
receipts. Every holder of depositary receipts at the time the amendment becomes
effective will be deemed to consent and agree to the amendment and to be bound
by the deposit agreement, as so amended. No amendment may impair the right of
any owner of depositary shares to receive shares of the preferred stock and any
money or other property represented thereby, subject to the conditions specified
in the deposit agreement, upon surrender of the depositary receipts evidencing
such depositary shares, except in order to comply with mandatory provisions of
applicable law.
Whenever so directed by the Patterson, the Depositary will terminate
the deposit agreement by mailing notice of termination to the record holders of
all depositary receipts then outstanding at least 30 days before the termination
date stated in the notice. The depositary may also terminate the deposit
agreement if 45 days have expired after the Depositary delivered to the
Patterson a written notice of its election to resign and a successor depositary
has not been appointed and accepted its appointment. If any depositary receipts
remain outstanding after the date of termination, the Depositary will
discontinue the transfer of depositary receipts, will suspend the distribution
of dividends to the holders of depositary receipts, and will not give any
further notices (other than notice of termination) or perform any further acts
under the deposit agreement, except that the Depositary will continue (1) to
collect dividends and any other distributions on the preferred stock and (2) to
deliver the preferred stock, together with the corresponding dividends and
distributions and the net proceeds of any sales of rights, preferences,
privileges or other property, without liability for interest thereon, in
exchange for depositary receipts surrendered. At any time after two years from
the date of termination, the Depositary may sell the preferred stock then held
by it at public or private sales, at such place or places and upon such terms as
it deems proper, and may hold the net proceeds of any sale, together with any
money and other property then held by it, without liability for interest
thereon, for the pro rata benefit of the holders of depositary receipts which
have not been surrendered.
CHARGES OF DEPOSITARY
Patterson will pay all charges arising solely from the existence of the
depositary arrangements. Patterson will pay charges of the Depositary in
connection with the initial deposit of the preferred stock and issuance of
depositary receipts, all withdrawals of shares of preferred stock by owners of
depositary shares, any redemption of the preferred stock and the distribution of
information to holders of the depositary receipts. Holders of depositary shares
will pay other transfer and other taxes and governmental charges and such other
charges as are expressly provided in the deposit agreement to be for their
accounts.
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MISCELLANEOUS
The Depositary will forward to the holders of depositary shares all
reports and communications from Patterson which are delivered to the Depositary
and that Patterson is required to furnish to the holders of the preferred stock.
Neither the Depositary nor Patterson will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. The obligations of Patterson and the
Depositary under the deposit agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
preferred stock for deposit, holders of depositary shares or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Patterson notice
of its election to do so, and Patterson may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF WARRANTS
Patterson may issue warrants to purchase shares of common stock, shares
of preferred stock or debt securities. The preferred stock may be represented by
depositary shares. Warrants may be issued, subject to regulatory approvals,
independently or together with any common stock, preferred stock or debt
securities, as the case may be, and may be attached to or separate from such
common stock, preferred stock or debt securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into between
Patterson and a warrant agent. The warrant agent will act solely as an agent of
Patterson in connection with the warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of warrants. The following sets forth certain general terms
and provisions of the warrants offered hereby. Further terms of the warrants and
the applicable warrant agreement will be set forth in the applicable prospectus
supplement.
The applicable prospectus supplement will describe the following terms
of any warrants in respect of which this Prospectus is delivered:
- the title of such warrants;
- a description of the securities (which may include shares of
common stock, shares of preferred stock or debt securities)
for which such warrants are exercisable;
- the price or prices at which such warrants will be issued;
- the periods during which the warrants are exercisable;
- the number of shares of common stock or preferred stock or the
amount of debt securities for which each warrant is
exercisable;
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- the exercise price for such warrants, including any changes to
or adjustments in the exercise price;
- the currency or currencies, including composite currencies, in
which the exercise price of such warrants may be payable;
- if applicable, the designation and terms of the shares of
preferred stock with which such warrants are issued;
- if applicable, the terms of the debt securities with which
such warrants are issued;
- if applicable, the number of warrants issued with each share
of common stock or preferred stock or debt security;
- if applicable, the date on and after which such warrants and
the related shares of common stock or preferred stock or debt
securities will be separately transferable;
- if applicable, a discussion of certain United States federal
income tax considerations;
- any listing of the warrants on a securities exchange; and
- any other terms of such warrants, including terms, procedures
and limitations relating to the exchange and exercise of such
warrants.
Prior to the exercise of their warrants, holders of warrants will not
have any of the rights of holders of the securities purchasable upon exercise,
and will not be entitled to:
- receive payments of principal of (or premium if any) or
interest, if any, on any debt securities purchasable upon
exercise;
- receive dividend payments, if any, with respect to any
underlying securities; or
- exercise the voting rights of any common stock or preferred
stock purchasable upon exercise.
EXERCISE OF WARRANTS
Unless otherwise indicated in the applicable prospectus supplement
relating thereto, the warrants will be issued in registered form. Each warrant
will entitle its holder to purchase for cash the principal amount or number of
securities of Patterson at the exercise price set forth in, or determinable
from, the applicable prospectus supplement relating to the warrants offered
thereby. Warrants may be exercised as set forth in the applicable prospectus
supplement relating to the warrants offered thereby at any time up to the close
of business on the expiration date set forth in the prospectus supplement. After
the close of business on the expiration date (or any later expiration date, as
extended by Patterson), unexercised warrants will become void.
Upon receipt of payment and of the certificate evidencing a warrant,
properly completed and duly executed, at the corporate trust office of the
warrant agent or any other office indicated in the applicable prospectus
supplement, Patterson will, as soon as practicable, forward the securities
purchasable upon
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such exercise. If less than all of the warrants represented by a surrendered
warrant certificate are exercised, a new warrant certificate will be issued for
the remaining warrants.
MODIFICATIONS
The warrant agreements and the terms of the warrants may be amended by
Patterson and the warrant agent, without the consent of the holders of warrants,
for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained therein, or in
any other manner which Patterson may deem necessary or desirable and which will
not materially and adversely affect the interests of holders of outstanding
warrants.
Patterson and the warrant agent also may modify or amend certain other
terms of the warrant agreements and the warrants with the consent of the holders
of not less than a majority in number of the then-outstanding unexercised
warrants affected. However, no such modification or amendment may be made
without the consent of the affected holders if the amendment would:
- shorten the period of time during which the warrants may be
exercised;
- otherwise materially and adversely affect the exercise rights
of the holders of the warrants; or
- reduce the number of outstanding warrants.
MERGER, CONSOLIDATION OR SALE OF ASSETS
If at any time there occurs a merger of, consolidation of, or sale of
substantially all of the assets of, Patterson, as a result of which securities
underlying warrants are converted into the right to receive stock, securities or
other property, then each outstanding warrant will thereafter only be
exercisable for the kind and amount of stock, securities or other property
receivable upon the consummation of that transaction by a holder of the number
of Securities underlying the warrant.
ENFORCEABILITY OF RIGHTS BY HOLDERS
The warrant agent will act solely as an agent of Patterson in
connection with the issuance and exercise of any warrants. The warrant agent
will have no duty or responsibility in case of any default by Patterson in the
performance of its obligations under the warrant agreements or the warrant
certificates. Each holder of warrants may, without the consent of the warrant
agent, enforce by appropriate legal action, on its own behalf, its right to
exercise its warrants.
DESCRIPTION OF CAPITAL STOCK
Patterson is authorized by its Certificate of Incorporation to issue 50
million shares of common stock and one million shares of preferred stock. As of
June 30, 1999, there were 32,517,028 shares of common stock issued and
outstanding and no issued and outstanding shares of the preferred stock.
COMMON STOCK
A summary of the terms and provisions of the common stock is set forth
below.
Dividends. The holders of common stock are entitled to receive
dividends when, as and if declared by the Board out of funds legally available
therefor, provided that if any shares of preferred
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33
stock, issued under this prospectus and any accompanying prospectus supplement,
or any other shares of preferred stock are at the time outstanding, the payment
of dividends on common stock or other distributions (including Patterson
repurchases of common stock) will be subject to the declaration and payment of
all cumulative dividends on outstanding shares of preferred stock, and any
preferred stock issued under this prospectus and any accompanying prospectus
supplement and any other shares of preferred stock which are then outstanding.
Liquidation. In the event of the dissolution, liquidation or winding up
of Patterson, holders of common stock are entitled to share ratably in any
assets remaining after the satisfaction in full of the prior rights of
creditors, including holders of Patterson's indebtedness, and the payment of the
aggregate liquidation preference of the preferred stock, and any preferred stock
issued under this Prospectus and any accompanying prospectus supplement and any
other shares of preferred stock then outstanding.
Voting. Patterson's stockholders are entitled to one vote for each
share on all matters voted on by stockholders, including election of directors.
Shares of common stock held by Patterson or any entity controlled by Patterson
do not have voting rights and are not counted in determining the presence of a
quorum. Directors are elected annually. Holders of common stock have no
cumulative voting rights.
No Other Rights. The holders of common stock do not have any
conversion, redemption or preemptive rights.
Transfer Agent. The transfer agent for the common stock is Continental
Stock Transfer & Trust Company, New York, New York.
Listing. Shares of Patterson's outstanding common stock are traded on
the Nasdaq National Market.
PREFERRED STOCK
Preferred stock may be issued in series from time to time with such
designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions thereof, to the extent that such are not fixed in
Patterson's Restated Certificate of Incorporation, as amended, as the Board of
Directors determines. The rights, preferences, limitations and restrictions on
different series of preferred stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The Board may authorize
the issuance of preferred stock which ranks senior to the common stock with
respect to the payment of dividends and the distribution of assets on
liquidation. In addition, the Board is authorized to fix the limitations and
restrictions, if any, upon the payment of dividends on common stock to be
effective while any shares of preferred stock are outstanding. The Board of
Directors, without stockholder approval, can issue preferred stock with voting,
conversion and other rights which could adversely affect the voting power of the
holders of common stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of Patterson. Patterson
has not issued any shares of preferred stock. However, as of June 30, 1999, an
aggregate of 325,170 shares of preferred stock had been reserved for issuance
upon exercise of the Rights described under "-- Stockholder Rights Plan."
STOCKHOLDER RIGHTS PLAN
In January 1997, the Board of Directors of Patterson adopted a
stockholder rights plan under which stockholders of record as of January 17,
1997, received a dividend in the form of preferred share purchase rights (the
"Rights"). The Rights permit the holder to purchase one one-hundredth of a share
(a
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unit) of Series A preferred stock at an initial exercise price of $41.50 per
share under certain circumstances. The purchase price, the number of units of
preferred stock and the type of securities issuable upon exercise of the Rights
are subject to adjustment. The Rights expire on January 2, 2007 unless earlier
redeemed or exchanged. Until a Right is exercised, the holder thereof has no
rights as a stockholder of Patterson, including the right to vote or receive
dividends. The Rights become exercisable on the earlier to occur of (i) the
acquisition by a person or group of affiliated or associated persons of 15% or
more of the outstanding shares of common stock, or (ii) 10 days following the
commencement of or announcement of an intention to acquire 15% or more of the
outstanding shares of common stock through a tender offer or exchange offer.
OTHER PROVISIONS HAVING POSSIBLE ANTI-TAKEOVER EFFECT
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the corporate charter or bylaws or
otherwise, which, along with certain provisions of the Delaware General
Corporation Law (the "DGCL"), may have the effect of delaying or deterring any
unsolicited takeover attempts notwithstanding that a majority of the
stockholders might benefit from such a takeover or attempt. Section 203 of the
DGCL, which applies to Patterson since the common stock is traded on the Nasdaq
National Market, restricts certain "business combinations" with an "interested
stockholder" for three years following the date such person becomes an
interested stockholder, unless the Board of Directors approves the business
combination. "Business combinations" is defined to include mergers, sale of
assets and other similar transactions with an "interested stockholder." An
"interested stockholder" is defined as a person who, together with affiliates,
owns (or, within the prior three years, did own) 15% or more of the
corporation's voting stock. By delaying or deterring unsolicited takeover
attempts, these provisions could adversely affect prevailing market prices for
Patterson's common stock.
Patterson's Restated Certificate of Incorporation, as amended, and
Bylaws contain certain provisions that could discourage potential takeover
attempts and make more difficult attempts by stockholders to change management.
The following paragraphs set forth a summary of these provisions:
Special Meetings of Stockholders. The Restated Certificate of
Incorporation, as amended, provides that special meetings of stockholders may be
called only by the Board of Directors (or a majority of the members thereof),
the Chief Executive Officer, the President or the holders of a majority of the
outstanding stock entitled to vote at such special meeting. This provision will
make it more difficult for stockholders to call a special meeting.
No Stockholder Action by Written Consent. The Restated Certificate of
Incorporation, as amended, provides that stockholder action may be taken only at
annual or special meetings and not by written consent of the stockholders.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive offices of Patterson not less
than 30 days nor more than 60 days prior to the meeting as originally scheduled;
provided that in the event less than 40 days written notice is given to
stockholders, notice by the stockholder to be made timely must be received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed. The Bylaws also
specify certain requirements for a stockholders notice to be in proper written
form. These provisions may preclude some stockholders from bringing matters
before the stockholders at an annual meeting or from making nominations for
directors at an annual meeting.
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Authorized Class of Preferred Stock. See "-- Preferred Stock" for
information concerning Patterson's preferred stock.
PLAN OF DISTRIBUTION
Patterson and the Selling Stockholders may offer Securities to or
through underwriters, through agents or directly to other purchasers.
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices (which may be changed from
time to time), at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Each
prospectus supplement will describe the method of distribution of the Securities
offered therein.
Patterson and the Selling Stockholders may sell Securities directly,
through agents designated from time to time, through underwriting syndicates led
by one or more managing underwriters or through one or more underwriters acting
alone. Each prospectus supplement will set forth the terms of the Securities to
which such prospectus supplement relates, including the name or names of any
underwriters or agents with whom Patterson or the Selling Stockholders have
entered into arrangements with respect to the sale of such Securities, the
public offering or purchase price of such Securities and the net proceeds to
Patterson or the Selling Stockholders from such sale, any underwriting discounts
and other items constituting underwriters' compensation, any discounts and
commissions allowed or paid to dealers, if any, any commissions allowed or paid
to agents, and the securities exchange or exchanges, if any, on which such
Securities will be listed. Dealer trading may take place in certain of the
Securities, including Securities not listed on any securities exchange.
Securities may be purchased to be reoffered to the public through
underwriting syndicates led by one or more managing underwriters, or through one
or more underwriters acting alone. The underwriter or underwriters with respect
to each underwritten offering of Securities will be named in the prospectus
supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover page of
such prospectus supplement. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase the
Securities will be subject to certain conditions precedent and each of the
underwriters with respect to a sale of Securities will be obligated to purchase
all of its Securities if any are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may be offered and sold by Patterson and the Selling
Stockholders through agents designated by Patterson or the Selling Stockholders,
as the case may be, from time to time. Any agent involved in the offer and sale
of any Securities will be named, and any commissions payable by Patterson or the
Selling Stockholders, as the case may be, to such agent will be set forth, in
the prospectus supplement relating to such offering. Unless otherwise indicated
in such prospectus supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
Offers to purchase Securities may be solicited directly by Patterson or
the Selling Stockholders and sales thereof may be made by Patterson or the
Selling Stockholders, as the case may be, directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale thereof. The terms of any such sales will be
described in the prospectus supplement relating thereto.
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36
Patterson and the Selling Stockholders may also issue contracts under
which the counterparty may be required to purchase Securities. Such contracts
would be issued for Securities in amounts, at prices and on terms to be set
forth in a prospectus supplement.
The anticipated place and time of delivery of Securities will be set
forth in the applicable prospectus supplement.
If so indicated in the applicable prospectus supplement, Patterson or
the Selling Stockholders will authorize underwriters or agents to solicit offers
by certain institutions to purchase Securities from Patterson or the Selling
Stockholders, as the case may be, pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
Patterson or the Selling Stockholders, as the case may be. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any purchaser
under any such contract will not be subject to any conditions except that:
- The purchase of the Securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject; and
- If the Securities are also being sold to underwriters acting
as principals for their own account, the underwriters shall
have purchased such Securities not sold for delayed delivery.
The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of
such contracts.
Any underwriter or agent participating in the distribution of the
Securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold and any discounts or
commissions received by them from Patterson or the Selling Stockholders, as the
case may be, and any profit realized by them on the sale or resale of the
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act.
Underwriters and agents may be entitled, under agreements entered into
with Patterson or the Selling Stockholders, to indemnification by Patterson or
the Selling Stockholders, as the case may be, against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such underwriters or agents may be required to make in respect
thereof. Certain of such underwriters and agents, including their associates,
may be customers of, engage in transactions with and perform services for,
Patterson and its subsidiaries or the Selling Stockholders in the ordinary
course of business.
The Securities may or may not be listed on a national securities
exchange or a foreign securities exchange, other than the common stock, which is
traded on the Nasdaq National Market. Any common stock sold pursuant to a
prospectus supplement will be traded on the Nasdaq National Market, subject to
official notice of issuance. Any underwriters to whom Securities are sold by
Patterson for public offering and sale may make a market in those Securities,
but the underwriters will not be obligated to do so and may discontinue any
market making activities at any time without notice. No assurances can be given
that there will be an active trading market for the Securities.
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LEGAL MATTERS
The validity of the Securities offered will be passed upon for Patterson by
Baker & Hostetler LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from Patterson's Annual Report on Form 10-K for the year ended
December 31, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The estimated reserve evaluations and related calculations of Mr. Brian
Wallace, P.E., Dallas, Texas, an independent petroleum engineer, incorporated in
this Prospectus by reference from Patterson's Annual Report on Form 10-K for the
year ended December 31, 1998, have been so incorporated in reliance upon the
authority of Mr. Wallace as an expert in petroleum engineering.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934. You
may read and copy this information at the following locations of the SEC:
Judiciary Plaza, Room 10024 Seven World Trade Center
450 Fifth Street, N.W. Suite 1300
Washington, D.C. 20549 New York, New York 10048
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661
You can also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Room 10024, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the
Public Reference Room by calling the SEC at (800) SEC-0330.
The SEC also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like Patterson,
that file electronically with the SEC. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about us at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
We have filed with the SEC a registration statement on Form S-3 that
registers the Securities we are offering. The registration statement, including
the attached exhibits and schedules, contains additional relevant information
about us and our Securities. The rules and regulations of the SEC allow us to
omit certain information included in the registration statement from this
prospectus.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus included as part of this Registration
Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of the Securities registered
hereby, all of which expenses, except for the SEC registration fee and the NASD
filing fee, are estimates:
Description Amount
----------- --------
SEC registration fee........................................................................... $ 41,700
NASD filing fee................................................................................ 10,000
Nasdaq National Market listing fee............................................................. 20,000
Trustee's and warrant agent's fees............................................................. 25,000
Rating agency fees............................................................................. 50,000
Accounting fees and expenses................................................................... 75,000
Legal fees and expenses........................................................................ 150,000
Printing expenses.............................................................................. 125,000
Blue sky fees and expenses..................................................................... 20,000
Transfer agent fees and expenses............................................................... 10,000
Miscellaneous.................................................................................. 73,300
--------
Total................................................................................ $600,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The DGCL provides for indemnification by a corporation of costs
incurred by directors, employees and agents in connection with an action, suit
or proceeding brought by reason of their position as a director, employee or
agent. The person being indemnified must have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation. The DGCL provides that a corporation may advance payment of
expenses. The DGCL further provides that the indemnification and advancement of
expenses provisions of the DGCL will not be deemed exclusive of any other rights
to which these indemnifications or advancements of expenses may be entitled
under bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action under official capacity and as to action in another
capacity when holding such office.
In addition to the general indemnification section, Delaware law
provides further protection for directors under Section 102(b)(7) of the DGCL.
This section was enacted in June 1986 and allows a Delaware corporation to
include in its certificate of incorporation a provision that eliminates and
limits certain personal liability of a director for monetary damages for certain
breaches of the director's fiduciary duty of care, provided that any such
provision does not (in the words of the statute) do any of the following:
[E]liminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or
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which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of this Title (dealing with willful or
negligent violation of the statutory provision concerning dividends and
stock purchases and redemptions), or (iv) for any transaction from
which the director derived an improper personal benefit. No such
provision shall eliminate or limit the liability of a director for any
act or omission occurring prior to the date when such provision becomes
effective....
The Board of Directors is empowered to make other indemnification as
authorized under any bylaw, agreement, the Certificate of Incorporation, Bylaws
or corporate resolution so long as the indemnification is consistent with the
DGCL.
Patterson's Restated Certificate of Incorporation, as amended, provides
that, to the fullest extent permitted by the DGCL, a director of Patterson will
not be liable to Patterson or its stockholders for monetary damages for breach
of fiduciary duty as a director. Patterson's Bylaws provide that to the extent
that a director or officer of Patterson is successful on the merits in the
defense of a suit or proceeding brought against him by reason of the fact that
he is a director or officer of Patterson, he will be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action. In other circumstances, a director or officer of Patterson may be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in and not opposed to the best interests of
Patterson, and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; however, in an action or
suit by or in the right of Patterson to procure a judgment in its favor, such
person will not be indemnified if he has been adjudged to be liable to Patterson
unless and only to the extent that the Delaware Court of Chancery or the court
in which such actin or suit was brought determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court deems proper. A
determination that indemnification of a director or officer is proper will be
made by a disinterested majority of Patterson's Board of Directors, by
independent legal counsel or by the stockholders of Patterson. Patterson's
Bylaws also provide that Patterson may advance the payment of expenses and that
the indemnification and advancement of expenses provisions of the Bylaws are
nonexclusive. Patterson maintains director and officer liability insurance
covering director and officer indemnification.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference
herein:
Item 601
Exhibit Cross
Number Reference Document as Form S-3 Exhibit
------- --------- ----------------------------
1.1 1 Form of Underwriting Agreement - Equity*
1.2 1 Form of Underwriting Agreement - Debt*
2.1 2 Agreement and Plan of Merger, dated as of
April 12, 1996, among Patterson Energy,
Inc., Patterson Drilling Company and
Tucker Drilling Company, Inc. and
amendment thereto, dated May 16, 1996 (1)
4.1 4 Excerpt from Restated Certificate of
Incorporation , as amended, of Patterson
Energy, Inc. regarding authorized Common
Stock and Preferred Stock
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Item 601
Exhibit Cross
Number Reference Document as Form S-3 Exhibit
------- --------- ----------------------------
4.2 4 Form of Certificate of Designation of
Preferred Stock*
4.3 4 Form of Debt Security Indenture
4.4 4 Form of Debt Security (included in
Exhibit 4.3)
4.5 4 Form of Stock Warrant Agreement for
warrants attached to equity securities
4.6 4 Form of Stock Warrant Certificate
(included as Exhibit A in Exhibit 4.5)
4.7 4 Form of Debt Securities Warrant Agreement
for warrants attached to debt securities
4.8 4 Form of Debt Securities Warrant
Certificate (included as Exhibit A in
Exhibit 4.7)
4.9 4 Form of Warrant Agreement for warrants not
attached to equity or debt securities
4.10 4 Form of Warrant Certificate (included as
Exhibit A in Exhibit 4.9)
4.11 4 Form of Deposit Agreement, including form
of Depositary Receipt for Depositary
Shares
5.1 5 Opinion of Baker & Hostetler LLP regarding
the legality of the Securities to be
offered
12.1 12 Statement of Computation of Ratio of
Earnings to Fixed Charges
15.1 15 Letter of PricewaterhouseCoopers LLP
regarding unaudited interim financial
information
23.1 23 Consent of PricewaterhouseCoopers LLP
23.2 23 Consent of M. Brian Wallace, independent
petroleum engineer
23.3 23 Consent of Baker & Hostetler LLP (included
in Exhibit 5.1)
24.1 24 Power of Attorney (included on the
signature page hereto)
25.1 25 Statement of eligibility of trustee under
the Senior Debt Securities*
25.2 25 Statement of eligibility of trustee under
the Senior Subordinated Debt Securities*
25.3 25 Statement of eligibility of trustee under
the Subordinated Debt Securities*
- ---------
* To be filed by amendment or to be incorporated by reference in connection with
the offering of the Securities.
(1) Incorporated by reference to Item 7, "Financial Statements and Exhibits" to
Form 8-K dated April 22, 1996, and filed on April 30, 1996.
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ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, Patterson
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of Patterson in the successful
defense of any action, suit or proceedings) is asserted by such director,
officer or controlling person in connection with the Securities being
registered, Patterson will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) Patterson hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Patterson's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
Securities offered therein, and the offering of such Securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Patterson hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be determined to be a new registration statement
relating to the Securities offered therein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) Patterson hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts of events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of Securities offered (if the total dollar
value of Securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume price represent no
more than a 20% change in the maximum aggregate offering
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price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
Patterson pursuant to section 13 or section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the Securities
offered therein, and the offering of such Securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Securities being registered which remain unsold at
the termination of the offering.
(e) Patterson hereby undertakes to file an application for the purpose
of determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the SEC under Section 305(b)(2) of the Trust Indenture
Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Patterson
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Snyder, State of Texas, on the 28th day of October,
1999.
PATTERSON ENERGY, INC.
By: /s/ A. GLENN PATTERSON
--------------------------
A. Glenn Patterson
President
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Each of the undersigned officers and directors of Patterson Energy,
Inc. hereby appoints Cloyce A. Talbott and A. Glenn Patterson as attorneys and
agents for the undersigned, with full power of substitution, for and in the
name, place and stead of the undersigned, to sign and file with the SEC under
the Securities Act of 1933 any and all amendments (including post-effective
amendments) and exhibits to this Registration Statement and any and all
applications, instruments or documents to be filed with the SEC pertaining to
the registration of the Securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed as of October 28, 1999, by the following
persons in the capacities indicated:
/s/ CLOYCE A. TALBOTT Chairman of the Board, Director and
- ------------------------------- Chief Executive Officer
Cloyce A. Talbott
Principal Executive Officer
/s/ A. GLENN PATTERSON President, Chief Operating Officer and
- ------------------------------- Director
A. Glenn Patterson
/s/ ROBERT C. GIST Director
- -------------------------------
Robert C. Gist
/s/ VINCENT A. ROSSI, JR. Director
- -------------------------------
Vincent A. Rossi, Jr.
/s/ SPENCER D. ARMOUR, III Director
- -------------------------------
Spencer D. Armour, III
/s/ JONATHAN D. NELSON Vice President--Finance, Secretary and
- ------------------------------- Treasurer and Chief Financial Officer
Jonathan D. Nelson
Principal Accounting Officer
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EXHIBIT INDEX
Item 601
Exhibit Cross
Number Reference Document as Form S-3 Exhibit
------- --------- ----------------------------
1.1 1 Form of Underwriting Agreement - Equity*
1.2 1 Form of Underwriting Agreement - Debt*
2.1 2 Agreement and Plan of Merger, dated as of
April 12, 1996, among Patterson Energy,
Inc., Patterson Drilling Company and
Tucker Drilling Company, Inc. and
amendment thereto, dated May 16, 1996 (1)
4.1 4 Excerpt from Restated Certificate of
Incorporation , as amended, of Patterson
Energy, Inc. regarding authorized Common
Stock and Preferred Stock
4.2 4 Form of Certificate of Designation of
Preferred Stock*
4.3 4 Form of Debt Security Indenture
4.4 4 Form of Debt Security (included in
Exhibit 4.3)
4.5 4 Form of Stock Warrant Agreement for
warrants attached to equity securities
4.6 4 Form of Stock Warrant Certificate
(included as Exhibit A in Exhibit 4.5)
4.7 4 Form of Debt Securities Warrant Agreement
for warrants attached to debt securities
4.8 4 Form of Debt Securities Warrant
Certificate (included as Exhibit A in
Exhibit 4.7)
4.9 4 Form of Warrant Agreement for warrants not
attached to equity or debt securities
4.10 4 Form of Warrant Certificate (included as
Exhibit A in Exhibit 4.9)
4.11 4 Form of Deposit Agreement, including form
of Depositary Receipt for Depositary
Shares
5.1 5 Opinion of Baker & Hostetler LLP regarding
the legality of the Securities to be
offered
12.1 12 Statement of Computation of Ratio of
Earnings to Fixed Charges
15.1 15 Letter of PricewaterhouseCoopers LLP
regarding unaudited interim financial
information
23.1 23 Consent of PricewaterhouseCoopers LLP
23.2 23 Consent of M. Brian Wallace, independent
petroleum engineer
23.3 23 Consent of Baker & Hostetler LLP (included
in Exhibit 5.1)
24.1 24 Power of Attorney (included on the
signature page hereto)
25.1 25 Statement of eligibility of trustee under
the Senior Debt Securities*
25.2 25 Statement of eligibility of trustee under
the Senior Subordinated Debt Securities*
25.3 25 Statement of eligibility of trustee under
the Subordinated Debt Securities*
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* To be filed by amendment or to be incorporated by reference in connection with
the offering of the Securities.
(1) Incorporated by reference to Item 7, "Financial Statements and Exhibits" to
Form 8-K dated April 22, 1996, and filed on April 30, 1996.