Exhibit 10.1

Execution Version

CANYON CAPITAL ADVISORS LLC

2000 Avenue of the Stars, 11th Floor

Los Angeles, CA 90067

CONFIDENTIAL

December 12, 2016

Patterson-UTI Energy, Inc.

10713 W. Sam Houston Parkway North, Suite 800

Houston, Texas 77064

Attention: Chief Financial Officer

Telephone: (281)765-7100

Facsimile: (281)765-7175

 

  Re: Project Egypt Commitment Letter

Ladies and Gentlemen:

You have advised Canyon Capital Advisors LLC (“Canyon Capital”, “we” or “us”)
that Patterson - UTI Energy, Inc., a Delaware corporation (“PTEN” or “you”)
plans to acquire Seventy Seven Energy Inc., a Delaware corporation (the
“Target”) by merger of a newly formed wholly owned subsidiary of PTEN with and
into the Target (the “Acquisition”) pursuant to that certain Agreement and Plan
of Merger dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Acquisition Agreement”). After giving
effect to the Acquisition, the Target will be a wholly-owned subsidiary of PTEN.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Term Sheet attached hereto as Exhibit A (the “Term Sheet”, and
together with this commitment letter, the “Commitment Letter”), as applicable.
You have further advised us that you desire a commitment for a USD
$150.0 million Senior Unsecured Bridge Facility described in the Term Sheet (the
“Facility”), to be used, if you so elect, to finance a portion of the
consideration for the Acquisition.

Commitment

Canyon Capital, on behalf of one or more managed funds and accounts (together
with Canyon Capital, the “Canyon Parties”), is pleased to advise you of its
commitment to provide 100% of the Facility as described in this Commitment
Letter, subject only to the satisfaction (or waiver by the Canyon Parties) of
the applicable conditions set forth in the section entitled “Conditions
Precedent to the Facility” in Exhibit B hereto (limited on the Closing Date (as
defined below) as indicated therein).

 

1

--------------------------------------------------------------------------------

Information

You hereby represent and warrant that (in the case of information about the
Target and its subsidiaries, to your knowledge) all written information and
written data (other than estimates and forward looking statements and general
economic and industry information) concerning PTEN and its subsidiaries, the
Target and its subsidiaries and the transactions contemplated herein (such
written information and written data, the “Information”) that has been or will
be made available to Canyon Capital directly or indirectly by, or at the request
of, you or by any of your representatives, when taken as a whole, is or will be,
when furnished, correct in all material respects and does not or will not, when
furnished and when taken as a whole, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made (after giving effect to all supplements and
updates thereto from time to time). You agree that, if at any time prior to the
Closing Date you become aware that any of the representations and warranties in
the preceding sentence would be (with respect to the Target and its
subsidiaries, to your knowledge) made by you would be incorrect in any material
respect if the Information were being furnished, and such representations and
warranties were being made, at such time, then you will promptly inform us
thereof and will promptly supplement the such that such representations and
warranties are correct in all material respects under those circumstances (or,
in the case of the Information provided by you relating to the Target and its
subsidiaries, to your knowledge, such representations and warranties are correct
in all material respects under those circumstances). Canyon Capital (i) will be
entitled to use and rely primarily on the Information without responsibility for
independent verification thereof and (ii) assumes no responsibility for the
accuracy or completeness of the Information. It has been agreed that you will
not provide any projections to Canyon Capital in connection with the
transactions contemplated by this Commitment Letter. Notwithstanding anything to
the contrary, the accuracy of the foregoing representations, whether or not
cured, shall not be a condition to the obligations of Canyon Capital or any
other Canyon Party or the funding of the Facility pursuant to the terms and
conditions set forth herein unless the inaccuracy results in an express
condition hereunder otherwise not having been satisfied or waived.

Conditions

The commitments of the Canyon Parties hereunder to provide the Facility are
subject only to the satisfaction (or waiver by the Canyon Parties) of the
applicable conditions set forth in the section entitled “Conditions Precedent to
the Facility” in Exhibit B hereto (limited on the Closing Date (as defined
below) as indicated therein) including the payment of fees payable on the
Closing Date as specified in the separate Fee Letter dated the date hereof,
among you and Canyon Capital, and delivered herewith with respect to the
Facility (the “Fee Letter”), it being understood and agreed that there are no
other conditions (implied or otherwise) to the commitments hereunder.

 

2

--------------------------------------------------------------------------------

Indemnity; Expense Reimbursement

To induce the Canyon Parties to enter into this Commitment Letter and to proceed
with the definitive documentation in connection with the Facility (the
“Financing Documentation”), you agree (a) to indemnify and hold harmless each
Canyon Party, its affiliates and the respective officers, directors, employees,
agents, advisors and other representatives and successors of each of the
foregoing (each, an “Indemnified Person”), from and against any and all losses,
claims, damages and liabilities (collectively, “Losses”) of any kind or nature
and reasonable and documented and invoiced out-of-pocket fees and expenses
(including reasonable and documented and invoiced out-of-pocket legal expenses,
subject to the restrictions and limitations on counsels set forth below), joint
or several, to which any such Indemnified Person may become subject, in the case
of any such Losses and related expenses, to the extent arising out of, resulting
from, or in connection with, any claim, litigation, investigation or proceeding
(including any inquiry or investigation) relating to this Commitment Letter
(including the Term Sheet), the Acquisition or any related transaction
contemplated hereby, the provision of the Facility or any use of the proceeds
thereof (any of the foregoing, a “Proceeding”), regardless of whether any such
Indemnified Person is a party thereto and whether or not such Proceedings are
brought by you, your equity holders, affiliates or creditors or any other third
person, and to reimburse each such Indemnified Person promptly for any
reasonable and documented and invoiced out-of-pocket legal fees and expenses
incurred in connection with investigating, responding to, or defending any of
the foregoing of one firm of counsel for all such Indemnified Persons, taken as
a whole and, if necessary, of a single firm of local counsel in each appropriate
jurisdiction (which may include a single firm of special counsel acting in
multiple jurisdictions) for all such Indemnified Persons, taken as a whole (and,
solely in the case of an actual or perceived conflict of interest where the
Indemnified Person affected by such conflict notifies you of the existence of
such conflict and thereafter retains its own counsel, of one other firm of
counsel for such affected Indemnified Person) or other reasonable and documented
or invoiced out-of-pocket fees and expenses incurred in connection with
investigating, responding to, or defending any of the foregoing, or in
connection with the enforcement of any provision of this Commitment Letter;
provided that the foregoing indemnity will not, as to any Indemnified Person,
apply to Losses or related expenses to the extent that they have resulted from
(i) the willful misconduct, bad faith or gross negligence of such Indemnified
Person or any of such Indemnified Person’s affiliates or any of its or their
respective officers, directors, employees, agents, advisors or other
representatives or successors of any of the foregoing (as determined by a court
of competent jurisdiction in a final and non-appealable decision), (ii) a
material breach of the obligations under this Commitment Letter, the Financing
Documentation by such Indemnified Person or any of such Indemnified Person’s
affiliates or of any of its or their respective officers, directors, employees,
agents, advisors or other representatives or successors of any of the foregoing
(as determined by a court of competent jurisdiction in a final and
non-appealable decision) or (iii) any dispute solely among Indemnified Persons
and not arising out of any act or omission of you or any of your respective
subsidiaries or affiliates; and (b) regardless of whether the Closing Date
occurs, to reimburse the Canyon Parties from time to time, upon presentation of
a summary statement, for all reasonable and documented and invoiced
out-of-pocket expenses (including but not limited to expenses of the Canyon
Parties’ due diligence investigation, consultants’ fees (to the extent any such
consultant has been retained with your prior written consent (such consent not
to be unreasonably withheld or delayed)), travel expenses and reasonable fees,
disbursements and other charges of a single firm of counsel to the Canyon
Parties, and, if necessary, of a single firm of local counsel to the Canyon
Parties in each appropriate jurisdiction (which may include a single firm of
special counsel acting in multiple jurisdictions) and of such other counsel
retained

 

3

--------------------------------------------------------------------------------

with your prior written consent (such consent not to be unreasonably withheld or
delayed)), in each case incurred in connection with the providing of the
Facility and the preparation, negotiation and enforcement of this Commitment
Letter and the Financing Documentation (collectively, the “Expenses”). The
foregoing provisions in this paragraph shall be superseded, in each case, to the
extent covered thereby by the applicable provisions contained in the Financing
Documentation upon execution thereof and thereafter shall have no further force
and effect.

Notwithstanding any other provision of this Commitment Letter, (i) no
Indemnified Person shall be liable for any damages arising from the use by
others of information or other materials obtained through internet, electronic,
telecommunications or other information transmission systems, except to the
extent that such damages have resulted from the willful misconduct, bad faith or
gross negligence of such Indemnified Person or any of such Indemnified Person’s
affiliates or any of its or their respective officers, directors, employees,
agents, advisors or other representatives or successors (as determined by a
court of competent jurisdiction in a final and non-appealable decision) and
(ii) none of us, you (or any of your subsidiaries or affiliates), or any
Indemnified Person shall be liable for any indirect, special, punitive or
consequential damages (including, without limitation, any loss of profits,
business or anticipated savings) in connection with this Commitment Letter, the
Acquisition (including the providing of the Facility and the use of proceeds
thereunder), or with respect to any activities related to the Facility,
including the preparation of this Commitment Letter, and the Financing
Documentation; provided that nothing in this paragraph shall limit your
indemnity and reimbursement obligations to the extent that such indirect,
special, punitive or consequential damages are included in any claim by a third
party unaffiliated with any of the Canyon Parties with respect to which the
applicable Indemnified Person is entitled to indemnification under the previous
paragraph.

You shall not be liable for any settlement of any Proceeding (or any portion
thereof) effected without your written consent (which consent shall not be
unreasonably withheld or delayed, it being understood that the withholding of
consent due to non-satisfaction of any of the conditions described in clauses
(i) and (ii) of the succeeding paragraph (with “you” being substituted for
“Indemnified Person” in each such clause) shall be deemed reasonable), but if
settled with your written consent or if there is a final and non-appealable
judgment by a court of competent jurisdiction for the plaintiff in any such
Proceeding, you agree to indemnify and hold harmless each Indemnified Person
from and against any and all Losses and reasonable and documented or invoiced
legal or other out-of-pocket expenses by reason of such settlement or judgment
in accordance with and to the extent provided in the other provisions of this
Commitment Letter. If the Indemnifying Party has reimbursed or indemnified any
Indemnified Person for any legal or other expenses in accordance with such
request and there is a final and non-appealable determination by a court of
competent jurisdiction that the Indemnified Person was not entitled to
indemnification or contribution rights with respect to such payment pursuant to
this Commitment Letter, then the Indemnified Person shall promptly refund such
amount.

You shall not, without the prior written consent of any Indemnified Person
(which consent shall not be unreasonably withheld or delayed, it being
understood that the withholding of consent due to non-satisfaction of any of the
conditions described in clauses (i) and (ii) of this sentence shall be deemed
reasonable), effect any settlement of any pending or threatened Proceeding in
respect

 

4

--------------------------------------------------------------------------------

of which indemnity could have been sought hereunder by such Indemnified Person
unless such settlement (i) includes an unconditional release of such Indemnified
Person in form and substance reasonably satisfactory to such Indemnified Person
from all liability or claims that are the subject matter of such Proceeding and
(ii) does not include any statement as to or any admission of fault,
culpability, wrongdoing or a failure to act by or on behalf of any Indemnified
Person.

Confidentiality

You agree that you will not disclose, directly or indirectly, this Commitment
Letter, the Term Sheet, the other exhibits and attachments hereto, the Fee
Letter or the contents of each thereof (“Commitment Documents”), to any person
or entity without prior written approval of the Canyon Parties (such approval
not to be unreasonably withheld or delayed), except (a) if Canyon Capital
consents in writing (such consent not to be unreasonably withheld or delayed) to
such proposed disclosure, (b) for disclosure on a confidential basis to your
directors, officers, employees, accountants, attorneys and other professional
advisors who have been advised of their obligation to maintain the
confidentiality of the Commitment Documents for the purpose of evaluating,
negotiating or entering into the Transactions or (c) pursuant to the order of
any court or administrative agency or in any pending legal, judicial or
administrative proceeding, or otherwise as required by applicable law, rule or
regulation or compulsory legal process or to the extent requested or required by
governmental and/or regulatory authorities, in each case based on the reasonable
advice of your legal counsel (in which case you agree to the extent practicable
and not prohibited by applicable law, rule or regulation, to inform us promptly
thereof prior to disclosure; provided that after your acceptance of this
Commitment Letter and the Fee Letter and the payment of the fees required to be
paid on the date hereof pursuant to the Fee Letter, you may publically disclose
this Commitment Letter (including the Term Sheet) (for the avoidance of doubt,
the Fee Letter shall not be publically disclosed although the amounts of fees
may be included in your financial statements). You agree to include Canyon
Capital’s commitment to provide the Facility in connection with the Acquisition
in any press release or public announcement of the Acquisition and you further
agree to provide Canyon Capital reasonable opportunity prior to any such press
release or public announcement to review and comment upon the references to
Canyon Capital in such press release or public announcement. The parties agree
that the Confidentiality Agreement, dated December 6, 2016, by and among Canyon
Capital and PTEN shall remain in full force and effect in accordance with its
terms notwithstanding the execution of this Commitment Letter.

Miscellaneous

Canyon Capital reserves the right, after the execution of the Financing
Documentation to assign all or a portion of the commitments hereunder to
institutional investors previously approved in writing by you or otherwise
reasonably acceptable to you (such acceptance not to be unreasonably withheld,
conditioned or delayed) (such assignees, together with the Canyon Parties, the
“Commitment Parties”); provided that, it is agreed that (i) syndication or
assignment of, or receipt of commitments or participations in respect of, all or
any portion of the commitments hereunder prior to the date of the borrowing of
funds under the Facility in accordance with the Financing Documentation on the
date of the closing of the Acquisition (the

 

5

--------------------------------------------------------------------------------

date of such borrowing of the funds under the Facility, the “Closing Date”)
shall not be a condition to such commitments; and (ii) Canyon Capital shall not
be relieved, released or novated from its obligations hereunder in connection
with any such assignment or syndication, including its commitments in respect
thereof, until after the borrowing of funds under the Facility has occurred
unless you otherwise consent thereto.

Except as provided in the previous paragraph, this Commitment Letter and the
commitments hereunder shall not be assignable by any party hereto (other than by
Canyon Capital to another Canyon Party) without the prior written consent of
each other party hereto (such consent not to be unreasonably withheld or
delayed) (and any attempted assignment without such consent shall be null and
void). This Commitment Letter and the commitments hereunder are intended to be
solely for the benefit of the parties hereto (and Indemnified Persons to the
extent expressly set forth herein) and do not and are not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto (and Indemnified Persons to the extent expressly set forth
herein). Each Canyon Party reserves the right to employ the services of its
respective affiliates or branches in providing services contemplated hereby and
to allocate, in whole or in part, to their affiliates certain fees payable to
such Canyon Party in such manner as such Canyon Party and its respective
affiliates or branches may agree in their sole discretion and, to the extent so
employed, such affiliates and branches shall be entitled to the benefits and
protections afforded to, and subject to the provisions governing the conduct of,
such Canyon Party hereunder. This Commitment Letter may not be amended or any
provision hereof waived or modified except by an instrument in writing signed by
Canyon Capital and you. This Commitment Letter may be executed in any number of
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement. Delivery of an executed
counterpart of a signature page of this Commitment Letter by facsimile
transmission or other electronic transmission (i.e., a “pdf” or “tif”) shall be
effective as delivery of a manually executed counterpart hereof. This Commitment
Letter (including the exhibits hereto) dated the date hereof and the Fee Letter,
(i) are the only agreements that have been entered into among the parties hereto
with respect to the Facility and the transactions contemplated by this
Commitment Letter and (ii) supersede all prior understandings, whether written
or oral, among us with respect to the Facility and set forth the entire
understanding of the parties hereto with respect thereto. THIS COMMITMENT
LETTER, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER, OR RELATED TO, THIS
COMMITMENT LETTER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN
CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; PROVIDED, HOWEVER, THAT THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN IN
DETERMINING (A) THE INTERPRETATION OF A “COMPANY MATERIAL ADVERSE EFFECT” (AS
DEFINED IN THE ACQUISITION AGREEMENT) AND WHETHER A “COMPANY MATERIAL ADVERSE
EFFECT” HAS OCCURRED AND (B) WHETHER THE ACQUISITION HAS BEEN CONSUMMATED IN
ACCORDANCE WITH THE TERMS OF THE ACQUISITION AGREEMENT AND ALL OTHER ISSUES AND
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND
ENFORCEABILITY OF THE ACQUISITION AGREEMENT AND THE EXHIBITS AND SCHEDULES
THERETO (IN

 

6

--------------------------------------------------------------------------------

EACH CASE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, TO THE
EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION).

Each of the parties hereto agrees that this Commitment Letter is a binding and
enforceable agreement (subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or
affecting creditors’ rights generally and general principles of equity (whether
considered in a proceeding in equity or law)) with respect to the subject matter
contained herein, including an agreement of each party to negotiate in good
faith the Financing Documentation by the parties hereto in a manner consistent
with this Commitment Letter, it being acknowledged and agreed that the
commitments provided hereunder are subject only to conditions precedent as
expressly provided herein.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY
RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF
SERVICES HEREUNDER OR THEREUNDER.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
County in the State of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Commitment Letter,
or the transactions contemplated hereby or thereby, or for recognition or
enforcement of any judgment, and agrees that all claims in respect of any such
action or proceeding shall only be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court, (b) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Commitment Letter, or the
transactions contemplated hereby or thereby in any New York State or in any such
Federal court, (c) waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court and (d) agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each of the parties
hereto agrees that service of process, summons, notice or document by registered
mail addressed to you or us at the addresses set forth above shall be effective
service of process for any suit, action or proceeding brought in any such court.

The indemnification, reimbursement, submission to jurisdiction, governing law,
venue, waiver of jury trial, syndication and confidentiality provisions
contained herein and the Fee Letter shall remain in full force and effect
notwithstanding the termination or expiration of this Commitment; provided that
the indemnification, confidentiality and reimbursement provisions shall be
superseded by Financing Documentation to the extent provided therein upon the
execution and delivery thereof.

 

7

--------------------------------------------------------------------------------

Section headings used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Commitment Letter.

If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms of this Commitment Letter and the Fee Letter by
returning to Canyon Capital on behalf of the Canyon Parties, executed
counterparts thereof together with payment of the fees required to be paid on
the date hereof pursuant to the Fee Letter on or prior to 5 p.m. E.S.T. on
December 13, 2016. The Canyon Parties’ respective commitments hereunder and the
obligations and agreements of the Canyon Parties contained herein will expire at
such time in the event that Canyon Capital has not received such executed
counterparts and such fees in accordance with the immediately preceding
sentence. If you do so execute and deliver to us this Commitment Letter and the
Fee Letter and pay such fees, this Commitment Letter and the commitments and
undertakings of each of the Canyon Parties shall remain effective and available
for you until the earliest to occur of (i) after execution of the Acquisition
Agreement and prior to the consummation of the Acquisition, the termination of
the Acquisition Agreement by you (or your affiliates) or with your (or your
affiliates’) written consent or otherwise in accordance with its terms (other
than with respect to provisions therein that expressly survive termination),
prior to closing of the Acquisition, (ii) the consummation of the Acquisition,
(iii) the April 30, 2017 (as such date may be extended from time in one month
increments not to extend beyond August 31, 2017 and upon written notice to
Canyon Capital and concurrent payment of the fees required to be paid in
connection with such extension under the Fee Letter) and (iv) the date a notice
of termination of the Commitment Letter and the commitments hereunder is
delivered to us by you (such date, the “Commitment Termination Date”). Upon the
occurrence of any of the events referred to in the preceding sentence, this
Commitment Letter and the commitments of the Canyon Parties hereunder and the
agreement of the Canyon Parties to provide the services described herein shall
automatically terminate unless each of the Canyon Parties shall, in its sole
discretion, agree to an extension.

 

8

--------------------------------------------------------------------------------

We are pleased to have the opportunity to work with you in connection with this
important financing.

 

Very truly yours,

CANYON CAPITAL ADVISORS LLC,

 

on behalf of one or more managed funds and accounts

By:   /s/ Jonathan M. Kaplan   Name: Jonathan M. Kaplan   Title:   Authorized
Signatory

Commitment Letter Signature Page

--------------------------------------------------------------------------------

Accepted and agreed to as of

the date first above written:

Patterson-UTI Energy, Inc. By:   /s/ John E. Vollmer III   Name: John E. Vollmer
III  

Title:   Senior Vice President-Corporate

            Development, Chief Financial Officer

            & Treasurer

Commitment Letter Signature Page

--------------------------------------------------------------------------------

EXHIBIT A

Project Egypt

USD $150.0 Million Senior Unsecured Bridge Facility

Summary of Principal Terms and Conditions

All capitalized terms used but not defined in herein shall have the meanings
given to them in the

Commitment Letter to which this summary of principal terms and conditions

(this “Term Sheet”) is attached, including the other exhibits hereto.

 

Borrower:    Patterson-UTI Energy, Inc. (the “Borrower”). Guarantors:    The
same entities that guarantee the Existing Credit Agreement (the “Guarantors”).
Facility:    $150.0 Million Senior Unsecured Bridge Facility (the “Facility”).
Term:    3 years. Ranking:    The Facility will be senior unsecured debt of the
Borrower and Guarantors and rank pari passu with the Existing Credit Agreement
and private placement notes. Purpose:    To finance the company’s proposed
acquisition of Seventy Seven Energy Inc. (the “Target”), including the repayment
of certain debt of the Target (the “Acquisition”) and to pay related fees and
expenses. Availability:    Available in a single draw on the Closing Date. OID:
   As set forth in the Fee Letter. Pricing:    As set forth in the Fee Letter.
Optional Prepayments:    Prepayable at any time at par. Mandatory Prepayments:
   50% of the net cash proceeds from debt, equity and convertible issuances of
Borrower or Guarantors (other than drawings under the Existing Credit
Agreement). Conditions Precedent:    As set forth in Annex B.

Affirmative and Negative

Covenants and Events of Default:

   Substantially identical to the Existing Credit Agreement, it being understood
that the Facility shall not have any affirmative or negative covenants or events
of default that are not in the Existing Credit Agreement nor have less
permissive exceptions, baskets, qualifications. or carve-outs in respect of such
covenants and events of default.

 

A - 1

--------------------------------------------------------------------------------

EXHIBIT A

 

Financial Covenant(s):    Substantially identical to Existing Credit Agreement
(debt to cap ratio of <40% and interest coverage of at least 3X). Financing
Documentation    Financing Documentation will be based on the existing
Patterson-UTI Energy, Inc. Credit Agreement with Wells Fargo Bank, N.A., as
Administrative Agent, dated September 27, 2012, as amended on January 9, 2015
and July 8, 2016 (the “Existing Credit Agreement”), with only such changes as to
give effect to the items set forth in this term sheet, including the single
draw, non-revolving unsecured nature of the facility. The Financing
Documentation will provide for a financing institution selected by Canyon
Capital to act as “agent” for the Facility in accordance with the Financing
Documentation (such agent, the “Administrative Agent”). Representations and
Warranties    Substantially identical to the Existing Credit Agreement.

 

A - 2

--------------------------------------------------------------------------------

EXHIBIT B

Conditions Precedent to the Facility

The Canyon Parties’ obligation to provide the Facility on the Closing Date shall
be subject only to the satisfaction (or waiver by Canyon Capital) of the
following conditions:

1. The Acquisition shall have been or, substantially concurrently with the
borrowing of funds under the Facility pursuant to the Financing Documentation,
shall be consummated in all material respects in accordance with the terms of
the Acquisition Agreement, without giving effect to any modifications,
amendments or express waivers or consents by you that are materially adverse to
the interests of the Canyon Parties without the consent of Canyon Capital (such
consent not to be unreasonably withheld, conditioned or delayed) (it being
understood and agreed that any change to the definition of “Company Material
Adverse Effect” contained in the Acquisition Agreement and any waiver of any
condition related thereto shall be deemed to be materially adverse to the Canyon
Parties and shall require the consent of Canyon Capital). For purposes of the
foregoing condition, it is hereby understood and agreed that any change in the
purchase price in connection with the Acquisition shall not be deemed to be
materially adverse to the interests of the Canyon Parties.

2. All fees and expenses required to be paid on or prior the Closing Date
pursuant to the Fee Letter, to the extent invoiced at least three business days
prior to the Closing Date (except as otherwise reasonably agreed by the
Borrower), shall, upon the borrowing of funds under the Facility, have been, or
will be substantially simultaneously, paid.

3. (a) The Financing Documentation (which shall, in each case, be in accordance
with the terms of the Commitment Letter and the Term Sheet, as applicable) shall
have been executed and delivered by the Borrower and the Guarantors,
(b) customary legal opinions; provided, however, that the only legal opinions
the receipt of which shall be a condition precedent to the availability and
initial funding of the Facility shall be valid existence and good standing,
power and authority (as it relates to due authorization, execution, delivery and
performance of the Financing Documentation), due authorization, due execution
and delivery, enforceability, non-contravention of organizational documents and
applicable law, no default or creation of security interest with respect to
material debt agreements or instruments to be agreed, governmental approvals,
investment company and Regulation U and X and (c) customary officer’s closing
certificates, organizational documents, customary evidence of authorization and
good standing certificates in jurisdictions of formation/organization, in each
case with respect to the Borrower and the Guarantors (to the extent applicable)
and a solvency certificate (as of the Closing Date after giving effect to the
Acquisition and transactions contemplated hereby substantially in the form of
Annex I attached hereto (the “Solvency Certificate”), certified by a senior
authorized financial executive officer of the PTEN or other person with
equivalent duties) shall have been delivered to the Canyon Parties.

4. The representations and warranties in the Financing Documentation shall be
true and correct as of the Closing Date and there shall be no default or event
of default thereunder after giving effect to the funding of the Facility;
provided that to the extent any loans are being drawn on the Closing Date
pursuant to the Existing Credit Agreement to finance in part the consideration
payable pursuant to the Acquisition Agreement and the lenders under the

 

B - 1

--------------------------------------------------------------------------------

EXHIBIT B

 

Existing Credit Agreement have, in connection with the making of such loans,
waived any equivalent representation or warranty (other than any Specified
Representation (defined below)) or any default or event of default under the
Existing Credit Agreement, then the corresponding representation or warranty
(other than any Specified Representation) or default or event of default under
the Financing Documentation shall be deemed waived for purposes of this
paragraph 4. For purposes hereof, “Specified Representations” means the
representations and warranties of PTEN relating to corporate or other
organizational existence of PTEN and the Guarantors, power and authority of PTEN
and the Guarantors with respect to entry into and performance of the relevant
Financing Documentation, due authorization, execution and delivery by PTEN and
the Guarantors of the relevant Financing Documentation, enforceability of the
relevant Financing Documentation against PTEN and the Guarantors, no violation
of, or conflict with PTEN’s and the Guarantors’ organizational documents or
material debt documents related to the entering into and performance of the
relevant Financing Documentation, solvency as of the Closing Date (after giving
effect to the Acquisition and transactions contemplated hereby) of you and your
subsidiaries on a consolidated basis (with solvency to be defined in a manner
consistent with the Solvency Certificate), Federal Reserve margin regulations,
the Investment Company Act, OFAC and anti-terrorism and the Patriot Act.

 

B - 2

--------------------------------------------------------------------------------

EXHIBIT B

 

ANNEX I - FORM OF SOLVENCY CERTIFICATE

SOLVENCY CERTIFICATE

of

BORROWER

AND ITS SUBSIDIARIES

[DATE]

Pursuant to the Credit Agreement (the “Credit Agreement”), the undersigned
hereby certifies to the Canyon Parties, solely in such undersigned’s capacity as
[chief financial officer] [specify other person with equivalent duties] of
[            ], a [                    ] (the “Borrower”), and not individually
(and without personal liability), as follows:

As of the date hereof, on a pro forma basis after giving effect to the
consummation of the Acquisition and the borrowing of funds pursuant to the
Credit Agreement on the date hereof, and after giving effect to the application
of the proceeds of such funds:

(a) the amount of the fair value of the assets of the Borrower and its
subsidiaries, on a consolidated basis as of such date, exceeds, on a
consolidated basis, the amount of all liabilities of the Borrower and its
subsidiaries on a consolidated basis, contingent or otherwise,

(b) the present fair saleable value of the property (on a going concern basis)
of the Borrower and its subsidiaries, on a consolidated basis, is greater than
the amount that will be required to pay the probable liability, on a
consolidated basis, of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured in the ordinary course of business,

(c) the Borrower and its subsidiaries, on a consolidated basis, are able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured in the ordinary course of business and

(d) the Borrower and its subsidiaries, on a consolidated basis, are not engaged
in, and are not about to engage in, any business or transaction contemplated as
of the date hereof for which they have unreasonably small capital.

For purposes of this solvency certificate, the amount of any contingent
liability at any time shall be computed as the amount that would reasonably be
expected to become an actual and matured liability. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.

 

--------------------------------------------------------------------------------

EXHIBIT B

 

The undersigned is familiar with the business and financial position of the
Borrower and its subsidiaries (taken as a whole). In reaching the conclusions
set forth in this solvency certificate, the undersigned has made such other
investigations and inquiries as the undersigned has deemed appropriate, having
taken into account the nature of the particular business anticipated to be
conducted by the Borrower and its subsidiaries (taken as a whole) after
consummation of the transactions contemplated by the Credit Agreement.

IN WITNESS WHEREOF, the undersigned has executed this solvency certificate in
such undersigned’s capacity as [chief financial officer][specify other person
with equivalent duties] of the Borrower, on behalf of the Borrower, and not
individually, as of the date first stated above.

 

 

 

Name: Title: [Chief Financial Officer] of           [•]

 

Annex I - 2