<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
SCHEDULE 13D
Under The Securities Exchange Act of 1934
(Amendment No. )(1)
DI Industries, Inc.
- ------------------------------------------------------------------------------
(Name of issuer)
Common Stock, par value $0.10 per share
- ------------------------------------------------------------------------------
(Title of class of securities)
232909-10-1
- ------------------------------------------------------------------------------
(CUSIP Number)
c/o William R. Ziegler
Parson & Brown
666 Third Avenue, 9th Floor
New York, New York 10017; (212) 551-9860
- ------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
August 28, 1996
- ------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1 (b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X|. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note. Six copies of this statement including all exhibits, should be filed
with the Commission. See Rule 13d-1 (a) for other parties to whom copies are to
be sent.
(Continued on following pages)
- --------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of Pages
<PAGE>
<PAGE>
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CUSIP No. 232909-10-1 13D Page 2 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Somerset Drilling Associates, L.L.C.
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
2 (b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,428,978
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00 (Limited Liability Company)
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 3 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Somerset Capital Partners
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,428,978
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 4 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Thomas H. O'Neill, Jr.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 PF (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|-|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,428,978
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 5 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Steven A. Webster
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 BK (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,428,978
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 6 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
William R. Ziegler
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 BK (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,428,978
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 7 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
U.S. Rig and Equipment, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Oklahoma
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 8 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Mike Mullen Energy Equipment Resource, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 9 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
GCT Investments, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 10 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
PRD Rig Partnership 1995, Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 11 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
EER National 78 Partnership, Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 12 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Roy T. Oliver, Jr.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 13 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Mike L. Mullen
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
33,200,407
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.20%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 14 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Norex Drilling Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 WC (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,730,105
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.91%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 15 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Pronor Holdings Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,730,105
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.91%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 16 of Pages
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Norex Industries, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4 OO (See Item 3)
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
|_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,730,105
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.91%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
CUSIP No. 232909-10-1 13D Page 17 of Pages
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NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Prosperity Investments, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4 OO (See Item 3)
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,730,105
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |X|
See Item 5(a)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.91%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 18 of Pages
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NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Kristian Siem
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4 N/A
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Norway
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NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
See Item 5(a)
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |_|
See Item 5(a)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
See Item 5(a)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 19 of Pages
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NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
1
Frank Capstick
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4 N/A
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
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NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY -------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH See Item 5(b)
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
See Item 5(b)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
See Item 5(b)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
See Item 5(a)
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* |_|
See Item 5(a)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
See Item 5(a)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
Introduction.
The reporting persons named in Item 2 below (collectively, the
"Group") are hereby jointly filing this Schedule 13D as a group solely because
they may be deemed a "group" within the meaning of Rule 13d-5(b)(1) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), by virtue of the fact that the shares of common stock of the issuer
directly or indirectly beneficially owned by them are held subject to certain
agreements with respect to the voting and disposition of same under the terms
and conditions of a certain shareholders' agreement dated May 7, 1996, as
amended on June 11, 1996 (as amended, the "Shareholders' Agreement"). In
accordance with Rule 13d-1(f) promulgated pursuant to the Exchange Act, the
persons named in Item 2 below have executed a written agreement relating to the
joint filing of this Schedule 13D (the "Group Filing Agreement"), a copy of
which is attached hereto as Exhibit I.
Item 1. Security and Issuer.
This statement relates to the common stock, par value $0.10 per
share (the "Common Stock") of DI Industries, Inc., a Texas corporation (the
"Company"). The address of the principal executive offices of the Company is 450
Gears Road, Suite 625, Houston, Texas 77067.
Item 2. Identity and Background.
The reporting persons are the signatories to the Shareholders'
Agreement and the control persons of such signatories, and are comprised of
three subgroups, as follows: (i) Somerset Drilling Associates, L.L.C., a
Delaware limited liability company ("Somerset"), Somerset Capital Partners, a
New York general partnership and the managing member of Somerset ("SCP"), Thomas
H. O'Neill, Jr., an individual ("O'Neill"), Steven A. Webster, an individual
("Webster") and William R. Ziegler, an individual ("Ziegler"), being the three
general partners of SCP (collectively, the "SCP Partners"; and together with
Somerset and SCP, the "Somerset Group"); (ii) Roy T. Oliver, Jr., an individual
("Oliver"), U.S. Rig and Equipment, Inc., an Oklahoma corporation ("USRE"), Mike
Mullen Energy Equipment Resource, Inc., a Texas corporation ("MMEER"), GCT
Investments, Inc., a Texas corporation ("GCT"), Mike L. Mullen, an individual
("Mullen" ), PRD Rig Partnership 1995, Ltd., a Texas limited partnership
("PRD"), and EER National 78 Partnership, Ltd., a Texas limited partnership
("N78"; together with Oliver, USRE, MMEER, GCT, Mullen, and PRD, the
"Mullen/Oliver Group"); and (iii) Norex Drilling Ltd., a Bermuda corporation
("Norex Drilling"), Pronor Holdings Ltd., a British Virgin Islands corporation
("Pronor"), Norex Industries, Inc., a Cayman Islands company ("NXA"), Prosperity
Investments Inc., a British Virgin Islands company ("Prosperity"), Kristian
Siem, an individual ("Siem") and Frank Capstick, an individual ("Capstick")
(NXA, Prosperity, Siem and Capstick,
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together with Norex Drilling and Pronor, the "Drilling Group"). The members of
the Somerset Group, the Mullen/Oliver Group and the Drilling Group are
hereinafter sometimes referred to individually as a "Reporting Person" and
collectively as the "Reporting Persons").
Somerset Group
Somerset is a Delaware limited liability company that was formed
recently to serve as a principal shareholder of Somerset Investment Corp., a
Texas corporation ("SIC") that was formed to participate in the Somerset Merger
(as hereinafter defined), and to acquire, own and hold the shares of Common
Stock of the Company to be issued to Somerset in the Somerset Merger. The
address of the principal business and the principal office of Somerset is 69
Delaware Avenue, Buffalo, New York 14202. The sole managing member of Somerset
is Somerset Capital Partners.
SCP is a New York general partnership that was formed recently to
serve as a principal shareholder of SIC and as the managing member of Somerset,
and to acquire, own and hold the shares of Common Stock of the Company to be
issued to SCP in the Somerset Merger. The address of the principal business and
the principal office of SCP is 69 Delaware Avenue, Buffalo, New York 14202. The
only partners of SCP are Thomas H. O'Neill, Jr., Steven A. Webster and William
R. Ziegler.
O'Neill is a natural person and one of the three general partners of
SCP and has a business address of 69 Delaware Avenue, Buffalo, New York 14202.
The present principal occupation or employment of O'Neill is as the Chairman and
Chief Executive Officer of Somerset Exploration Corporation, an oil and gas
exploration and production company with its principal place of business located
at 69 Delaware Avenue, Buffalo, New York 14202. O'Neill is a United States
citizen.
Webster is a natural person and one of the three general partners of
SCP and has a business address of 1900 West Loop South, Suite 1800, Houston,
Texas 77027. The present principal occupation or employment of Webster is as the
Chairman, Chief Executive Officer and Treasurer of Falcon Drilling Company,
Inc., a marine oil and gas drilling contractor with its principal place of
business located at 1900 West Loop South, Suite 1800, Houston, Texas 77027.
Webster is a United States citizen.
Ziegler is a natural person and one of the three general partners of
SCP and has a business address of 666 Third Avenue, 9th Floor, New York, New
York 10017. The present principal occupation or employment of Ziegler is as a
partner of Parson & Brown, a law firm with its principal place of business
located at 666 Third Avenue, 9th Floor, New York, New York 10017. Ziegler is a
United States citizen.
During the last five years, no member of the Somerset Group has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, no member of the Somerset Group was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating
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activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
Mullen/Oliver Group
Oliver is a natural person who has a business address of 6601 S.W.
29th Street, Oklahoma City, Oklahoma 73179. The present principal occupation or
employment of Oliver is as the Chairman, President and Chief Executive Officer
of U.S. Rig and Equipment, Inc., a worldwide supplier of drilling equipment with
its principal place of business located at 6601 S.W. 29th Street, Oklahoma City,
Oklahoma 73179. Oliver is a United States citizen.
USRE is an Oklahoma corporation whose principal business is as a
worldwide supplier of drilling equipment. The address of the principal business
and principal office of USRE is 6601 S.W. 29th Street, Oklahoma City, Oklahoma
73179. Oliver is the sole executive office, director and control person of USRE.
MMEER is a Texas corporation whose principal business is as a
worldwide supplier of drilling equipment. The address of the principal business
and principal office of MMEER is 8411 Preston Road, Suite 730, LB2, Dallas,
Texas 75225. Mullen is the sole executive officer, director and control person
of MMEER.
GCT is a Texas corporation whose principal business is as a
worldwide supplier of drilling equipment. The address of the principal business
and principal office of GCT is 8411 Preston Road Suite 730, LB2, Dallas, Texas
75225. Mullen is the sole executive officer, director and control person of GCT.
Mullen is a natural person who has a business address of 8411
Preston Road Suite 730, LB2, Dallas, Texas 75225. The present principal
occupation or employment of Mullen is as the President and Chief Executive
Officer of MMEER and GCT. Mullen is a United States citizen.
PRD is a Texas limited partnership whose principal business is the
acquisition, holding and disposition of a single specified land drilling rig.
The address of the principal business and principal office of PRD is 8411
Preston Road Suite 730, LB2, Dallas, Texas 75225. MMEER is the sole general
partner of PRD.
N78 is a Texas limited partnership whose principal business is the
acquisition, holding and disposition of a single specified land drilling rig.
The address of the principal business and principal office of N78 is 8411
Preston Road Suite 730, LB2, Dallas, Texas 75225. MMEER is the sole general
partner of N78.
During the last five years, no member of the Mullen/Oliver Group has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, no member of the Mullen/Oliver Group
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or
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mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Drilling Group
Norex Drilling is a Bermuda corporation whose principal business is
investments in accordance with directions received from its sole shareholder,
NXA. The address of the principal business and principal office of Norex
Drilling is Cedar House, 41 Cedar Avenue, Hamilton, HM-12, Bermuda. The
executive officers and directors of Norex Drilling are listed in Annex A
attached hereto. NXA is considered the control person of Norex Drilling. Other
control persons may be deemed to include Elderberry Holdings Limited, a Bahamas
company ("Elderberry"), Harrington Trust Limited, a Bermuda trust company (the
"Trustee") and Sero Trust, a Bermuda trust (the "Trust"). Elderberry owns
approximately 35.15% of the issued and outstanding common stock of NXA. The
Trustee owns Elderberry and approximately 3.48% of the issued and outstanding
common stock of NXA on behalf of the Trust whose potential beneficiaries include
the mother and four brothers of Kristian Siem, referred to below.
NXA is a Cayman Islands company whose principal business is
investments in securities issued by oil and gas industry companies and in oil
and gas drilling rigs. NXA owns 100% of the issued and outstanding capital stock
of Norex Drilling. The address of the principal business and principal office of
NXA is P.O. Box HM 429, Hamilton, HM BX, Bermuda (Registered office: c/o Appleby
Spurling & Kempe, Cedar House, 41 Cedar Avenue, Hamilton, HM-12, Bermuda). The
executive officers and directors of NXA are listed in Annex B attached hereto;
there are no other control persons of NXA, except for Elderberry, Trustee and
the Trust.
Siem, the Chairman of the Board, Director and Vice President of
Norex Drilling, the Chairman of the Board, Director and CEO of NXA, the Chairman
of the Board and Managing Director of Pronor and the Chairman of the Board and
Managing Director of Prosperity, is a natural person who lives at 30 Hyde Park
Gate, London, England. The present principal occupation or employment of Siem is
as Chairman of the Board and Chief Executive Officer of NXA. Siem is a citizen
of Norway.
Capstick, a Director and the President of Norex Drilling and the
President of NXA, is a natural person whose registered business address is Cedar
House, 41 Cedar Avenue, Hamilton, HM-12, Bermuda. The present principal
occupation or employment of Capstick is as a Director and President of NXA.
Capstick is a citizen of Bermuda.
Pronor is a British Virgin Islands company whose principal business
is investments. The address of the principal business and principal office of
Pronor is c/o Morgan & Morgan Trust Corp. Ltd., Road Town, Pasea Estate,
Tortola, British Virgin Islands. The executive officers and directors of Pronor
are listed in Annex C attached hereto; there are no other control persons of
Pronor, except for Prosperity, NXA and Orkla ASA, a Kingdom of Norway company
("Orkla").
Prosperity is a British Virgin Islands company formed as a joint
venture between NXA and Orkla, whose principal business is investments.
Prosperity owns 100% of the
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outstanding capital stock of Pronor. The address of the principal business and
principal office of Prosperity is c/o Morgan & Morgan Trust Corp. Ltd., Road
Town, Pasea Estate, Tortola, British Virgin Islands. The executive officers and
directors of Prosperity are listed in Annex D attached hereto; there are no
other control persons of Prosperity, except for NXA and Orkla, the principal
shareholders of Prosperity.
Orkla is a Kingdom of Norway company. Orkla owns approximately
47.06% of the outstanding capital stock of Pronor. The members of the Drilling
Group believe that the principal business of Orkla is investments and that the
address of the principal business and principal office of Orkla is P.O. Box 308,
1342 Lysaker, Norway. On September 5, 1996, Orkla accepted an offer from NXA,
pursuant to which NXA will purchase Orkla's 47.06% interest in Prosperity for
$4,000,000, with an approximate closing date of September 12, 1996. See Item 6
and Exhibits X and XI attached hereto.
During the last five years, no member of the Drilling Group (and, to
the best knowledge of the members of the Drilling Group, no executive officer,
director and/or control person of any member of the Drilling Group) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, no member of the Drilling Group (and,
to the best knowledge of the members of the Drilling Group, no executive
officer, director and/or control person of any member of the Drilling Group) was
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Somerset Group
Pursuant to the terms and conditions of that certain Agreement and
Plan of Merger between the Company and SIC dated May 7, 1996, as amended by an
Amendment dated June 11, 1996, and a Second Amendment dated July 26, 1996 (as
amended, the "Somerset Merger Agreement"), on August 29, 1996 (the "Effective
Date"), SIC was merged with and into the Company and each outstanding share of
common stock of SIC (individually, a "Somerset Share" and collectively, the
"Somerset Shares") was converted into the right to receive 39,423.978 shares of
Company Common Stock, or an aggregate of 39,423,978 shares of Company Common
Stock (hereinafter, the "Somerset Merger"). The Somerset Merger exchange ratio
was based on a $25,000,000 valuation placed upon the Somerset Shares, based upon
cash contributions by the shareholders of SIC (individually, a "Somerset
Shareholder" and collectively, the "Somerset Shareholders") to SIC of at least
$25,000,000. In addition to the 39,423,978 shares of Company Common Stock issued
to the Somerset Shareholders (inclusive of Somerset and SCP, as well as certain
other persons that are not members of the Somerset Group and are not Reporting
Persons), in the Somerset Merger, in accordance with the terms of the Somerset
Merger Agreement, the Company also issued to the Somerset Shareholders certain
warrants (collectively, the "Somerset Shareholder Shadow Warrants"), which
provide the Somerset Shareholders the right to purchase up to 1,720,000 shares
of Company Common Stock, exercisable only in the
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event that the issued and outstanding Series A Preferred Stock of the Company is
converted into Company Common Stock or a certain option to acquire shares of
Company Common Stock is exercised, and in such event, only with respect to an
equivalent number of shares as are subject to such conversion or exercise. (See
Item 4 below for further details with respect to the Somerset Shareholder Shadow
Warrants.) The shares of Company Common Stock issued in the Somerset Merger to
the Somerset Shareholders represent approximately one-third of the shares of the
Company Common Stock outstanding immediately after the Somerset Merger and the
Rig Merger (as such term is hereinafter defined; the Somerset Merger and the Rig
Merger being sometimes hereinafter collectively referred to as the "Mergers").
Of the aggregate 39,423,978 shares of Company Common Stock issued to
the Somerset Shareholders in the Somerset Merger, (i) 35,423,978 shares of
Company Common Stock were issued to members of the Somerset Group, are held
subject to the terms and conditions of the Shareholders Agreement and are part
of the aggregate number of shares deemed beneficially owned by the reporting
persons named in Item 2 above and signatory hereto as members of the Group
described in the Introduction section of this Schedule 13D and (ii) 4,000,000
shares of Company Common Stock were issued to Somerset Shareholders who are not
members of the Somerset Group, and such shares are not held subject to the terms
and conditions of the Shareholders Agreement and are not part of the aggregate
number of shares deemed beneficially owned by the reporting persons named in
Item 2 above and signatory hereto as members of the Group described in the
Introduction section of this Schedule 13D. Of the aggregate 1,720,000 shares of
Company Common Stock that are the subject of the Somerset Shareholder Shadow
Warrants, (i) 1,545,487 shares of Company Common Stock are the subject of
Somerset Shareholder Shadow Warrants issued to members of the Somerset Group
(hereinafter, the "Somerset Group Shadow Warrants") and (ii) 174,513 shares of
Company Common Stock are the subject of Somerset Shareholder Shadow Warrants
issued to Somerset Shareholders who are not members of the Somerset Group. The
shares of Company Common Stock issued in the Somerset Merger to the Somerset
Shareholders that are members of the Somerset Group represent approximately
30.09% of the shares of the Company Common Stock outstanding immediately after
the Mergers.
The source of funds for the $19,000,000 cash contribution made by
Somerset to SIC was the offering and sale of limited liability company interests
in Somerset in a private placement transaction. The source of funds for the
$6,000,000 cash contribution made by SCP to SIC was as follows: (i) $2,000,000
borrowed by Webster and Ziegler from Citibank N.A., secured by common stock of a
company not affiliated with the Company that is owned indirectly by them through
a corporation that they own and control, and contributed to SCP for their
general partnership interest therein, (ii) $1,000,000 contributed by O'Neill for
his general partnership interest in SCP and (iii) $3,000,000 contributed by
other investors who are not part of the Somerset Group and not Reporting
Persons.
Mullen/Oliver Group
Pursuant to the terms and conditions of that certain Agreement and
Plan of Merger among the Company, DI Merger Sub, Inc. ("Company Sub"), Oliver,
Mullen, R.T. Oliver, Inc. ("RTO") and Land Rig Acquisition Corp. ("LRAC") dated
May 7, 1996, as amended by an
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Amendment dated June 11, 1996 and a Second Amendment dated July 26, 1996 (as
amended, the "Rig Merger Agreement"; and together with the Somerset Merger
Agreement, the "Merger Agreements"), on the Effective Date, (i) RTO and Company
Sub were merged with and into LRAC, with LRAC as the surviving corporation, and
LRAC became a wholly-owned subsidiary of the Company, (ii) each of the
outstanding shares of common stock of RTO (individually, a "RTO Share" and
collectively, the "RTO Shares") was converted into the right to receive
22,650.652 shares of Company Common Stock, or an aggregate of 11,325,326 shares
of Company Common Stock and (iii) each of the outstanding shares of common stock
of LRAC (individually, a "LRAC Share" and collectively, the "LRAC Shares"; the
RTO Shares and the LRAC Shares being sometimes hereinafter collectively referred
to as the "RTO/LRAC Shares") was converted into the right to receive 28,098.652
shares of Company Common Stock, or an aggregate of 28,098,652 shares of Company
Common Stock (hereinafter, the "Rig Merger"). The Rig Merger exchange ratio was
based on a $25,000,000 valuation placed upon the RTO/LRAC Shares, based upon a
valuation of an 18-unit fleet of all electric land drilling rigs (collectively,
the "Merger Rigs") owned by RTO and LRAC prior to the Rig Merger and owned
solely by LRAC upon consummation of the Rig Merger. In addition to the
39,423,978 shares of Company Common Stock issued to the shareholders of RTO and
LRAC (inclusive of the members of the Mullen/Oliver Group, as well as certain
other persons that are not members of the Mullen/Oliver Group and are not
Reporting Persons) in the Rig Merger (hereinafter, sometimes collectively
referred to as the "RTO/LRAC Shareholders"), in the Rig Merger, in accordance
with the terms of the Rig Merger Agreement, the Company also issued to the
RTO/LRAC Shareholders certain warrants (collectively, the "RTO/LRAC Shadow
Warrants"), which provide the RTO/LRAC Shareholders the right to purchase up to
1,720,000 shares of Company Common Stock, exercisable only in the event that the
issued and outstanding Series A Preferred Stock of the Company is converted into
Company Common Stock or a certain option to acquire shares of Company Common
Stock is exercised, and in such event, only with respect to an equivalent number
of shares as are subject to such conversion or exercise. (See Item 4 below for
further details with respect to the RTO/LRAC Shareholder Shadow Warrants.) The
shares of Company Common Stock issued in the Rig Merger to the RTO/LRAC
Shareholders represent approximately one-third of the shares of the Company
Common Stock outstanding immediately after the Mergers.
Of the aggregate 39,423,978 shares of Company Common Stock issued to
the RTO/LRAC Shareholders in the Rig Merger, (i) 33,200,407 shares of Company
Common Stock were issued to members of the Mullen/Oliver Group, are held subject
to the terms and conditions of the Shareholders Agreement and are part of the
aggregate number of shares deemed beneficially owned by the reporting persons
named in Item 2 above and signatory hereto as members of the Group described in
the Introduction section of this Schedule 13D and (ii) 6,223,571 shares of
Company Common Stock were issued to RTO/LRAC Shareholders who are not members of
the Mullen/Oliver Group, and such shares are not held subject to the terms and
conditions of the Shareholders Agreement and are not part of the aggregate
number of shares deemed beneficially owned by the reporting persons named in
Item 2 above and signatory hereto as members of the Group described in the
Introduction section of this Schedule 13D. Of the aggregate 1,720,000 shares of
Company Common Stock that are the subject of the RTO/LRAC Shadow Warrants, (i)
1,448,445 shares of Company Common Stock are the subject of RTO/LRAC Shadow
Warrants issued to members of the Mullen/Oliver Group (hereinafter, the
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"Mullen/Oliver Shadow Warrants") and (ii) 271,555 shares of Company Common Stock
are the subject of RTO/LRAC Shadow Warrants issued to RTO/LRAC Shareholders who
are not members of the Mullen/Oliver Group. The shares of Company Common Stock
issued in the Rig Merger to the RTO/LRAC Shareholders that are members of the
Mullen/Oliver Group represent approximately 28.20% of the shares of the Company
Common Stock outstanding immediately after the Mergers.
The Merger Rigs which indirectly served as the consideration for the
acquisition by the members of the Mullen/Oliver Group of the shares of Common
Stock of the Company received by them in the Rig Merger were existing oil rig
inventory of RTO and LRAC.
Drilling Group
The source and amount of funds for the original 20,690,105 shares of
Common Stock acquired by Norex Drilling on June 2, 1994 (inclusive of the
aggregate 18,730,105 shares currently owned by the Drilling Group) was working
capital of Norex Drilling and/or its sole shareholder, NXA, in the aggregate
amount of $14,483,073, or $0.70 per share, paid in cash to the seller of such
shares. On July 1, 1994, Norex Drilling and NXA sold 1,960,000 of the shares of
Common Stock acquired by them in June of 1994. In October of 1995, NXA and Orkla
formed Prosperity as a joint venture company and part of the shareholder
contribution made by NXA to capitalize Prosperity was 8,300,000 shares of Common
Stock of the Company that were subsequently transferred, together with other
assets, by Prosperity to its wholly-owned subsidiary, Pronor.
Item 4. Purpose of Transaction.
As disclosed in Item 3 above, the members of the Drilling Group
acquired the shares of Company Common Stock owned by them prior to the
contemplation of the Mergers in private transactions, the members of the
Somerset Group acquired the shares of Company Common Stock owned by them in the
Somerset Merger and the members of the Mullen/Oliver Group acquired the shares
of Company Common Stock owned by them in the Rig Merger.
The purpose of the initial acquisition of the 18,730,105 shares of
Company Common Stock acquired by Norex Drilling and NXA in June of 1994, as
previously disclosed in that certain Schedule 13D dated May 26, 1994, as amended
by Amendment 1 to Schedule 13D dated August 24, 1994, filed by Norex Drilling
and NXA with the Commission, was investment, and the purpose of the transfer of
the 8,300,000 shares of Company Common Stock by Norex Drilling and NXA to Pronor
in October of 1995, as previously disclosed in that certain Amendment No. 2 to
Schedule 13D dated October 17, 1995, filed by Norex Drilling, NXA and Pronor
with the Commission, was to satisfy the shareholder contribution requirements
agreed to by each of NXA and Orkla for the purpose of capitalizing both
Prosperity and Pronor. The members of the Drilling Group have retained the
shares of Common Stock primarily for investment purposes, but also with a view
towards influencing management.
The 35,423,978 shares of Company Common Stock issued to the members
of the Somerset Group in the Somerset Merger and the 33,200,407 shares of
Company Common Stock
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issued to members of the Mullen/Oliver Group in the Rig Merger were acquired by
such reporting persons primarily for investment purposes, but also with a view
towards influencing management. In addition, as members of the Mullen/Oliver
Group are suppliers of drilling equipment, another reason for the consummation
of the Rig Merger by the members of the Mullen/Oliver Group was to provide for
the sale of the interests in the Merger Rigs by LRAC and RTO.
As disclosed in Item 3 above, (i) in addition to the 35,423,978
shares of Company Common Stock issued to the members of the Somerset Group in
the Somerset Merger, in accordance with the terms of the Somerset Merger
Agreement, the Company also issued to the members of the Somerset Group the
Somerset Group Shadow Warrants, which provide the members of the Somerset Group
the right to purchase up to 1,545,487 shares of Company Common Stock under
certain circumstances and (ii) in addition to the 33,200,407 shares of Company
Common Stock issued to the members of the Mullen/Oliver Group in the Rig Merger,
in accordance with the terms of the Rig Merger Agreement, the Company also
issued to the members of the Mullen/Oliver Group the Mullen/Oliver Shadow
Warrants, which provide the Mullen Oliver Group the right to purchase up to
1,448,445 shares of Company Common Stock under certain circumstances. The
Somerset Group Shadow Warrants and the Mullen/Oliver Shadow Warrants
(collectively, the "Reporting Group Shadow Warrants"; and together with the
other shadow warrants issued in the Mergers to Somerset Shareholders and LRAC
Shareholders who are not Reporting Persons, the "Shadow Warrants") are
essentially anti-dilution devices that are exercisable only in the event that
the issued and outstanding Series A Preferred Stock of the Company is converted
into Company Common Stock or a certain option to acquire shares of Company
Common Stock (the "Option") is exercised, and in such event, only with respect
to an equivalent number of shares as are subject to such conversion or exercise.
The Shadow Warrants (inclusive of the Reporting Group Shadow Warrants) will be
exercisable at the conversion price or option price (as applicable) at which the
shares of Series A Preferred Stock are converted (i.e., $1.25 per share) or the
Option is exercised (i.e., $1.00 per share), if at all.
As further described in Item 6 below, contemporaneously with the
execution and delivery of the Merger Agreements, Somerset and SCP, each of the
members of the Mullen/Oliver Group other than PRD and N78 (although the shares
of Company Common Stock owned of record by them are held subject to the terms of
the Shareholders' Agreement) and Norex Drilling and Pronor entered into the
Shareholders' Agreement, which became effective as of the Effective Date of the
Mergers. Pursuant to the terms of the Shareholders' Agreement, the Shareholders'
Agreement Parties are required to vote their Company Common Stock so as to
ensure that the Board of Directors and the board of directors of any material
subsidiary (as defined) of the Company consists of five directors, of which the
Drilling Group, the Mullen/Oliver Group and the Somerset Group will each be
entitled to designate and maintain one director and the remaining two of which
(the "Non-Party Directors") shall be persons who are not officers of the Company
and do not represent any concentrated or family holdings of shares of stock of
the Company (including any of the Shareholders' Agreement Parties). The initial
nominees under the Shareholders' Agreement were William R. Ziegler on behalf of
the Somerset Group, Ivar Siem on behalf of the Drilling Group, Roy T. Oliver,
Jr. on behalf of the Muller/Oliver Group and Steven A. Webster and Peter M. Holt
as the Non-Party Directors. In addition, each of the Shareholders' Agreement
Parties has granted the other parties a four year irrevocable proxy to enforce
the foregoing provisions (individually, an "Irrevocable Proxy" and collectively,
the "Irrevocable
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Proxies"). At the Annual Meeting of the Shareholders of the Company held on
August 27, 1996, the above-listed director nominees were elected by the
shareholders as the directors of the Company to serve until the next Annual
Meeting of the Shareholders of the Company and the Mergers were approved by
the shareholders of the Company. See Item 6 for further details with
respect to the Shareholders' Agreement.
The consummation of the transactions contemplated by the Merger
Agreements was subject to the satisfaction of various conditions that were
outside of the control of the parties to such agreements, including, without
limitation, the approval of such transactions by the shareholders of the Company
(which approval was obtained on August 27, 1996) and the approval by the
American Stock Exchange of the listing of the shares of Company Common Stock to
be issued in the Mergers (which approval was obtained on August 28, 1996). The
Mergers were effected and the shares of Company Common Stock were issued on
August 29, 1996.
Although there is no present intention to do so any of the Reporting
Persons may decide to make additional purchases of Common Stock in the future
either in the open market or in private transactions, subject to their
evaluation of the Company's business, prospects and financial condition, the
market for the Common Stock, other opportunities available to the Reporting
Persons, prospects for the respective business' of the Reporting Persons,
general economic conditions, money and stock market conditions and other future
developments.
PRD and N78 intend to distribute to their respective partners all
shares of the Common Stock of the Company acquired by them in connection with
the Rig Merger. None of such partners other than MMEER is a Reporting Person. In
addition, MMEER and Oliver intend to transfer a presently undeterminable number
of shares of the Common Stock to persons who are not Reporting Persons in
satisfaction of certain contractual obligations that are unrelated to the
Company or Common Stock of the Company.
As previously disclosed in Item 2 above, pursuant to the terms of
that certain Stock Purchase Agreement dated September 5, 1996 between NXA and
Orkla (the "NXA Stock Purchase Agreement"), NXA has the right to acquire Orkla's
47.06% interest in Prosperity, the sole shareholder of Pronor, which owns
8,300,000 shares of Common Stock. The consummation of this transaction,
presently scheduled to take place on September 12, 1996, would result in NXA
acquiring full beneficial ownership of these shares of Common Stock. See Item 6
and Exhibits X and XI attached hereto.
Depending upon the results of the reviews and the other factors
mentioned above, any one of the Reporting Persons, at any time, may decide to
change its intention with respect to the acquisition and/or retention of shares
of Common Stock, including, without limitation, a determination to increase,
decrease or entirely dispose of its holdings of Common Stock, although, except
for the contemplated distribution of shares of Common Stock by PRD and N78 to
its partners and by MMEER and Oliver in satisfaction of certain contractual
obligations and the proposed acquisition by NXA of the direct interest in
Prosperity (and therefore the indirect interest in the shares of Common Stock
owned by Pronor) described above, none of the Reporting Persons has any current
intention to do so.
Any one of the Reporting Persons may also approach members of the
Company's management either directly or indirectly through the director
representatives of the three shareholder groups under the Shareholders'
Agreement in connection with the foregoing and/or any other matter enumerated in
clauses (a) through (j) of Item 4 of Schedule 13D and/or each of Ivar Siem,
Oliver and Ziegler, in their capacities as directors of the Company, may seek to
influence the management of the Company.
The descriptions of the Merger Agreements, the Reporting Group
Shadow Warrants, the Shareholders' Agreement (inclusive of the other agreements
which are exhibits
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thereto, including, without limitation, the Form of Irrevocable Proxy) and the
NXA Stock Purchase Agreement contained in this Item 4 are summaries and are
subject to and qualified in their entirety by reference to the detailed
provisions of such documents, copies of which are attached hereto as Exhibits
and incorporated herein by reference (see Item 7 below for specific Exhibit
references).
Except as discussed above in this Item 4 (inclusive of the
provisions of the documents incorporated herein by reference), none of the
Reporting Persons nor, to the best knowledge of the Reporting Persons, any
director or executive officer of any Reporting Person that is not a Reporting
Person hereunder, has any current plans or proposals which relate to or would
result in the occurrence of any actions or events specified in clauses (a)
through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate number and percentage of shares of Common Stock
beneficially owned by each person named in Item 2 above are as follows:
Somerset Group
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by Somerset on the date hereof are 29,962,223
shares of Common Stock, or approximately 25.45% of the 117,720,734 shares of
Common Stock issued and outstanding after giving effect to the consummation of
the Mergers.
The aggregate number and percentage of the Common Stock which are
owned beneficially by SCP on the date hereof are 35,423,978 shares of Common
Stock, or approximately 30.09% of the 117,720,734 shares of Common Stock issued
and outstanding after giving effect to the consummation of the Mergers, which
number and percentage include the 29,962,223 shares owned of record by Somerset,
since SCP is the managing member of Somerset, as well as the 5,461,755 shares
owned of record by SCP.
The aggregate number and percentage of the Common Stock which are
owned beneficially by each of O'Neill and Webster on the date hereof are
35,423,978 shares of Common Stock, or approximately 30.09% of the 117,720,734
shares of Common Stock issued and outstanding after giving effect to the
consummation of the Mergers, which number and percentage include the 29,962,223
shares owned of record by Somerset and the 5,461,755 shares owned of record by
SCP, since each of O'Neill and Webster is a partner of SCP and SCP is the
managing member of Somerset.
The aggregate number and percentage of the Common Stock which are
owned beneficially by Ziegler on the date hereof are 35,428,978 shares of Common
Stock, or approximately 30.1% of the 117,720,734 shares of Common Stock issued
and outstanding after giving effect to the consummation of the Mergers, which
number and percentage include the 29,962,223 shares owned of record by Somerset
and the 5,461,755 shares owned of record by
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SCP, since Ziegler is a partner of SCP and SCP is the managing member of
Somerset, as well as 5,000 shares owned of record by Ziegler.
Notwithstanding the foregoing, if each of Somerset, SCP, O'Neill,
Webster and Ziegler are deemed to constitute a "group" within the meaning of
Section 13(d)(3) and Rule 13d-5(b) by virtue of their action in concert in
connection with the acquisition of an aggregate of 35,423,978 shares of Common
Stock pursuant to the Somerset Merger Agreement, then each of the foregoing
members of the Somerset Group may be deemed to beneficially own an aggregate of
35,428,978 shares of Company Common Stock, or approximately 30.1% of the
117,720,734 shares of Common Stock issued and outstanding after giving effect to
the consummation of the Mergers (inclusive of the 35,423,978 shares of Common
Stock acquired by such persons pursuant to the Somerset Merger Agreement and the
5,000 shares of Common Stock acquired individually by Ziegler several years
ago).
The foregoing aggregate number and percentage of the Common Stock
beneficially owned by the various members of the Somerset Group as of the date
hereof does not include any shares of Common Stock that any member of the
Somerset Group may have the right to acquire upon any exercise of the Somerset
Group Shadow Warrant, as any such right to acquire shares of Common Stock
pursuant to the Somerset Shadow Warrant is contingent upon the occurrence of
events not within the control of any member of the Somerset Group and which may
or may not occur within 60 days of the date hereof.
Mullen/Oliver Group
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by USRE on the date hereof are 3,097,876 shares
of Common Stock, or approximately 2.63% of the 117,720,734 shares of Common
Stock issued and outstanding after giving effect to the consummation of the
Mergers.
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by Oliver on the date hereof are 15,214,208
shares of Common Stock, or approximately 12.92% of the 117,720,734 shares of
Common Stock issued and outstanding after giving effect to the consummation of
the Mergers, which number and percentage include (i) the 3,097,876 shares owned
of record by USRE, since USRE is a corporation wholly-owned and controlled by
Oliver, (ii) the 11,325,326 shares owned of record by Oliver and (iii) 791,006
shares owned beneficially by Oliver as a result of an oral understanding with
MMEER.
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by PRD on the date hereof are 2,329,097 shares
of Common Stock, or approximately 1.98% of the 117,720,734 shares of Common
Stock issued and outstanding after giving effect to the consummation of the
Mergers.
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by N78 on the date hereof are 1,497,096 shares
of Common Stock, or approximately 1.27% of the 117,720,734 shares of Common
Stock issued and outstanding after giving effect to the consummation of the
Mergers.
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The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by GCT on the date hereof are 3,616,016 shares
of Common Stock, or approximately 3.07% of the 117,720,734 shares of Common
Stock issued and outstanding after giving effect to the consummation of the
Mergers.
The aggregate number and percentage of the Common Stock which are
owned beneficially by MMEER on the date hereof are 15,161,189 shares of Common
Stock, or approximately 12.88% of the 117,720,734 shares of Common Stock issued
and outstanding after giving effect to the consummation of the Mergers, which
number and percentage include the 3,826,193 shares collectively owned of record
by PRD and N78, since MMEER is the sole general partner of each of PRD and N78,
as well as the 11,334,996 shares owned of record by MMEER.
The aggregate number and percentage of the Common Stock which are
owned beneficially by Mullen on the date hereof are 18,777,205 shares of Common
Stock, or approximately 15.95% of the 117,720,734 shares of Common Stock issued
and outstanding after giving effect to the consummation of the Mergers, which
number and percentage include the 15,161,189 shares owned beneficially by MMEER
(of which 11,334,996 shares are owned of record by MMEER and an aggregate of
3,826,193 shares are beneficially owned through PRD and N78) and the 3,616,016
shares owned beneficially and of record by GCT, since each of MMEER and GCT is a
corporation controlled by Mullen.
Notwithstanding the foregoing, if each of USRE, Oliver, PRD, N78,
GCT, MMEER and Mullen are deemed to constitute a "group" within the meaning of
Section 13(d)(3) and Rule 13d-5(b) by virtue of their action in concert in
connection with the acquisition of an aggregate of 33,200,407 shares of Common
Stock pursuant to the Rig Merger Agreement, then each of the foregoing members
of the Mullen/Oliver Group may be deemed to beneficially own all 33,200,407
shares of Common Stock, or approximately 28.20% of the 117,720,734 shares of
Common Stock issued and outstanding after giving effect to the consummation of
the Mergers, acquired by such persons pursuant to the Rig Merger Agreement.
The foregoing aggregate number and percentage of the Common Stock
beneficially owned by the various members of the Mullen/Oliver Group as of the
date hereof does not include any shares of Common Stock that any member of the
Mullen/Oliver Group may have the right to acquire upon any exercise of the
Mullen/Oliver Shadow Warrants, as any such right to acquire shares of Common
Stock pursuant to the Mullen/Oliver Shadow Warrants is contingent upon the
occurrence of events not within the control of any member of the Mullen/Oliver
Group and which may or may not occur within 60 days of the date hereof.
Drilling Group
The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by Norex Drilling on the date hereof are
10,430,105 shares of Common Stock, or approximately 8.86% of the 117,720,734
shares of Common Stock issued and outstanding after giving effect to the
consummation of the Mergers.
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The aggregate number and percentage of the Common Stock which are
owned beneficially and of record by Pronor on the date hereof are 8,300,000
shares of Common Stock, or approximately 7.05% of the 117,720,734 shares of
Common Stock issued and outstanding after giving effect to the consummation of
the Mergers.
NXA, as the control person of Norex Drilling, may be deemed to
beneficially own the 10,430,105 shares of Common Stock owned of record by Norex
Drilling, or approximately 8.86% of the 117,720,734 shares of Common Stock
issued and outstanding after giving effect to the consummation of the Mergers.
In addition, NXA, as a principal shareholder of Prosperity, which is the sole
shareholder of Pronor, may be deemed to beneficially own the 8,300,000 shares of
Common Stock owned of record by Pronor, or approximately 7.05% of the
117,720,734 shares of Common Stock issued and outstanding after giving effect to
the consummation of the Mergers. Notwithstanding the foregoing, until the
consummation of the transactions contemplated by the NXA Stock Purchase
Agreement, Orkla, as a principal shareholder of Prosperity, which is the sole
shareholder of Pronor, may be deemed to share beneficial ownership of the
8,300,000 shares of Common Stock owned of record by Pronor, or approximately
7.05% of the 117,720,734 shares of Common Stock issued and outstanding after
giving effect to the consummation of the Mergers.
Notwithstanding the foregoing, if each of Norex Drilling, Pronor,
NXA (after giving effect to the pending purchase of Orkla's interest in
Prosperity by NXA), Prosperity, Siem and Capstick are deemed to constitute a
"group" within the meaning of Section 13(d)(3) and Rule 13d-5(b) by virtue of
their action in concert in connection with the initial acquisition of an
aggregate of 18,730,105 shares of Common Stock by Norex Drilling and Pronor,
then each of the foregoing members of the Drilling Group may be deemed to
beneficially own all 18,730,105 shares of Common Stock, or approximately 15.91%
of the 117,720,734 shares of Common Stock issued and outstanding after giving
effect to the consummation of the Mergers, so acquired and held by the
individual members of the Drilling Group.
Each of Siem and Capstick and each of the other individuals listed
on Annexes A - D attached hereto expressly disclaims beneficial ownership of any
shares of Common Stock covered by this Statement.
Reporting Group
Notwithstanding the foregoing, if each of the members of the
Somerset Group, the Mullen/Oliver Group and the Drilling Group are deemed to
constitute a "group" within the meaning of Section 13(d)(3) and Rule 13d-5(b) by
virtue of the fact that the shares of Common Stock of the Company directly or
indirectly beneficially owned by them are held subject to the certain agreements
with respect to the voting and disposition of same under the terms and
conditions of the Shareholders Agreement, then each of the foregoing members of
each of the Somerset Group, the Mullen/Oliver Group and the Drilling Group may
be deemed to beneficially own all of the 87,359,490 shares of Common Stock, or
approximately 74.21% of the 117,720,734 shares of Common Stock issued and
outstanding after giving effect to the consummation of the Mergers, held subject
to the terms and conditions of the Shareholders Agreement. Each of the members
of the Somerset Group expressly disclaims beneficial
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ownership of the shares of Common Stock acquired and owned of record by any
members of each of the Mullen/Oliver Group and the Drilling Group; each of the
members of the Mullen/Oliver Group expressly disclaims beneficial ownership of
the shares of Common Stock acquired and owned of record by any members of each
of the Somerset Group and the Drilling Group; and each of the members of the
Drilling Group expressly disclaims beneficial ownership of the shares of Common
Stock acquired and owned of record by any members of each of the Somerset Group
and the Mullen/Oliver Group.
(b) With respect to each person named in response to paragraph (a)
of this Item 5 of Schedule 13D, set forth below are the number of shares of
Common Stock as to which there is sole power to vote or to direct the vote,
shared power to vote or direct the vote, and sole or shared power to dispose or
direct the disposition:
Somerset Group
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by Somerset thereunder, (i)
Somerset may be deemed to have the sole power to vote (and direct the vote of)
and to dispose of (and direct the disposition of) the 29,962,223 shares of
Common Stock owned of record by it and (ii) notwithstanding the foregoing, SCP,
as the sole managing member of Somerset, and each of O'Neill, Webster and
Ziegler, as the general partners of SCP, may be deemed to share the power to
vote (and direct the vote of) and to dispose of (and direct the disposition of)
the 29,962,223 shares of Common Stock owned of record by Somerset.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by SCP thereunder, (i) SCP may
be deemed to (A) have the sole power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 5,461,755 shares of Common Stock
owned of record by it and (B) as the sole managing member of Somerset, share the
power to vote (and direct the vote of) and to dispose of (and direct the
disposition of) the 29,962,223 shares of Common Stock owned of record by
Somerset and (ii) notwithstanding the foregoing, each of O'Neill, Webster and
Ziegler, as the general partners of SCP, may be deemed to share the power to
vote (and direct the vote of) and to dispose of (and direct the disposition of)
(A) the 5,461,755 shares of Common Stock owned of record by SCP and (B) the
29,962,223 shares of Common Stock owned of record by Somerset and beneficially
by SCP.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxies executed and delivered by each of Somerset and SCP
thereunder, (i) each of O'Neill, Webster and Ziegler, as the general partners of
SCP, may be deemed to share the power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 35,423,978 shares of Common Stock
beneficially owned by SCP 5,461,755 shares of which are owned of record by SCP
and 29,962,223 shares of which are owned of record by Somerset) and (ii) Ziegler
may be deemed to have the sole power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 5,000 shares of Common Stock
owned of record by him.
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In addition, notwithstanding the foregoing, (i) if each of Somerset,
SCP, O'Neill, Webster and Ziegler are deemed to constitute a "group" within the
meaning of Section 13(d)(3) and Rule 13d-5(b) by virtue of their action in
concert in connection with the acquisition of an aggregate of 35,423,978 shares
of Common Stock pursuant to the Somerset Merger Agreement, then (A) Somerset may
be deemed to share with SCP and each of O'Neill, Webster and Ziegler, the power
to vote (and direct the vote of) and to dispose of (and direct the disposition
of) the 5,461,755 shares of Common Stock owned of record by SCP and (B) each of
Somerset, SCP, O'Neill and Webster may be deemed to share with Ziegler the power
to vote (and direct the vote of) and to dispose of (and direct the disposition
of) the 5,000 shares of Common Stock owned of record by Ziegler and (ii) if each
of the members of the Somerset Group, the Mullen/Oliver Group and the Drilling
Group are deemed to constitute a "group" within the meaning of Section 13(d)(3)
and Rule 13d-5(b) by virtue of the fact that the shares of Common Stock of the
Company directly or indirectly beneficially owned by them are held subject to
the certain agreements with respect to the voting and disposition of same under
the terms and conditions of the Shareholders Agreement and the Irrevocable
Proxies executed and delivered thereunder, then (A) each of the foregoing
members of the Somerset Group may be deemed to share with the members of each of
the Mullen/Oliver Group and the Drilling Group, the power to vote (and direct
the vote of) and to dispose of (and direct the disposition of) the 33,200,407
shares of Common Stock owned of record by the various members of the
Mullen/Oliver Group and the 18,730,105 shares of Common Stock owned of record by
the various members of the Drilling Group and (B) each of the members of the
Mullen/Oliver Group and the Drilling Group may be deemed to share with the
members of the Somerset Group, the power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 35,428,978 shares of Common Stock
owned of record by the various members of the Somerset Group. Each of the
members of the Somerset Group expressly disclaims beneficial ownership of the
shares of Common Stock acquired and owned of record by any members of each of
the Mullen/Oliver Group and the Drilling Group.
Mullen/Oliver Group
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by USRE thereunder, (i) USRE
may be deemed to have the sole power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 3,097,876 shares of Common Stock
owned of record by it and (ii) notwithstanding the foregoing, Oliver, as the
sole owner and control person of USRE, may be deemed to share the power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
3,097,876 shares of Common Stock owned of record by USRE.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxies executed and delivered by each of USRE and Oliver
thereunder, Oliver may be deemed to (i) have the sole power to vote (and direct
the vote of) and to dispose of (and direct the disposition of) the 11,325,326
shares owned of record by Oliver, (ii) as the sole owner and control person of
USRE, share the power to vote (and direct the vote of) and to dispose of (and
direct the disposition of) the 3,097,876 shares of Common Stock owned of record
by USRE, and (iii) as a result of an oral understanding with MMEER, share the
power to vote (and to direct the vote of) and to dispose of (and direct the
disposition of) 791,006 shares of Common Stock owned of record by MMEER and/or
entities controlled by MMEER.
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Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by MMEER, the sole general
partner of PRD, thereunder, (i) PRD may be deemed to have the sole power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
2,329,097 shares of Common Stock owned of record by it and (ii) notwithstanding
the foregoing, MMEER, as the sole general partner of PRD, and Mullen, as the
control person of MMEER, may be deemed to share the power to vote (and direct
the vote of) and to dispose of (and direct the disposition of) the 2,329,097
shares of Common Stock owned of record by PRD.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by MMEER, the sole general
partner of N78, thereunder, (i) N78 may be deemed to have the sole power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
1,497,096 shares of Common Stock owned of record by it and (ii) notwithstanding
the foregoing, MMEER, as the sole general partner of N78, and Mullen, as the
sole control person of MMEER, may be deemed to share the power to vote (and
direct the vote of) and to dispose of (and direct the disposition of) the
1,497,096 shares of Common Stock owned of record by N78.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by GCT thereunder, (i) GCT may
be deemed to have the sole power to vote (and direct the vote of) and to dispose
of (and direct the disposition of) the 3,616,016 shares of Common Stock owned of
record by it and (ii) notwithstanding the foregoing, Mullen, as the sole control
person of GCT, may be deemed to share the power to vote (and direct the vote of)
and to dispose of (and direct the disposition of) the 3,616,016 shares of Common
Stock owned of record by GCT.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by MMEER thereunder, (i) MMEER
may be deemed to (A) have the sole power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 11,334,996 shares of Common Stock
owned of record by it and (B) as the sole general partner of each of PRD and
N78, share the power to vote (and direct the vote of) and to dispose of (and
direct the disposition of) the 3,826,193 shares owned of record by PRD and N78
and (ii) notwithstanding the foregoing, (A) Mullen, as the sole control person
of MMEER, may be deemed to share the power to vote (and direct the vote of) and
to dispose of (and direct the disposition of) (x) the 11,334,996 shares of
Common Stock owned of record by MMEER and (y) the 3,826,193 shares of Common
Stock owned of record by PRD and N78 and beneficially by MMEER and (B) Oliver,
as a result of an oral understanding with MMEER, may be deemed to share the
power to vote (and to direct the vote of) and to dispose of (and direct the
disposition of) 791,006 shares of Common Stock owned of record by MMEER and/or
entities controlled by MMEER.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxies executed and delivered by MMEER and GCT thereunder,
Mullen, as the sole control person of each of MMEER and GCT, may be deemed to
share the power to vote (and direct the vote of) and to dispose of (and direct
the disposition of) the (i) 15,161,189 shares owned beneficially by MMEER
11,334,996 shares of which are owned of record by MMEER and
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<PAGE>
3,826,193 shares of which collectively are owned of record by PRD and N78) and
(ii) 3,616,016 shares owned beneficially and of record by GCT.
In addition, notwithstanding the foregoing, (i) if each of USRE,
Oliver, PRD, N78, GCT, MMEER and Mullen are deemed to constitute a "group"
within the meaning of Section 13(d)(3) and Rule 13d-5(b) by virtue of their
action in concert in connection with the acquisition of an aggregate of
33,200,407 shares of Common Stock pursuant to the Rig Merger Agreement, then
each member of the Mullen/Oliver Group may be deemed to share with all of the
other members of the Mullen/Oliver Group the power to vote (and direct the vote
of) and to dispose of (and direct the disposition of) all 33,200,407 shares of
Common Stock owned of record by any member of the Mullen/Oliver Group and (ii)
if each of the members of the Somerset Group, the Mullen/Oliver Group and the
Drilling Group are deemed to constitute a "group" within the meaning of Section
13(d)(3) and Rule 13d-5(b) by virtue of the fact that the shares of Common Stock
of the Company directly or indirectly beneficially owned by them are held
subject to the certain agreements with respect to the voting and disposition of
same under the terms and conditions of the Shareholders Agreement and the
Irrevocable Proxies executed and delivered thereunder, then (A) each of the
foregoing members of the Mullen/Oliver Group may be deemed to share with the
members of each of the Somerset Group and the Drilling Group, the power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
35,428,978 shares of Common Stock owned of record by the various members of the
Somerset Group and the 18,730,105 shares of Common Stock owned of record by the
various members of the Drilling Group and (B) each of the members of the
Somerset Group and the Drilling Group may be deemed to share with the members of
the Mullen/Oliver Group, the power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 33,200,407 shares of Common Stock
owned of record by the various members of the Mullen/Oliver Group. Each of the
members of the Mullen/Oliver Group expressly disclaims beneficial ownership of
the shares of Common Stock acquired and owned of record by any members of each
of the Somerset Group and the Drilling Group.
Drilling Group
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by Norex Drilling thereunder,
(i) Norex Drilling may be deemed to have the sole power to vote (and direct the
vote of) and to dispose of (and direct the disposition of) the 10,430,105 shares
of Common Stock owned of record by it and (ii) notwithstanding the foregoing,
NXA, as the sole control person of Norex Drilling, may be deemed to share the
power to vote (and direct the vote of) and to dispose of (and direct the
disposition of) the 10,430,105 shares of Common Stock owned of record by Norex
Drilling.
Subject to the terms and conditions of the Shareholders Agreement
and the Irrevocable Proxy executed and delivered by Pronor thereunder, (i)
Pronor may be deemed to have the sole power to vote (and direct the vote of) and
to dispose of (and direct the disposition of) the 8,300,000 shares of Common
Stock owned of record by it and (ii) notwithstanding the foregoing, Prosperity
and NXA (after giving effect to the pending purchase of Orkla's interest in
Prosperity by NXA), as control persons of Pronor, may be deemed to share the
power to vote
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<PAGE>
<PAGE>
(and direct the vote of) and to dispose of (and direct the disposition of) the
8,300,000 shares of Common Stock owned of record by Pronor.
In addition, notwithstanding the foregoing, (i) if each of Norex
Drilling, Pronor, NXA (after giving effect to the pending purchase of Orkla's
interest in Prosperity by NXA), Prosperity, Siem and Capstick are deemed to
constitute a "group" within the meaning of Section 13(d)(3) and Rule 13d-5(b) by
virtue of their action in concert in connection with the initial acquisition of
an aggregate of 18,730,105 shares of Common Stock by Norex Drilling and Pronor,
then each member of the Drilling Group may be deemed to share with all of the
other members of the Drilling Group the power to vote (and direct the vote of)
and to dispose of (and direct the disposition of) all 18,730,105 shares of
Common Stock owned of record by any member of the Drilling Group and (ii) if
each of the members of the Somerset Group, the Mullen/Oliver Group and the
Drilling Group are deemed to constitute a "group" within the meaning of Section
13(d)(3) and Rule 13d-5(b) by virtue of the fact that the shares of Common Stock
of the Company directly or indirectly beneficially owned by them are held
subject to the certain agreements with respect to the voting and disposition of
same under the terms and conditions of the Shareholders Agreement and the
Irrevocable Proxies executed and delivered thereunder, then (A) each of the
foregoing members of the Drilling Group may be deemed to share with the members
of each of the Somerset Group and the Mullen/Oliver Group, the power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
35,428,978 shares of Common Stock owned of record by the various members of the
Somerset Group and the 33,200,407 shares of Common Stock owned of record by the
various members of the Mullen/Oliver Group and (B) each of the members of the
Somerset Group and the Mullen/Oliver Group may be deemed to share with the
members of the Drilling Group, the power to vote (and direct the vote of) and to
dispose of (and direct the disposition of) the 18,730,105 shares of Common Stock
owned of record by the various members of the Drilling Group. Each of the
members of the Drilling Group expressly disclaims beneficial ownership of the
shares of Common Stock acquired and owned of record by any members of each of
the Somerset Group and the Mullen/Oliver Group. In addition, as previously
stated, each of Siem and Capstick and each of the other individuals listed on
Annexes A - D attached hereto expressly disclaims beneficial ownership of any
shares of Common Stock covered by this Statement.
(c) Except for the acquisitions of an aggregate of 68,629,385 shares
of Common Stock by members of the Somerset Group and the Mullen/Oliver Group
pursuant to the terms of the Merger Agreements disclosed in response to Items 3
and 4 above, during the past 60 days, none of the Reporting Persons nor, to the
best knowledge of the Reporting Persons, any director or executive officer of
any Reporting Person that is not a Reporting Person hereunder, has effected any
transaction in the Common Stock. See Items 3 and 4 above and subsection (a) and
(b) of this Item 5 for further details in connection with the acquisition of
shares of Common Stock pursuant to the Merger Agreements.
(d) Not applicable.
(e) Not applicable.
-19-
<PAGE>
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
As previously disclosed in Item 4 above, Somerset and SCP, each of
the members of the Mullen/Oliver Group other than PRD and N78 (although the
shares of Company Common Stock owned of record by them are held subject to the
terms of the Shareholders' Agreement) and Norex Drilling and Pronor (Norex
Drilling and Pronor being sometimes hereinafter collectively referred to as the
"Company Parties") entered into the Shareholders' Agreement, which contains
various agreements among such parties with respect to the Company Common Stock
owned or to be acquired by them, as further described below. The Shareholders'
Agreement became effective as of the Effective Date of the Mergers and
terminates four years thereafter, unless sooner terminated under the terms of
the Shareholders' Agreement. Upon the consummation of the Mergers, the parties
to the Shareholders' Agreement (hereinafter sometimes collectively referred to
as the "Shareholders' Agreement Parties") held an aggregate of 87,359,490
shares, or 74.21%, of the 117,720,734 shares of Company Common Stock issued and
outstanding as of the Effective Date.
The Shareholders' Agreement requires that the Shareholders'
Agreement Parties vote their Company Common Stock so as to ensure that the Board
of Directors and the board of directors of any material subsidiary (as defined)
of the Company consists of five directors, of which the Company Parties, the
Mullen/Oliver Group and the Somerset Group will each be entitled to designate
and maintain one director and the remaining two of which (the "Non-Party
Directors") shall be persons who are not officers of the Company and do not
represent any concentrated or family holdings of shares of stock of the Company
(including any of the Shareholders' Agreement Parties). The initial nominees
under the Shareholders' Agreement were William R. Ziegler on behalf of the
Somerset Group, Ivar Siem on behalf of the Company Parties, Roy T. Oliver, Jr.
on behalf of the Mullen/Oliver Group and Steven A. Webster and Peter M. Holt as
the Non-Party Directors. Each of the Shareholders' Agreement Parties has granted
the other parties an Irrevocable Proxy to enforce the foregoing provisions. The
Shareholders' Agreement also contains (i) certain standstill provisions that
effectively deprive the Shareholders' Agreement Parties of voting rights with
respect to any additional shares of the Company that they may thereafter acquire
so as to limit their relative voting power to their voting power as of the
Effective Date, and (ii) certain provisions that provide rights of first refusal
and co-sale among the Shareholders' Agreement Parties as to certain sales or
dispositions of shares of the Company to third parties.
As previously disclosed in Items 3 and 4 above, (i) SIC, a
corporation owned by the Somerset Shareholders (including Somerset and SCP), was
a party to the Somerset Merger Agreement, which agreement provided, among other
things, for (A) the merger of SIC with and into the Company, (B) the issuance by
the Company to the Somerset Shareholders (including Somerset and SCP) of an
aggregate of 39,423,978 shares of Company Common Stock for all of the Somerset
Shares, and (C) the issuance to the Somerset Shareholders of the Somerset
Shareholder Shadow Warrants (inclusive of the issuance to Somerset and SCP of
the Somerset Group Shadow Warrants) and (ii) certain members of the
Mullen/Oliver Group were parties to the Rig Merger Agreement, which agreement
provided, among other things, for (A) the merger of each of RTO and Company Sub
with and into LRAC, with LRAC (which became a wholly-owned
-20-
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<PAGE>
subsidiary of the Company as part of such merger) as the surviving corporation,
(B) the issuance by the Company to Oliver, as the sole shareholder of RTO, of
11,325,326 shares of Company Common Stock for all of the RTO Shares, (C) the
issuance by the Company to the shareholders of LRAC (including Mullen and
certain entities owned and controlled by Mullen) of an aggregate of 28,098,652
shares of Company Common Stock for all of the LRAC Shares, and (D) the issuance
to the RTO/LRAC Shareholders of the RTO/LRAC Shadow Warrants (inclusive of the
issuance to members of the Mullen/Oliver Group of the Mullen/Oliver Shadow
Warrants). See Items 3 and 4 above for more detailed information with respect to
the Mergers and the Shadow Warrants.
In addition, contemporaneously with the execution and delivery of
the Merger Agreements, the Company and certain members of the Somerset Group and
the Mullen/Oliver Group, as well as certain members of the Drilling Group
(collectively the "Registration Rights Agreement Parties"), entered into a
Registration Rights Agreement dated May 7, 1996, as amended June 11, 1996, and
further amended as of July 26, 1996 (as amended, the "Registration Rights
Agreement"), that requires the Company, upon the occurrence of certain events,
to register for resale under the Securities Act of 1933, as amended (the
"Securities Act"), the shares of Company Common Stock owned by the Registration
Rights Agreement Parties and certain permitted assignees thereof, including a
requirement of the Company to file promptly and maintain the effectiveness of a
Registration Statement on Form S-3 covering the resale of the shares of Company
Common Stock issued in the Mergers (inclusive of any shares of Company Common
Stock (i) issued in the Mergers to Somerset Shareholders and/or LRAC
Shareholders who are not Registration Rights Agreement Parties and/or (ii)
issuable upon exercise of the Somerset Shareholder Shadow Warrants and the
RTO/LRAC Shadow Warrants).
Contemporaneously with the execution and delivery of the Somerset
Merger Agreement, the Company entered into an investment monitoring agreement
with SCP dated May 7, 1996, but effective as of the Effective Date (the
"Investment Monitoring Agreement") providing for a one time payment by the
Company of $75,000 (the "Investment Monitoring Fee") to SCP to monitor on behalf
of Somerset and SCP the investment in the Company by Somerset and SCP resulting
from the Somerset Merger. The Investment Monitoring Fee was paid by the Company
on the Effective Date of the Mergers.
Pursuant to Article V of that certain Limited Liability Company
Agreement of Somerset dated July 1, 1996 (the "Somerset LLC Agreement"), once
the members of Somerset have received distributions of cash and/or securities
equal in value to the sum of a specified priority return on their investment in
Somerset and the amount of such investment, SCP, as the managing member of
Somerset, is entitled to receive 20% of all subsequent distributions made by
Somerset of (i) available cash flow from Somerset (which may include proceeds
from the sale of Common Stock) and (ii) securities of the Company, in addition
to its pro rata share of any such distributions made to the members of Somerset
in proportion to their respective capital contributions to Somerset.
As previously disclosed in Item 5 above, pursuant to an oral
understanding between MMEER and Oliver, Oliver may be deemed to share with MMEER
voting and
-21-
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<PAGE>
dispositive with respect to 791,006 shares of Common Stock owned of record by
MMEER and/or entities controlled by MMEER.
As previously disclosed in Item 2 above, Prosperity, which is the
sole shareholder of Pronor, which owns 8,300,000 shares of Common Stock, is a
joint venture between NXA and Orkla. Pursuant to the terms of that certain
Shareholders' Agreement dated October 11, 1995 between NXA and Orkla (the "NXA
Shareholders Agreement"), the managing director of Prosperity, which is to be
chosen by NXA, shall be entitled to vote all shares of stock owned by Prosperity
and Pronor, including the 8,300,000 shares of Common Stock owned by Pronor,
subject only to a requirement that such managing director consult with and
consider the interests of each of Orkla and NXA in connection therewith. The NXA
Shareholders Agreement also provides for a purchase option, pursuant to which
NXA has the right to acquire 50% of Orkla's interest in Prosperity. Pursuant to
an exercise notice dated September 5, 1996 from NXA to Orkla (the "NXA Option
Exercise Notice"), NXA exercised its option to acquire 50% of Orkla's interest
in Prosperity. In addition, pursuant to the NXA Stock Purchase Agreement
described in Item 4 above, NXA has the right to acquire the remaining 50% of
Orkla's interest in Prosperity. Therefore, upon the consummation of the
transactions contemplated by the NXA Stock Purchase Agreement, scheduled to take
place on September 12, 1996, NXA will directly own all of Orkla's interest in
Prosperity and Orkla will no longer share beneficial ownership of the 8,300,000
shares of Common Stock owned of record by Pronor. As a practical matter, the
consummation of the transactions contemplated by the NXA Stock Purchase
Agreement will also result in the termination of the NXA Shareholders Agreement.
The descriptions of the Merger Agreements, the Reporting Group
Shadow Warrants, the Shareholders' Agreement (inclusive of the other agreements
which are exhibits thereto, including, without limitation, the Form of
Irrevocable Proxy), the Registration Rights Agreement, the Investment Monitoring
Agreement, the Somerset LLC Agreement , the NXA Shareholders Agreement, the NXA
Option Exercise Notice and the NXA Stock Purchase Agreement contained in this
Item 6 are summaries and are subject to and qualified in their entirety by
reference to the detailed provisions of such documents, copies of which are
attached hereto as Exhibits and incorporated herein by reference (see Item 7
below for specific Exhibit references).
Except as discussed in this Item 6 and in Item 4 above (in each
case, inclusive of the provisions of the documents incorporated herein by
reference), none of the Reporting Persons nor, to the best knowledge of the
Reporting Persons, any director or executive officer of any Reporting Person
that is not a Reporting Person hereunder, is a party to any contract,
arrangement, understanding or relationship (legal or otherwise) among the
Reporting Persons named in Item 2 above or between any such Reporting Persons
and any other person with respect to any securities of the Company, including,
without limitation, those relating to the transfer or voting of any securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, the giving or withholding of
proxies, the pledge of securities or any other arrangement involving a
contingency the occurrence of which would give another person voting power or
investment power over such securities.
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<PAGE>
Item 7. Material to be Filed as Exhibits.
I. Group Filing Agreement referred to in the Introduction.
II. Rig Merger Agreement referred to in Items 3, 4 and 6.
III. Somerset Merger Agreement referred to in Items 3, 4 and 6.
IV. Shareholders Agreement (inclusive of the Form of Irrevocable Proxy)
referred to in the Introduction and Items 3, 4 and 6.
V. Form of Shadow Warrant referred to in Items 3, 4 and 6.
VI. Registration Rights Agreement referred to in Item 6.
VII. Investment Monitoring Agreement referred to in Item 6.
VIII. Somerset LLC Agreement referred to in Item 6.
IX. NXA Shareholders' Agreement referred to in Item 6.
X. NXA Option Exercise Notice referred to in Item 6.
XI. NXA Stock Purchase Agreement referred to in Item 4 and 6 .
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, each of the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
SOMERSET GROUP:
Dated: September 5, 1996 SOMERSET DRILLING ASSOCIATES, L.L.C.
By: Somerset Capital Partners, its Managing
Member
By: /s/ William R. Ziegler
------------------------------------
William R. Ziegler, Partner
Dated: September 5, 1996 SOMERSET CAPITAL PARTNERS
By: /s/ William R. Ziegler
------------------------------------
William R. Ziegler, Partner
Dated: September 5, 1996 /s/ Thomas H. O'Neill, Jr.
------------------------------------
Thomas H. O'Neill, Jr., Individually
Dated: September 5, 1996 /s/ Steven A. Webster
------------------------------------
Steven A. Webster, Individually
Dated: September 5, 1996 /s/ William R. Ziegler
------------------------------------
William R. Ziegler, Individually
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<PAGE>
MULLEN/OLIVER GROUP:
Dated: September 5, 1996 U.S. RIG AND EQUIPMENT, INC.
By: /s/ Roy T. Oliver, Jr.
------------------------------------
Name: Roy T. Oliver, Jr.
Title: President
Dated: September 5, 1996 MIKE MULLEN ENERGY EQUIPMENT
RESOURCE, INC.
By: /s/ Mike L. Mullen
------------------------------------
Name: Mike L. Mullen
Title: President
Dated: September 5, 1996 GCT INVESTMENTS, INC.
By: /s/ Mike L. Mullen
------------------------------------
Name: Mike L. Mullen
Title: President
Dated: September 5, 1996 PRD RIG PARTNERSHIP 1995, LTD.
By: Mike Mullen Energy Equipment Resource,
Inc., its General Partner
By: /s/ Mike L. Mullen
------------------------------------
Name: Mike L. Mullen
Title: President
Dated: September 5, 1996 EER NATIONAL 78 PARTNERSHIP, LTD.
By: Mike Mullen Energy Equipment Resource,
Inc., its General Partner
By: /s/ Mike L. Mullen
------------------------------------
Name: Mike L. Mullen
Title: President
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<PAGE>
Dated: September 5, 1996 /s/ Roy T. Oliver, Jr.
------------------------------------
Roy T. Oliver, Jr., Individually
Dated: September 5, 1996 /s/ Mike L. Mullen
------------------------------------
Mike L. Mullen, Individually
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<PAGE>
DRILLING GROUP:
Dated: September 6, 1996 NOREX DRILLING LTD.
By: /s/ Frank Capstick
------------------------------------
Name: Frank Capstick
Title: President
Dated: September 7, 1996 PRONOR HOLDINGS LTD.
By: /s/ Kristian Siem
------------------------------------
Name: Kristian Siem
Title: Managing Director
Dated: September 6, 1996 NOREX INDUSTRIES, INC.
By: /s/ Frank Capstick
------------------------------------
Name: Frank Capstick
Title: President
Dated: September 7, 1996 PROSPERITY INVESTMENTS, INC.
By: /s/ Kristian Siem
------------------------------------
Name: Kristian Siem
Title: Managing Director
Dated: September 7, 1996 /s/ Kristian Siem
------------------------------------
Kristian Siem, Individually
Dated: September 6, 1996 /s/ Frank Capstick
------------------------------------
Frank Capstick, Individually
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
I Schedule 13D Group Filing Agreement dated August 27, 1996 among
Somerset Drilling Associates, L.L.C., Somerset Capital Partners,
Thomas H. O'Neill, Jr., Steven A. Webster, William R. Ziegler,
Roy T. Oliver, Jr., U.S. Rig and Equipment, Inc., Mike Mullen
Energy Equipment Resource, Inc., GCT Investments, Inc., Mike L.
Mullen, PRD Rig Partnership 1995, Ltd., EER National 78
Partnership, Ltd., Norex Drilling Ltd., Pronor Holdings Ltd.,
Norex Industries, Inc., Prosperity Investments, Inc., Kristian
Siem and Frank Capstick.
II(a) Agreement and Plan of Merger dated May 7, 1996, among DI
Industries, Inc., DI Merger Sub, Inc., Roy T. Oliver, Jr., Mike
L. Mullen, R.T. Oliver, Inc. and Land Rig Acquisition Corp.
(Incorporated by reference to Exhibit 2.1 to the Registration
Statement of the Company on Form S-4 filed on June 14, 1996 (No.
333-6077).
II(b) Amendment to Agreement and Plan of Merger dated June 11, 1996,
among DI Industries, Inc., DI Merger Sub, Inc., Roy T. Oliver,
Jr., Mike L. Mullen, R.T. Oliver, Inc. and Land Rig Acquisition
Corp. (Incorporated by reference to Exhibit 2.1.1 to the
Registration Statement of the Company on Form S-4 filed on June
14, 1996 (No. 333-6077).
II(c) Second Amendment to Agreement and Plan of Merger dated July 26,
1996, among DI Industries, Inc., DI Merger Sub, Inc., Roy T.
Oliver, Jr., Mike L. Mullen, R.T. Oliver, Inc. and Land Rig
Acquisition Corp. (Incorporated by reference to Exhibit 2.1.2 to
the Registration Statement on Form S-3 (Amendment No. 1 to
Registration Statement on Form S-4) of the Company filed on
August 15, 1996 (No. 333-6077).
III(a) Agreement and Plan of Merger dated May 7, 1996, among DI
Industries, Inc. and Somerset Investment Corp. (Incorporated by
reference to Exhibit 2.2 to the Registration Statement of the
Company on Form S-4 filed on June 14, 1996 (No. 333-6077).
III(b) Amendment to Agreement and Plan of Merger dated June 11, 1996,
among DI Industries, Inc. and Somerset Investment Corp.
(Incorporated by reference to Exhibit 2.2.1 to the Registration
Statement of the Company on Form S-4 filed on June 14, 1996 (No.
333-6077).
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<PAGE>
III(c) Second Amendment to Agreement and Plan of Merger dated July 26,
1996, among DI Industries, Inc. and Somerset Investment Corp.
(Incorporated by reference to Exhibit 2.2.2 to the Registration
Statement on Form S-3 (Amendment No. 1 to Registration Statement
on Form S-4) of the Company filed on August 15, 1996 (No.
333-6077).
IV(a) Shareholders' Agreement dated May 7, 1996, among Somerset
Drilling Associates, L.L.C., Roy T. Oliver, Jr., U.S. Rig and
Equipment, Inc., Mike Mullen Energy Equipment Resource, Inc., GCT
Investments, Inc., Mike L. Mullen, Norex Drilling Ltd., and
Pronor Holdings, Ltd., inclusive of the Form of Irrevocable Proxy
attached as an Exhibit thereto (Incorporated by reference to
Exhibit 10.9 to the Registration Statement of the Company on Form
S-4 filed on June 14, 1996 (No. 333-6077).
IV(b) Amendment to Shareholders Agreement dated June 11, 1996, among
Somerset Drilling Associates, L.L.C., Somerset Capital Partners,
Roy T. Oliver, Jr., U.S. Rig and Equipment, Inc., Mike Mullen
Energy Equipment Resource, Inc., GCT Investments, Inc., Mike L.
Mullen, Norex Drilling Ltd., and Pronor Holdings, Ltd.
(Incorporated by reference to Exhibit 10.9.1 to the Registration
Statement of the Company on Form S-4 filed on June 14, 1996 (No.
333-6077).
V(a) Form of Shadow Warrant to be issued to the shareholders of
Somerset Investment Corporation (Incorporated by reference to
Exhibit 10.10 to the Registration Statement of the Company on
Form S-4 filed on June 14, 1996 (No. 333-6077).
V(b) Form of Shadow Warrant to be issued to the shareholders of R.T.
Oliver, Inc. and Land Rig Acquisition Corporation (Incorporated
by reference to Exhibit 10.11 to the Registration Statement of
the Company on Form S-4 filed on June 14, 1996 (No. 333-6077).
VI(a) Registration Rights Agreement dated May 7, 1996, among Somerset
Drilling Associates, L.L.C., Roy T. Oliver, Jr., U.S. Rig and
Equipment, Inc., Mike Mullen Energy Equipment Resource, Inc., GCT
Investments, Inc., Norex Drilling Ltd., and Pronor Holdings, Ltd.
(Incorporated by reference to Exhibit 10.12 to the Registration
Statement of the Company on Form S-4 filed on June 14, 1996 (No.
333-6077).
VI(b) Amendment to Registration Rights Agreement dated June 11, 1996,
among Somerset Drilling Associates, L.L.C., Somerset Capital
Partners, Roy T. Oliver, Jr., U.S. Rig and Equipment, Inc., Mike
Mullen Energy Equipment Resource, Inc., GCT Investments, Inc.,
Norex Drilling Ltd., and Pronor Holdings, Ltd. (Incorporated by
reference to Exhibit 10.12.1 to the Registration Statement of the
Company on Form S-4 filed on June 14, 1996 (No. 333-6077).
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<PAGE>
VI(c) Second Amendment to Registration Rights Agreement dated July 26,
1996, among Somerset Drilling Associates, L.L.C., Somerset
Capital partners, Roy T. Oliver, Jr., U.S. Rig and Equipment,
Inc., Mike Mullen Energy Equipment Resource, Inc., GCT
Investments, Inc., Norex Drilling Ltd., and Pronor Holdings, Ltd.
(Incorporated by reference to Exhibit 10.4.2 to the Registration
Statement on Form S-3 (Amendment No. 1 to Registration Statement
on Form S-4) of the Company filed on August 15, 1996 (No.
333-6077).
VII Investment Monitoring Agreement dated May 7, 1996, among DI
Industries, Inc., Somerset Capital Partners and Somerset Drilling
Associates, L.L.C. (Incorporated by reference to Exhibit 10.13 to
the Registration Statement of the Company on Form S-4 filed on
June 14, 1996 (No. 333-6077).
VIII Limited Liability Company Agreement of Somerset Drilling
Associates, L.L.C. dated July 1, 1996
IX. Shareholders' Agreement dated October 11, 1995 between Norex
America Inc. (n/k/a Norex Industries, Inc.) and Orkla AS
X. Option Exercise Notice dated September 5, 1996 from Norex
Industries, Inc. to Orkla ASA
XI. Stock Purchase Agreement dated September 5, 1996 between Norex
Industries, Inc. and Orkla ASA
-30-
<PAGE>
<PAGE>
ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF
NOREX DRILLING LTD.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Citizenship or Employment
---------------- ----------- --------------------
<S> <C> <C>
Kristian Siem Norway Chairman of the Board of Directors
Business address: and Chief Executive Officer of Norex
Norex Offshore Holding Industries Inc.
12 Jerpefaret
0104 Oslo
Norway
Frank Capstick Bermuda President of Norex Industries Inc.
Business address:
P.O. Box HM 429
Hamilton, HM BX
Bermuda
David J. Doyle Bermuda Attorney and barrister of Appleby,
Business address: Spurling & Kempe
Appleby, Spurling & Kempe
Cedar House
41 Cedar Avenue
Hamilton, HM EX
Bermuda
Michael Delouche United States Controller of Norex Industries Inc.
Business address:
11 Greenway Plaza
Houston, TX 77046
</TABLE>
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<PAGE>
<PAGE>
ANNEX B
DIRECTORS AND EXECUTIVE OFFICERS OF
NOREX INDUSTRIES, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Citizenship or Employment
---------------- ----------- --------------------
<S> <C> <C>
Kristian Siem Norway Chairman of the Board of Directors
Business address: and Chief Executive Officer of Norex
Norex Offshore Holding Industries Inc.
12 Jerpefaret
0104 Oslo
Norway
Dudley B. Sanger United Kingdom Private Investor
Home address:
29 Kingston House South
London SW7 1NF
England
Riulf Rustad Norway President of UNI Storebrand
Business address: Investment Management and a
UNI Storebrand ASA member of Group Executive
Ruselokkveien 26 Committee of UNI Storebrand ASA
N-0114 Olso
Norway
Gilbert W. Smith United States Private Investor
Home address:
9723 Lindsay Blake Lane
Great Falls, VA 22066
Ivar Siem Norway Chairman of Avenir AS
Business address:
Avenir AS
Furulundtoppen 25
0281 Oslo
Norway
M.D. Moross United Kingdom Private Investor
Home address:
7 Prince's Gate
London SW7 1QL
England
Barry W. Ridings United States Managing Director of Alex, Brown &
Business address: Sons Incorporated
Alex, Brown & Sons Inc.
1290 Avenue of Americas
New York, NY 10104
Frank Capstick Bermuda President of Norex Industries Inc.
Business address:
P.O. Box HM 429
Hamilton, HM BX
Bermuda
Michael Delouche United States Controller of Norex Industries Inc.
Business address:
11 Greenway Plaza
Houston, TX 77046
</TABLE>
-32-
<PAGE>
<PAGE>
ANNEX C
DIRECTORS AND EXECUTIVE OFFICERS OF
PRONOR HOLDINGS LTD.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Citizenship or Employment
---------------- ----------- --------------------
<S> <C> <C>
Kristian Siem Norway Chairman of the Board of Directors
Business address: and Chief Executive Officer of Norex
Norex Offshore Holding Industries Inc.
12 Jerpefaret
0104 Oslo
Norway
Tom Vidar Rygh Norway Managing Director of Orkla ASA
Business address:
Orkla ASA
Lilleakerveien 2
0283 Oslo
Norway
Morten Blix Norway Vice-President of Orkla ASA
Business address:
Orkla ASA
Lilleakerveien 2
0283 Oslo
Norway
Michael Delouche United States Controller of Norex Industries Inc.
Business address:
11 Greenway Plaza
Houston, TX 77046
</TABLE>
-33-
<PAGE>
<PAGE>
ANNEX D
DIRECTORS AND EXECUTIVE OFFICERS OF
PROSPERITY INVESTMENTS, INC.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Citizenship or Employment
---------------- ----------- --------------------
<S> <C> <C>
Kristian Siem Norway Chairman of the Board of Directors
Business address: and Chief Executive Officer of Norex
Norex Offshore Holding Industries Inc.
12 Jerpefaret
0104 Oslo
Norway
Tom Vidar Rygh Norway Managing Director of Orkla ASA
Business address:
Orkla ASA
Lilleakerveien 2
0283 Oslo
Norway
Morten Blix Norway Vice-President of Orkla ASA
Business address:
Orkla ASA
Lilleakerveien 2
0283 Oslo
Norway
Michael Delouche United States Controller of Norex Industries Inc.
Business address:
11 Greenway Plaza
Houston, TX 77046
</TABLE>
-34-
<PAGE>
<PAGE>
EXHIBIT I
SCHEDULE 13D GROUP FILING AGREEMENT
AGREEMENT (this "Agreement"), made as of this 27th day of August,
1996, by and among Somerset Drilling Associates, L.L.C., a Delaware limited
liability company ("Somerset"), Somerset Capital Partners, a New York general
partnership and the managing member of Somerset ("SCP"; and together with
Somerset, the "Somerset Group"), Roy T. Oliver, Jr., an individual ("Oliver"),
U.S. Rig and Equipment, Inc., an Oklahoma corporation ("USRE"), Mike Mullen
Energy Equipment Resource, Inc., a Texas corporation ("EER"), GCT Investments,
Inc., a Texas corporation ("GCT"), Mike L. Mullen, an individual ("Mullen" and
together with Oliver, USRE, EER and GCT, the "Mullen/Oliver Group"), Norex
Drilling Ltd., a Bermuda corporation ("Norex Drilling"), and Pronor Holdings
Ltd., a British Virgin Island corporation ("Pronor" and, together with Norex
Drilling, the "Drilling Group") (the Somerset Group, the Mullen/Oliver Group,
Norex Drilling and Pronor are hereinafter sometimes referred to individually as
a "Shareholder" and collectively as the "Shareholders") and the following
persons: Thomas H. O'Neill, Jr., an individual ("O'Neill"), Steven A. Webster ,
an individual ("Webster"), William R. Ziegler, an individual ("Ziegler"), PRD
Rig Partnership 1995, Ltd., a Texas limited partnership ("PRD"), EER National 78
Partnership, Ltd., a Texas limited partnership ("N78"), Norex Industries, Inc.,
a Cayman Islands company ("NXA"), Prosperity Investments, Inc., a British Virgin
Islands company ("Prosperity"), Kristian Siem ("Siem") and Frank Capstick
("Capstick") (each, an "Indirect Beneficial Owner" and collectively, the
"Indirect Beneficial Owners"; the Shareholders and the Indirect Beneficial
Owners being sometimes hereinafter individually referred to as a "Reporting
Person" and collectively as the "Reporting Persons").
<PAGE>
<PAGE>
WHEREAS, Norex Drilling and Pronor are corporate shareholders of DI
Industries, Inc., a Texas corporation (the "Corporation"), that owned stock in,
and were the controlling shareholder group of, the Corporation prior to the
execution of the Merger Agreements and the Shareholders Agreement (as each term
is hereinafter defined);
WHEREAS, pursuant to two separate merger agreements, each dated May
7, 1996, and amended as of June 11, 1996 (as amended, collectively, the "Merger
Agreements"), the Somerset Group and the Mullen/Oliver Group will receive, upon
the effective date of the mergers contemplated by the Merger Agreements (the
"Mergers"), Common Stock and warrants to acquire Common Stock of the
Corporation;
WHEREAS, the Shareholders are parties to a certain Shareholders
Agreement dated May 7, 1996, and amended as of June 11, 1996, but effective as
of the effective date of the Mergers (as amended, the "Shareholders Agreement"),
which provides, among other things, for certain agreements with respect to the
transfer and the voting of shares of the Corporation owned or to be owned by the
Shareholders;
WHEREAS, by virtue of certain provisions of the Shareholders
Agreement, upon the effective date of the Mergers, the Reporting Persons may be
deemed a "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission") pursuant thereto; and
WHEREAS, the Reporting Persons desire to set forth their agreement
with respect to a joint filing, on behalf of the "group" and each of its
members, of an initial statement, on Schedule 13D, and any and all required
amendments thereto, with respect to the beneficial ownership of securities of
the Corporation by the group and its members, inclusive of the grant
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<PAGE>
<PAGE>
of a power of attorney with respect to the preparation, execution and filing of
such Schedule 13D and any and all amendments thereto;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the parties hereto, each intending to be legally
bound, hereby agree as follows:
1. Effective Date. This Agreement shall become effective upon the
effectiveness of the Mergers, except that the provisions of Sections 3 and 5
shall be effective as of the date of the execution of this Agreement.
2. Joint Filing of Schedule 13D and Amendments. Each of the
undersigned Reporting Persons agrees to file jointly (or cause the joint filing
of, as the case may be), as a "group" within the meaning of Section 13(d)(3) of
the Exchange Act and the rules and regulations promulgated by the Commission
thereunder (the "Group"), with the Commission and send (or cause to be sent) to
each of the American Stock Exchange ("AMEX") (or to any national stock exchange
on which the equity securities of the Corporation may then be listed) and the
Corporation, (i) an initial statement, on Schedule 13D, with respect to the
beneficial ownership of securities of the Corporation by the Group and its
members after giving effect to the Mergers (the "Initial Statement"), as
promptly as possible following the effective date of the Mergers, but in any
event on or prior to the 10th day after the effective date of the Mergers, and
(ii) thereafter, during the term of this Agreement, any and all required
amendments to such Initial Statement (individually, an "Amendment" and,
collectively, the "Amendments"), as promptly as practicable following the date
of the event, occurrence, transaction or other change in the facts stated in the
Initial Statement that requires the filing of an amendment thereto, in each
case, in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated by the Commission thereunder. Each of the undersigned
Reporting Persons further agrees that the
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<PAGE>
<PAGE>
Initial Statement and any and all Amendments filed with the Commission by or on
behalf of the Group comprised of the undersigned Reporting Persons, in respect
of the beneficial ownership of equity securities of the Corporation, shall be
deemed to be filed by or on behalf of each of the undersigned Reporting Persons.
3. Power of Attorney. (a) Each of the undersigned Reporting Persons
hereby constitutes and appoints each of Edwin T. Markham and Marybeth Riordan,
acting singly, as his, her or its true and lawful attorney-in-fact, with full
power of substitution and revocation, to prepare, execute and file on behalf of
the undersigned, as a member of the Group, the Initial Statement and any and all
Amendments thereto, and each of the undersigned Reporting Persons does hereby
ratify and confirm all that said attorneys-in-fact shall do or cause to be done
by virtue thereof. THIS POWER OF ATTORNEY IS IRREVOCABLE during the term of this
Agreement and shall terminate contemporaneously with the termination of this
Agreement pursuant to the provisions of Section 6 hereof.
(b) Each of the undersigned Reporting Persons hereby expressly
acknowledges that: (i) the power of attorney provided above is merely a grant to
such attorneys-in-fact of authority to act on behalf of such Reporting Person
and shall not be deemed to create any duty or obligation, express or implied, on
the part of any such attorney-in-fact to actually exercise such authority or to
take or refrain from taking any action on behalf of such Reporting Person; (ii)
any obligation under the securities laws of any Reporting Person to file any
Schedule 13D (inclusive of amendments thereof) with respect to the equity
securities of the Corporation or any successor thereto, whether by virtue of
his, her or its direct or indirect ownership of shares, status as a signatory to
the Shareholders Agreement or otherwise, shall remain the sole obligation of
such Reporting Person and no attorney-in-fact shall be deemed to have assumed
any such obligation
4
<PAGE>
<PAGE>
or duty of any Reporting Person under the securities laws by virtue of the grant
of the power of attorney provided above; and (iii) such Reporting Person shall
remain liable for the accuracy and completeness of any and all information with
respect to such Reporting Person contained (or, with respect to any omission,
that should have been contained) in any Initial Statement or Amendment that is
filed by or on behalf of such Reporting Person and no attorney-in-fact shall be
deemed to have assumed any obligation or liability of any Reporting Person under
the securities laws for any misstatements or omissions with respect to any such
Initial Statement or Amendment.
(c) Each of the undersigned Reporting Persons hereby expressly
agrees to indemnify, defend and hold harmless, each attorney-in-fact named above
and any substitute thereof, from and against any and all liability, loss, claim,
expense, cost, damage, action or other charges brought against or incurred or
suffered by, any such attorney-in-fact, arising out of or in connection with the
grant of the power of attorney provided above, any exercise by such
attorney-in-fact of such power, any action or inaction taken or refrained to be
taken, as the case may be, by any attorney-in-fact in connection with or related
to such power, and any misstatements or omissions with respect to any
information contained, or required to be contained, in any Initial Statement or
Amendment, other than any liability, loss, claim, expense, cost, damage, action
or other charges brought against or incurred or suffered by such
attorney-in-fact as a result of any willful malfeasance, bad faith or
intentional misconduct on the part of such attorney-in fact.
4. Representations and Warranties of Shareholder Groups.
4.1 Representations and Warranties of the Somerset Group. Each of
the undersigned members of the Somerset Group, after consultation with his or
its legal counsel,
5
<PAGE>
<PAGE>
hereby represents and warrants in favor of each of the members of the Drilling
Group and the Mullen/Oliver Group that: (i) O'Neill, Webster and Ziegler are the
only persons enumerated by General Instruction C of Schedule 13D that are
required to provide the information called for by Items 2 - 6 of Schedule 13D
with respect to the shares to be issued to Somerset and SCP in the Mergers and
to be held by the Somerset Group pursuant to the terms and conditions of the
Shareholders Agreement; (ii) there are no beneficial owners (within the meaning
of Section 13(d) of the Exchange Act and the rules and regulations promulgated
by the Commission thereunder), direct or indirect, of the shares to be owned and
held by the Somerset Group subject to the terms of the Shareholders Agreement,
other than the persons signatory hereto under the caption "Somerset Group" on
the signature pages hereof; (iii) such person has reviewed the draft Initial
Statement (inclusive of the Exhibit list contained therein) attached hereto as
Exhibit A and confirms the accuracy and completeness of the information and
documentation with respect to such Reporting Person and his, her or its
beneficial interest in any shares contained therein, or referred to therein, as
the case may be; and (iv) such person will promptly notify the attorneys-in-fact
named above of the addition of any new member to the Somerset Group as signatory
to the Shareholders Agreement or the addition of any new beneficial owner
(within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated by the Commission thereunder), direct or indirect, of
shares that become subject to the terms and conditions of the Shareholders
Agreement and will use his or its best efforts to cause any such new beneficial
owner of shares subject to the Shareholders Agreement, irrespective of whether
or not such person becomes a signatory to the Shareholders Agreement, to
acknowledge his or its membership in the Group and to evidence same by executing
and delivering a joinder to this Agreement.
6
<PAGE>
<PAGE>
4.2 Representations and Warranties of the Drilling Group. Each of
the undersigned members of the Drilling Group, after consultation with his or
its legal counsel, hereby represents and warrants in favor of each of the
members of the Somerset Group and the Mullen/Oliver Group that: (i) Norex
Drilling, Pronor, NXA, Prosperity, Siem and Capstick are the only persons
enumerated by General Instruction C of Schedule 13D that are required to provide
the information called for by Items 2 - 6 of Schedule 13D with respect to the
shares owned and to be held by the Drilling Group pursuant to the terms and
conditions of the Shareholders Agreement; (ii) there are no beneficial owners
(within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated by the Commission thereunder), direct or indirect, of
the shares owned and to be held by the Drilling Group subject to the terms of
the Shareholders Agreement, other than the persons signatory hereto under the
caption "Drilling Group" on the signature pages hereof; (iii) such person has
reviewed the draft Initial Statement (inclusive of the Exhibit list contained
therein) attached hereto as Exhibit A and confirms the accuracy and completeness
of the information and documentation with respect to such Reporting Person and
his, her or its beneficial interest in any shares contained therein, or referred
to therein, as the case may be; and (iv) such person will promptly notify the
attorneys-in-fact named above of the addition of any new member to the Drilling
Group as signatory to the Shareholders Agreement or the addition of any new
beneficial owner (within the meaning of Section 13(d) of the Exchange Act and
the rules and regulations promulgated by the Commission thereunder), direct or
indirect, of shares that become subject to the terms and conditions of the
Shareholders Agreement and will use his or its best efforts to cause any such
new beneficial owner of shares subject to the Shareholders Agreement,
irrespective of whether or not such person becomes a signatory to the
Shareholders Agreement, to acknowledge his or its
7
<PAGE>
<PAGE>
membership in the Group and to evidence same by executing and delivering a
joinder to this Agreement.
4.3 Representations and Warranties of the Mullen/Oliver Group. Each
of the undersigned members of the Mullen/Oliver Group, after consultation with
his or its legal counsel, hereby represents and warrants in favor of each of the
members of the Somerset Group and the Drilling Group that: (i) USRE, MMEER, GCT,
PRD, EER, Mullen and Oliver are the only persons enumerated by General
Instruction C of Schedule 13D that are required to provide the information
called for by Items 2 - 6 of Schedule 13D with respect to the shares to be owned
and held by the Mullen/Oliver Group pursuant to the terms and conditions of the
Shareholders Agreement; (ii) there are no beneficial owners (within the meaning
of Section 13(d) of the Exchange Act and the rules and regulations promulgated
by the Commission thereunder), direct or indirect, of the shares to be owned and
held by the Mullen/Oliver Group subject to the terms of the Shareholders
Agreement, other than listed in Schedule 2.3 to the Shareholders' Agreement and
the persons signatory hereto under the caption "Mullen/Oliver Group" on the
signature pages hereof; (iii) such person has reviewed the draft Initial
Statement (inclusive of the Exhibit list contained therein) attached hereto as
Exhibit A and confirms the accuracy and completeness of the information and
documentation with respect to such Reporting Person and his, her or its
beneficial interest in any shares contained therein, or referred to therein, as
the case may be; and (iv) such person will promptly notify the attorneys-in-fact
named above of the addition of any new member to the Mullen/Oliver Group as
signatory to the Shareholders Agreement or the addition of any new beneficial
owner (within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated by the Commission thereunder), direct or indirect, of
shares that become subject to the terms and conditions of the Shareholders
Agreement and will
8
<PAGE>
<PAGE>
use his or its best efforts to cause any such new beneficial owner of shares
subject to the Shareholders Agreement, irrespective of whether or not such
person becomes a signatory to the Shareholders Agreement, to acknowledge his or
its membership in the Group and to evidence same by executing and delivering a
joinder to this Agreement.
5. Provision of Information; Notification of Material Changes. Each
of the undersigned Reporting Persons agrees promptly to: (i) provide to (A) the
attorneys-in-fact named above and/or their designated representative and (B)
each of the other signatories to this Agreement, any and all information and
documents with respect to such Reporting Person and his, her or its direct or
indirect beneficial ownership of shares as may be reasonably requested by such
person in connection with the preparation of the Initial Statement or any
Amendment thereto; (ii) review for accuracy and completeness any information or
documentation with respect to such Reporting Person and his, her or its
beneficial interest in any shares contained in any draft of any Initial
Statement or Amendment (inclusive of any schedules or exhibits thereto)
submitted to such person for review and comment and provide any corrections or
additions to the information or documentation contained therein as shall be
necessary to ensure the accuracy and completeness thereof; (iii) review for
accuracy and completeness, and for purposes of providing any information or
documentation required to be contained in any Amendment required as a result of
any subsequent material change to the facts set forth therein, any Initial
Statement or Amendment that is filed with the Commission and a copy of which is
distributed to such person; and (iv) inform (A) the attorneys-in-fact named
above and/or their designated representative and (B) each of the other
signatories to this Agreement, of any material change in the facts set forth in
the Initial Statement or any Amendment of which the Reporting Person becomes
aware and provide to such attorneys-in-fact and other signatories to this
Agreement any and all information
9
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<PAGE>
and documentation in connection therewith as is in the possession of such person
for purposes of facilitating the preparation and filing by the attorneys-in-fact
and/or any party signatory to this Agreement of any required Amendment in
connection therewith.
By way of example, and not by limitation, for purposes of this
Agreement, a change in material facts shall include (i) an acquisition or
disposition of any shares or other transaction with respect to any shares
(inclusive of a grant to any person of the right to receive or the power to
direct the receipt of dividends from, or the proceeds of sale of, such
securities) or any event or occurrence which causes any Reporting Person to
cease to be the beneficial owner of shares or member of the Group, (ii) any new
contracts, arrangements, understandings or relationships (legal or otherwise)
among any of the Reporting Persons or between any of such Reporting Persons and
any other person with respect to any securities of the Corporation (including,
without limitation, those relating to the transfer or voting of any securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies, pledge of securities or any other arrangement involving a
contingency the occurrence of which would give another person voting power or
investment power over such securities), or any amendment or termination of any
such contract, arrangement, understanding or relationship disclosed in the
Initial Statement or any Amendment; (iii) the purpose or purposes of the
acquisition of any additional shares of the Corporation (and the source and
amount of funds therefor, including disclosure of any financing arrangements),
or any change in intent with respect to the ownership of shares, or any plans or
proposals that relate to or would result in:
(a) the acquisition by any person of additional securities of
the Corporation, or the disposition of securities of the
Corporation;
10
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<PAGE>
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Corporation or any of
its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Corporation or of any of its subsidiaries;
(d) any change in the present board of directors or management
of the Corporation, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on the
board;
(e) any material change in the present capitalization or
dividend policy of the Corporation;
(f) any other material change in the Corporation's business or
corporate structure;
(g) changes in the Corporation's charter, bylaws or
instruments corresponding thereto or other actions which may impede
the acquisition of control of the Corporation by any person;
(h) causing a class of securities of the Corporation to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association;
(i) a class of equity securities of the Corporation becoming
eligible for termination of registration pursuant to Section
12(g)(4) of the Act; or
(j) any action similar to any of those enumerated above;
or (iv) a change in any of the following: the identity of any control person(s)
of any Reporting Person, the business address of any Reporting Person, the
principal occupation or employment (with respect to any natural person) or
business (with respect to any entity) of any Reporting Person, the citizenship
of any Reporting Person, or whether any Reporting Person has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result thereof is subject to a judgment, decree
or final order enjoining future violations of or
11
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<PAGE>
prohibiting or mandating activities subject to federal or state securities laws
or finding any violation with respect to such laws.
6. Termination. This Agreement shall terminate upon the earlier to
occur of (i) the termination of the Shareholders Agreement or (ii) the date that
the Group ceases to beneficially own, within the meaning of Section 13(d) of the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder, at least five percent (5%) of the voting securities of the
Corporation; provided, however, that notwithstanding the foregoing, the
provisions of this Agreement shall remain in full force and effect until any
required final Amendment shall have been filed with the Commission to reflect
the termination of the Group's filing obligations under Section 13(d) of the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder. In addition, this Agreement shall terminate as to any Reporting
Person on the date that such Shareholder (or with respect to any Indirect
Beneficial Owner, the date that the Shareholder through whom he, she or it has
an indirect beneficial interest in the securities of the Corporation) ceases to
be a party to, or in any manner subject to the obligations or entitled to the
benefits of, the Shareholders Agreement; provided, however, that notwithstanding
the foregoing, the provisions of this Agreement shall remain in full force and
effect with respect to such Reporting Person until any required Amendment shall
have been filed with the Commission to reflect that such Reporting Person is no
longer a member of the Group.
7. Certain Definitions. As used herein the following terms shall
have the meanings set forth below:
12
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7.1 The term "affiliate" means, with respect to any person, any
other person that directly or indirectly controls or is controlled by or is
under common control with such person.
7.2 The term "control" as used herein shall have the meaning
specified in Rule 405 promulgated by the Commission under the Securities Act of
1933, as amended.
7.3 The term "Indirect Beneficial Owner" as used herein shall
include, in addition to each control person of the original Shareholders
signatory to the Shareholders Agreement, each of whom is also an original
signatory to this Agreement, any control person of any transferee of any
Shareholder that is required to execute and deliver to the Corporation an
Acknowledgment pursuant to Section 16 of the Shareholders Agreement, any
transferee of or successor to any Indirect Beneficial Owner with respect to any
indirect beneficial interest in any shares and any person who hereinafter
becomes a control person of any Reporting Person, in each respect, only so long
as such person is a beneficial owner, within the meaning of Section 13D of the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder, of any shares that are subject to the terms of the Shareholders
Agreement.
7.4 The term "party" or "party to this Agreement" as used herein
shall mean (i) any person signatory to this Agreement, (ii) any transferee of
any shares owned by any Shareholder that is required to execute and deliver to
the Corporation an Acknowledgment pursuant to Section 16 of the Shareholders
Agreement in connection with its acquisition of shares, (iii) any control person
of any such transferee that would be deemed the indirect beneficial owner,
within the meaning of Section 13D of the Exchange Act and the rules and
regulations promulgated by the Commission thereunder, of any such shares
acquired by such transferee and (iv) any transferee of or successor to any
Indirect Beneficial Owner with respect to
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<PAGE>
any indirect beneficial interest in any shares and any person who hereafter
becomes a control person of any Reporting Person.
7.5 The term "person" as used herein means any individual,
corporation, company, partnership, joint venture, trust, association,
unincorporated organization, or other entity or group.
7.6 The term "shares" as used herein shall be deemed to refer to all
the shares of the Common Stock of the Corporation, or warrants to purchase such
Common Stock, owned by the Shareholders or any Indirect Beneficial Owner at the
time of execution of this Agreement; any additional shares of the Common Stock
of the Corporation hereafter acquired by any Shareholder or any Indirect
Beneficial Owner; any shares of the Common Stock of the Corporation hereafter
issued in exchange therefor by way of reclassification of shares, merger,
consolidation, reorganization, recapitalization or otherwise; any additional
shares issued to the respective Shareholders or any Indirect Beneficial Owner by
reason of stock dividends, share distributions, increases in the outstanding
shares; and (unless the context does not permit such interpretation) any shares
of the Common Stock of the Corporation issuable to any Shareholder or any
Indirect Beneficial Owner upon exercise of options, warrants, rights, and
conversion rights or privileges.
7.7 The term "Shareholder" as used herein shall include, in addition
to the original signatories to the Shareholders Agreement, each of whom is also
a signatory to this Agreement, any transferee of any Shareholder that is
required to execute and deliver to the Corporation an Acknowledgment pursuant to
Section 16 of the Shareholders Agreement, in each respect, only so long as such
person holds shares.
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8. Merger. In the event of the merger of the Corporation with and
into any other corporation whose equity securities are registered with the
Commission pursuant to the Exchange Act, this Agreement shall continue in effect
and thereafter any references in this Agreement to the Corporation shall refer
to the surviving corporation pursuant to such merger.
9. Binding Effect; Successors and Assigns. This Agreement shall
inure to the benefit of and shall bind the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. The
provisions of this Agreement shall be binding upon (i) transferees of
Shareholders (other than Unrestricted Transferees (as such term is defined in
the Shareholders Agreement)), (ii) any control person of any such transferee
that would be deemed the indirect beneficial owner, within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated by
the Commission thereunder, of any such shares acquired by such transferee, (iii)
transferees of Indirect Beneficial Owners with respect to any indirect
beneficial ownership of any shares, (iv) any transferee of or successor to any
Indirect Beneficial Owner with respect to any indirect beneficial interest in
any shares and (v) any person who hereinafter becomes a control person of any
Reporting Person (each, a "New Reporting Person"). No Reporting Person signatory
hereto shall transfer any direct or indirect beneficial interest in any shares
to any person that is not a signatory to this Agreement (other than any transfer
of shares by any Shareholder to an Unrestricted Transferee (as defined in the
Shareholders Agreement) in accordance with the terms of the Shareholders
Agreement), and no person shall hereinafter become a control person of any
Reporting Person, unless said person shall execute a Joinder to this Agreement
and agree to be bound hereby. Upon execution of any such Joinder, said new
Reporting Person shall be deemed to be a party hereto subject to the obligations
created hereby.
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10. Further Assurances. The parties agree to make, execute and
deliver any and all agreements, instruments and documents, and to do any and all
other acts, deeds and things, which may be necessary or advisable to carry out
the provisions of this Agreement or to effectuate the intent and purpose
thereof.
11. Notices. Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein shall be given in
writing by certified or registered mail, telecopier, Federal Express, Express
Mail, or personal delivery against written receipt addressed, transmitted or
delivered, to the respective addresses of the parties set forth on the signature
pages hereto, or to such other address as may be designated by any of them in a
notice given to the other parties hereto as provided above.
Each such notice shall be deemed given at the time it is received by
the addressee.
12. Amendment. This Agreement (inclusive of the Power of Attorney
provided for herein) supersedes and cancels all prior agreements and
understandings among the parties hereto, and contains all of the terms and
conditions agreed upon by the parties, with respect to the subject matter
hereof, and none of the parties shall be bound by any representations,
warranties, covenants or conditions with respect thereto not expressly set forth
herein. No modification of this Agreement shall be binding or given effect
unless the same shall be in writing and signed by all of the parties.
13. Waiver. Any failure by a party hereto to comply with any
obligation, agreement or condition herein may be expressly waived in writing by
each of the other parties hereto, but such waiver or failure to insist upon
strict compliance with such obligation, agreement or condition shall not operate
as a wavier of, or estoppel with respect to, any such subsequent or other
failure.
16
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14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
17
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date and year first above written.
SOMERSET GROUP:
69 Delaware Avenue SOMERSET DRILLING ASSOCIATES, L.L.C.
Buffalo, New York 14202 By: Somerset Capital Partners, its Managing
Telephone No.: (716) 842-0711 Member
Telefax No.: (716) 842-2514
By: /s/ William R. Ziegler
----------------------------------------
William R. Ziegler, Partner
69 Delaware Avenue SOMERSET CAPITAL PARTNERS
Buffalo, New York 14202
Telephone No.: (716) 842-0711
Telefax No.: (716) 842-2514 By: /s/ William R. Ziegler
----------------------------------------
William R. Ziegler, Partner
69 Delaware Avenue /s/ Thomas H. O'Neill, Jr.
Buffalo, New York 14202 --------------------------------------------
Telephone No.: (716) 842-0711 Thomas H. O'Neill, Jr., Individually
Telefax No.: (716) 842-2514
1900 West Loop South, Suite 1800 /s/ Steven A. Webster
Houston, Texas 77027 --------------------------------------------
Telephone No.: (713) 623-8984 Steven A. Webster, Individually
Telefax No.: (713) 623-8103
666 Third Avenue, 9th Floor /s/ William R. Ziegler
New York, New York 10017 --------------------------------------------
Telephone No.: (212) 551-9860 William R. Ziegler, Individually
Telefax No.: (212) 682-9112
18
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MULLEN/OLIVER GROUP:
6601 S.W. 29th Street U.S. RIG AND EQUIPMENT, INC.
Oklahoma City, OK 73179
Telephone No.: (405) 745-4137
Telefax No.: (405) 745-4557 By: /s/ Roy T. Oliver, Jr.
----------------------------------------
Name: Roy T. Oliver, Jr.
Title: President
8411 Preston Road MIKE MULLEN ENERGY EQUIPMENT
Suite 730, LB2 RESOURCE, INC.
Dallas, TX 75225
Telephone No.: (214) 692-6690
Telefax No.: (214) 692-6101 By: /s/ Mike L. Mullen
----------------------------------------
Name: Mike L. Mullen
Title: President
8411 Preston Road GCT INVESTMENTS, INC.
Suite 730, LB2
Dallas, TX 75225
Telephone No.: (214) 692-6690 By: /s/ Mike L. Mullen
Telefax No.: (214) 692-6101 ----------------------------------------
Name: Mike L. Mullen
Title: President
8411 Preston Road PRD RIG PARTNERSHIP 1995, LTD.
Suite 730, LB2 By: Mike Mullen Energy Equipment Resource,
Dallas, TX 75225 Inc., its General Partner
Telephone No.: (214) 692-6690
Telefax No.: (214) 692-6101
By: /s/ Mike L. Mullen
----------------------------------------
Name: Mike L. Mullen
Title: President
8411 Preston Road EER NATIONAL 78 PARTNERSHIP, LTD.
Suite 730, LB2 By: Mike Mullen Energy Equipment Resource,
Dallas, TX 75225 Inc., its General Partner
Telephone No.: (214) 692-6690
Telefax No.: (214) 692-6101
By: /s/ Mike L. Mullen
----------------------------------------
Name: Mike L. Mullen
Title: President
19
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c/o U.S. Rig and Equipment, Inc. /s/ Roy T. Oliver
6601 S.W. 29th Street --------------------------------------------
Oklahoma City, OK 73179 Roy T. Oliver, Jr., Individually
Telephone No.: (405) 745-4137
Telefax No.: (405) 745-4557
c/o Mike Mullen Energy Equipment /s/ Mike L. Mullen
Resource, Inc. --------------------------------------------
8411 Preston Road Mike L. Mullen, Individually
Suite 730, LB2
Dallas, TX 75225
Telephone No.: (214) 692-6690
Telefax No.: (214) 692-6101
20
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DRILLING GROUP:
Cedar House NOREX DRILLING LTD.
41 Cedar Avenue
Hamilton, HM-12, Bermuda
Telephone No.: +1 441 283 2058 By: /s/ Frank Capstick
Telefax No.: +1 441 283 3231 -----------------------------------------
Name: Frank Capstick
Title: President
c/o Morgan & Morgan Trust PRONOR HOLDINGS LTD.
Corp. Ltd.
Road Town
Pasea Estate
Tortola, British Virgin Islands By: /s/ Kristian Siem
Telephone No.: +1 441 293 2058 -----------------------------------------
Telefax No.: +1 441 293 3231 Name: Kristian Siem
Title: Managing Director
Cedar House NOREX INDUSTRIES, INC.
41 Cedar Avenue
Hamilton, HM-12, Bermuda
Telephone No.: +1 441 283 2058 By: /s/ Frank Capstick
Telefax No.: +1 441 283 3231 -----------------------------------------
Name: Frank Capstick
Title: President
c/o Morgan & Morgan Trust PROSPERITY INVESTMENTS, INC.
Corp. Ltd.
Road Town
Pasea Estate
Tortola, British Virgin Islands By: /s/ Kristian Siem
Telephone No.: +1 441 293 2058 -----------------------------------------
Telefax No.: +1 441 293 3231 Name: Kristian Siem
Title: Managing Director
c/o Norex Offshore Holdings AS /s/ Kristian Siem
Jerpefaret 12, Oslo, Norway --------------------------------------------
Telephone No.: Kristian Siem, Individually
Telefax No.:
Cedar House /s/ Frank Capstick
41 Cedar Avenue --------------------------------------------
Hamilton, HM-12, Bermuda Frank Capstick, Individually
Telephone No.: +1 441 283 2058
Telefax No.: +1 441 283 3231
21
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EXHIBIT VIII
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
OF
SOMERSET DRILLING ASSOCIATES, L.L.C.
Dated as of July 1, 1996
================================================================================
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
THE COMPANY AND ITS BUSINESS
<S> <C> <C>
2.1 Formation ...................................................... 4
2.2 Certificate of Formation ....................................... 4
2.3 Name ........................................................... 4
2.4 Place of Business .............................................. 4
2.5 Registered Office and Agent .................................... 4
2.6 Purposes ....................................................... 4
2.7 Title to Property .............................................. 5
2.8 Duration ....................................................... 5
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 Member's Capital ............................................... 5
3.2 Limitations on Member's Liability and Return of Capital ........ 5
3.3 Capital Accounts ............................................... 5
3.4 Member Loans ................................................... 6
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Allocation of Net Profits and Net Loss of the Company .......... 6
4.2 Residual Allocations ........................................... 7
4.3 Qualified Income Offset ........................................ 7
4.4 Minimum Gain Chargeback ........................................ 7
4.5 Special Allocations ............................................ 7
4.6 Fees to Members or Affiliates .................................. 7
4.7 Section 704(c) Allocation ...................................... 8
4.8 Distribution in Kind ........................................... 8
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow ........................... 8
5.2 Estimated Taxes and Withholding ................................ 9
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VI
CONTROL AND MANAGEMENT
<S> <C> <C>
6.1 Management of the Company ...................................... 9
6.2 Authority and Responsibility of the Managers ................... 9
6.3 Limitations on Authority of Managers ........................... 11
6.4 Participation by Members ....................................... 11
6.5 Other Activities of Managers or Members ........................ 12
6.6 Fees and Expenses; Compensation of Managers .................... 12
6.7 Liability for Acts and Omissions; Indemnification .............. 12
6.8 Number, Tenure and Qualifications of Managers .................. 12
6.9 Resignation of Managers ........................................ 13
6.10 Removal of a Manager ........................................... 13
6.11 Vacancies of Managers .......................................... 14
6.12 Place of Managers' Meetings .................................... 14
6.13 Special Meetings of Managers ................................... 14
6.14 Notice of Adjournment .......................................... 14
6.15 Waiver of Notice ............................................... 14
6.16 Action by Managers; Quorum; Voting; Action Without a Meeting ... 15
6.17 Meetings by Telephone .......................................... 15
6.18 Adjournment .................................................... 15
6.19 Committees of the Managers ..................................... 15
ARTICLE VII
MEETINGS OF MEMBERS
7.1 Meetings ....................................................... 15
7.2 Place of Meetings .............................................. 16
7.3 Notice of Meetings ............................................. 16
7.4 Record Date .................................................... 16
7.5 Quorum ......................................................... 16
7.6 Manner of Acting ............................................... 16
7.7 Proxies ........................................................ 16
7.8 Action by Members Without a Meeting ............................ 17
7.9 Waiver of Notice ............................................... 18
7.10 Voting Agreements .............................................. 18
ARTICLE VIII
TRANSFERS OF COMPANY INTERESTS
8.1 Investment Representation ...................................... 18
8.2 Assignment by Members .......................................... 18
8.3 Void Transfers; Effective Date ................................. 19
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE IX
ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS
<S> <C> <C>
9.1 Books and Records .............................................. 20
9.2 Reports ........................................................ 20
9.3 Tax Returns .................................................... 20
9.4 Section 754 Election ........................................... 20
9.5 Tax Matters Partner ............................................ 20
9.6 Withholding .................................................... 21
9.7 Bank Accounts .................................................. 21
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Withdrawal ..................................................... 21
10.2 Dissolution .................................................... 21
10.3 Distribution Upon Liquidation of the Company ................... 22
10.4 Capital Account Deficits ....................................... 22
10.5 Certificate of Cancellation .................................... 23
ARTICLE XI
AMENDMENTS
11.1 Amendments Adopted Solely by the Managers ...................... 23
11.2 Amendments to be Adopted by Managers and Members ............... 23
ARTICLE XII
VALUATION OF SECURITIES OF DI
12.1 Normal Valuation ............................................... 24
12.2 Legal Restrictions on Transfer ................................. 24
12.3 Objection to Valuation ......................................... 24
ARTICLE XIII
MISCELLANEOUS
13.1 Notices ........................................................ 24
13.2 Successors and Assigns ......................................... 25
13.3 No Oral Modifications; Amendments .............................. 25
13.4 Captions ....................................................... 25
13.5 Terms .......................................................... 25
13.6 Invalidity ..................................................... 25
13.7 Further Assurances ............................................. 25
13.8 Complete Agreement ............................................. 25
</TABLE>
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<TABLE>
<S> <C> <C>
13.9 Attorneys' Fees ................................................ 25
13.10 Governing Law .................................................. 25
13.11 No Third Party Beneficiary ..................................... 25
13.12 Exhibits and Schedules ......................................... 26
13.13 References to this Agreement ................................... 26
13.14 Power of Attorney .............................................. 26
13.15 Reliance on Authority of Person Signing Agreement .............. 27
13.16 Consents and Approvals ......................................... 27
13.17 DI Common Stock ................................................ 27
</TABLE>
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LIMITED LIABILITY COMPANY AGREEMENT
OF
SOMERSET DRILLING ASSOCIATES, L.L.C.
------------------------------
This Limited Liability Company Agreement of Somerset Drilling
Associates, L.L.C. (the "Company"), dated as of July 1, 1996, is made and
entered into by and among Somerset Capital Partners, a general partnership, as a
Member and the sole initial Manager (the "Managing Member"), and the other
Persons listed on Schedule A hereto, as Members (the "Investor Members"),
W I T N E S S E T H :
In consideration of the mutual agreements made herein, the Members
hereby agree to constitute a limited liability company pursuant to the Act as
follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the respective
meanings specified in this Article I:
"Accountants" means any firm of independent certified public
accountants as shall be engaged by the Company.
"Act" means the Delaware Limited Liability Company Act, as amended
from time to time.
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) increase such Capital Account by any amounts which such Member
is obligated to contribute to the Company (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the
Company pursuant to Treasury Regulations Sections 1.704-2(g) (1) and 1.704-2(i)
(5); and
(ii) reduce such Capital Account by the amount of the items
described in Treasury Regulation Section 1.704-1(b) (2) (ii) (d) (4), (5) and
(6).
"Adjusted Invested Capital" (with respect to each Member) means, at
any time, the sum of all Capital Contributions made by such Member pursuant to
Article III less distributions previously made to that Member pursuant to
Section 5.1 (ii).
"Affiliate" means, when used with reference to a specified Person,
(i) any Person directly or indirectly controlling, controlled by or under common
control with such Person, (ii)
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any Person owning or controlling 10% or more of the outstanding voting interests
of such Person, and (iii) any relative or spouse of such Person.
"Agreement" means this Limited Liability Company Agreement, as
originally executed and as amended from time to time, as the context requires.
"Available Cash Flow" means, with respect to any Fiscal Year or
other period, the sum of all cash receipts of the Company from any and all
sources, less all cash disbursements (including loan repayments, capital
improvements and replacements) and a reasonable allowance for reserves,
contingencies and anticipated obligations as determined by the Managers.
"Bankruptcy" means, with respect to a Person, the occurrence of any
of the following events: (a) the filing by that Person of a petition commencing
a voluntary case in bankruptcy under applicable bankruptcy laws; (b) entry
against that Person of an order for relief under applicable bankruptcy laws; (c)
written admission by that Person of its inability to pay its debts as they
mature, or an assignment by that Person for the benefit of creditors; or (d)
appointment of a receiver for the property or affairs of that Person.
"Capital Account" means, with respect to each Member, an account
determined in accordance with the provisions of Section 3.4 of this Agreement.
"Capital Contribution" means, with respect to each Member, the total
amount of money and fair market value of any property contributed to the Company
by such Member.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Company" means the limited liability company formed under this
Agreement.
"Company Minimum Gain" means the amount determined by computing with
respect to each nonrecourse liability of the Company, the amount of gain (of
whatever character), if any, that would be realized by the Company if it
disposed (in a taxable transaction) of the Company's property subject to such
liability in full satisfaction thereof, and by then aggregating the amounts so
computed as set forth in Treasury Regulation Section 1.704-2(d).
"Depreciation" shall mean, for each fiscal year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the Federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis.
"DI" means DI Industries, Inc., a Texas corporation, or any
successor thereto.
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"Fiscal Year" means the fiscal year of the Company as determined the
Managers. As used in this Agreement, a Fiscal Year shall include any partial
Fiscal Year at the beginning and end of the Company term.
"Interest" means a Member's percentage interest in the Company.
"Majority-in-Interest of the Members" means such of the Members
whose Capital Contributions equal (at the time of determination) more than 50%
of the total Capital Contributions of all Members.
"Managers" means the Managing Member or any other Persons who or
which succeed the Managing Member or are added as Managers pursuant to this
Agreement.
"Member" means the Managing Member and each Person who or which is
listed in Schedule A hereto and executes a counterpart of this Agreement as a
Member and each Person who or which may hereafter become a party to this
Agreement as a substitute Member.
"Net Profits" and "Net Loss" shall mean, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Company that is exempt from Federal income tax
and not otherwise taken into account in computing Net Profits or Net Loss shall
be added to such taxable income or loss; and
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Net Profits or Net Loss shall be subtracted from such
taxable income or loss.
"Person" means an individual, trust, estate, tax-exempt entity,
partnership, joint venture, association, company, corporation, limited liability
company, government or agency thereof, or other entity.
"Prime Rate" means the base rate of interest announced from time to
time by Chemical Bank, New York, N.Y.
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"Priority Return" means, with respect to a Member, a sum equivalent
to the Priority Return Rate, cumulative but not compounded (pro rated for any
partial year), of the amount of the Adjusted Invested Capital of such Member
from time to time, calculated from time to time during the period to which the
Priority Return relates, commencing on the date the Member is admitted to the
Company.
"Priority Return Rate" means six percent (6%) per annum for the
first one-year period to which the Priority Return Relates; nine percent (9%)
for the second one-year period; twelve percent (12%) for the third one-year
period; fifteen percent (15%) for the fourth one-year period; and eighteen
percent (18%) for the fifth one-year period.
"Treasury Regulations" means all proposed, temporary and final
regulations promulgated under the Code, as such regulations may be amended from
time to time.
ARTICLE II
THE COMPANY AND ITS BUSINESS
2.1 Formation. The Members hereby form a limited liability company
under and pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement.
2.2 Certificate of Formation. A Certificate of Formation has been
filed in the office of the Delaware Secretary of State in accordance with the
provisions of the Act. The Managers shall take any and all other actions
reasonably necessary to perfect and maintain the status of the Company as a
limited liability company under the Act.
2.3 Name. The name of the Company shall be Somerset Drilling
Associates, L.L.C., and all business of the Company shall be conducted in such
name.
2.4 Place of Business. The office of the Company shall be located at
such place within or without the State of Delaware as may be determined by the
Managers.
2.5 Registered Office and Agent. The registered office of the
Company in the State of Delaware shall be at 32 Loockerman Square, Suite L-100,
Dover, Delaware 19904. The registered agent of the Company for service of
process at the address shall be Prentice Hall Legal and Financial Services. The
Company may, upon compliance with the Act, change the location of its registered
office in the State of Delaware or its registered agent for service of process
in the State of Delaware as the Managers deem appropriate.
2.6 Purposes. The purposes of the Company shall be (i) to invest in
DI, an onshore oil and gas drilling contractor, which investment is more fully
described in the Private Placement Memorandum of the Company dated June 11,
1996, pursuant to which the
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membership interests in the Company were offered, and (ii) to enter into any
lawful transaction and engage in any lawful activities in furtherance of or
incidental to the foregoing purposes. The Company shall not engage in any other
activity except as set forth above.
2.7 Title to Property. All real and personal property owned by the
Company shall be owned by the Company as an entity and, insofar as permitted by
applicable law, no Member shall have any ownership interest in such property in
its individual name or right and each Member's Interest shall be personal
property for all purposes.
2.8 Duration. The Company shall commence as of the date the
Certificate of Formation for the Company is filed in the office of the Delaware
Secretary of State and shall continue for a period of five (5) years thereafter,
unless sooner dissolved or terminated pursuant to statute or any provision of
this Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 Member's Capital. Prior to or upon the execution of this
Agreement, each of the Members shall contribute to the capital of the Company
the sum designated opposite his or its name under the heading "Capital
Contribution" on Schedule A.
3.2 Limitations on Member's Liability and Return of Capital. Subject
to compliance with the other terms of this Agreement, the personal liability of
each Member (in his capacity as a Member) arising out of or in any manner
relating to the Company and its activities and obligations shall be limited to
and shall not exceed the Member's Capital Contributions, except as provided by
the Act. A Member shall not (i) be obligated to lend or advance funds to the
Company for any purpose except as expressly provided in this Agreement, (ii) be
liable for the obligations of any other Member, (iii) be entitled to the return
of his or its Capital Contribution at any fixed time or upon demand, or (iv)
receive any interest on capital.
3.3 Capital Accounts. The Company shall maintain for each Member a
separate Capital Account in accordance with the rules of Treasury Regulations
Section 1.704-1(b). Such Capital Account shall be increased by (i) such Member's
cash contributions, (ii) the agreed fair market value of property contributed by
such Member (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under Code Section 752), and
(iii) all items of Company income and gain (including income and gain exempt
from tax) allocated to such Member pursuant to Article IV or other provisions of
this Agreement and decreased by (i) the amount of cash distributed to such
Member, (ii) the agreed fair market value of all actual and deemed distributions
of property made to such Member pursuant to this Agreement (net of liabilities
secured by such distributed property that the Member is considered to assume or
take subject to under Code Section 752), and (iii) all items of
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Company deduction and loss allocated to such Member pursuant to Article IV or
other provisions of this Agreement.
In the event any Member transfers any Interest in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent it relates to the transferred Interest.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in
a manner consistent with such Regulations and any amendment or successor
provision thereto.
3.4 Member Loans. In the event that additional funds (in excess of
the Members' agreed Capital Contributions) are required by the Company for any
purpose relating to the business of the Company or for any of its obligations,
expenses, costs, or expenditures, including operating deficits, the Company may
borrow such funds as are needed from any Member or other Person for such period
of time and on such reasonable business terms as the Managers and the lender may
agree and at the rate of interest then prevailing for comparable loans, or if
such loan is from a Member or Affiliate, at an interest rate equal to the rate
at which the lending Member or Affiliate has borrowed such funds, provided that
such rate charged by a Member or Affiliate may not exceed the Prime Rate plus
four percent (4%) per annum. Any security interest in the property of the
Company which is given to any Member or Affiliate shall be subordinate to any
security interest in Company property given by the Company to any lender who is
not a Member or Affiliate of a Member. Loans made under this Section may be
repaid out of Available Cash Flow, but any amount of any such loan that is
outstanding at the time of the occurrence of any of the events described in
Article X shall be repaid as provided in Article X.
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Allocation of Net Profits and Net Loss of the Company. Except as
otherwise provided in this Article IV, Net Profits and Net Loss of the Company
in each Fiscal Year shall be allocated among the Members as follows:
(a) Net Profits. Net Profits shall be allocated among the Members as
follows:
(i) first, to each of the Members until the cumulative Net
Profits allocated to such Member pursuant to this Section 4.1(a) is equal to the
cumulative Net Loss previously allocated to the Member pursuant to Section
4.1(b);
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(ii) second, to the Members until the cumulative Net Profits
allocated to the Members pursuant to this Section 4.1(a)(ii) is equal to 100% of
the accrued amount of the Members' Priority Return; and
(iii) thereafter, 20% to the Managing Member and 80% to the
Members (including the Investor Members and the Managing Member), in proportion
to their Capital Contributions.
(b) Allocation of Net Loss. Except as otherwise provided in this Article, Net
Loss shall be allocated among the Members as follows:
(i) first, in proportion to the positive balances, if any, in
the Members' respective Capital Accounts, until such balances are reduced to
zero; and
(ii) thereafter, to the Members, in proportion to their
Capital Contributions.
4.2 Residual Allocations. Except as otherwise provided in this
Agreement, all items of Company income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be divided among the Members in the
same proportions as they share Net Profits or Net Losses, as the case may be,
for the Fiscal Year.
4.3 Qualified Income Offset. If any Member unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d), items of Company income shall
be specially allocated to such Member in an amount and manner sufficient to
eliminate the Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible. This Section 4.3 is
intended to constitute a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(3).
4.4 Minimum Gain Chargeback. If there is a net decrease in Company
Minimum Gain during a Fiscal Year, each Member will be allocated, before any
other allocation under this Article IV, items of income and gain for such Fiscal
Year (and if necessary, subsequent years) in proportion to and to the extent of
an amount equal to such Member's share of the net decrease in Company Minimum
Gain determined in accordance with Treasury Regulations Section l.704-2(g)(2).
This Section 4.4 is intended to comply with, and shall be interpreted
consistently with, the "minimum gain chargeback" provisions of Treasury
Regulations Section l.704-2(f).
4.5 Special Allocations. Any special allocations of items of Net
Profits pursuant to Sections 4.3 and 4.4 shall be taken into account in
computing subsequent allocations of Net Profits pursuant to Section 4.l, so that
the net amount of any items so allocated and the gain, loss and any other item
allocated to each Member pursuant to Section 4.l shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to the provisions of this Article if such special allocations had not
occurred.
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4.6 Fees to Members or Affiliates. Notwithstanding the provisions of
Section 4.l, in the event that any fees, interest, or other amounts paid to any
Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the Company and any Member or Affiliate thereof providing for
the payment of such amount, and deducted by the Company in reliance on Section
707(a) and/or 707(c) of the Code, are disallowed as deductions to the Company on
its federal income tax return and are treated as Company distributions, then
(i) the Net Profits or Net Loss, as the case may be, for the Fiscal
Year in which such fees, interest, or other amounts were paid shall be increased
or decreased, as the case may be, by the amount of such fees, interest, or other
amounts that are treated as Company distributions; and
(ii) there shall be allocated to the Member to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 4.l, an amount of gross income for the Fiscal
Year equal to the amount of such fees, interest, or other amounts that are
treated as Company distributions.
4.7 Section 704(c) Allocation. Any item of income, gain, loss, and
deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the Company and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
4.8 Distribution in Kind. If assets of the Company are distributed
in kind, Net Profits and Net Losses shall be allocated as if such assets had
been sold for their fair market value on the date of distribution. For purposes
of this allocation, the fair market value of such asset shall be determined as
provided in Article XII hereof, with respect to securities of DI, or by the
Managing Member, in all other cases.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow. Available Cash Flow shall
be distributed as soon as practicable, and securities of DI may be distributed
from time to time, to and among the Members as follows:
(i) first, to each of the Members to the extent of its accrued
Priority Return, reduced by any prior distributions made under this Section
5.1(i);
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(ii) second, to each of the Members to the extent of its
Adjusted Invested Capital; and
(iii) thereafter, 20% to the Managing Member and 80% to the
Members (including the Investor Members and the Managing Member), in proportion
to their Capital Contributions.
For the purposes hereof, securities of DI distributed to the Members shall be
valued in accordance with Article XII hereof.
5.2 Estimated Taxes and Withholding Notwithstanding the provisions
of Section 5.1, distributions of Available Cash Flow with respect to any fiscal
year or other applicable period shall be made on a quarterly basis, based on
estimated results of operations through any applicable quarter, to all Members
to pay any required quarterly estimated federal and state income taxes with
respect to any profits of the Company attributable to such fiscal year or other
applicable period, assuming that all Members are subject to the highest marginal
federal and New York income tax rates. Distributions on account of estimated
income taxes shall be made at least ten (10) days prior to the due date of any
quarterly estimated tax payment. Any amounts withheld by the Company with
respect to any profits allocated to any Member as required under the Code or any
provision of applicable state and local income tax law shall be treated as
amounts distributed to the Members pursuant to this Article V. To the extent any
distributions under this Section 5.2 exceed the amounts distributable to the
Members under Section 5.1, any such excess shall be deemed to be an interest
free advance to the Members receiving such excess distributions, payable to the
Company from subsequent distributions as made. The foregoing distributions with
respect to federal and state income taxes shall be made even if as of the
applicable period the Company does not have sufficient Available Cash Flow to
cover such distributions.
ARTICLE VI
CONTROL AND MANAGEMENT
6.1 Management of the Company. The overall management and control of
the business and affairs of the Company shall be vested solely in the Managers,
who shall be responsible for the management of the Company's business.
6.2 Authority and Responsibility of the Managers.
(a) Except as expressly provided in this Agreement, all decisions
respecting any matter set forth in this Agreement or otherwise affecting or
arising out of the conduct of the business of the Company shall be made by the
Managers, and the Managers shall have the exclusive right and full authority to
manage, conduct and operate the Company's business. Specifically, but not by way
of limitation, the Managers shall be authorized and responsible,
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subject to the limitations elsewhere set forth in this Agreement, in the name
and on behalf of the Company:
(i) to borrow and lend money and, as security therefor, to
mortgage, pledge or otherwise encumber the assets of the Company;
(ii) to cause to be paid on or before the due date thereof all
amounts due and payable by the Company to any Person, including, without
limitation, to Affiliates of the Managers to the extent permitted under this
Agreement;
(iii) to employ such agents, employees, managers, accountants,
attorneys, consultants and other Persons, (including, without limitation, itself
and its Affiliates to the extent permitted under this Agreement) necessary or
appropriate to carry out the business and affairs of the Company, and to pay
such fees, expenses, salaries, wages and other compensation to such Persons as
it shall, in its sole discretion, determine;
(iv) to pay, extend, renew, modify, adjust, submit to
arbitration, prosecute, defend or compromise, upon such terms as it may
determine and upon such evidence as it may deem sufficient, any obligation,
suit, liability, cause of action or claim, including taxes, either in favor of
or against the Company;
(v) to pay any and all fees and to make any and all
expenditures which it, in its sole discretion, deems necessary or appropriate in
connection with the organization of the Company, the management of the affairs
of the Company, and the carrying out of its obligations and responsibilities
under this Agreement;
(vi) to cause to be paid any and all taxes, charges and
assessments that may be levied, assessed or imposed upon any of the assets of
the Company;
(vii) to cause all payments and other income which become due
with respect to the Company's investments to be collected;
(viii) to sign checks and make proper disbursements of Company
funds and to issue receipts for and on behalf of the Company;
(ix) to sell or refinance all or any portion of the Company's
investments;
(x) to enter into the agreements and engage in transactions
with entities and persons with which or whom the Managers are, is or may be
affiliated or with other Persons;
(xi) to make all elections required or permitted to be made by
the Company under the Code, except as provided in Section 9.4; and
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(xii) to assume and exercise all rights, powers, and
responsibilities granted to Managers by the Act and, subject to the limitations
set forth in this Agreement, to do any and all acts and things which shall be in
furtherance of the Company's business as set forth in this Agreement.
(b) With respect to all of its rights, powers and responsibilities
under this Agreement, the Managers are authorized to execute and deliver, in the
name and on behalf of the Company, such notes and other evidence of
indebtedness, contracts, assignments, deeds, leases, loan agreements, mortgages
and other security instruments as it deems proper, all on such terms and
conditions as they deem proper.
6.3 Limitations on Authority of Managers. Notwithstanding anything
to the contrary contained in this Agreement, the Managers shall not have the
authority,
(a) Without the approval of all the Members:
(i) to do any willful act in contravention of this Agreement;
(ii) to confess a judgment in a material amount against the
Company;
(iii) to convert property of the Company to its own use, or
assign any rights in specific property of the Company for other than a purpose
of the Company;
(iv) to admit a person as a Manager or a Member, except as
provided in this Agreement;
(v) to perform any act that would subject the Members to
liability other than as members of a limited liability company in any
jurisdiction;
(vi) to pay for any services performed by the Managers or an
Affiliate thereof, except as otherwise permitted in this Agreement;
(vii) to execute or deliver any general assignment for the
benefit of the creditors of the Company; or
(viii)to make any loan to a Manager or its Affiliates; or
(b) without the vote or written consent of a Majority-in-Interest of
the Members:
(i) to admit additional or substitute Members, except as
permitted hereunder; or
(ii) to admit any new Managers, except as permitted hereunder.
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6.4 Participation by Members. No Investor Member shall participate
in or interfere with the management of the Company or the operation of its
business. The exercise by an Investor Member of any of his rights or powers
granted in this Agreement shall not be deemed taking part in control of the
business of the Company and shall not constitute a violation of this Section
6.4. No Investor Member shall have any power or authority to sign for or to bind
the Company in any manner or for any purpose whatsoever. No Investor Member
shall have priority over any other Member with respect to any rights or duties
contained in this Agreement, unless expressly provided for in this Agreement.
6.5 Other Activities of Managers or Members.
(a) The Managers shall not be required to devote their full time and
effort to the affairs of the Company, but shall devote such time and effort as
may reasonably be required to adequately promote the Company's interests.
(b) The parties hereto expressly agree that any Manager or Member
may at any time engage in and possess interests in other business ventures of
any and every nature and description, independently or with others, including,
but not limited to, engaging in activities which parallel or compete with the
business of the Company, and neither the Company nor any Member shall by virtue
of this Agreement have any right, title or interest in or to such independent
activities or to the income or profits derived therefrom.
6.6 Fees and Expenses; Compensation of Managers.
(a) Except as specifically provided in this Agreement, no fees shall
be paid to any Member or Manager by the Company. However, the Managers shall be
entitled to receive an annual fee from DI for its services in monitoring the
Company's investment in DI and reimbursement for all reasonable out-of-pocket
costs and expenses incurred on behalf of the Company.
(b) Nothing in this Agreement shall be deemed to limit or restrict
the rights of the Managers or any of their Affiliates to contract for and
receive separate fees and benefits, directly or indirectly, as a result of their
interests in any Person which supplies goods or services to, or otherwise
transacts business with the Company or DI; provided, however, that the material
terms of any such transaction with the Company shall be (i) disclosed to each
Member or a predecessor in interest in writing at or prior to his admission to
the Partnership, or (ii) approved by a Majority-in-Interest of the Members, or
(iii) not materially less favorable to the Company than those which would be
obtainable from an unrelated party in an arm's-length transaction.
6.7 Liability for Acts and Omissions; Indemnification. The Managers
shall not be liable, responsible, or accountable in damages or otherwise to any
of the Members for, and the Company shall indemnify and save harmless the
Managers from, any loss or damage incurred by any of them by reason of an act or
omission performed or omitted by any of them in good faith on behalf of the
Company and in a manner reasonably believed by any of them to be within
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the scope of the authority granted to them by this Agreement and in the best
interests of the Company, except for willful misconduct.
6.8 Number, Tenure and Qualifications of Managers. The number of
Managers of the Company may be amended from time to time by the vote or written
consent of at least two-thirds of all Member's Interests. Each Manager shall
hold office until the next annual meeting of Members or until a successor shall
have been elected and qualified. Managers shall be elected by the vote or
written consent of at least a Majority-in-Interest of the Members and need not
be residents of the State of Delaware or Members of the Company. Notwithstanding
the foregoing, the Managing Member shall be the sole Manager of the Company
until it has resigned or been removed for cause as herein provided.
6.9 Resignation of Managers. Any Manager may resign at any time by
giving written notice to the Company. The resignation of any Manager shall take
effect upon receipt of such notice or at any later time specified in such
notice. Unless otherwise specified in such notice, the acceptance of the
resignation shall not be necessary to make it effective. The resignation of the
Manager who is also a Member shall not affect the Manager's rights as a Member
and shall not constitute a withdrawal as a Member.
6.10 Removal of a Manager.
(a) The Members, at any time, upon the consent of two-thirds in
Interest of the Members, may remove a Manager for "cause." For purposes hereof,
"cause" means the occurrence of any one or more of the following acts on the
part of the Manager(s):
(1) willful and persistent inattention to his duties;
(2) an act or acts amounting to gross negligence or willful
malfeasance to the material detriment of the Company; or
(3) a material breach of a Manager's obligations and duties
pursuant to this Agreement.
(b) To accomplish removal, the Members shall give notice to the
Manager, who shall have sixty (60) days from such notice to cure the reason or
reasons for such removal, and in the event of such cure he shall remain as a
Manager. If, at the end of sixty (60) days he has not cured the reason or
reasons for such removal, upon a further notice from the Members, the powers and
authorities conferred on him as a Manager under this Agreement shall cease. If
the Manager shall: (i) at or before the expiration of the 60-day period notify
the Members that in his reasonable opinion there is no cause for his removal
under the standards set forth in this Section 6.10 or (ii) upon its receipt from
the Members of the notice stating he is being removed, notify the Members that
in his reasonable opinion he has cured the reason for his proposed removal, then
the question of whether the Manager is to be removed shall be referred to an
impartial arbitrator mutually agreeable to the Manager and the Members, or,
failing such agreement within ten (10) business days, the parties shall apply
within fifteen (15) business days
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to the American Arbitration Association for appointment of an independent
arbitrator, who, in either case, shall have had no prior dealings with any
Manager or Member. The determination of the arbitrator shall be made within
sixty (60) business days of the date upon which he receives the question and
shall be final, conclusive and binding upon such Manager and the Members. The
costs of the arbitrator shall be borne equally by the Manager and the Members.
(c) The removed Manager shall have no further right or obligation to
bind or manage the Company. Otherwise, the removal of the Manager shall not
affect any existing rights or obligations of such Manager with respect to the
Company, including such Manager's right to exoneration and indemnification under
Section 6.7 for acts or omissions prior to the date of his removal, or to his
interest, if any, as a Member in the Company's capital, distributions, income,
gains, losses and deductions.
6.11 Vacancies of Managers. Any vacancy occurring for any reason in
the number of Managers may be filled by the vote or written consent of at least
a majority of the remaining Managers then in office; provided, however, that if
there are no remaining Managers, each vacancy shall be filled by the vote or
written consent of at least a Majority-in-Interest of the Members. A Manager
elected to fill a vacancy shall be elected for the unexpired term of the
Manager's predecessor in office and shall hold office until the expiration of
such term and until the Manager's successor has been elected and qualified. A
Manager chosen to fill a position resulting from an increase in the number of
Managers shall hold office until the next annual meeting of Members and until a
successor has been elected and qualified.
6.12 Place of Managers' Meetings. Regular and special meetings of
the Managers shall be held at any place within or without the State of Delaware
which has been designated from time to time by resolution of the Managers or by
the affirmative vote of a Majority-in-Interest of all the Members then entitled
to vote at a meeting of Members. In the absence of such designation, all
meetings shall be held at the principal office of the Company.
6.13 Special Meetings of Managers. Special meetings of the Managers
for any purpose or purposes shall be called at any time by any Manager. Notice
of such special meetings, unless waived by attendance thereat or by written
consent to the holding of the meeting, shall be given by written notice mailed
at least ten (10) days before the date of such meeting or be hand delivered or
sent by facsimile at least ten (10) days before the date such meeting is to be
held.
6.14 Notice of Adjournment. Notice of the time and place of holding
an adjourned meeting need not be given to absent Managers if the time and place
be fixed at the meeting adjourned.
6.15 Waiver of Notice. The transactions approved or the actions
taken at any meeting of the Managers, however called and noticed or wherever
held, shall be as valid as though such transactions had been approved or such
other actions taken at a meeting duly held after regular call and notice, if (a)
a quorum be present, and (b) either before or after the meeting, each of the
Managers not present signs a written waiver of notice, or a consent to holding
such
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meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the Company records or made a part of the minutes
of the meeting.
6.16 Action by Managers; Quorum; Voting; Action Without a Meeting.
(a) A majority of the total number of Managers shall be necessary to
constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Managers present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Company, unless a greater number be required by the
Act. The Managers present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough Managers to have less than a quorum.
(b) Each Manager shall have one vote. Any action which under any
provision of this Agreement may be taken at a meeting of the Managers may be
taken without a meeting if authorized by a writing signed by a majority of
Managers who would be entitled to vote upon such action at a meeting, unless the
Agreement requires such action to be taken by the unanimous vote of all of the
Managers, in which case such writing shall be signed by all of the Managers who
would be entitled to vote upon such action at a meeting, in each case filed with
the records of the Company.
6.17 Meetings by Telephone. Managers, or any committee designated by
the Managers, may participate in a meeting of the Managers by means of
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear one another, and such
participation in a meeting shall constitute presence in person at the meeting.
6.18 Adjournment. A majority of the Managers present may adjourn any
Managers' meeting to meet again at a stated day and hour or until the time fixed
for the next regular meeting of the Managers.
6.19 Committees of the Managers. The Managers, by resolution, may
designate from among the Managers one or more committees, each of which shall
comprise one or more of the Managers, and may designate one or more of the
Managers as alternate members of any committee, who may, subject to any
limitations imposed by the Managers, replace absent or disqualified Managers at
any meeting of that committee. Any such committee, to the extent provided in
such resolution, shall have and may exercise all of the authority of the
Managers, subject to the restrictions contained in the Act and hereunder.
ARTICLE VII
MEETINGS OF MEMBERS
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7.1 Meetings. Meetings of the Members, for any purpose or purposes,
may be called by any Manager or any Member holding not less than twenty percent
(20%) of the Members' Interests.
7.2 Place of Meetings. Meetings of the Members may be held at any
place, within or outside the State of Delaware, for any meeting of the Members
designated in any notice of such meeting. If no such designation is made, the
place of any such meeting shall be the principal office of the Company.
7.3 Notice of Meetings. Written notice stating the place, day and
hour of the meeting indicating that it is being issued by or at the direction of
the person or persons calling the meeting, stating the purpose or purposes for
which the meeting is called shall be delivered no fewer than ten (10) nor more
than sixty (60) days before the date of the meeting.
7.4 Record Date. For the purpose of determining the Members entitled
to notice of or to vote at any meeting of Members or any adjournment of such
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which notice of
the meeting is mailed or the date on which the resolution declaring a
distribution is adopted, as the case may be, shall be the record date for making
such a determination. When a determination of Members entitled to vote at any
meeting of Members has been made pursuant to this Section, the determination
shall apply to any adjournment of the meeting.
7.5 Quorum. Members holding not less than a majority of all Members'
Interests, represented in person or by proxy, shall constitute a quorum at any
meeting of Members. In the absence of a quorum at any meeting of Members, a
majority of the Members' Interests so represented may adjourn the meeting from
time to time for a period not to exceed sixty (60) days without further notice.
However, if the adjournment is for more than sixty (60) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Member of record entitled to vote
at such meeting. At an adjourned meeting at which a quorum shall be present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed. The Members present at a meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during
the meeting of Members' Interests whose absence results in less than a quorum
being present.
7.6 Manner of Acting. If a quorum is present at any meeting, the
vote or written consent of Members holding not less than a majority of Members'
Interests shall be the act of the Members, unless the vote of a greater or less
proportion or number is otherwise required by the Act or this Agreement.
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7.7 Proxies.
(a) A Member may vote in person or by proxy executed in writing by
the Member or by a duly authorized attorney-in-fact.
(b) Every proxy must be signed by the Member or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Member executing it, except as
otherwise provided in this Section.
(c) The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the Member who executed the proxy
unless, before the authority is exercised, written notice of an adjudication of
such incompetence or of such death is received by any Manager.
(d) Except when other provision shall have been made by written
agreement between the parties, the record holder of a Member's Interest which he
or it holds as pledgee or otherwise as security or which belong to another,
shall issue to the pledgor or to such owner of such Member's Interest, upon
demand therefor and payment of necessary expenses thereof, a proxy to vote or
take other action thereon.
(e) A proxy which is entitled "irrevocable proxy" and which states
that it is irrevocable, is irrevocable when it is held by (i) a pledgee, (ii) a
Person who has purchased or agreed to purchase the shares, (iii) a creditor or
creditors of the corporation who extend or continue credit to the corporation in
consideration of the proxy if the proxy states that it was given in
consideration of such extension or continuation of credit, the amount thereof,
and the name of the person extending or continuing credit, (iv) a Person who has
contracted to perform services for the Company, if a proxy is required by the
contract of employment, if the proxy states that it was given in consideration
of such contract of employment, the name of the employee and the period of
employment contracted for, or (v) a nominee of any of the Persons described in
clauses (i)-(iv) of this sentence.
(f) Notwithstanding a provision in a proxy described in Section
7.7(e)(i), (iii) or (iv) stating that it is irrevocable, the proxy becomes
revocable after the pledge is redeemed, or the debt of the Company is paid, or
the period of employment provided for in the contract of employment has
terminated and, in a case provided for in Section 7.7(e)(iii) or (iv) of this
Agreement, becomes revocable three (3) years after the date of the proxy or at
the end of the period, if any, specified therein, whichever period is less,
unless the period of irrevocability is renewed from time to time by the
execution of a new irrevocable proxy as provided in this Section 7.7. This
paragraph does not affect the duration of a proxy under paragraph (b) of this
Section 7.7.
(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of a Member's Interest without knowledge of the
existence of such proxy.
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7.8 Action by Members Without a Meeting.
(a) Whenever the Members of the Company are required or permitted to
take any action by vote, such action may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken shall be signed by the Members who hold the voting
interests having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all of the
Members entitled to vote therein were present and voted and shall be delivered
to the office of the Company, its principal place of business or a Manager,
employee or agent of the Company.
(b) Every written consent shall bear the date of signature of each
Member who signs the consent, and no written consent shall be effective to take
the action referred to therein unless, within sixty (60) days of the earliest
dated consent delivered in the manner required by this Section to the Company,
written consents signed by a sufficient number of Members to take the action are
delivered to the office of the Company, its principal place of business or a
Manager, employee or agent of the Company having custody of the records of the
Company.
(c) Prompt notice of the taking of the action without a meeting by
less than unanimous written consent shall be given to each Member who has not
consented in writing but who would have been entitled to vote thereon had such
action been taken at a meeting.
7.9 Waiver of Notice. Notice of a meeting need not be given to any
Member who submits a signed waiver of notice, in person or by proxy, whether
before or after the meeting. The attendance of any Member at a meeting, in
person or by proxy, without protesting prior to the conclusion of the meeting
the lack of notice of such meeting, shall constitute a waiver of notice by him.
7.10 Voting Agreements. An agreement between two or more Members, if
in writing and signed by the parties thereto, may provide that in exercising any
voting rights, the Members' Interest held by them shall be voted as therein
provided, or as they may agree, or as determined in accordance with a procedure
agreed upon by them.
ARTICLE VIII
TRANSFERS OF COMPANY INTERESTS
8.1 Investment Representation.
(a) Each Member represents and warrants that it is acquiring its
Interest for its own account for investment purposes only and not with a view to
the distribution or resale thereof, in whole or in part.
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(b) Each Member agrees that he will not sell, assign or otherwise
transfer his Interest or any fraction thereof to any Person who does not
similarly represent and warrant and similarly agree not to sell, assign or
transfer such Interest or fraction thereof to any Person who does not similarly
represent and warrant and agree.
8.2 Assignment by Members. Except as otherwise expressly provided in
this Section 8.2, a Member shall not sell, assign, transfer or encumber all or
any part of his Interest to any other Person, whether or not a Member, unless
the assignment is effected by substitution of the assignee as a Member in
compliance with the following conditions:
(a) the assignment shall be set forth in a written instrument in the
form and substance acceptable to legal counsel to the Company which (i) states
that the assignee desires to be substituted as a Member and accepts and adopts
all of the terms and provisions of this Agreement, and (ii) provides for the
payment by the parties to the assignment of all reasonable expenses incurred by
the Company in connection with the substitution, including, but not limited to,
the cost of obtaining opinions of legal counsel, preparing the necessary
amendment to this Agreement, the filing of an amendment to the Certificate of
Formation, if required, and all legal fees in connection with any of the
foregoing;
(b) a majority of the Managers that are also Members shall consent
to the assignment, which any Manager/Member may refuse to do with or without
cause; and
(c) if requested by the Managers, the Company shall obtain an
opinion of legal counsel acceptable to the Managers, or shall require the
parties to the assignment to provide to the Company an opinion of legal counsel
acceptable to the Managers, to the effect that (i) the assignment is exempt from
registration and qualification under the Securities Act of 1933, as amended, and
all applicable state securities laws and (ii) the assignment will not cause a
termination of the Company for Federal income tax purposes.
8.3 Void Transfers; Effective Date.
(a) Assignment of a Member's Interest to a minor or person adjudged
insane or incompetent is prohibited (unless by will or intestate succession),
and consent of the Managers to any such assignment shall be void and of no
effect.
(b) Any purported assignment of a Member's Interest otherwise than
by way of substitution in accordance with this Article VIII shall be of no
effect as between the Company and the purported assignee and shall be
unenforceable as against the Company and the Members or the Managers. The
Managers shall not be charged with actual or constructive notice of any such
purported assignment and are expressly prohibited from making allocations and
distributions under this Agreement in accordance with any such purported
assignment.
(c) Any substitution of Members shall (unless otherwise agreed by
the Managers or required by law) become effective for all purposes as of the
first day of the month in which all the conditions of the substitution have been
satisfied. Any Person substituted as a
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Member pursuant to Section 8.2 shall (except as otherwise expressly provided in
this Agreement) be a Member for all purposes of this Agreement to the extent of
the Interest acquired by that Person.
ARTICLE IX
ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS
9.1 Books and Records. The Managers shall keep at the Company's
principal office separate books of account for the Company which shall show a
true and accurate record of all costs and expenses incurred, all charges made,
all credits made and received and all income derived in connection with the
operation of the Company business in accordance with generally accepted
accounting principles consistently applied.
Each Member shall, at its sole expense, have the right, upon
reasonable notice to the Managers, to examine, copy and audit the Company's
books and records during normal business hours.
9.2 Reports. The Managers, at the expense of the Company, shall
cause to be prepared and distributed to the Members within 90 days after the
expiration of each Fiscal Year, a balance sheet and profit and loss statement
prepared by the Accountants.
9.3 Tax Returns. The Managers shall cause the Accountants to prepare
all income and other tax returns of the Company to be filed not later than the
date when such filings are required by law. The Managers shall furnish to each
Member a copy of each such return as soon as it has been filed, together with
any schedules or other information which each Member may require in connection
with such Member's own tax affairs. Each of the Members shall, in its respective
income tax return and other statements filed with the Internal Revenue Service
or other taxing authority, report taxable income in accordance with the
provisions of this Agreement.
9.4 Section 754 Election. In connection with any assignment or
transfer of an Interest described in Sections 734(b) and 743(b) of the Code and
which is permitted by the terms of this Agreement, the Managers shall in their
reasonable discretion cause the Company, at the written request of the
transferor, the transferee or the successor to such Interest, on behalf of the
Company and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b) (or any like statute or regulation then in effect) to make an
election to adjust the basis of the Company's property in the manner provided in
Section 755 of the Code provided such adjustment increases the basis of Company
property, and such transferee shall pay all costs incurred by the Company in
connection therewith, including, without limitation, reasonable attorneys' and
accountants' fees.
9.5 Tax Matters Partner. The Managers shall designate one Manager as
the "Tax Matters Partner" under Code Section 6231(a)(7), with all powers
attendant thereto, who shall be authorized and required to represent the Company
(at the Company's expense) in
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connection with all examinations of the Company's affairs by tax authorities,
including resulting administrative and judicial proceedings, and to expend
Company funds for professional services and costs associated therewith. Each
Member agrees to cooperate with the Managers and the Tax Matters Partner and to
do or refrain from doing any or all things reasonably required by them to
conduct such proceedings. The Managing Member shall be the initial Tax Matters
Partner.
9.6 Withholding. If the Managers, in their reasonable judgment,
determine that the Code requires the Company to withhold any tax with respect to
a Member's distributive share of Company income, gain, loss, deduction or
credit, distributions of Available Cash Flow, or liquidating distributions, the
Managers shall cause the Company to withhold and pay the tax. Notwithstanding
the foregoing, the Managers shall not undertake to withhold any such tax unless
and until they have received a written opinion of counsel to the Company that
such withholding is required. If at any time the amount required to be withheld
exceeds the amount that would otherwise be distributed to the Member to whom the
withholding requirement applies, that Member shall, as a condition to receiving
any further distribution, make an additional Capital Contribution equal to the
excess of the amount required to be withheld (and interest and penalties, if
applicable) over the amount, if any, that would otherwise be distributed to that
Member and which is available to be withheld. Any amount withheld with respect
to a Member shall be deducted from the amount that would otherwise be
distributed to that Member but shall be treated as though it had been
distributed to that Member for all purposes of this Agreement.
9.7 Bank Accounts. The bank accounts of the Company shall be
maintained in such banking institutions as the Managers determine and
withdrawals shall be made only in the regular course of Company business and as
otherwise authorized in this Agreement on such signature or signatures as the
Managers may determine. The funds of the Company shall not be commingled with
the funds of any other person.
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Withdrawal. Except as otherwise provided in this Agreement, no
Member shall at any time retire or withdraw from the Company or withdraw any
amount out of its Capital Account. Any Member retiring or withdrawing in
contravention of this Section 10.1 shall indemnify, defend and hold harmless the
Company and all other Members (other than a Member who is, at the time of such
withdrawal, in default under this Agreement) from and against any losses,
expenses, judgments, fines, settlements or damages suffered or incurred by the
Company or any such other Member arising out of or resulting from such
retirement or withdrawal.
10.2 Dissolution. The Company shall be dissolved and its business
wound-up upon the earliest to occur of:
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(i) the expiration of the term;
(ii) the Managers and a Majority-in-Interest of the Members
determine that the Company should be dissolved;
(iii) the Bankruptcy of the Company;
(iv) the Bankruptcy, dissolution, death, incapacity or withdrawal of
any Manager that is also a Member or the occurrence of any other event that
terminates the continued membership of any such Manager, unless within one
hundred eighty (180) days after such event the Company is continued by the
consent of a Majority-in-Interest of all of the remaining Members; and
(v) the sale or other disposition of all or substantially all of the
Company's assets.
Except as otherwise set forth herein, upon the dissolution of the
Company, the Managers shall take all actions deemed necessary or appropriate in
their sole discretion to windup the business affairs of the Company.
10.3 Distribution Upon Liquidation of the Company. Any proceeds
received by the Company in connection with the liquidation of the Company, or
other distributions made on liquidation (including distributions of securities
of DI), shall be distributed (after giving effect to all charges and credits to
Capital Accounts resulting from allocations and prior distributions) as follows
and in the following order or priority:
(a) first, to the payment of debts and liabilities of the Company to
the extent required (including all expenses of the Company incident to any such
liquidation of the Company, other than loans or other debts and liabilities of
the Company due to any Member or any Affiliate of any Member);
(b) second, to the setting up of any reserves which the Managers
deem reasonably necessary for contingent, unmatured or unforeseen liabilities or
obligations of the Company;
(c) third, to the repayment of any unrepaid loans theretofore made
by any Member or any Affiliate of any Member to the Company for Company
obligations, and to the payment of any other debts and liabilities of the
Company to any Member or any Affiliate of any Member;
(d) fourth, to the Members with positive Capital Accounts in an
amount equal to and in accordance with their Capital Account balances, until
such balances have been reduced to zero; and
(e) fifth, to the Members pro-rata in accordance with their
Interests.
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For the purposes hereof, securities of DI distributed to the Members shall be
valued in accordance with Article XII hereof.
10.4 Capital Account Deficits. If any Member has a deficit balance
in its Capital Account following the liquidation of its Interest, as determined
after taking into account all adjustments to such Capital Account for the Fiscal
Year of the Company during which such liquidation occurs (other than those made
pursuant to this Section 10.4), such Member shall have no obligation to make any
Capital Contribution, and the negative balance of any Capital Account shall not
be considered a debt owed by the Member to the Company or to any other Person
for any purpose.
10.5 Certificate of Cancellation. Following the dissolution of the
Company, or at any time there are less than two Members, the Managers shall file
a Certificate of Cancellation with the Secretary of State of Delaware pursuant
to the Act.
ARTICLE XI
AMENDMENTS
11.1 Amendments Adopted Solely by the Managers. The Managers may,
without the consent of any Member, amend any provision of this Agreement and
execute whatever documents may be required in connection therewith to reflect:
(a) a change in the name of the Company or the location of the
principal place of business of the Company;
(b) the admission of a substituted Member in accordance with this
Agreement;
(c) a change which is necessary to qualify the Company under the
laws of any jurisdiction or which is necessary and advisable in the opinion of
the Managers to assure that the Company will not be treated as an association
taxable as a corporation and not as a limited liability company;
(d) a change of address of any Member; or
(e) any other amendment which is ministerial or similar to the
foregoing.
11.2 Amendments to be Adopted by Managers and Members. All
amendments to this Agreement shall be in writing and, except as provided in
Section 11.1, shall be approved by the Managers and by a Majority-in-Interest of
the Members, unless a greater vote or the specific approval of a Member is
required by this Agreement, in which case such greater vote or specific consent
shall be required.
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ARTICLE XII
VALUATION OF SECURITIES OF DI
12.1 Normal Valuation. For the purposes of this Agreement, the value
of any security of DI as of the date of distribution to the Members (or, in the
event such date is a holiday or other day which is not a business day, as of the
next preceding business day) will be determined as follows:
(a) a security which is listed on a recognized securities exchange
or the National Market System will be valued at its last sales price or, if no
sale occurred on such date, at the last "bid" price; and
(b) a security which is traded over-the-counter (other than on the
National Market System) will be valued at the most recent "bid" price; and
(c) all other securities will be valued on such date by the Managing
Member at fair market value in such manner as it may reasonably determine.
12.2 Legal Restrictions on Transfer. Any security which is held
under a representation that it has been acquired for investment and not with a
view to public sale or distribution, or which is held subject to any other legal
restrictions, will be valued at such discount, if any, from the value determined
under 12.1 above as the Managing Member deems reasonably necessary in its sole
discretion to reflect properly the effect of such legal restriction on the
marketability of such security.
12.3 Objection to Valuation. If a Majority-in-Interest of the
Members object to the valuation of any security, the Managing Member will (at
the Company's expense) cause an independent securities expert (mutually
acceptable to the Managing Member and a Majority-in-Interest of the Members), to
review such valuation, and such expert's determination will be binding on the
parties.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. All notices required or permitted by this Agreement
shall be in writing and may be delivered by hand to the party to be served or
may be sent by registered or certified mail, with postage prepaid, return
receipt requested, or may be transmitted by overnight courier service, and
addressed in the case of the Company to 32 Loockerman Square, Suite L-100,
Dover, Delaware 19904, with a copy to William R. Ziegler, Esq., Parson & Brown,
666 Third Avenue, New York, New York 10017, and in the case of the Members as
set forth on Schedule A hereto, or to such other address as shall from time to
time be supplied in writing by
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any party to the other. Notice sent by registered or certified mail, post-paid,
with return receipt requested, addressed as above provided, shall be deemed
given four (4) days after deposit of same in the United States mail. Any notice
or other document sent or delivered in any other manner shall be effective only
if and when received.
13.2 Successors and Assigns. Subject to the restrictions on transfer
set forth herein, this Agreement shall bind and inure to the benefit of the
parties hereto and their respective legal representatives, successors and
assigns.
13.3 No Oral Modifications; Amendments. No oral amendment of this
Agreement shall be binding on the Members or the Company. Unless otherwise set
forth hereunder, any modification or amendment of this Agreement must be in
writing signed by all of the Members.
13.4 Captions. Any article, section or paragraph titles or captions
contained in this Agreement and the table of contents are for convenience of
reference only and shall not be deemed a part of this Agreement.
13.5 Terms. Common nouns and pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular and plural, as the identity of the
Person may in the context require. Any references to the Code or other statutes
or laws shall include all amendments, modifications or replacements of the
specific sections and provisions concerned.
13.6 Invalidity. If any provision of this Agreement shall be held
invalid, it shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.
13.7 Further Assurances. The parties hereto agree that they will
cooperate with each other and will execute and deliver or cause to be delivered,
all such other instruments, and will take all such other actions, as either
party hereto may reasonably request from time to time in order to effectuate the
provisions and purposes hereof.
13.8 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement between the Members. It supersedes all
prior written and oral statements and no representation, statement, condition or
warranty not contained in this Agreement shall be binding on the Members or have
any force or effect whatsoever.
13.9 Attorneys' Fees. If any proceeding is brought by one Member
against one or more of the other Members to enforce, or for breach of, any of
the provisions in this Agreement, the prevailing Member(s) shall be entitled in
such proceeding to recover reasonable attorneys' fees together with the costs of
such proceeding therein incurred.
13.10 Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware.
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13.11 No Third Party Beneficiary. Any agreement to pay any amount
and any assumption of liability herein contained, express or implied, shall be
only for the benefit of the Members and their respective heirs, successors and
assigns, and such agreements and assumption shall not inure to the benefit of
the obligees of any indebtedness or any other Person, whomsoever, it being the
intention of the Members that no one shall be deemed to be a third party
beneficiary of this Agreement.
13.12 Exhibits and Schedules. Each of the Exhibits and Schedules
attached hereto are hereby incorporated herein and made a part hereof for all
purposes, and references herein thereto shall be deemed to include this
reference and incorporation.
13.13 References to this Agreement. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections, respectively, of this Agreement unless otherwise expressly stated.
The words "herein," "hereof," "hereunder," "hereby," "this Agreement" and other
similar references shall be construed to mean and include this Agreement and all
amendments thereof and supplements thereto unless the context shall clearly
indicate or require otherwise.
13.14 Power of Attorney.
(a) Each of the Members and each successor or assign thereof
irrevocably constitutes and appoints each Manager his true and lawful attorney,
in his name, place and stead, to make, execute, acknowledge, swear to and file
any of the following documents:
(i) any modifications or amendments of this Agreement as
required under the laws of the State of Delaware or any other state;
(ii) any modifications or amendments of the Certificate of
Formation or other instrument which may be required to be filed by the Company
under the laws of the State of Delaware or any other state;
(iii) a certificate of fictitious name for the Company;
(iv) any other instrument which may be required to be filed by
the Company under the laws of any state or government or by any governmental
agency, or which the Managers deem it advisable to file; and
(v) any documents which may be required to effect the
continuation of the Company, the admission of an additional or substituted
Member or the dissolution and termination of the Company, provided such
continuation, admission or dissolution and termination are in accordance with
the terms of this Agreement.
(b) The within and foregoing power of attorney:
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(i) is a special power of attorney coupled with an interest
and is irrevocable; and
(ii) may be exercised by any Manager for each Member by
listing all of the Members executing any instrument with a single signature of
the Manager acting as attorney-in-fact for all of them.
(c) Pursuant to the power of attorney hereinabove granted by each
Member to each Manager with the execution of this Agreement, as hereinabove
described, each Member authorizes said attorney to take any further action which
said attorney shall consider necessary or convenient in connection with any of
the foregoing, hereby giving said attorney full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the foregoing as fully as said Member might or could do if
personally present, and hereby ratifying and confirming all that said attorney
shall lawfully do or cause to be done by virtue hereof.
13.15 Reliance on Authority of Person Signing Agreement. If a Member
is a trust (with or without disclosed beneficiaries), general partnership,
limited partnership, limited liability company, estate, corporation, or any
entity other than a natural person, the Company and the Members shall:
(a) not be required to determine the authority of the person signing
this Agreement to make any commitment or undertaking on behalf of such entity or
to determine any fact or circumstance bearing upon the existence of the
authority of such entity or to determine any fact or circumstance bearing upon
the existence of the authority of such person;
(b) not be required to see to the application or distribution of
proceeds paid or credited to persons signing this Agreement on behalf of such
entity;
(c) be entitled to rely on the authority of the person signing this
Agreement with respect to the voting of the Interest of such entity and with
respect to the giving of consent on behalf of such entity in connection with any
matter for which consent is permitted or required under this Agreement; and
(d) be entitled to rely upon the authority of any general partner,
joint partner, or successor trustee, or president or vice president, as the case
may be, of any such entity the same as if such person were the person originally
signing this Agreement on behalf of such entity.
13.16 Consents and Approvals. Whenever the consent or approval of a
Member is required by this Agreement, such Member shall have the right to give
or withhold such consent or approval in his or its sole discretion, unless
otherwise specified.
13.17 DI Common Stock. Each of the Members agrees, so long as he is
a Member, not to establish or maintain a short position in the Common Stock of
DI.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first written above.
MANAGING MEMBER: SOMERSET CAPITAL PARTNERS
By: /s/ William R. Ziegler
-------------------------
Name: William R. Ziegler
Title: Partner
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Form of Investor Member Signature Page
INVESTOR MEMBER:
----------------------------
(Signature of Investor)
----------------------------
(Please print name)
----------------------------
(Number of Interests)
Residence Address of Investor (please Mailing Address if different from
print): residence address (please print):
- ---------------------------------- -------------------------------------
(Street) (Street)
- ---------------------------------- -------------------------------------
(City) (State) (Zip Code) (City) (State) (Zip Code)
- ---------------------------------- -------------------------------------
(Telephone Number) (Telephone Number)
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EXHIBIT IX
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (Agreement) is entered into by Orkla AS (Orkla), a
company organized under the laws of Norway and Norex America, Inc. (NXA), a
company organized under the laws of the Cayman Islands.
WITNESSETH:
WHEREAS, Orkla is the owner of 1,415,200 shares of Norex America, Inc . common
stock, $1.00 par value per share (NXA Shares); and
WHEREAS, NXA is the owner of: (1) an 8.5% Unsecured Exchangeable Note Due 1996
Dated August 27, 1993 issued by Zapata Corporation with a remaining outstanding
balance of $4,795,814.13 (Zapata Note); (2) 13% Senior Secured Notes Due 2003
issued by Kloster Cruise Limited (Kloster) with a face value of $1,335,000 (KCL
Notes) with accrued interest through the Closing Date, which date is hereinafter
defined, payable to NXA within five days of receipt of payment from Kloster; (3)
290,000 shares of Wilrig AS, NOK30 par value per share or the equivalent in
Transocean AS shares (Wilrig Shares); (4) 8,300,000 share of DI Industries, Inc.
common stock, $0.10 par value per share (DI Shares); and (5) $3,693,784.87 net
receivables due from Engelburn Investments, Inc. (Engelburn Receivables) secured
by a second ship mortgage on the MT Saraband (Vessel); and
WHEREAS, Orkla desires to contribute the NXA Shares to Prosperity Investments,
Inc. (Prosperity) in exchange (1) for capital of $2,000,000 as represented by
800 shares of Prosperity common stock, or a 44.44% interest in the issued and
outstanding shares of Prosperity, $l.00 par value per share, and paid-in
capital, (2) $13,000,000 cash and (3) a $7,500,000 Note issued by Pronor
Holdings Limited (Pronor), a wholly-owned subsidiary of Prosperity, bearing
interest at 8% p. a., with a single payment of principal and accrued interest
due one year from the date of issue (Pronor Note) with the Pronor Note secured
with first priority by the (1) Wilrig Shares, (2) the DI Shares and (3) the
Engelburn Receivables all of which shall be owned by Pronor, with no recourse to
Prosperity; and
WHEREAS, NXA desires to contribute (1) $3,700,000 cash, (2) Zapata Note, (3) KCL
Notes, (4) Wilrig Shares, (5) DI Shares and (6) Engelburn Receivables to
Prosperity in exchange (1) for capital of $2,000,000 as represented by 800
shares of Prosperity common stock, or a 44.44% interest in the issued and
outstanding shares of Prosperity, $1.00 par value per share, and paid-in capital
and (2) a $15,700,000 Note issued by Prosperity, bearing interest at 8% p. a.,
with interest deferred and added to principal outstanding at the end of each
twelve month period with a single payment of principal and deferred and accrued
interest due 39 months from the date of issue (Prosperity Note) and secured by a
second lien over the assets of Prosperity; and
WHEREAS, Orkla and NXA both desire to add one or more shareholders who will
contribute a total $500,000 cash in exchange for a total capital of $500,000 as
represented by 200 shares of
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Prosperity common stock, or an 11.11% interest in the issued and outstanding
shares of Prosperity, $1.00 par value per share, and paid-in capital; however,
Orkla and NXA recognize that the additional shareholder(s) may not be identified
as of the Closing Date and, consequently, the 44.44% interest to be acquired by
each of Orkla and NXA as mentioned hereinabove will temporarily comprise and
constitute 50.0% interest to be held by each of Orkla and NXA; and
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, Orkla and NXA hereby agree as follows:
I. SHAREHOLDER EXCHANGE
1.1 Exchange
Based upon the representations, warranties and agreements of Orkla and NXA
herein contained, and on the terms and subject to the conditions set forth
in this Agreement, on the Closing Date, Orkla hereby agrees to contribute,
assign, transfer and deliver to Prosperity the NXA Shares at a value of
$15.90 per share which value is agreed to by Orkla and NXA in exchange for
(a) a 44.44% interest in the issued and outstanding shares of Prosperity,
(b) $13,000,000 cash and (c) the Pronor Note, and NXA agrees to contribute,
assign, transfer and deliver to Prosperity (a) $3,700,000 cash, (b) Zapata
Note valued at par, (c) KCL Notes valued at $750 per $1,000 par value of
bonds, (d) Wilrig Shares valued at $3,000,000, (e) DI Shares valued at
$4,150,000 and (f) Engelburn Receivables valued at $1,050,000 each of which
values are agreed to by Orkla and NXA in exchange for (a) a 44.44% interest
in the issued and outstanding shares of Prosperity and (b) the Prosperity
Note. NXA hereby represents and warrants that the balance sheets of
Prosperity and Pronor shall, as at the Closing Date, be as set out in the
balance sheets appended as Exhibit I hereto and that there are no other
liabilities, whether actual or contingent, in either company other than as
disclosed therein.
1.2 Delivery
The parties hereto hereby agree that these actions set out herein shall be
consummated through NordlandsBanken AS of Oslo acting as escrow agent (the
"Escrow Agent") to the parties.
The following deliveries shall be made on the Closing Date:
a) From Orkla to the Escrow Agent to the order of Prosperity:
(i) The NXA Shares, transfer instructions in favor of Prosperity and
notification to DnB that the NXA Shares are blocked in favor of
the Escrow Agent.
b) From NXA to the Escrow Agent to the order of Prosperity:
(i) $3,700,000 in cash.
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(ii) A share certificate representing 18,730,105 shares of DI
Industries, Inc. together with stock power and instructions to
the Escrow Agent to arrange for the issuance of two new share
certificates in registered form in exchange thereof, one of which
to represent the DI Shares in the name of Pronor.
c) From Prosperity to the Escrow Agent to the order of Orkla:
(i) $13,000,000 to be transferred to a blocked account with the
Escrow Agent, to be released at the option of Orkla against
delivery of the NXA Shares.
Prosperity shall pay interest on any unpaid amount from 9
October, 1995 until payment is made at a rate of 8% p.a. for a
period of 10 days. Thereafter the interest rate shall increase to
12% p.a. until all amounts and accrued interest are paid.
The following deliveries shall be made on the Closing Date or at least on the
10th business day thereafter:
a) From NXA to the Escrow Agent to the order of Prosperity:
(i) The Zapata Note duly endorsed for transfer to Prosperity together
with notice of assignment and satisfactory evidence of delivery
of the notice.
(ii) The KCL Notes duly endorsed for transfer to Prosperity together
with notice of assignment and satisfactory evidence of delivery
of the notice.
b) From NXA to the Escrow Agent to the order of Pronor:
(i) Transfer instructions in favor of Pronor in respect of the Wilrig
Shares together with notification to DnB that the account to
which the shares are credited has been blocked in favor of the
Escrow Agent.
(ii) The Engelburn Receivables duly endorsed for transfer to Pronor
together with assignment agreement, notice of assignment,
acknowledgment from Engelburn and a second priority ship mortgage
deed in the amount o
