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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
Under The Securities Exchange Act of 1934
(Amendment No. )(1)
Grey Wolf, Inc. (f/k/a DI Industries, Inc.)
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(Name of issuer)
Common Stock, par value $0.10 per share
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(Title of class of securities)
232909-10-1
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(CUSIP Number)
c/o William R. Ziegler
Parson & Brown
666 Third Avenue, 9th Floor
New York, New York 10017; (212) 551-9860
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(Name, address and telephone number of person
authorized to receive notices and communications)
September 30, 1997
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(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 |_|.
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)
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(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
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CUSIP No. 232909-10-1 13D Page 2 of Pages
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
2 Somerset Drilling Associates, L.L.C.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS* OO (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY 7 SOLE VOTING POWER
EACH See Item 5(b)
REPORTING
PERSON WITH
8 SHARED VOTING POWER
See Item 5(b)
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
35,423,978
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |X|
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.3%
14 TYPE OF REPORTING PERSON*
00 (Limited Liability Company)
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 3 of Pages
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Somerset Capital Partners
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS* OO (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
See Item 5(b)
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
35,423,978
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |X|
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 4 of Pages
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Thomas H. O'Neill, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS* PF (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
See Item 5(b)
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
35,423,978
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |X|
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.3%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 5 of Pages
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Steven A. Webster
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS* BK (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
See Item 5(b)
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 35,499,978
(inclusive of stock options to acquire 75,000 shares of Common Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |X|
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.36%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 232909-10-1 13D Page 6 of Pages
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
William R. Ziegler
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS* BK (See Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES See Item 5(b)
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
See Item 5(b)
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 35,503,978
(inclusive of stock options to acquire 75,000 shares of Common Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |X|
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.37%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
INTRODUCTION.
The reporting persons identified in Item 2 below (collectively,
the "Reporting Persons"), together with certain other persons that were parties
to a certain shareholders' agreement dated May 7, 1996, as amended on June 11,
1996 (as amended, the "Shareholders' Agreement") and the control persons of such
parties (collectively, the "Shareholders' Agreement Group"), were signatories to
an initial statement, on Schedule 13D, that was filed with the Securities and
Exchange Commission (the "Commission") on September 9, 1996, as amended by an
Amendment No. 1 thereto that was filed with the Commission on March 4, 1997
(collectively, the "Prior Schedule 13D"). The Shareholders' Agreement Group (i)
jointly filed the Prior Schedule 13D as a group solely because they may have
been 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 were held subject to certain
agreements with respect to the voting and disposition of same under the terms
and conditions of the Shareholders' Agreement and (ii) in accordance with Rule
13d-1(f) promulgated pursuant to the Exchange Act, all of the members of the
Shareholders' Agreement Group had executed a written agreement, as subsequently
amended, relating to the joint filing of the Prior Schedule 13D (the "Prior
Group Filing Agreement"). The Shareholders' Agreement Group was comprised of
three separate subgroups, with the Reporting Persons comprising the subgroup
referred to as the Somerset Group, all as more fully described in the Prior
Schedule 13D. The parties to the Shareholders' Agreement entered into a Second
Amendment to Shareholders' Agreement, dated September 30, 1997, which provided
for a termination of all of the provisions of the Shareholders' Agreement in
their entirety (the "Termination of Shareholders' Agreement"). As a result of
the Termination of Shareholders' Agreement, the Shareholders' Agreement Group
ceased to be a "group" within the meaning of Rule 13d-5(b)(1) promulgated
pursuant to the Exchange Act, and accordingly, the former members of the
Shareholders' Agreement Group are jointly filing an Amendment No. 2 to the Prior
Schedule 13D to disclose the disbanding of the Shareholders' Agreement Group
caused by the Termination of Shareholders' Agreement and the termination of the
Prior Group Filing Agreement (the "Termination of Prior Schedule 13D").
As a result of the Termination of Shareholders Agreement and
Termination of Prior Schedule 13D, each of the Reporting Persons is required to
file a Schedule 13D to disclose his or its, as the case may be, current
beneficial ownership of more than 5% of the outstanding common stock of the
issuer. The Reporting Persons named in Item 2 below, who comprise the Somerset
Group described in the Prior Schedule 13D, which group was one of the three
subgroups under the Shareholders' Agreement, have chosen to satisfy this filing
obligation by jointly filing this Schedule 13D, not only because they may be
deemed a "group" within the meaning of Rule 13d-5(b)(1) promulgated pursuant to
the Exchange Act by virtue of the fact that they acted in concert in connection
with the initial acquisition of securities of the issuer, but also because, for
the most part, they may be deemed to share beneficial ownership with respect to
the same securities of the issuer. In accordance with Rule 13d-1(f) promulgated
pursuant to the
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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 Grey Wolf, Inc. (f/k/a DI Industries, Inc.), a
Texas corporation (the "Company"). The address of the principal executive
offices of the Company is 10370 Richmond Avenue, Suite 600, Houston, Texas
77042-4136.
ITEM 2. IDENTITY AND BACKGROUND.
The reporting persons are 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"), with O'Neill,
Webster and Ziegler being the three general partners of SCP. Somerset, SCP,
O'Neill, Webster and Ziegler are sometimes hereinafter collectively referred
to as the "Somerset Group".
Somerset is a Delaware limited liability company that was formed
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 254 Franklin Street,
Buffalo, New York 14202. The sole managing member of Somerset is SCP.
SCP is a New York general partnership that was formed 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 254 Franklin Street, Buffalo, New York 14202. The
only partners of SCP are O'Neill, Webster and Ziegler.
O'Neill is a natural person and one of the three general partners
of SCP and has a business address of 254 Franklin Street, 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 254 Franklin Street, 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
Page 8 of Pages
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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, none of the Reporting Persons has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, none of the Reporting Persons 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.
As disclosed in the Prior Schedule 13D, 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 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 represented approximately one-third of the shares of the Company
Common Stock outstanding immediately after the Somerset Merger and a certain
other merger described in the
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Prior Schedule 13D that was effected contemporaneously therewith (the Somerset
Merger and such other 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, which shares
were previously held subject to the terms and conditions of the Shareholders'
Agreement (which terminated on September 30, 1997) and are part of the aggregate
number of shares deemed beneficially owned by the Reporting Persons and (ii)
4,000,000 shares of Company Common Stock were issued to Somerset Shareholders
who are not members of the Somerset Group (which shares were never subject to
the terms and conditions of the Shareholders Agreement and were and are not part
of the aggregate number of shares deemed beneficially owned by the Reporting
Persons). 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 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.
ITEM 4. PURPOSE OF TRANSACTION.
As disclosed in Item 3 above, the members of the Somerset Group
acquired most of the shares of Company Common Stock owned by them in the
Somerset Merger.
The 35,423,978 shares of Company Common Stock issued to the
members of the Somerset Group in the Somerset Merger were acquired by such
Reporting Persons primarily for investment purposes, but also with a view
towards influencing management.
As disclosed in Item 3 above, 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. The Somerset Group Shadow Warrants are
Page 10 of Pages
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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 Somerset 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 previously disclosed in the Prior Schedule 13D,
contemporaneously with the execution and delivery of the Merger Agreements, the
Shareholders' Agreement Parties (inclusive of Somerset and SCP) entered into the
Shareholders' Agreement, which became effective as of the Effective Date of the
Mergers. The Shareholders' Agreement required the Shareholders' Agreement
Parties 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 would consist of five directors, comprised of one representative of
each of the three subgroups (inclusive of the Somerset Group) and two directors
(the "Non-Party Directors") 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). In addition, each of the
Shareholders' Agreement Parties had granted in favor of the other parties a four
year irrevocable proxy to enforce the foregoing provisions (individually, an
"Irrevocable Proxy" and collectively, the "Irrevocable Proxies"). At the Annual
Meeting of the Shareholders of the Company held on August 27, 1996, Ziegler, as
the director nominee of the Somerset Group, and Webster, as one of the two
Non-Party Directors, were two of the five persons elected to the Board of
Directors by the shareholders of the Company to serve until the next Annual
Meeting of the Shareholders of the Company. Although the Shareholders' Agreement
(inclusive of the Irrevocable Proxies executed and delivered pursuant thereto)
was terminated effective as of September 30, 1997, Webster and Ziegler continue
to serve as directors of the Company.
As previously disclosed in the Prior Schedule 13D, the Somerset
Merger was effected and an aggregate of 35,423,978 shares of Company Common
Stock were issued to members of the Somerset Group on August 29, 1996, following
the satisfaction of the last closing condition to the consummation of the
transactions contemplated by the Somerset Merger Agreement.
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.
Somerset presently intends to sell an aggregate of up to
5,524,000 shares of Common Stock as part of a secondary public offering of
Common Stock of the Company pursuant to a Registration Statement, on Form S-3,
that was filed by the Company with the Commission on September 29, 1997 (the
"Registration Statement").
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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 his or 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 his or its holdings of Common Stock,
although, except for the contemplated public sale of shares of Common Stock by
Somerset 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 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
Webster 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 Somerset Group
Shadow Warrants, the Shareholders' Agreement (inclusive of the other agreements
which are exhibits thereto, including, without limitation, the Form of
Irrevocable Proxy) and the Termination of Shareholders' 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 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:
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 19.7% of the 151,835,391 shares of
Common Stock issued and outstanding as of September 18, 1997, as set forth in
the Registration Statement.
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 23.3% of the 151,835,391 shares of Common Stock issued
and outstanding as of September 18, 1997, as set forth in the Registration
Statement, 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.
Page 12 of Pages
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The aggregate number and percentage of the Common Stock which are
owned beneficially by O'Neill on the date hereof are 35,423,978 shares of Common
Stock, or approximately 23.3% of the 151,835,391 shares of Common Stock issued
and outstanding as of September 18, 1997, as set forth in the Registration
Statement, 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
O'Neill 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 Webster on the date hereof are 35,499,978 shares of Common
Stock, or approximately 23.36% of the 151,910,391 shares of Common Stock that
would have been issued and outstanding as of September 18, 1997, assuming the
exercise of vested stock options to acquire 75,000 shares of Common Stock held
by Webster, 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
Webster is a partner of SCP and SCP is the managing member of Somerset, as well
as 1,000 shares owned of record by Webster and the vested stock options to
acquire 75,000 shares of Common Stock owned by Webster.
The aggregate number and percentage of the Common Stock which are
owned beneficially by Ziegler on the date hereof are 35,503,978 shares of Common
Stock, or approximately 23.37% of the 151,910,391 shares of Common Stock that
would have been issued and outstanding as of September 18, 1997, assuming the
exercise of vested stock options to acquire 75,000 shares of Common Stock held
by Ziegler, 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
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 and the vested stock options to
acquire 75,000 shares of Common Stock owned 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
35,579,978 shares of Company Common Stock, or approximately 23.4% of the
151,985,391 shares of Common Stock that would have been issued and outstanding
as of September 18, 1997, assuming the exercise of vested stock options to
acquire 150,000 shares of Common Stock held in the aggregate by Webster and by
Ziegler (inclusive of the 35,423,978 shares of Common Stock acquired by such
persons pursuant to the Somerset Merger Agreement, the 5,000 shares of Common
Stock acquired individually by Ziegler several years ago, the 1,000 shares
acquired individually by Webster several years ago and the 75,000 stock options
issued to each of Webster and Ziegler as directors of the Company). Each of
Somerset, SCP, O'Neill and Ziegler disclaims beneficial ownership of the shares
of Common Stock owned (and/or to be owned, upon exercise of vested stock
options) of record by Webster and each of Somerset, SCP, O'Neill and Webster
disclaims beneficial ownership of the shares of Common Stock owned (and/or to be
owned, upon exercise of vested stock options) of record by Ziegler.
Page 13 of Pages
<PAGE>
<PAGE>
The foregoing aggregate number and percentage of the Common Stock
beneficially owned by the Reporting Persons 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
Warrants, as any such right to acquire shares of Common Stock pursuant to the
Somerset Group Shadow Warrants is contingent upon the occurrence of events not
within the control of any Reporting Person and which may or may not occur within
60 days of the date hereof.
(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 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, 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.
SCP 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 5,461,755
shares of Common Stock owned of record by it and (ii) 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. 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) (i) the 5,461,755 shares of Common Stock owned of record by SCP
and (ii) the 29,962,223 shares of Common Stock owned of record by Somerset and
beneficially by SCP.
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). In addition,
(i) Webster may be deemed to have the sole power to vote (and direct the vote
of) and to dispose of (and direct the disposition of) (A) the 1,000 shares of
Common Stock owned of record by him and (B) upon exercise of vested stock
options held by him, the 75,000 shares of Common Stock issuable pursuant
thereto, 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) (A) the
5,000 shares of Common Stock owned of record by him and (B) upon exercise of
vested stock options held by him, the 75,000 shares of Common Stock issuable
pursuant thereto.
In addition, 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
Page 14 of Pages
<PAGE>
<PAGE>
aggregate of 35,423,978 shares of Common Stock pursuant to the Somerset Merger
Agreement, then (i) 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, (ii) 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 the 75,000 shares of Common Stock issuable upon
the exercise of vested stock options held by Ziegler and (iii) each of Somerset,
SCP, O'Neill and Ziegler may be deemed to share with Webster the power to vote
(and direct the vote of) and to dispose of (and direct the disposition of) the
1,000 shares of Common Stock owned of record by Webster and the 75,000 shares of
Common Stock issuable upon the exercise of vested stock options held by Webster.
Each of Somerset, SCP, O'Neill and Ziegler disclaims beneficial ownership of the
shares of Common Stock owned (and/or to be owned, upon exercise of vested stock
options) of record by Webster and each of Somerset, SCP, O'Neill and Webster
disclaims beneficial ownership of the shares of Common Stock owned (and/or to be
owned, upon exercise of vested stock options) of record by Ziegler.
(c) Except for the pledge of 5,461,755 shares of Common Stock by
SCP described in Item 6 below, during the past 60 days, none of the Reporting
Persons has effected any transaction in the Common Stock.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
As previously disclosed in Item 4 above, and in the Prior
Schedule 13D, Somerset and SCP were parties to the Shareholders' Agreement,
which became effective as of the Effective Date of the Mergers. The
Shareholders' Agreement required that the parties thereto (collectively, 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 each
of the three subgroups (inclusive of the Somerset Group) would be entitled to
designate and maintain one director and the remaining two of which (the
"Non-Party Directors") would 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). Ziegler was the
initial nominee of the Somerset Group under the Shareholders' Agreement and
Webster was one of the two Non-Party Directors. Each of the Shareholders'
Agreement Parties had granted the other parties an Irrevocable Proxy to enforce
the foregoing provisions. The Shareholders' Agreement also contained (i) certain
standstill provisions that effectively deprived 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 of the Mergers, and (ii) certain
provisions that provided rights of first refusal and
Page 15 of Pages
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<PAGE>
co-sale among the Shareholders' Agreement Parties as to certain sales or
dispositions of shares of the Company to third parties. As previously disclosed
above in the Introduction and in Item 4, the Shareholders' Agreement Parties
(inclusive of Somerset and SCP) entered into the Termination of Shareholders'
Agreement, which provided for a termination of all of the provisions of the
Shareholders' Agreement, effective as of September 30, 1997. The Irrevocable
Proxies executed and delivered pursuant to the Shareholders' Agreement
terminated pursuant to their terms upon the termination of the Shareholders'
Agreement. Upon the filing of the Termination of Prior Schedule 13D with the
Commission, the Prior Group Filing Agreement will terminate pursuant to its
terms.
In addition, contemporaneously with the execution and delivery of
the Somerset Merger Agreement, the Company and certain members of the Somerset
Group, as well as certain other parties (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 who are not Registration Rights Agreement Parties and/or (ii)
issuable upon exercise of the Somerset Shareholder Shadow Warrants). The
Registration Rights Agreement remains in full force and effect.
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.
Each of Webster and Ziegler is a party to a Stock Option
Agreement dated as of August 29, 1996 with the Company (the "Webster Stock
Option Agreement" and the "Ziegler
Page 16 of Pages
<PAGE>
<PAGE>
Stock Option Agreement," respectively, and collectively, the "Stock Option
Agreements"), pursuant to which non-qualified stock options to acquire 75,000
shares of Common Stock, at an exercise price of $1.625 per share, were granted
to each of Webster and Ziegler. The options granted pursuant to the Stock Option
Agreements are non-transferable and are exercisable during a ten-year exercise
period, commencing on the date of grant, subject to earlier expiration in the
event that the optionee ceases to serve as a director of the Company.
On September 15, 1997, SCP pledged the 5,461,755 shares of Common
Stock owned of record by it in favor of M&T Bank (the "Bank") to secure a
$715,000 loan made by the Bank to SCP. The loan documentation, inclusive of a
pledge agreement with respect to such shares of Common Stock, contains standard
default provisions.
The descriptions of the Merger Agreements, the Somerset Group
Shadow Warrants, the Shareholders' Agreement (inclusive of the other agreements
which are exhibits thereto, including, without limitation, the Form of
Irrevocable Proxy), the Termination of Shareholders' Agreement, the Registration
Rights Agreement, the Investment Monitoring Agreement, the Somerset LLC
Agreement, and the Stock Option Agreements 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 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.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
I. Group Filing Agreement referred to in the Introduction.
II. Somerset Merger Agreement referred to in Items 3, 4 and 6.
III. Shareholders Agreement (inclusive of the Form of Irrevocable
Proxy) and Amendment thereto, referred to in the Introduction
and Items 3, 4 and 6.
IV. Form of Shadow Warrant referred to in Items 3 and 4.
V. Registration Rights Agreement referred to in Item 6.
Page 17 of Pages
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<PAGE>
VI. Investment Monitoring Agreement referred to in Item 6.
VII. Somerset LLC Agreement referred to in Item 6.
VIII. Second Amendment to Shareholders' Agreement, referred to as the
Termination of Shareholders' Agreement in the Introduction and
in Items 4 and 6.
IX. Webster Stock Option Agreement referred to in Item 6.
X. Ziegler Stock Option Agreement referred to in Item 6.
Page 18 of Pages
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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: October 8, 1997 SOMERSET DRILLING ASSOCIATES, L.L.C.
----------------------------
By: Somerset Capital Partners,
its Managing Member
By: /s/ WILLIAM R. ZIEGLER
--------------------------------
William R. Ziegler, Partner
Dated: October 8, 1997 SOMERSET CAPITAL PARTNERS
----------------------------
By: /s/ WILLIAM R. ZIEGLER
--------------------------------
William R. Ziegler, Partner
Dated: October 8, 1997 /s/ THOMAS H. O'NEILL, JR.
---------------------------- ---------------------------
Thomas H. O'Neill, Jr., Individually
Dated: October 8, 1997 /s/ STEVEN A. WEBSTER
---------------------------- ----------------------
Steven A. Webster, Individually
Dated: October 8, 1997 /s/ WILLIAM R. ZIEGLER
---------------------------- -----------------------
William R. Ziegler, Individually
Page 19 of Pages
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EXHIBIT INDEX
Exhibit
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
I Schedule 13D Group Filing Agreement dated October 8, 1997 among
Somerset Drilling Associates, L.L.C., Somerset Capital Partners, Thomas H.
O'Neill, Jr., Steven A. Webster and William R. Ziegler.
II(a) Agreement and Plan of Merger dated May 7, 1996, among DI Industries, Inc.
(n/k/a Grey Wolf, Inc.) and Somerset Investment Corp. (Incorporated by
reference to Exhibit 2.2 to the Registration Statement of the Company on
Form S-4 filed with the Commission on June 14, 1996 (No. 333-6077).
II(b) Amendment to Agreement and Plan of Merger dated June 11, 1996, among DI
Industries, Inc. (n/k/a Grey Wolf, 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 with the Commission 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. (n/k/a Grey Wolf, 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 with the Commission on August 15, 1996 (No. 333-6077).
III(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 with the Commission on June 14, 1996 (No. 333-6077).
III(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 with the
Commission on June 14, 1996 (No. 333-6077).
</TABLE>
Page 20 of Pages
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
IV(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 with the Commission on June 14, 1996 (No.
333-6077).
V(a) Registration Rights Agreement dated May 7, 1996, among DI
Industries, Inc. (n/k/a Grey Wolf, Inc.), 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
with the Commission on June 14, 1996 (No.
333-6077).
V(b) Amendment to Registration Rights Agreement dated June 11, 1996, among
DI Industries, Inc. (n/k/a Grey Wolf, Inc.), 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 with the Commission on June 14, 1996 (No.
333-6077).
V(c) Second Amendment to Registration Rights Agreement dated July 26, 1996,
among DI Industries, Inc. (n/k/a Grey Wolf, Inc.), 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 with the Commission on August 15, 1996 (No. 333-6077).
VI Investment Monitoring Agreement dated May 7, 1996, among DI
Industries, Inc. (n/k/a Grey Wolf, 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 with
the Commission on June 14, 1996 (No. 333-6077).
VII Limited Liability Company Agreement of Somerset Drilling
Associates, L.L.C. dated July 1, 1996 (Incorporated by
reference to Exhibit VIII to the Schedule 13D of the
Shareholders' Agreement Group filed with the Commission on
September 9, 1996).
VIII Second Amendment to Shareholders' Agreement, dated as of September 30,
1997, by and among Somerset Drilling Associates, L.L.C., Somerset Capital
Partners, Roy T. Oliver, Jr., U.S. Rig and Equipment, Inc., Mike Mullen
</TABLE>
Page 21 of Pages
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Energy Equipment Resource, Inc., GCT Investments, Inc., Mike L. Mullen,
Norex Drilling Ltd., and Pronor Holdings, Ltd.
IX. Non-Qualified Stock Option Agreement, dated as of August 29, 1996, by and
between DI Industries, Inc. (n/k/a Grey Wolf, Inc.) and Steven A. Webster.
X. Non-Qualified Stock Option Agreement, dated as of August 29, 1996, by and
between DI Industries, Inc. (n/k/a Grey Wolf, Inc.) and William R. Ziegler.
</TABLE>
Page 22 of Pages
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EXHIBIT I
SCHEDULE 13D GROUP FILING AGREEMENT
AGREEMENT by and among Somerset Drilling Associates, L.L.C., a
Delaware limited liability company ("Somerset"), Somerset Capital Partners, a
New York general partnership ("SCP") and the sole managing member of Somerset,
Thomas H. O'Neill, Jr., an individual ("O'Neill"), Steven A. Webster, an
individual ("Webster") and William R. Ziegler, an individual ("Ziegler"),
whereby each of them agrees to jointly file a statement on Schedule 13D with the
Securities and Exchange Commission (the "Commission"), pursuant to Section 13D
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations promulgated by the Commission thereunder, in connection
with their ownership of certain securities (inclusive of shares of common stock
and shadow warrants to purchase shares of common stock) of Grey Wolf Inc. (f/k/a
DI Industries Inc.) (the "Company"), and any required amendments thereto, and
that such Schedule 13D (inclusive of any amendments thereto) with respect to the
beneficial ownership of shares of common stock of the Company, shall be deemed
to be filed on behalf of each of them.
IN WITNESS WHEREOF, each of the undersigned have executed this
Agreement as of the 8th day of October, 1997.
SOMERSET DRILLING ASSOCIATES, L.L.C.
By: Somerset Capital Partners, Managing Member
By:/s/ WILLIAM R. ZIEGLER
----------------------------------------------
Name: William R. Ziegler
Title: Partner
SOMERSET CAPITAL PARTNERS
By:/s/ WILLIAM R. ZIEGLER
-----------------------------------------------
Name: William R. Ziegler
Title: Partner
/s/ THOMAS H. O'NEILL, JR.
-----------------------------------------------
Thomas H. O'Neill, Jr., Individually
<PAGE>
<PAGE>
/s/ STEVEN A. WEBSTER
-----------------------------------------------
Steven A. Webster, Individually
/s/ WILLIAM R. ZIEGLER
-----------------------------------------------
William R. Ziegler, Individually
<PAGE>
<PAGE>
EXHIBIT VIII
SECOND AMENDMENT TO SHAREHOLDERS' AGREEMENT
This Second Amendment to Shareholders' Agreement (this "Second
Amendment") is made as of September 30, 1997 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"), Roy T. Oliver, Jr., a natural person ("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 ("GCI"), Mike L. Mullen, a natural person ("Mullen"), Norex Drilling
Ltd., a Bermuda corporation ("Norex Drilling"), and Pronor Holdings Ltd., a
British Virgin Islands corporation ("Pronor").
WHEREAS, Somerset, SCP, Oliver, USRE, EER, GCT, Mullen, Norex Drilling
and Pronor (collectively, the "Shareholders") are parties to the Shareholders'
Agreement (the "Agreement") dated as of May 7, 1996, as amended by the Amendment
to Shareholders' Agreement dated as of June 11, 1996; and
WHEREAS, the Shareholders desire to terminate the provisions of the
Agreement.
NOW, THEREFORE, each of the Shareholders hereby agrees and amends the
Agreement such that all the agreements, obligations, rights, representations,
warranties, covenants and other provisions of the Shareholders' Agreement are
terminated in their entirety and henceforth shall be of no force and effect.
EXECUTED to be effective as of the date set forth above.
SOMERSET DRILLING ASSOCIATES, L.L.C.
By: /s/ WILLIAM R. ZIEGLER
-------------------------------------
Name: William R. Ziegler
-------------------------------------
Title: Partner of SCP, Managing Member
------------------------------------
SOMERSET CAPITAL PARTNERS
By: /s/ WILLIAM R. ZIEGLER
-------------------------------------
Name: William R. Ziegler
-------------------------------------
Title: Partner
-------------------------------------
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
<PAGE>
<PAGE>
ROY T. OLIVER, JR.
By: /s/ ROY T. OLIVER, JR.
----------------------------
Name: Roy T. Oliver, Jr.
------------------------
U.S. RIG AND EQUIPMENT, INC.
By: /s/ ROY T. OLIVER, JR.
---------------------------
Name: Roy T. Oliver, Jr.
------------------------
Title: President
------------------------
MIKE MULLEN ENERGY EQUIPMENT
RESOURCE, INC.
By: /s/ MIKE L. MULLEN
---------------------------
Name: Mike L. Mullen
------------------------
Title: President
------------------------
GCT INVESTMENT, INC.
By: /s/ MIKE L. MULLEN
---------------------------
Name: Mike L. Mullen
------------------------
Title: President
------------------------
MIKE L. MULLEN
By: /s/ MIKE L. MULLEN
---------------------------
Name: Mike L. Mullen
------------------------
NOREX DRILLING LTD.
By: /s/ FRANK CAPSTICK
---------------------------
Name: Frank Capstick
------------------------
Title: President
------------------------
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
- 2 -
<PAGE>
<PAGE>
PRONOR HOLDINGS LTD.
By: /s/ FRANK CAPSTICK
--------------------------
Name: Frank Capstick
-----------------------
Title: President
-----------------------
- 3 -
<PAGE>
<PAGE>
EXHIBIT IX
DI INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this 29th
day of August, 1996, by and between DI Industries, Inc., a Texas corporation
(the "Company") and Steven A. Webster, an individual (the "Optionee").
RECITALS
WHEREAS, Optionee currently serves as a non-employee director of the
Company;
WHEREAS, the Company desires to grant to Optionee non-qualified options
to purchase shares of the Company's common stock for services rendered and to be
rendered as a member of the Company's board or directors;
WHEREAS, the undersigned parties desire to formalize such agreement
regarding the grant of stock options to Optionee as provided herein.
NOW, THEREFORE, in consideration of the premises, material covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. GRANT. As of the date hereof (the "Grant Date"), the Company hereby
grants to Optionee a non-qualified stock option (the "Option") to purchase a
total of 75,000 shares (the "Shares") of the Company's common stock, par value
$0.10 per share (the "Common Stock"), at an exercise price of $1.625 per share,
subject to the terms and conditions provided herein.
2. TERM OF OPTION. This Option may be exercised at any time during the
period commencing on the Grant Date and expiring 10 years thereafter (the
"Option Period") provided, that this Option may be exercised during such term
only in accordance with the terms and conditions of this Agreement, subject
specifically to Sections 3 and 7 of this Agreement.
3. EXERCISE OF OPTION. This Option shall be exercisable during the
Option Period, subject to the provisions, as follows:
(a) Right of Exercise. This Option is exercisable at any time during
the Option Period, in whole or in part; provided, however, that this Option may
only be exercisable to acquire whole shares of Common Stock.
(b) Method of Exercise. This Option is exercisable by delivery of
this Agreement and a written notice to the attention of the Secretary of the
Company, no fewer than five business days before the proposed effective date of
exercise, signed by Optionee, specifying
<PAGE>
<PAGE>
the number of Shares to be acquired on, and the effective date of, such
exercise. Optionee may withdraw notice of exercise of this Option at any time
before close of business on the business day preceding the proposed exercise
date, and in this instance, the Company will return this Agreement to the
Optionee.
(c) Method of Payment. Payment of the exercise price for the Shares
purchased under this Option shall be delivered, in person or by certified mail
to the attention of the Secretary of the Company, on the effective date of
exercise either (i) in cash, or by certified check, bank cashier's check,
payable to the order of the Company or by wire transfer to an account designated
in writing by the Company to the Optionee, or (ii) subject to the approval of
the board of directors of the Company, (A) in shares of Common Stock owned by
the Optionee and valued at their fair market value on the effective date of
exercise, as determined by such board in its sole discretion, (B) through a
cashless exercise, in which the Optionee shall exchange a number of the options
subject to such a cashless exercise for that number of shares of Common Stock
determined by multiplying the number of shares into which such exchanged option
is exercisable by a fraction, the numerator of which is the fair market value of
a share of Common Stock on the exercise date, as determined by such board in its
sole discretion, minus the exercise price for such option, and the denominator
of which is such fair market value of a share of Common Stock on the exercise
date, or (C) in any combination of the payment methods described in (i) or
(ii)(A) or (B), above. If payment is made in shares of Common Stock such shares
must be delivered to the Secretary, duly endorsed in blank or accompanied by
stock powers duly executed in blank, and any other documents that the Secretary
may require.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares or the method of payment of the consideration for such
Shares would constitute a violation of any applicable federal or state
securities or other laws or regulations, including any rule under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by
the Federal Reserve Board, or any rules or regulations of any stock exchange on
which the Common Stock may be listed.
5. NON-TRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option may only be exercised by the Optionee. This Option is not assignable
or transferable, in whole or in part, other than by will or by the laws of
descent and distribution.
6. ISSUANCE OF CERTIFICATE. As soon as reasonably practicable after the
exercise of this Option in accordance with Section 3, the Company shall issue to
the Optionee a certificate representing the Shares acquired, together with
delivery of a new stock option agreement to the extent any Options remain after
such exercise. Each certificate representing Shares shall bear conspicuous
legends worded substantially as follows, in addition to any other legends
required by law:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON
DELIVERY
-2-
<PAGE>
<PAGE>
TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OF
STOCK OR MORE THAN ONE SERIES OF A CLASS. THE CORPORATION WILL FURNISH A
STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OR STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR
SUCH PREFERENCES AND/OR RIGHTS, WITHOUT CHARGE, TO THE HOLDER OF THIS
CERTIFICATE UPON RECEIPT BY THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER
REQUESTING SUCH COPY.
THE ARTICLES OF INCORPORATION OF THIS CORPORATION DENY PREEMPTIVE RIGHTS
TO ITS SHAREHOLDERS. A FULL STATEMENT OF SUCH LIMITATION IS SET FORTH IN
THE ARTICLES OF INCORPORATION ON FILE IN THE OFFICE OF THE SECRETARY OF
STATE OF THE STATE OF TEXAS. THE CORPORATION WILL FURNISH A COPY OF SUCH
STATEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO
THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
7. SECURITIES LAW REQUIREMENTS. The Optionee agrees and understands that
the Shares may be restricted securities as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold, assigned or transferred, unless the sale, assignment or transfer of such
shares is registered under the Securities Act and applicable blue sky laws, as
now in effect or hereafter amended, or there is furnished an opinion of counsel
in form and substance satisfactory to the Company from counsel acceptable to the
Company that such registrations are not required.
8. NO RIGHTS AS SHAREHOLDER. The Optionee shall not have any rights as a
shareholder with respect to any of the Shares until the date of issuance by the
Company to the Optionee of a stock certificate representing such Shares pursuant
to Section 6 hereof. Except as otherwise provided in Section 9 hereof, the
Optionee shall not be entitled to any dividends, cash or otherwise, or any
adjustment of the Shares for such dividends, if the record date therefor is
prior to the date of issuance of such stock certificate.
9. CORPORATE PROCEEDINGS OF THE COMPANY.
(a) The existence of the Option shall not affect in any way the right
or power of the Company or its officers, directors and shareholders, as
the case may be, to (i) make or authorize any adjustments,
recapitalizations, reorganizations or other changes in the capital
structure or business of the Company, (ii) participate in any merger or
consolidation of the Company, (iii) issue any Common Stock, bonds,
debentures, preferred or prior preference stock or any other securities
affecting the Common Stock or the rights of holders thereof, (iv)
dissolve or liquidate the Company, (v) sell or transfer all or any part
of the assets or business of the Company, or (vi) perform any other
corporate act or proceedings, whether of a similar character or
otherwise.
(b) If the Company merges into or with or consolidates with (such
events collectively referred herein as a "Merger") any corporation or
corporations or entity or
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<PAGE>
<PAGE>
entities and is not the surviving corporation, then the surviving
corporation may assume the Option or substitute a new option of the
surviving corporation for the Option; provided, however, that the excess
of the aggregate fair market value of the securities subject to the
Option immediately after such assumption, or the new option immediately
after such substitution, over the aggregate exercise price of such
shares must be, based upon a good faith determination by the Board of
Directors of the Company, not less than the excess of the aggregate fair
market value of the Common Stock subject to the Option immediately
before such substitution or assumption over the aggregate exercise price
of such Common Stock.
(c) In the event that the surviving corporation does not utilize the
provisions of (b) above, or in the event of a dissolution or liquidation
of the Company, the Company shall cause written notice of such Merger or
dissolution or liquidation (and the material terms and conditions
thereof) to be delivered to the Optionee at least ten (10) days prior to
the proposed effective date (the "Effective Date") of such event. The
Optionee shall be entitled to exercise the Option until the Effective
Date, or until the Expiration Date if earlier. To the extent that the
Merger or liquidation is consummated after the Effective Date, the
Option shall terminate and the Company shall have no further obligations
of any type hereunder. The provisions of this paragraph shall not apply
to any merger or reorganization, the principal purpose of which is to
change the jurisdiction of the domicile of the Company.
(d) If, while the Option is outstanding, the Company shall effect a
subdivision or consolidation of the shares of Common Stock or other
capital readjustment, the payment of a common stock dividend, or other
increase or reduction of the number of shares of Common Stock
outstanding, without receiving compensation therefor in money, services
or property, then (i) in the event of an increase in the number of
shares of Common Stock outstanding, the number of Shares shall be
proportionately increased, and the per share exercise price shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of shares of Common Stock outstanding, the number of Shares shall
be proportionately reduced, and the per share exercise price shall be
proportionately increased. No fractional share of Common Stock shall be
issued upon any such exercised and the exercise price shall be
appropriately reduced on account of any fractional share not issued.
(e) The issuance by the Company of shares stock of any class of
securities convertible into shares of stock of any class, including
Common Stock, for cash, property, labor or services rendered, either
upon direct sale or upon the exercise of rights, options, or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of Shares or the exercise price thereof.
10. REGISTRATION RIGHTS. The Optionee shall have no registration
rights with respect to the Shares.
-4-
<PAGE>
<PAGE>
11. TERMINATION. Except as otherwise provided in Section 9(c) hereof,
this Option, to the extent not previously exercised, shall terminate on the
earliest of the following to occur:
(a) on the last day of the three-month period commencing on the date
on which the Optionee ceases to be a member of the Company's board of
directors, for any reason other than death of the Optionee, during which
period the Optionee shall be entitled to exercise all or any portion of
this Option held by Optionee on the date of such cessation, to the
extent such Option was exercisable by Optionee on such date of such
cessation, and subject to the provisions of Section 3 hereof;
(b) on the last day of the one year period commencing on the date of
the Optionee's death while serving as a member of the Company's board of
directors, during which period the executor or administrator of the
Optionee's estate or the person or persons to whom the Optionee shall
have transferred all or any portion of this Option by will or the laws
of descent and distribution, shall be entitled to exercise all or any
portion of the respective Option, to the extent such Option would have
been exercisable by Optionee on the date of his or her death, and
subject to the provisions of Section 3 hereof; or
(c) ten years after the Grant Date.
12. TERM OF DIRECTORSHIP. This Option shall not grant to Optionee any
right to continue serving as a member of the Company's board of directors.
13. INDEPENDENT LEGAL AND TAX ADVICE. The Optionee has been advised and
been provided the opportunity to obtain independent legal and tax advice
regarding the grant and exercise of this Option and the disposition of any
Shares acquired thereby.
14. AMENDMENT. This Agreement may not be amended, modified or waived
except by a written instrument signed by the party against whom enforcement of
any such modification, amendment or waiver is sought.
15. GOVERNING LAW. This Agreement shall be governed by and shall be
construed and enforced in accordance with the laws of the State of Texas.
16. NOTICES. All notices, requests, demands or other communications
permitted to be given hereunder shall be in writing and shall be deemed property
given or made when personally delivered to an officer of the Company or to the
Optionee, as the case may be, or if mailed when deposited in the United States
mails by certified or registered mail, return receipt requests, postage prepaid
and addressed to the address set forth for each party on the signature page
hereto. Any party may change its address by giving notice in writing to the
other party stating the new address, and such change will be effective
immediately upon receipt of such notice.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts by original or facsimile signature, each of which shall be deemed
an original and all of which together shall constitute one and the same
instrument.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be duly executed as of the date first above written.
DI INDUSTRIES, INC.
By: /s/ IVAR SIEM
---------------------------------------
Ivar Siem
Chairman of the Board
Address: DI Industries, Inc.
10370 Richmond, Suite 600
Houston, Texas 77042
Attn: President
Telecopy: (713) 435-6170
OPTIONEE:
/s/ STEVEN A. WEBSTER
--------------------------------------------
Steven A. Webster
Falcon Drilling Company
1900 West Loop South, Suite 1800
Houston, TX 77027
Telecopy: (713) 623-8103
-6-
<PAGE>
<PAGE>
EXHIBIT X
DI INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this 29th
day of August, 1996, by and between DI Industries, Inc., a Texas corporation
(the "Company") and William R. Ziegler, an individual (the "Optionee").
RECITALS
WHEREAS, Optionee currently serves as a non-employee director of the
Company;
WHEREAS, the Company desires to grant to Optionee non-qualified options
to purchase shares of the Company's common stock for services rendered and to be
rendered as a member of the Company's board or directors;
WHEREAS, the undersigned parties desire to formalize such agreement
regarding the grant of stock options to Optionee as provided herein.
NOW, THEREFORE, in consideration of the premises, material covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. GRANT. As of the date hereof (the "Grant Date"), the Company hereby
grants to Optionee a non-qualified stock option (the "Option") to purchase a
total of 75,000 shares (the "Shares") of the Company's common stock, par value
$0.10 per share (the "Common Stock"), at an exercise price of $1.625 per share,
subject to the terms and conditions provided herein.
2. TERM OF OPTION. This Option may be exercised at any time during the
period commencing on the Grant Date and expiring 10 years thereafter (the
"Option Period") provided, that this Option may be exercised during such term
only in accordance with the terms and conditions of this Agreement, subject
specifically to Sections 3 and 7 of this Agreement.
3. EXERCISE OF OPTION. This Option shall be exercisable during the
Option Period, subject to the provisions, as follows:
(a) Right of Exercise. This Option is exercisable at any time during
the Option Period, in whole or in part; provided, however, that this Option may
only be exercisable to acquire whole shares of Common Stock.
(b) Method of Exercise. This Option is exercisable by delivery of
this Agreement and a written notice to the attention of the Secretary of the
Company, no fewer than five business days before the proposed effective date of
exercise, signed by Optionee, specifying
<PAGE>
<PAGE>
the number of Shares to be acquired on, and the effective date of, such
exercise. Optionee may withdraw notice of exercise of this Option at any time
before close of business on the business day preceding the proposed exercise
date, and in this instance, the Company will return this Agreement to the
Optionee.
(c) Method of Payment. Payment of the exercise price for the Shares
purchased under this Option shall be delivered, in person or by certified mail
to the attention of the Secretary of the Company, on the effective date of
exercise either (i) in cash, or by certified check, bank cashier's check,
payable to the order of the Company or by wire transfer to an account designated
in writing by the Company to the Optionee, or (ii) subject to the approval of
the board of directors of the Company, (A) in shares of Common Stock owned by
the Optionee and valued at their fair market value on the effective date of
exercise, as determined by such board in its sole discretion, (B) through a
cashless exercise, in which the Optionee shall exchange a number of the options
subject to such a cashless exercise for that number of shares of Common Stock
determined by multiplying the number of shares into which such exchanged option
is exercisable by a fraction, the numerator of which is the fair market value of
a share of Common Stock on the exercise date, as determined by such board in its
sole discretion, minus the exercise price for such option, and the denominator
of which is such fair market value of a share of Common Stock on the exercise
date, or (C) in any combination of the payment methods described in (i) or
(ii)(A) or (B), above. If payment is made in shares of Common Stock such shares
must be delivered to the Secretary, duly endorsed in blank or accompanied by
stock powers duly executed in blank, and any other documents that the Secretary
may require.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares or the method of payment of the consideration for such
Shares would constitute a violation of any applicable federal or state
securities or other laws or regulations, including any rule under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by
the Federal Reserve Board, or any rules or regulations of any stock exchange on
which the Common Stock may be listed.
5. NON-TRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option may only be exercised by the Optionee. This Option is not assignable
or transferable, in whole or in part, other than by will or by the laws of
descent and distribution.
6. ISSUANCE OF CERTIFICATE. As soon as reasonably practicable after the
exercise of this Option in accordance with Section 3, the Company shall issue to
the Optionee a certificate representing the Shares acquired, together with
delivery of a new stock option agreement to the extent any Options remain after
such exercise. Each certificate representing Shares shall bear conspicuous
legends worded substantially as follows, in addition to any other legends
required by law:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON
DELIVERY
-2-
<PAGE>
<PAGE>
TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OF
STOCK OR MORE THAN ONE SERIES OF A CLASS. THE CORPORATION WILL FURNISH A
STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OR STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR
SUCH PREFERENCES AND/OR RIGHTS, WITHOUT CHARGE, TO THE HOLDER OF THIS
CERTIFICATE UPON RECEIPT BY THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER
REQUESTING SUCH COPY.
THE ARTICLES OF INCORPORATION OF THIS CORPORATION DENY PREEMPTIVE RIGHTS
TO ITS SHAREHOLDERS. A FULL STATEMENT OF SUCH LIMITATION IS SET FORTH IN
THE ARTICLES OF INCORPORATION ON FILE IN THE OFFICE OF THE SECRETARY OF
STATE OF THE STATE OF TEXAS. THE CORPORATION WILL FURNISH A COPY OF SUCH
STATEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO
THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
7. SECURITIES LAW REQUIREMENTS. The Optionee agrees and understands that
the Shares may be restricted securities as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold, assigned or transferred, unless the sale, assignment or transfer of such
shares is registered under the Securities Act and applicable blue sky laws, as
now in effect or hereafter amended, or there is furnished an opinion of counsel
in form and substance satisfactory to the Company from counsel acceptable to the
Company that such registrations are not required.
8. NO RIGHTS AS SHAREHOLDER. The Optionee shall not have any rights as a
shareholder with respect to any of the Shares until the date of issuance by the
Company to the Optionee of a stock certificate representing such Shares pursuant
to Section 6 hereof. Except as otherwise provided in Section 9 hereof, the
Optionee shall not be entitled to any dividends, cash or otherwise, or any
adjustment of the Shares for such dividends, if the record date therefor is
prior to the date of issuance of such stock certificate.
9. CORPORATE PROCEEDINGS OF THE COMPANY.
(a) The existence of the Option shall not affect in any way the right
or power of the Company or its officers, directors and shareholders, as
the case may be, to (i) make or authorize any adjustments,
recapitalizations, reorganizations or other changes in the capital
structure or business of the Company, (ii) participate in any merger or
consolidation of the Company, (iii) issue any Common Stock, bonds,
debentures, preferred or prior preference stock or any other securities
affecting the Common Stock or the rights of holders thereof, (iv)
dissolve or liquidate the Company, (v) sell or transfer all or any part
of the assets or business of the Company, or (vi) perform any other
corporate act or proceedings, whether of a similar character or
otherwise.
(b) If the Company merges into or with or consolidates with (such
events collectively referred herein as a "Merger") any corporation or
corporations or entity or
-3-
<PAGE>
<PAGE>
entities and is not the surviving corporation, then the surviving
corporation may assume the Option or substitute a new option of the
surviving corporation for the Option; provided, however, that the excess
of the aggregate fair market value of the securities subject to the
Option immediately after such assumption, or the new option immediately
after such substitution, over the aggregate exercise price of such
shares must be, based upon a good faith determination by the Board of
Directors of the Company, not less than the excess of the aggregate fair
market value of the Common Stock subject to the Option immediately
before such substitution or assumption over the aggregate exercise price
of such Common Stock.
(c) In the event that the surviving corporation does not utilize the
provisions of (b) above, or in the event of a dissolution or liquidation
of the Company, the Company shall cause written notice of such Merger or
dissolution or liquidation (and the material terms and conditions
thereof) to be delivered to the Optionee at least ten (10) days prior to
the proposed effective date (the "Effective Date") of such event. The
Optionee shall be entitled to exercise the Option until the Effective
Date, or until the Expiration Date if earlier. To the extent that the
Merger or liquidation is consummated after the Effective Date, the
Option shall terminate and the Company shall have no further obligations
of any type hereunder. The provisions of this paragraph shall not apply
to any merger or reorganization, the principal purpose of which is to
change the jurisdiction of the domicile of the Company.
(d) If, while the Option is outstanding, the Company shall effect a
subdivision or consolidation of the shares of Common Stock or other
capital readjustment, the payment of a common stock dividend, or other
increase or reduction of the number of shares of Common Stock
outstanding, without receiving compensation therefor in money, services
or property, then (i) in the event of an increase in the number of
shares of Common Stock outstanding, the number of Shares shall be
proportionately increased, and the per share exercise price shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of shares of Common Stock outstanding, the number of Shares shall
be proportionately reduced, and the per share exercise price shall be
proportionately increased. No fractional share of Common Stock shall be
issued upon any such exercised and the exercise price shall be
appropriately reduced on account of any fractional share not issued.
(e) The issuance by the Company of shares stock of any class of
securities convertible into shares of stock of any class, including
Common Stock, for cash, property, labor or services rendered, either
upon direct sale or upon the exercise of rights, options, or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of Shares or the exercise price thereof.
10. REGISTRATION RIGHTS. The Optionee shall have no registration rights
with respect to the Shares.
-4-
<PAGE>
<PAGE>
11. TERMINATION. Except as otherwise provided in Section 9(c) hereof,
this Option, to the extent not previously exercised, shall terminate on the
earliest of the following to occur:
(a) on the last day of the three-month period commencing on the date
on which the Optionee ceases to be a member of the Company's board of
directors, for any reason other than death of the Optionee, during which
period the Optionee shall be entitled to exercise all or any portion of
this Option held by Optionee on the date of such cessation, to the
extent such Option was exercisable by Optionee on such date of such
cessation, and subject to the provisions of Section 3 hereof;
(b) on the last day of the one year period commencing on the date of
the Optionee's death while serving as a member of the Company's board of
directors, during which period the executor or administrator of the
Optionee's estate or the person or persons to whom the Optionee shall
have transferred all or any portion of this Option by will or the laws
of descent and distribution, shall be entitled to exercise all or any
portion of the respective Option, to the extent such Option would have
been exercisable by Optionee on the date of his or her death, and
subject to the provisions of Section 3 hereof; or
(c) ten years after the Grant Date.
12. TERM OF DIRECTORSHIP. This Option shall not grant to Optionee any
right to continue serving as a member of the Company's board of directors.
13. INDEPENDENT LEGAL AND TAX ADVICE. The Optionee has been advised and
been provided the opportunity to obtain independent legal and tax advice
regarding the grant and exercise of this Option and the disposition of any
Shares acquired thereby.
14. AMENDMENT. This Agreement may not be amended, modified or waived
except by a written instrument signed by the party against whom enforcement of
any such modification, amendment or waiver is sought.
15. GOVERNING LAW. This Agreement shall be governed by and shall be
construed and enforced in accordance with the laws of the State of Texas.
16. NOTICES. All notices, requests, demands or other communications
permitted to be given hereunder shall be in writing and shall be deemed property
given or made when personally delivered to an officer of the Company or to the
Optionee, as the case may be, or if mailed when deposited in the United States
mails by certified or registered mail, return receipt requests, postage prepaid
and addressed to the address set forth for each party on the signature page
hereto. Any party may change its address by giving notice in writing to the
other party stating the new address, and such change will be effective
immediately upon receipt of such notice.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts by original or facsimile signature, each of which shall be deemed
an original and all of which together shall constitute one and the same
instrument.
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be duly executed as of the date first above written.
DI INDUSTRIES, INC.
By: /s/ IVAR SIEM
-----------------------------------------
Ivar Siem
Chairman of the Board
Address: DI Industries, Inc.
10370 Richmond, Suite 600
Houston, Texas 77042
Attn: President
Telecopy: (713) 435-6170
OPTIONEE:
/s/ WILLIAM R. ZIEGLER
--------------------------------------------
William R. Ziegler
Parson & Brown
666 Third Avenue, 9th Floor
New York, NY 10017
Telecopy: (212) 682-9112
-6-
