<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): September 19, 1997
(September 15, 1997)
GREY WOLF, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
TEXAS 1-8226 74-2144774
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
</TABLE>
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042-4136
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
(713) 435-6100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
DI INDUSTRIES, INC.
450 GEARS ROAD, SUITE 625
HOUSTON, TEXAS 77077
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 5. OTHER EVENTS
A. CHANGE OF CORPORATE NAME
On September 18, 1997, DI Industries, Inc., a Texas corporation (the
"Company") changed its corporate name to "Grey Wolf, Inc." by the filing with
the Secretary of State of Texas of Articles of Amendment to its Articles of
Incorporation. No other changes were made to the Company's Articles of
Incorporation. The name change was approved by the written consent of more
than a majority of the Company's shareholders and was the subject of an
Information Statement filed by the Company with the Securities and Exchange
Commission pursuant to Section 14(c) of the Securities Exchange Act of 1934, as
amended, which was mailed to the Company's shareholders on or about August 28,
1997.
In connection with the Company's change of corporate name, the
American Stock Exchange's trading symbol for the Company's common stock, par
value $.10 per share, was changed to "GW," effective September 19, 1997.
B. PENDING ACQUISITION OF SUBSTANTIALLY ALL OPERATING ASSETS OF THE
JUSTISS DRILLING DIVISION OF JUSTISS OIL COMPANY
GENERAL
On September 15, 1997, Grey Wolf Drilling Company, a wholly-owned
subsidiary of the Company (the "Buyer"), entered into an Asset Purchase
Agreement with Justiss Oil Company, Inc., a Louisiana corporation ("Justiss
Oil") to acquire substantially all of the operating assets of its Justiss
Drilling Division ("Justiss Drilling"). The Asset Purchase Agreement is
referred to below as the "Agreement" and the transactions contemplated thereby
are collectively referred to as the "Acquisition."
JUSTISS DRILLING
Justiss Drilling currently operates a fleet of 12 land drilling rigs
primarily in Northern Louisiana, Southern Arkansas, and East Texas. The
Company currently anticipates that substantially all of Justiss Drilling's rig
operating personnel (approximately 300 persons) will be offered continued
employment by Grey Wolf Drilling Company following closing of the Acquisition.
The executive offices of Justiss Oil are located in Jena, Louisiana.
THE ACQUISITION
The Agreement provides that the Buyer will acquire substantially all
of the operating assets of Justiss Drilling including 12 drilling rigs, drill
pipe, inventory, spare parts, equipment, drilling contracts (other than turnkey
contracts) and related records. Generally excluded from the assets to be
purchased are all cash, cash equivalents, marketable securities, accounts
receivable and rights to payments arising prior to the closing date, and
turnkey drilling contracts. No real estate or real estate
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leases are included among the assets to be purchased. The assets to be
acquired in the Acquisition are referred to below as the "Assets."
The gross purchase price for the Assets is presently expected to be
$36.0 million, payable in cash. The Agreement provides, however, that if on
the closing date of the Acquisition any of Justiss Drilling's rigs are drilling
a well pursuant to a turnkey drilling contract (a "Turnkey Rig"), Justiss
Drilling will complete the drilling of the turnkey well (retaining any related
expenses, revenues, risks and losses for its own account) and the purchase
gross purchase price otherwise payable on the closing date of the acquisition
will be reduced by an amount allocated by the parties to the Turnkey Rigs.
Upon completion of the drilling of the turnkey well (as certified to the Buyer
by Justiss Oil), the Agreement provides that the Turnkey Rig will be conveyed
by Justiss Oil to the Buyer for payment to Justiss Oil of the portion of the
purchase price previously withheld with respect to the Turnkey Rig.
As described further below, the Buyer made a $2.0 million deposit into
an escrow account with a national banking institution upon execution of the
Agreement. The Agreement provides that the escrow deposit (plus any interest
or income earned thereon and less any fees and expenses of the escrow agent)
will be applied against the total purchase price for the Assets, or will serve
as liquidated damages in the event of the Buyer's breach of the Agreement.
The Company currently expects to fund substantially all of the
purchase price for the Acquisition (both at the initial and any deferred
closing necessitated by Turnkey Rigs) by borrowing under its $50.0 million
revolving credit facility with its commercial banks. No amounts are currently
outstanding under the Company's revolving credit facility.
The Agreement contains certain customary representations and
warranties of Justiss Oil with respect to the business conducted by Justiss
Drilling. In light of the prior right of the Buyer to inspect the Assets, the
Agreement provides that the Assets will be purchased "as is, where is," without
representations or warranties by Justiss Oil as to the condition of the Assets.
The obligation of both the Buyer and Justiss Oil to close the
transaction is subject to the conditions that (i) there be no private or
governmental action to prevent the closing or obtain damages or other relief
with respect to the Acquisition, or any threat of such action, and (ii) the
termination or early termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, will have
occurred. Additionally, the separate obligations of the Buyer and Justiss Oil
to close the Acquisition are each subject to further customary conditions
including (i) the continued truth and accuracy of the other party's
representations and warranties, (ii) compliance by the other party of its
obligations under the Agreement, (iii) satisfaction by each party's legal
counsel with certain actions and proceedings required to carry out the
Acquisition, and (iv) receipt by each party of certain legal opinions from
legal counsel to the other party. The obligation of the Buyer to close the
Acquisition is subject to the additional conditions that (i) all permits and
approvals from governmental entities that are necessary to own and operate the
Assets will have been received, (ii) all consents required for the assignment
of Justiss Drilling's contracts to the Buyer will have been received, except as
may otherwise be agreed by the parties, (iii) Justiss Drilling's business must
have been operated as usual and without entering into any material agreements
extending a substantial term beyond the closing date; and (iv) there shall have
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been no material adverse change in the business of Justiss Drilling or the
Assets from the date of the Agreement to the closing. The Buyer's obligation
to consummate the Acquisition is not subject to the obtaining of third party
financing of the Acquisition.
With respect to Justiss Drilling employees, the Agreement provides
that Justiss Drilling will terminate the employment of substantially all of its
rig-based employees on the closing date and that the Buyer will offer
employment to all such employees, subject to satisfactory physical and drug
screening examinations. The employment so offered is required to be at a
compensation level (excluding benefits) at least equal to the current
compensation of the employee. Benefits to be extended by the Buyer are
required to be equivalent to those of the Buyer's employees in similar
positions and with service credit for the number of years employed by Justiss
Drilling for all benefit plans in which the period of service is used to
determine benefits. The Company currently expects to make offers of employment
to all rig-based Justiss employees.
The Agreement provides that it may be terminated by either party in
the event the closing of the Acquisition has not occurred on or before November
1, 1997 if the party so terminating the Agreement did not prevent a timely
closing of the Acquisition by its breach of the Agreement. Both parties have
agreed to use good faith and all reasonable efforts to satisfy the conditions
to closing under the Agreement.
The previously described $2.0 million escrow deposit by the Buyer will
serve as liquidated damages to secure the performance of the Buyers'
obligations under the Agreement. The escrow deposit will be nonrefundable to
the Buyer unless (i) the conditions precedent to the Buyer's obligations and
the mutual conditions precedent to the closing of the Acquisition are not
satisfied without the Buyer's fault, or (ii) the Acquisition is not closed by
mutual agreement. Justiss Oil's sole remedy for the Buyer's breach of the
Agreement will be Justiss Oil's right to retain the deposit
The foregoing summary description of the Agreement is qualified in its
entirety by the text of the Agreement itself which is filed herewith as Exhibit
99.1.
THE ASSETS
The principal operating assets of Justiss Drilling consist of 12 land
drilling rigs and related equipment, inventory and supplies. Certain
information regarding the Justiss Drilling rig fleet proposed to be purchased
is set forth in the table below:
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JUSTISS DRILLING RIG FLEET
<TABLE>
<CAPTION>
RATED
DRILLING
RIG DRIVE HORSEPOWER DEPTH CURRENT
NUMBER DRAWWORKS SYSTEM RATING (IN FEET) STATUS
- ------ --------------------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
9 Continental-Emsco D-2 Mechanical 800 12,500 Working
10 Gardner-Denver 500 Mechanical 800 10,000 Working
11 National 80-B Mechanical 1,000 15,000 Working
27 National 80-B Mechanical 1,000 15,000 Working
34 Continental-Emsco D-2 Mechanical 800 12,500 Working
41 Continental-Emsco D-2 Mechanical 800 12,500 Working
42 Brewster N-45 Mechanical 450 8,000 Working
43 Brewster N-45 Mechanical 450 8,000 Working
44 National 80-B Mechanical 1,000 15,000 Working
46 Continental-Emsco D-2 Mechanical 800 12,500 Working
47 Continental Emsco D-1 Mechanical 550 10,000 Working
48 Wilson 75 Mechanical 900 11,000 Undergoing
Refurbishment
</TABLE>
5
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ITEM 7 Financial Statements and Exhibits
(c) EXHIBITS
Exhibit 99.1 Asset Purchase Agreement by and between Justiss Oil
Company, Inc. and Grey Wolf Drilling Company dated as
of September 15, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 19, 1997
GREY WOLF, INC.
(formerly DI Industries, Inc.)
By:/s/ T. Scott O'Keefe
-------------------------------------
T. Scott O'Keefe, Senior Vice
President and Chief Financial Officer
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER
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<S> <C>
Exhibit 99.1 Asset Purchase Agreement by and between Justiss Oil
Company, Inc. and Grey Wolf Drilling Company dated as
of September 15, 1996.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
_______________________________________
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
JUSTISS OIL COMPANY, INC.
AND
GREY WOLF DRILLING COMPANY
_______________________________________
Dated as of September 15, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of September 15, 1997 by and between Justiss Oil Company, Inc., a
Louisiana corporation (the "Company") and Grey Wolf Drilling Company, a Texas
corporation ("Buyer").
R E C I T A L S:
1. The Company is engaged through its Justiss Drilling Company
division (the "Division") in the business (the "Business") of domestic onshore
oil and gas well drilling; and
2. The Company desires to sell to Buyer substantially all of the
Division's assets, which are more fully described in Section 1.1 hereof, and
Buyer desires to acquire such assets in consideration of the payment by Buyer
of the purchase price provided for herein, all upon the terms and subject to
the conditions hereinafter set forth.
AGREEMENT
In consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions of the
parties contained herein, it is hereby agreed as follows:
1. Purchase and Sale of Assets.
1.1 Transfer of Assets. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, the Company shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase
and acquire from the Company (except as provided in Section 1.2 hereof) all of
the following assets, rights and properties:
(a) The twelve drilling rigs known as Justiss Rigs 9, 10,
11, 27, 34, 41, 42, 43, 44, 46, 47 and 48, together with all the
drilling machinery and equipment listed on Schedule 1.1(a) hereto
(collectively, the "Rigs");
(b) All the spare parts and inventory of the Division on
the Rigs and in the Company's yard listed on Schedule 1.1(b)
(collectively, the "Inventory");
(c) All warranties and guarantees, if any, express or
implied, existing for the benefit of the Company in connection with
the Rigs and Inventory to the extent assignable;
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(d) Copies of all personnel, safety, maintenance,
environmental, and other policy manuals for onshore operations,
catalogs, research material, technical information, software
technology relative to the above and all specifications, designs and
drawings owned by and in possession of the Company and used in the
conduct of the Business;
(e) The rights of the Company affecting the Business
under all contracts, (except the Turnkey Contracts so designated)
agreements and arrangements listed on Schedule 1.1(e) hereto
(collectively, the "Contracts");
(f) The rights of the Company under all Permits relating
to the conduct of the Business listed on Schedule 1.1(f) hereto, to
the extent that such permits are transferable;
(g) All Intellectual Property of the Company related to
the Business, and any goodwill associated therewith, including all
rights associated with all personnel, safety, maintenance,
environmental and other policy manuals conveyed to Buyer;
(h) Copies of all personnel files and other materials
relating to employees of the Company who may be offered employment by
Buyer including those contemplated by Section 6 hereof;
(i) All records of compliance and non-compliance with the
laws, regulations, ordinances and orders applicable to the Business;
(j) Copies of all blueprints, specifications, designs and
drawings associated solely and exclusively with the Rigs and
Inventory, to the extent owned by the Company and in its possession
and control;
(k) All current operating budgets for the Business; and
(l) Customer advances and prepayments under drilling
contracts received by the Company prior to Closing for drilling work
to be performed after Closing.
The assets described in this Section 1.1 as being sold, conveyed, assigned,
transferred and delivered to Buyer hereunder are sometimes hereinafter referred
to collectively as the "Assets".
1.2 Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following:
(a) Cash and cash equivalents or similar type
investments, such as certificates of deposit, Treasury bills and other
marketable securities and insurance premium prepayments; and
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(b) The accounts receivable of the Company as of the
Closing Date, all rights to payment under any assigned Contracts
arising out of work performed by the Company prior to the Closing Date
and all rights arising prior to the Closing Date under warranties and
guarantees insofar as such rights affect the exposure to Company for
any Retained Liabilities.
1.3 Instruments of Conveyance and Transfer. On the Closing Date,
the Company shall deliver or cause to be delivered to Buyer the following:
(a) A general conveyance in the form attached hereto as
Exhibit A transferring to Buyer good and marketable title to all of
the tangible personal property included in the Assets;
(b) An assignment to Buyer of the Company's right, title
and interest in each of the Contracts referred to in Section 1.1(e)
hereof;
(c) All appropriate documents for the assignment as of
the Closing Date of the Company's rights under the licenses, permits
and franchises referred to in Section 1.1(f) hereof;
(d) All appropriate documents for the assignment as of
the Closing Date of all patents, trademarks, trade names and other
Intellectual Property referred to in Section 1.1(g) hereof;
(e) Originals of all of the Contracts, commitments,
books, records, files and other data (except any such items that are
directly related to Retained Liabilities) that (i) are included in the
Assets or (ii) relate to or affect the Assets as of the time of
Closing and are reasonably necessary for the continued conduct of the
Business; and
(f) Such other instruments of transfer and assignment in
respect of the Assets as Buyer shall reasonably require and as shall
be consistent with the terms and provisions of this Agreement.
Prior to the Closing Date, the Company will take such reasonable steps as may
be requisite or appropriate so that no later than the close of business on the
Closing Date, Buyer will be placed in actual possession and control of all of
the Assets. Buyer will take possession of the Rigs at the locations on which
they are operating on the Closing Date.
1.4 Further Assurances. From time to time after the Closing, the
Company will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance,
assignment, transfer and delivery and will take such other actions as Buyer may
reasonably request in order to transfer, convey, assign and deliver to Buyer,
and to place
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Buyer in possession and control of any of the Assets or to enable Buyer to
exercise and enjoy all rights and benefits of the Company with respect thereto.
1.5 Liabilities.
(a) All liabilities of the Company existing on or arising
prior to the Closing Date, known or unknown, fixed or contingent, are
retained by the Company except for those arising after the Closing
Date from the condition of the Rigs or Inventory (the "Retained
Liabilities").
(b) Notwithstanding anything herein to the contrary, the
Company shall not assume any liability or obligation arising out of
any breach by the Buyer, including Buyer's failure to perform or
negligent or improper performance, of any assigned Contracts after the
Closing.
(c) All liabilities relating to the ownership and
operation of the Assets including with respect to the condition of the
Assets, arising from and after the Closing Date, known or unknown,
fixed or contingent, are assumed by Buyer (the "Assumed Liabilities").
1.6 Expenses: Consents and Taxes. Buyer shall assume
responsibility for and shall bear and pay all state sales and use taxes
resulting from the consummation of the transactions contemplated hereby and
Company and Buyer agree to cooperate to obtain all available exemptions from
such taxes.
1.7 Allocation of Drilling Contract Revenue. To implement the
provisions of Sections 1.2(b) and 1.1(e) hereto, the Company shall prepare and
submit to the operators for payment invoices for all day rate drilling
Contracts for periods up to the Closing Date and the Buyer shall prepare
invoices for periods after the Closing. With respect to footage basis drilling
contracts ongoing on the Closing Date, the Buyer shall conduct the accounting
for such Contracts in cooperation with the Company through the completion of
the relevant well, and shall invoice the customer on behalf of both parties.
With respect to each such footage contract, the Buyer shall determine the
expenses for the well and the revenue for the well, and remit to the Company
its pro rata portion of the revenue net of expenses (or bill the Company for
its pro rata portion of any loss) based upon the number of days drilling
completed before and after the Closing Date. Notwithstanding anything to the
contrary herein, Company shall complete all wells in progress under any
contracts for the drilling of turnkey wells on the Closing Date (the "Turnkey
Contracts") and Company shall be entitled to all proceeds from such Turnkey
Contracts and shall bear all expenses and risk of loss in connection therewith
including the risk of loss with respect to any Assets used in connection
therewith. The Turnkey Contracts and the Rigs being operated in connection
therewith (together with the estimated date of completion) are identified on
Schedule 1.1(e). Buyer shall withhold from payment of the Purchase Price an
amount equal to the portion of the Purchase Price allocable to the Rigs
(pursuant to Section 2.3 hereof) being used on the Turnkey Contracts (the
"Turnkey Rigs") until completion of any well in progress on the Closing Date
under such Turnkey Contract and notification by Company to Buyer
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in writing of such completion. Upon receipt thereof and of delivery of a
Supplemental Conveyance in the form of Exhibit C attached hereto executed by
the Company covering the Turnkey Rig, Buyer shall pay the amount allocated to
such Rig to Company and Company shall deliver possession of such Turnkey Rig to
Buyer.
2. Closing; Purchase Price.
2.1 Closing Date. The closing with respect to the transactions
provided for in this Agreement (the "Closing") shall take place at a time and
place to be mutually agreed to by the parties, within five business days after
the satisfaction or waiver of all of the conditions precedent described in
Section 5. The actual time and date of the Closing are herein called the
"Closing Date".
2.2 Purchase Price and Payment.
(a) As consideration for the Assets, and subject to the terms
and conditions of this Agreement, Buyer shall pay to the Company a
total of US$36,000,000 (the "Purchase Price").
(b) The Purchase Price shall be paid in cash on the
Closing Date to or upon the order of the Company in immediately
available Houston, Texas funds:
(i) by the Escrow Agent's delivery of
the Escrow Fund to the Company; and
(ii) by the Buyer's delivery of the
balance of the Purchase Price to the Company.
2.3 Purchase Price Allocation. Attached hereto as Schedule 2.3 is
an allocation of the Purchase Price among the Assets. As soon as practicable
after the Closing Date, the Company and Buyer shall jointly prepare IRS Form
8594 to report the allocation of the Purchase Price among the Assets,
consistent with Schedule 2.3. Each party hereto agrees not to assert, in
connection with any tax return, tax audit or similar proceeding, any allocation
that differs from that set forth in such Form 8594.
2.4 Prorations. Ad valorem and similar taxes and assessments
relating to the Assets shall be prorated between Buyer and the Company as of
the Closing Date based upon estimates of the amount of such taxes and
assessments that will be due and payable on the Assets during the year during
which the Closing Date occurs. As soon as the amount of actual taxes and
assessments is known, Buyer and the Company shall readjust the amount to be
paid by each party with the result that the Company shall pay for those taxes
and assessments attributable to the period of time up to and including the
Closing Date and Buyer shall pay for those attributable to the period
thereafter.
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3. Representations and Warranties.
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Buyer as follows:
(a) Due Organization; Good Standing and Power. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of Louisiana. The Company has the
corporate power and authority to own, lease and operate the Assets and
to conduct the Business. The Company is duly authorized, qualified or
licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which its right, title or interest in
or to any of the Assets, or the conduct of the Business, requires such
authorization, qualification or licensing, except where the failure to
so qualify or to be in good standing in such other jurisdictions would
not have a material adverse effect on any of the Assets, the Business
or the results of operations of the Company. No actions or
proceedings to dissolve the Company are pending.
(b) Validity of Agreement; Approvals; No Conflict with
Instruments. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all requisite
action on its part. No other corporate action is necessary for the
authorization, execution, delivery, and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally and by
general equity principles. Except as described in Schedule 3.1(b)
hereto the execution, delivery and performance of this Agreement by
the Company and the consummation by it of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under, any provision of any law, rule or
regulation, court order, judgment or decree applicable to the Company;
(ii) will not result in the creation of any Encumbrance on the Assets
under, conflict with, or result in the breach or termination of any
provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Company
under, or result in the creation of a lien, charge or Encumbrance upon
any portion of the assets of the Company pursuant to, the charter or
by-laws of the Company, or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement to
which the Company is a party or by which it or any of its assets is
bound or affected; and (iii) will not require any consent, approval,
waiver, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, except for (x) the filing
pursuant to the HSR Act and (y) any necessary consents to transfer or
assign Permits, to the extent the same are transferable or assignable.
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(c) Title to Properties; Absence of Liens and
Encumbrances. The Company owns (except as described in Schedule
3.1(c) hereto) good and marketable title to all of the Assets, free
and clear of all Encumbrances, and other restrictions of any kind and
nature.
(d) Contracts. Schedule 3.1(d) lists all contracts to
which the Company is a party which affect the operation of the Assets
or the Business. The Company has made available to the Buyer a
correct copy of each Contract that is in the Company's possession.
With respect to each Contract, to the best of Company's knowledge: (A)
the Contract is legal, valid, binding, enforceable, and in full force
and effect (except as to enforceability of indemnity provisions); (B)
the Contract will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 1.3 above), except
as to enforceability of indemnity provisions; (C) no party is in
breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the Contract, which
breach or default would have a material adverse effect on the Buyer
under such Contract; and (D) no party has repudiated any provision of
the Contract, which repudiation would have a material adverse effect
on the Buyer under such Contract.
(e) Permits and Other Data. Schedule 3.1(e) hereto
contains a complete and correct list of all Permits (other than sales
and use tax Permits and franchise tax registrations). True and
complete copies of all documents (including all amendments thereto)
referred to in Schedule 3.1(e) hereto have been delivered to or made
available for inspection by Buyer. To the knowledge of Company, all
Permits are in full force and effect and are valid and enforceable in
accordance with their respective terms, except where the failure to be
in full force and effect and valid and enforceable would not in the
aggregate have an adverse effect on the Assets on the Business. To
the knowledge of the Company, the Company and its respective
Affiliates are not in breach or default in the performance of any
material obligation thereunder and no event has occurred or has failed
to occur whereby any of the other parties thereto have been or will be
released therefrom or will be entitled to refuse to perform
thereunder. Except as set forth in Schedule 3.1(e) hereof, to the
knowledge of Company, there are no Permits to which the Company or any
of Affiliates is a party which are material to the ownership of any of
the Assets or to the conduct of the Business.
(f) Legal Proceedings. Except as described in Schedule
3.1(f) hereto, (i) there is no litigation, proceeding, claim or
governmental investigation pending or, to the knowledge of the
Company, threatened seeking relief or damages which, if granted, would
adversely affect the Assets, or the ability of Buyer to use and
operate the Assets or which would prevent the consummation of the
transactions contemplated by this Agreement and (ii) the Company has
not been charged with any violation of or, to the knowledge of the
Company, threatened with a charge or violation of, nor is the Company
aware of any facts or circumstances that, if discovered by third
parties, could give rise to a charge or a violation of, any provision
of Applicable Law or regulation which charge or violation, if
determined
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adversely to the Company, would adversely affect the Business or that
might reasonably be expected to affect the right of Buyer to own the
Assets or operate the Business after the Closing Date in substantially
the manner in which it is currently operated.
(g) Intellectual Property. Except for the Intellectual
Property set forth on Schedule 3.1(g) hereto, the Company does not
own, hold, use, or have pending any material Intellectual Property in
connection with the operation of its Assets and Business.
(h) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(h)
hereto, the Company has conducted the Business so as to comply with
all Applicable Laws, Permits, licenses, know-how or other proprietary
rights of others, the failure to comply with which would individually
or in the aggregate have a material adverse effect on the Business or
the results of operations of the Assets.
(i) Certain Fees. Neither Company nor any of its
officers, directors or employees has employed any broker or finder or
incurred any other liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(j) Environmental, Health and Safety Compliance. Except
as described on Schedule 3.1(j) hereto, and except where the failure
of any of the following statements to be true would not result in a
material adverse effect on the Assets and Business taken as a whole,
for the period beginning with the time at which the Company acquired
the Assets:
(i) the Company is, and has continuously
been, (in connection with the operation of the Assets) in
compliance in all material respects with all Environmental
Laws;
(ii) all material notices, Permits, or
similar authorizations, if any, required to be obtained or
filed under any Environmental Law in connection with the
operation of the Business have been obtained or filed;
(iii) there are no past, pending or
threatened investigations, proceedings or claims against the
Company (in connection with the operation of the Assets) that
are known to the Company relating to the presence, release or
remediation of any Hazardous Material or for non-compliance
with any Environmental Law; and
(iv) no conditions or circumstances are
known to the Company to exist or to have existed with respect
to the Company, including without limitation the off-site
disposal of Hazardous Materials, that could impose any
liability on Buyer with respect to any Environmental Law.
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For purposes of this Agreement, the term "Environmental Laws" shall
mean, as to any given asset or operation of the Company, all
applicable laws, statutes, ordinances, rules and regulations of any
Governmental Entity pertaining to protection of the environment in
effect as of the Closing Date. For purposes of this Agreement, the
term "Hazardous Material" shall mean any substance which is listed or
defined as a hazardous substance, hazardous constituent or solid waste
pursuant to any Environmental Law.
(k) Taxes. The Company has caused to be timely filed
with appropriate federal, state, local and other Governmental Entities
all Tax Returns required to be filed with respect to the Company or
the conduct of the Business and has paid, caused to be paid, or
adequately reserved in the Financial Statements all Taxes due or
claimed to be due from or with respect to such Tax Returns, unless
such failure to file, to pay or cause to be paid or adequately
reserved in the Financial Statements would not have a material adverse
effect on the Assets.
(l) Rights of Third Parties. Except as specifically set
forth on one or more of the Schedules hereto, the Assets are
transferable and assignable to Buyer as contemplated by this Agreement
without the waiver of any right of first refusal or the consent of any
other party being obtained, and there exists no preferential right of
purchase in favor of any person with respect to any of the Assets or
the Business.
(m) Additional Information. Schedule 3.1(m) hereto
contains accurate lists and summary descriptions of the following:
(i) the names and titles of and current
hourly rates for all employees of the Division;
(ii) all names under which the Division
has conducted any business or which the Division has otherwise
used; and
(iii) a listing of all performance and
similar bonds and letters of credit currently posted by, or
any certificate of financial responsibility or similar
evidence of financial accountability obtained or procured by,
the Company for the purpose of operating the Assets or
otherwise conducting the Business.
(n) Labor Matters. The Company has not suffered any
strike, slowdown, picketing or work stoppage by any union or other
group of employees. The Company is not a party to any collective
bargaining agreement; no such agreement determines the terms and
conditions of employment of any employee of the Company; no collective
bargaining agent has been certified as a representative of any of the
employees of the Company; and no representation campaign or election
is now in progress with respect to any of the employees of the
Company. The Company has complied in all material respects with all
laws relating to the employment of labor in the conduct of the
Business, including provisions thereof
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relating to wages, hours, equal opportunity and the payment of pension
contributions, social security and other taxes.
(o) Employee Benefit Plans and Arrangements. Schedule
3.1(o) hereto lists all written employee benefit plans and collective
bargaining, labor and employment agreements and severance agreements
or other similar arrangements (together with all documents or
instruments establishing or constituting any related trust, annuity
contract or other funding instrument), and whether or not legally
enforceable, to which the Company is (or ever has been) a party or by
which the Company is (or ever has been) bound, including (1) any
profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance, or
incentive compensation plan, agreement or arrangement, (2) any welfare
benefit plan, agreement or arrangement or any plan, agreement or
arrangement providing for "fringe benefits" or perquisites to
employees, officers, directors or agents, including benefits relating
to automobiles, clubs, vacation, child care, parenting or maternity
leave, sabbaticals, sick leave, medical expenses, dental expenses,
disability, accidental death or dismemberment, hospitalization, life
insurance and other types of insurance, (3) any employment agreement,
or (4) any other "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) (each, a "Benefit Plan"). Each Benefit Plan
has been maintained and contributed to in compliance with the
requirements of Applicable Law, except for such failures to maintain
or contribute that would not, in the aggregate, have a material
adverse effect on the financial condition of the Company or on the
Assets. The Company has paid and discharged when due all obligations
and liabilities arising under such Benefit Plans and Applicable Law of
a character which, if not paid or discharged, might result in the
imposition of an Encumbrance (other than a Permitted Encumbrance) or
the assertion of a liability enforceable against the Assets or the
Buyer, which could have a material adverse effect on the financial
condition of the Buyer or the Assets.
(p) Guarantees. Except as disclosed on Schedule 3.1(p),
the Company is not a guarantor or otherwise is liable for any
liability or obligation (including indebtedness) of any other person,
in connection with the operation of the Business.
(q) Net Worth. The Company's net worth on the Closing
Date will be in excess of $36,000,000.
(r) Certain Fees. Neither Company nor any of its
officers, directors or employees, on behalf of it, has employed any
broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Company as follows:
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(a) Due Organization; Good Standing and Power. The Buyer
is a corporation duly organized, validly existing and in good standing
under the laws of the state of Texas. The Buyer has the corporate
power and authority to own, lease and operate the Assets and to
conduct the Business. The Buyer is duly authorized, qualified or
licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which its right, title or interest in
or to any of the assets, or the conduct of the business, requires such
authorization, qualification or licensing, except where the failure to
so qualify or to be in good standing in such other jurisdictions would
not have a material adverse effect on any of its assets, business or
the results of operations of the Buyer. No actions or proceedings to
dissolve the Buyer are pending.
(b) Authorization and Validity of Agreement. The
execution, delivery and performance of this Agreement by the Buyer
have been duly authorized by all requisite action on its part. No
other corporate action is necessary for the authorization, execution,
delivery, and performance by the Buyer of this Agreement and the
consummation by the Buyer of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Buyer and
constitutes a legal, valid and binding obligation of the Buyer,
enforceable against it in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity
principles. Except as described in Schedule 3.2(b) hereto and as
would not constitute a material adverse effect on the transactions
contemplated herein, the execution, delivery and performance of this
Agreement by the Buyer and the consummation by it of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under, any provision of any law, rule or
regulation, court order, judgment or decree applicable to the Buyer;
(ii) will not conflict with, or result in the breach or termination of
any provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Buyer under
the charter or by-laws of the Buyer, or any indenture, mortgage, deed
of trust, lease, licensing agreement, contract, instrument or other
agreement to which the Buyer is a party or by which it or any of its
assets is bound or affected; and (iii) will not require any consent,
approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, except for (x)
the filing pursuant to the HSR Act and (y) any necessary consents to
transfer or assign Permits, to the extent the same are transferable or
assignable.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as disclosed on Schedule 3.2(c), the execution,
delivery and performance of this Agreement by Buyer and the
consummation by it of the transactions contemplated hereby (i) will
not violate (with or without the giving of notice or the lapse of time
or both), or require any consent, approval, filing or notice under any
provision of any law, rule or regulation, court order, judgment or
decree applicable to Buyer, and (ii) will not conflict with, or result
in the breach or termination of any provision of, or constitute a
default under, or result in the acceleration of the performance of the
obligations of Buyer, under, the charter or bylaws of
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<PAGE> 13
Buyer or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which Buyer is a
party or by which Buyer or any of its assets or properties is bound.
(d) Certain Fees. Neither Buyer nor any of its officers,
directors or employees, on behalf of it, has employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
3.3 Survival of Representations and Warranties. The
representations and warranties of the parties shall expire on the second
anniversary date of the Closing.
3.4 Scope of Representations of the Company. THE COMPANY MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE MAINTENANCE,
REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE, INVENTORY OR ANY OF THE RIGS
OR ANY PORTION THEREOF OR PROPERTY THEREON, INCLUDING ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IT BEING THE
EXPRESS AGREEMENT OF BUYER AND THE COMPANY THAT, EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, BUYER WILL OBTAIN THE INVENTORY AND RIGS IN THEIR CONDITION
AND STATE OF REPAIR ON THE CLOSING DATE, "AS IS," AND "WHERE IS."
4. Covenants; Actions Prior to Closing.
4.1 Access to Information. During the period beginning on the
date hereof and ending on the Closing Date, the Company will (a) give or cause
to be given to Buyer and its representatives such access, during normal
business hours, to the Assets as Buyer shall from time to time reasonably
request and (b) furnish or cause to be furnished to Buyer such financial and
operating data and other information with respect to the operations of the
Business as Buyer shall from time to time reasonably request. Buyer and its
representatives shall be entitled, in consultation with the Company, to such
access to the representatives, officers and employees of the Company as Buyer
may reasonably request. The Company shall permit Buyer and its representatives
to confirm, on reasonable notice and on the basis of agreed methods, with the
Company's principal vendors, customers, and trade Affiliates, that the
acquisition by Buyer of the Company will be acceptable to such vendors,
customers, and trade Affiliates and that the acquisition will not adversely
affect the relationship of such vendors, customers and trade Affiliates with
the Business.
4.2 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Buyer, during the period commencing on the date hereof and ending on the
Closing Date, the Company will:
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(a) conduct the Business only in the usual, regular and
ordinary manner consistent with current practice and, to the extent
consistent with such operation, use its reasonable efforts to keep
available the services of the present employees of the Division and
preserve the Company's present relationships with persons having
business dealings with the Company relating to the Business;
(b) maintain the Company's books, accounts and records
relating to the Business in the usual, regular and ordinary manner, on
a basis consistent with past practice, and comply in all material
respects with all Applicable Laws and other obligations of the
Company;
(c) not (i) sell, lease or otherwise dispose of any of
the Assets, (ii) modify or change in any material respect any contract
of the Company relating to the Business, other than in the ordinary
course of business or (iii) agree, whether in writing or otherwise, to
do any of the foregoing;
(d) not (i) permit or allow any of the Assets to become
subject to any liens or Encumbrances, (ii) waive any claims or rights
relating to the Assets, except in the ordinary course of business and
consistent with past practice, (iii) grant any increase in the
compensation of any employees employed in the conduct of the Business,
except in the ordinary course of business or as required by
contractual arrangements existing on the date hereof, (iv) enter into
any agreements giving rise to trade and barter obligations relating to
the Assets, or (v) agree, whether in writing or otherwise, to do any
of the foregoing;
(e) maintain the inventory associated with each drilling
rig, including spare components and parts, supporting inventory, drill
pipe and tubulars, in such amounts and of such quality as would be in
accordance with past practice and comparable historical levels and
sufficient to comply with any applicable Contract under which such
drilling rig is operating; and
(f) not execute any drilling contracts without the prior
written consent of Buyer, such consent not to be unreasonably
withheld.
4.3 Further Actions. Subject to the terms and conditions hereof,
the Company and Buyer will each use their reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using reasonable best
efforts: (i) to obtain prior to the Closing Date all Permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and parties to Contracts as are necessary for the consummation of the
transactions contemplated hereby; (ii) to effect all necessary registrations
and filings; and (iii) to furnish to each other such information and assistance
as reasonably may be requested in connection with the foregoing. Where the
consent of any third party is required under the terms of any of the Company's
leases or contracts to the transactions contemplated by this Agreement, the
Company will
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<PAGE> 15
use reasonable best efforts to obtain such consent on terms and conditions not
less favorable than as in effect on the date hereof. The Company and Buyer
shall cooperate fully with each other to the extent reasonably required to
obtain such consents. Notwithstanding any other provision hereof, this
Agreement shall not constitute or require an assignment to Buyer of any
Contract, Permit, or other right if an attempted assignment of the same without
the consent of any party would constitute a breach thereof or a violation of
Applicable Law unless and until such consent shall have been obtained.
4.4 Notification. The Company shall promptly notify Buyer in
writing and keep it advised as to (i) any litigation or administrative
proceeding filed or pending against the Company or, to its knowledge,
threatened against it, which would (x) have a material adverse effect on the
Assets or (y) challenge the transactions contemplated hereby; (ii) any material
damage or destruction of any of the Assets of the Company; (iii) any material
adverse change in the results of operations of the Business; and (iv) any
variance from the representations and warranties contained in Section 3.1
hereof or of any failure or inability on the part of the Company to comply with
any of its covenants contained in this Section 4.
4.5 No Inconsistent Action. No party hereto shall take any action
inconsistent with its obligations under this Agreement or which could
materially hinder or delay the consummation of the transactions contemplated by
this Agreement. The Company shall use reasonable best efforts to cause the
representations and warranties made by it herein to continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date.
4.6 Acquisition Proposals. None of the Company, or any Affiliate,
director, officer, employee or representative of any of them shall, directly or
indirectly (i) solicit, initiate or knowingly encourage any Acquisition
Proposal or (ii) engage in discussions or negotiations with any person that is
considering making or has made an Acquisition Proposal. The Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted heretofore with respect
to any Acquisition Proposal. The term "Acquisition Proposal," as used herein,
means any offer or proposal for or any indication of interest in, a merger or
other business combination involving the Company, or the acquisition of an
equity interest in or substantial portion of the assets of, the Company, other
than the transactions contemplated by this Agreement.
4.7 Hart-Scott-Rodino Act. The Company and the Buyer will each
file the Notification and Report Forms and related material that they are
required to file with the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice under the HSR Act, will use their
reasonable efforts to obtain an early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary, proper, or advisable, provided, however, that the reasonable efforts
of Buyer shall not include (a) proffering Buyer's willingness to accept an
order providing for the divestiture of such of the properties, assets,
operations, or business of the Company (or, in lieu thereof, such properties,
assets, operations, or business of Buyer or any of Buyer's Affiliates) as are
necessary to permit the consummation of the
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transactions contemplated by this Agreement, including an offer to hold
separate such properties, assets, operations or businesses pending any such
divestiture or (b) proffering Buyer's willingness to accept any other
conditions, restrictions, limitations or agreements affecting the full rights
of ownership of the Assets (or any portion thereof) as may be necessary to
permit the consummation of the transactions contemplated by this Agreement.
4.8 Public Announcements. Except as may be required by Applicable
Law or stock exchange or National Association of Securities Dealers, Inc.
regulation, neither Buyer and DI Industries, Inc., a Texas corporation ("DI"),
on the one hand, nor the Company, on the other, shall issue any press release
or otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party.
4.9 Rig Loss. Notwithstanding any other provision of this
Agreement:
(a) If any Rig shall become an actual or constructive
total loss (as determined by the Company's insurance underwriter)
prior to the Closing Date: (i) Buyer shall not be required to
purchase such Rig, (ii) the Purchase Price shall be reduced by the
amount allocated to such rig pursuant to Schedule 2.3, (iii) the term
"Assets" shall be deemed not to include such Rig and the Company shall
be entitled to any insurance proceeds and claims with respect thereto
(and such proceeds and claims shall be deemed to be Excluded Assets
for all purposes hereunder) and (iv) the other provisions of this
Agreement shall continue to be in effect and the Closing shall take
place in the manner contemplated herein.
(b) If a Rig sustains damage (estimated to cost more than
$10,000 to repair) not amounting to an actual or constructive total
loss prior to the Closing Date, at the Company's election either (i)
the Company shall repair or cause to be repaired the damage to the Rig
at the Company's own expense or (ii) elect not to repair such Rig. In
the case of an election under 4.10(b)(ii), the Buyer may (x) require
the Company to assign to Buyer at the Closing the rights the Company
has to receive insurance proceeds in respect of such loss or damage or
(y) elect to not purchase the Rig and be entitled to a reduction in
Purchase Price equal to its value as set out in Schedule 2.3. In the
case of either (i) or (ii)(x) above, Buyer shall remain obligated to
purchase the Assets on the Closing Date and the Purchase Price shall
not be reduced.
4.10 Performance Bonds. If the Company has posted a performance or
other similar bond or letter of credit in connection with the Company's
ownership or operation of the Assets or its performance under a Contract, Buyer
and the Company shall cooperate with each other in order (i) for the Company to
obtain the release of any such bond and (ii) to the extent required, for Buyer
to obtain a substitute bond or letter of credit or to assume the Company's
existing bond. Buyer shall reimburse the Company for all costs incurred by the
Company as a result of the Company's leaving a performance or similar bond or
letter of credit in place after the Closing Date in order to permit Buyer to
operate the Assets after the Closing Date.
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5. Conditions Precedent.
5.1 Conditions Precedent to Obligations of All Parties. The
respective obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by each party) at or prior to the Closing Date of each of the following
conditions:
(a) No Governmental Action. No action of any private
party or Governmental Entity shall have been taken or threatened and
no statute, rule, regulation or executive order shall have been
proposed, promulgated or enacted by any Governmental Entity which
seeks to restrain, enjoin or otherwise prohibit or to obtain damages
or other relief in connection with this Agreement or the transactions
contemplated hereby.
(b) Termination under Hart-Scott-Rodino Act. The
termination or early termination of the applicable waiting period
under the HSR Act shall have occurred.
5.2 Conditions Precedent to Obligations of Buyer. The obligations
of Buyer under this Agreement are subject to the satisfaction (or waiver by
Buyer) at or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Company contained herein or in
any certificate or document delivered to Buyer pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date.
(b) Performance of Agreements. The Company shall have
performed all obligations and agreements, and complied with all
covenants and conditions, contained in this Agreement to be performed
or complied with by it prior to or at the Closing Date.
(c) Officers Certificate. The Buyer shall have been
furnished with a certificate of a senior officer of the Company as to
the satisfaction of the conditions set forth in Sections 5.2(a) and
(b) above.
(d) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
counsel for Buyer, and such counsel shall have been furnished with
such certified copies of such corporate actions and proceedings and
such other instruments and documents as it shall have reasonably
requested.
(e) Licenses and Consents. All Permits, approvals,
authorizations, qualifications and orders of Governmental Entities
(including any air and water discharge permits required
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by the United States Environmental Protection Agency) which are
reasonably necessary to enable Buyer to own the Assets and conduct the
Business after the Closing in substantially the same manner as the
Assets are owned and the Business is being conducted as of the date
hereof shall be in full force and effect. All consents for assignment
of Contracts shall have been obtained, except as provided in Section
8.1 hereof.
(f) Opinion of Counsel of the Company. R. Joseph Wilson,
counsel for the Company, shall have furnished to Buyer its written
opinion, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer.
(g) Operation. The Business shall have been operated and
maintained substantially in the manner in which it has been operated
and maintained previously in the ordinary course of business and the
Company shall not have entered into or renewed any material agreements
or other commitments extending a substantial term beyond the Closing
Date or taken any action which is not in the ordinary course of
business, except for the transactions otherwise contemplated herein,
without the prior written approval of Buyer.
(h) Material Adverse Change. There shall have been no
material adverse change in the Assets or the Business from the date of
this Agreement until the Closing Date.
5.3 Conditions Precedent to the Obligations of the Company. The
obligations of Company under this Agreement are subject to the satisfaction (or
waiver by the Company) at or prior to the Closing Date of each of the following
conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Company pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date, except as contemplated or permitted by
this Agreement.
(b) Performance of Agreements. Buyer shall have
performed all obligations and agreements, and complied with all
covenants and conditions contained in this Agreement to be performed
or complied with by it prior to or at the Closing Date.
(c) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
counsel for the Company, and such counsel shall have been furnished
with such certified copies of such corporate actions and proceedings
and such other instruments and documents as it shall have reasonably
requested.
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(d) Opinion of Counsel to Buyer. Gardere Wynne Sewell &
Riggs, L.L.P., counsel for Buyer, shall have furnished to the Company
its written opinion, dated the Closing Date, substantially in form and
substance reasonably satisfactory to Company.
5.4 Deemed Waiver of Conditions Precedent. In the event that the
Closing occurs, all conditions precedent contained in this Article 5 which have
not been satisfied on the Closing Date shall (except as otherwise mutually
agreed by the parties) be deemed to have been waived by the applicable
requisite party.
6. Employees.
6.1 Employment. The Company shall terminate its employment
relationship with each of the Division's rig- based employees (except for those
employees engaged solely in the operation of Rig 49) on and as of the Closing
Date. Buyer shall offer employment to all of Division's employees following
the Closing, such offer to be subject to their passing physical and drug
screening as Buyer deems appropriate. The Company shall provide reasonable
assistance to the Buyer in the hiring process. For each employee to whom the
Buyer offers employment, such employee will be (i) offered compensation (not
including benefits) at least equal to the current compensation (not including
benefits) of such employee, (ii) offered benefits equivalent to employees in
similar positions at Buyer and (iii) credited with the number of years of his
employment by the Company for purposes of any of Buyer's employment plans under
which the period of service is used to determine the benefits thereunder.
6.2 No Buyer Liability. The Buyer shall have no responsibility,
liability or obligation, whether to employees, former employees, their
beneficiaries or to any other person with respect to, and the Company shall
indemnify and hold the Buyer harmless with respect to, the termination of the
employment of the Company's employees, any liability under the Worker
Adjustment and Retraining Notification Act (WARN) arising as a result of the
terminations of employment relationships contemplated by the first sentence of
Section 6.1, any employee benefit plan, practice, program or arrangement
(including the establishment, operation or termination thereof) maintained for
employees of the Company prior to the Closing. The Company shall remain
responsible for all expenses, taxes, claims, obligations or liabilities
associated with, arising out of or relating to any employee benefit plan,
practice, program or arrangement maintained by the Company with respect to the
Company prior to the Closing, including medical or disability claims incurred
but unreported prior to the Closing and medical benefits with respect to any
employee of the Company whose employment by the Company was terminated on or
before the Closing Date to the extent required by law. Buyer shall be under no
obligation to maintain or continue the insurance policies currently maintained
by the Company for the Company's employees.
7. Termination.
7.1 General. This Agreement may be terminated and the
transactions contemplated herein may be abandoned (a) by mutual consent of
Buyer and the Company or (b) by any party by
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notice to the other parties in the event that the Closing Date shall not have
occurred on or before November 1, 1997; provided, however, that if the Closing
Date shall not have occurred on or before such date due to a breach of this
Agreement by one of the parties or an Affiliate of such party, that party may
not terminate this Agreement. The parties hereto agree to use good faith and
all reasonable efforts to satisfy the conditions to Closing contained in
Section 5 hereunder.
7.2 No Liabilities in Event of Termination. Except as set forth
in Section 7.3 below, in the event of any termination of this Agreement as
provided above, this Agreement shall forthwith become wholly void and of no
further force or effect and there shall be no liability on the part of Buyer,
the Company or their respective officers, directors, or agents, except that the
provisions of Section 10.1 hereof shall remain in full force and effect, and
provided that nothing contained herein shall release any party from liability
for breach of any provision, covenant or agreement contained herein.
7.3 Failure to Close. On the date of this Agreement, Buyer has
delivered $2,000,000 to Texas Commerce Bank National Association, as Escrow
Agent (the "Escrow Agent"), on the terms and conditions set forth in the Escrow
Agreement attached hereto as Exhibit B (the "Escrow Agreement"). The
$2,000,000 plus any interest earned thereon, less any fees and expenses of the
Escrow Agent (the "Escrow Fund") shall serve as a non-refundable deposit and
liquidated damages to secure the performance of Buyer's obligations hereunder.
Buyer acknowledges that in agreeing to negotiate this Agreement, the Company
has foregone the opportunity to negotiate with other potential purchasers of
the Assets and to make certain operational and other changes at the Company.
Therefore, the Buyer and the Company agree that if there is a failure to close
the acquisition of the Assets, the Company shall be entitled to retain the
Escrow Fund as liquidated damages and not as a penalty, unless, (a) the Closing
does not occur as a result of a condition in Section 5.1 or 5.2 not being
satisfied through no fault of Buyer or (b) the Agreement is terminated through
mutual Agreement of Buyer and the Company. The Escrow Fund shall be the
Company's SOLE and EXCLUSIVE remedy for a breach of the Buyer's obligations
under this Agreement, and Buyer shall have no other liability to the Company
under this Agreement or otherwise.
8. Covenants; Action Subsequent to Closing.
8.1 (a) Post Closing Consent. In the event that the Company
shall have failed prior to the Closing Date to obtain consents to the transfer
of any Contract, Permit or other right that cannot be effectively transferred
to Buyer without such consent (a "Consent Required Contract"), and the Buyer
nevertheless determines to proceed with the Closing, the terms of this Section
8.1 shall govern the transfer of the benefits of each such Consent Required
Contract. The Company and Buyer shall use their reasonable best efforts after
the Closing Date to obtain any required consent to the assignment to, and the
assumption by, Buyer of each Consent Required Contract that is not transferred
to the Buyer at the Closing ("Non-assigned Contract"). The Company and Buyer
shall enter into an agreement on the Closing Date with respect to each
Non-assigned Contract providing that until the rights and obligations of the
Company thereunder are transferred to or assumed by Buyer, or, if earlier,
until the termination of such Non-assigned Contract, the Company shall
19
<PAGE> 21
continue to perform its obligations thereunder and Buyer shall provide such
assistance, at the sole expense of Buyer, as the Company may reasonably request
for such purpose, including the use of personnel and assets (by lease or
otherwise) of Buyer and its Affiliates of the type and quantity that the
Company would have used to perform such Non-assigned Contract had the
transactions contemplated by this Agreement not been consummated. Such
agreement shall also provide that in consideration of the provision of such
assistance, the Company shall, promptly after the payment of any amounts to the
Company by the other party to a Non-assigned Contract, pay such amounts to
Buyer after subtracting therefrom the reasonable direct costs and expenses
actually incurred by the Company as a result of its performance of the
Non-assigned Contract. The parties hereto acknowledge and agree that it is the
mutual intent of the parties that all benefits and burdens (except those
accrued as of the Closing Date) with respect to the foregoing shall be borne by
Buyer after the Closing Date and, at the Closing, the parties agree to enter
into an agreement to such effect.
(b) Notwithstanding Section 8.1(a) above, the parties have
agreed in Section 1.7 hereof that the Company will complete operations under
the Turnkey Contracts specified as such in Schedule 1.1(e) and therefore no
consents to assignment thereof shall be required until the well in progress
under such Turnkey Contract is completed.
8.2 Access to Books and Records.
(a) Until the third anniversary of the Closing Date, the
Company shall afford, and will cause its Affiliates to afford, to the
Buyer, its counsel, accountants and other authorized representatives,
during normal business hours, reasonable access to the books, records
and other data of the Business with respect to periods ending on or
prior to the Closing Date to the extent that such access may be
reasonably required by the Buyer to facilitate (i) the investigation,
litigation and final disposition of any claims which may have been or
may be made against the Buyer in connection with the Business or (ii)
for any other reasonable business purpose.
(b) Until the third anniversary of the Closing Date,
Buyer shall afford, and will cause its Affiliates to afford, to the
Company (as hereinafter defined), their respective counsel,
accountants and other authorized representatives, during normal
business hours, reasonable access to the books, records and other data
related to the business of Buyer relating to the Assets and the
Business with respect to periods ending on or prior to the Closing
Date to the extent that such access may be reasonably required by the
Company to facilitate (i) the investigation, litigation and final
disposition of any claims which may have been or may be made against
the Company in connection with the Business or (ii) for any other
reasonable business purpose.
8.3 Company's Covenants Not to Compete. In order to allow Buyer
to realize the full benefit of its bargain in connection with the purchase of
the Assets, neither the Company nor its Affiliates will at any time for a
period of three years following the Closing Date, directly or
20
<PAGE> 22
indirectly, acting alone or as a member of a partnership or as a holder of in
excess of 5% of any security of any class, or as a representative of, any
corporation or other business entity, engage in any business in competition
with the Business as conducted by the Company at the date hereof in those
geographic areas in which such Business is conducted or has been conducted
within one year prior to the Closing Date; provided, however, nothing herein
shall prohibit the Company from conducting (i) operations solely with the Rig
now designated as Rig 49 (or a rig of like kind if Rig 49 is replaced) or (ii)
well servicing operations consistent with the Company's past practices.
Company acknowledges that in the event the scope of the covenants set forth in
this Section 8.3 is deemed to be too broad in any proceeding, the court may
reduce such scope to that which it deems reasonable under the circumstances.
The parties hereto agree and acknowledge that Buyer would not have any adequate
remedy at law for the breach or threatened breach by the Company or any of its
Affiliates of the covenants and agreements set forth in this Section 8.3 and,
accordingly, Company further agrees that Buyer may, in addition to the other
remedies which may be available to it hereunder, file suit in equity to enjoin,
the Company, or any of their Affiliates from such breach or threatened breach
and consent to the issuance of injunctive relief hereunder. The Company
understands and agrees that the act of Buyer in entering into this Agreement,
and Buyer's covenants and payments hereunder, shall and do constitute
sufficient consideration for the Company to agree not to compete against Buyer
as set out in this Section 8.3.
9. Indemnification.
9.1 Indemnification by the Company. Subject to the provisions of
this Section 9, the Company shall protect, indemnify and hold harmless Buyer,
its Affiliates and each of its and their respective officers, directors and
agents and each person who controls Buyer in respect of any losses, claims,
damages, liabilities, deficiencies, delinquencies, defaults, assessments, fees,
penalties or related costs or expenses, including court costs and attorneys',
and accountants' fees and disbursements, and any federal, state or local income
or franchise taxes payable in respect of the receipt of cash or money in
discharge of the foregoing (collectively referred to herein as "Damages") to
which any Indemnified Party may become subject if such Damages arise out of or
are based upon (i) the Retained Liabilities, provided, however, the Company
shall only have liability hereunder when Damages arising from such Retained
Liabilities exceed a $10,000 aggregate threshold (at which point the Company
will be obligated to indemnify Buyer from and against all such Damages relating
back to the first dollar), and (ii) the breach of any of the representations or
warranties, covenants or agreements made by the Company in this Agreement,
including the Exhibits and Schedules hereto, or in any certificate or
instrument delivered by or on behalf of the Company pursuant to this Agreement;
provided, however, that Buyer shall not be entitled to assert rights of
indemnification under this Section 9.1(ii) unless and until the aggregate of
all such Damages exceeds $100,000 (it being understood that such Damages shall
accumulate until such time or times as the aggregate of all such Damages
exceeds $100,000, whereupon Buyer shall be entitled to indemnification
hereunder for any such Damages in excess of, but excluding, $100,000).
21
<PAGE> 23
9.2 Indemnification by Buyer. Subject to the provisions of this
Section 9, Buyer shall protect, indemnify and hold harmless the Company, its
Affiliates and each of its and their respective officers, directors and agents,
and each person who controls the Company, in respect of any Damages to which
the Company may become subject if such Damages arise out of or are based upon
the (i) the Assumed Liabilities, provided, however, Buyer shall only have
liability hereunder when Damages arising from such Assumed Liabilities exceed a
$10,000 aggregate threshold (at which point the Buyer will be obligated to
indemnify any Indemnified Party from and against all such Damages relating back
to the first dollar), (ii) breach of any of the representations, warranties,
covenants or agreements made by Buyer in this Agreement, including the Exhibits
and Schedules hereto and (iii) all liabilities for any violation of
Environmental Laws arising after the Closing Date regardless of whether the
act, omission, fact, or circumstance giving rise thereto occurred or existed on
or before the Closing Date; provided, however, that the Company shall not be
entitled to assert rights of indemnification under this Section 9.2(ii) unless
and until the aggregate of all such Damages exceeds $100,000 (it being
understood that such Damages shall accumulate until such time or times as the
aggregate of all such Damages exceeds $100,000, whereupon the Company shall be
entitled to indemnification hereunder for any such Damages in excess of, but
excluding, $100,000).
9.3 Monetary Limit on Indemnification Liability. Notwithstanding
any other provisions to the contrary in this Agreement, the liabilities under
Section 9.1 of the Company, on the one hand, and the liabilities under Section
9.2 of Buyer, on the other, shall be limited to the Purchase Price.
9.4 Indemnification Procedures. The obligations and liabilities
of each indemnifying party hereunder with respect to claims resulting from the
assertion of liability by the other party or third parties shall be subject to
the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification (a "Claim") against Buyer on the one hand
or the Company on the other (the "Indemnifying Party") under this
Section 9, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety (subject to any limitations contained in Section
9) of any Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of or caused by the Claim,
(ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Claim and fulfill its indemnification obligations hereunder, (iii)
the Claim involves only money
22
<PAGE> 24
damages and does not seek an injunction or other equitable relief,
(iv) settlement of, or an adverse judgment with respect to, the Claim
is not, in the good faith judgment of the Indemnifying Party, likely
to establish a precedential custom or practice materially adverse to
the continuing business interests of the Indemnified Party, and (v)
the Indemnifying Party conducts the defense of the Claim actively and
diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 9.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.4(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (ii) the Indemnifying Party will remain
responsible for any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Claim to the fullest extent provided in this Section 9. Nothing
contained herein shall limit either party's right to, in good faith,
dispute its obligation to indemnify the other party hereunder.
9.5 Applicability of Indemnification Obligation. EACH OF THE
AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD HARMLESS CONTAINED IN SECTIONS 9.1 AND
9.2 OF THIS AGREEMENT SHALL APPLY IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS
BASED IN WHOLE OR IN PART UPON THE SOLE OR CONTRIBUTORY NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR GROSS), BREACH OF WARRANTY, OR BREACH OR VIOLATION OF ANY
DUTY IMPOSED BY ANY LAW OR REGULATION, ON THE PART OF THE BENEFICIARY OF THE
AGREEMENT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.
10. Miscellaneous.
10.1 Payment of Certain Fees and Expenses. Each of the parties
hereto shall pay the fees and expenses incurred by it in connection with the
negotiation, preparation, execution and performance of this Agreement,
including brokers' fees, attorneys' fees and accountants' fees.
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<PAGE> 25
10.2 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Company:
Justiss Oil Company, Inc.
1810 East Oak Street
P. O. Box 1385
Jena, Louisiana 71342
Attn: President
(b) If to Buyer:
Grey Wolf Drilling Company
10370 Richmond Avenue
Suite 600
Houston, Texas 77042-4136
Attn: Mr. Thomas P. Richards
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attn: Mr. Frank Putman
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
10.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
10.4 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, personal representatives,
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
10.5 Assignability. This Agreement shall not be assignable by the
Company without the prior written consent of Buyer or by Buyer without the
prior written consent of the Company;
24
<PAGE> 26
provided, however, that Buyer shall be entitled to assign this Agreement to an
Affiliate without the consent of Company.
10.6 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party
so waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
10.7 Limitation on Interest. Regardless of any provision contained
herein or any other document executed in connection with this Agreement, the
parties hereto shall not be obliged to pay, and the parties hereto shall never
be entitled to charge, reserve, receive, collect or apply, as interest (it
being understood that interest shall be calculated as the aggregate of all
charges that are contracted for, charged, reserved, received, collected,
applied or paid which constitute interest under Applicable Law) payable
hereunder any amount in excess of the maximum nonusurious contract rate of
interest allowed from time to time by Applicable Law, and in the event any of
the parties hereto ever charges, reserves, receives, collects or applies, as
interest, any such excess, at the option of the payor of such interest, such
amount shall be deemed a partial prepayment of the amount payable hereunder or
promptly refunded to the payor of such interest.
10.8 Section Headings; Index. The section headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
10.9 Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.11 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
10.12 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and nothing contained herein should be deemed
to confer upon any third parties any remedy, claim, liability reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement.
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<PAGE> 27
10.13 DTPA Waiver. THE PARTIES HEREBY WAIVE THE PROVISIONS OF THE
TEXAS DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41
THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), OF
THE TEXAS BUSINESS AND COMMERCE CODE. To evidence their ability to grant such
waiver, the Parties hereby represent and warrant that they (a) are in the
business of seeking or acquiring, by purchase or lease, goods or services for
commercial or business use, (b) have (or will have at the Closing in the
aggregate) assets of $5 million or more according to their most recent
financial statement prepared in accordance with generally accepted accounting
principles, (c) have knowledge and experience in financial and business matters
that enable them to evaluate the merits and risks of the transaction
contemplated hereby and (d) are not in a significantly disparate bargaining
position.
11. Definitions.
11.1 Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"Affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person.
"Applicable Law" means any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition or otherwise),
easements and other encumbrances of every type and description,
whether imposed by law, agreement, understanding or otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or
other authority or instrumentality (domestic or foreign).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights, trade secrets, know-how, inventions,
and similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
26
<PAGE> 28
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from Governmental Entities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense or the initiation of legal action
or similar extraordinary efforts.
"Subsidiary" means any corporation more than 30 percent of
whose outstanding voting securities, or any partnership, joint
venture, or other entity more than 30 percent of whose total equity
interests is owned, directly or indirectly, by the Company.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax
imposed by any United States federal, state or local (or any foreign
or provincial) taxing authority, including any interest, penalties or
additions attributable thereto.
"Tax Return" means any return or report, including any related
or supporting information, with respect to Taxes.
11.2 Certain Additional Defined Terms. In addition to such terms
as are defined in Section 10.1, the following terms are used in this Agreement
as defined in the Sections of this Agreement referenced opposite such terms:
<TABLE>
<CAPTION>
Defined Terms Reference
------------- ---------
<S> <C>
Assets Section 1.1
Acquisition Proposal Section 4.6
Agreement Preamble
Assumed Liabilities Section 1.5(c)
Benefit Plan Section 3.1(o)
Business Recital 1
Buyer Preamble
Claim Section 9.4
Closing Section 2.1
Closing Date Section 2.1
Company Preamble
Consent Required Contract Section 8.1
Contracts Section 1.1(e)
DI Section 4.8
Damages Section 9.1
</TABLE>
27
<PAGE> 29
<TABLE>
<S> <C>
Environmental Laws Section 3.1(j)
Escrow Agent Section 7.3
Escrow Agreement Section 7.3
Escrow Fund Section 7.3
Hazardous Material Section 3.1(j)
Indemnified Party Section 9.4
Indemnifying Party Section 9.4
Inventory Section 1.1(b)
Non-assigned Contract Section 8.1
Purchase Price Section 2.2
Retained Liabilities Section 1.5(a)
Rigs Section 1.1(a)
Turnkey Contracts Section 1.7
Turnkey Rigs Section 1.7
</TABLE>
11.3 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes" and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit or Annex to
this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
JUSTISS OIL COMPANY, INC.
By: /s/ W. B. McCARTNEY, JR.
--------------------------------
Name: W. B. McCartney, Jr.
Title: Executive Vice President
GREY WOLF DRILLING COMPANY
By: /s/ THOMAS P. RICHARDS
--------------------------------
Name: Thomas P. Richards
Title: President and Chief Executive
Officer
28
<PAGE> 30
SCHEDULES TO ASSET PURCHASE AGREEMENT
[In accordance with the Rules of the Securities and Exchange
Commission, Schedules described in the foregoing Asset Purchase Agreement have
been omitted. The registrant agrees to furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission on request.]
<PAGE> 31
EXHIBIT A
GENERAL CONVEYANCE AND BILL OF SALE
This GENERAL CONVEYANCE AND BILL OF SALE ("General Conveyance") is made
effective as of the ______ day of October, 1997 by Justiss Oil Company, Inc., a
Louisiana corporation (the "Company").
RECITALS
1. Pursuant to the terms of an Asset Purchase Agreement (the
"Agreement") dated September 15, 1997 by and between the Grey Wolf Drilling
Company, a Texas corporation ("Buyer"), the Company agreed to convey the Assets
to Buyer, and makes this General Conveyance in order to evidence the conveyance
of all of the tangible and intangible personal property included in the Assets.
2. All capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Agreement.
ASSIGNMENT
NOW, THEREFORE, for and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00) in hand paid, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company does
hereby BARGAIN, GRANT, SELL, CONVEY, TRANSFER, DELIVER, and ASSIGN unto Buyer
all of the tangible and intangible personal property included in the Assets
(except the Turnkey Rigs and the Turnkey Contracts) (the "Conveyed Property").
The Conveyed Property is hereby conveyed free and clear of all liens,
claims, security interests, charges, leases, encumbrances, licenses, or
sublicenses and other restrictions of any kind or nature. EXCEPT AS
SPECIFICALLY SET FORTH IN THE AGREEMENT, THE COMPANY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE CONVEYED PROPERTY (INCLUDING ANY
WARRANTY AS TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE) AND
BUYER IS ACQUIRING THE CONVEYED PROPERTY "AS IS, WHERE IS".
TO HAVE AND TO HOLD the Conveyed Property unto Buyer and its successors
and assigns forever; and the Company does hereby bind itself and its successors
and assigns to WARRANT AND FOREVER DEFEND good and marketable title to the
Conveyed Property, subject only to the terms of the Agreement.
<PAGE> 32
From time to time hereafter, the Company will execute and deliver, or
cause to be executed and delivered, without further consideration, such other
instruments of conveyance, assignment, transfer and delivery and will take such
other actions as Buyer may reasonably request in order to more effectively
transfer, convey, assign and deliver to Buyer, and to place Buyer in possession
and control of any of the Conveyed Property or to enable Buyer to exercise and
enjoy all rights and benefits of the Company with respect thereto.
This General Conveyance is delivered pursuant to the Agreement, and in
the event of any conflict or inconsistency between any of the terms of the
Agreement and this General Conveyance, the terms of the Agreement shall
prevail.
IN WITNESS WHEREOF, the Company has executed this General Conveyance
effective as of the date set forth above.
JUSTISS OIL COMPANY, INC.
By:
--------------------------------
W. B. McCartney, Jr.
Executive Vice President
<PAGE> 33
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (as the same may be amended or modified from time
to time and including any and all written instructions given to "Escrow Agent"
(hereinafter defined) pursuant hereto, this "Escrow Agreement") is made and
entered into as of September 15, 1997 by and among Grey Wolf Drilling Company,
a Texas corporation ("Buyer"), and Justiss Oil Company, Inc., a Louisiana
corporation (the "Company," and Buyer together with the Company, sometimes
referred to collectively as the "Other Parties"), and Texas Commerce Bank
National Association, a national banking association with its principal offices
in Houston, Harris County, Texas (the "Bank").
W I T N E S S E T H :
WHEREAS, Buyer and the Company have entered into that certain Asset
Purchase Agreement (the "Agreement") of even date herewith, relating to the
purchase by Buyer from the Company of substantially all of the operating assets
of the Justiss Drilling Division of the Company; and
WHEREAS, pursuant to the Agreement, Buyer is obligated to deposit the
sum of $2,000,000 in escrow as earnest money in connection with the acquisition
of such assets from the Company; and
WHEREAS, Buyer and the Company have requested Bank to act in the
capacity of escrow agent under this Escrow Agreement, and Bank, subject to the
terms and conditions hereof, has agreed so to do.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. Each of Buyer and the Company
hereby appoints the Bank as the escrow agent under this Escrow Agreement (the
Bank in such capacity, the "Escrow Agent"), and Escrow Agent hereby accepts
such appointment.
2. Deposit. Upon execution of this Escrow Agreement, Buyer will
deliver to the Escrow Agent the sum of Two Million Dollars ($2,000,000) (as
said amount may increase or decrease as a result of the investment and
reinvestment thereof and as said amount may be reduced by charges thereto and
payments and setoffs therefrom to compensate or reimburse Escrow Agent for
amounts owing to it pursuant hereto, the "Deposit") to be held by Escrow Agent
in accordance with the terms hereof. Subject to and in accordance with the
terms and conditions hereof, Escrow Agent agrees that it shall receive, hold in
escrow, invest and reinvest and release or distribute the Deposit. It is
hereby expressly stipulated and agreed that all interest and other earnings on
the Deposit shall become a part of the Deposit for all purposes, and that all
losses resulting from the investment or reinvestment thereof from time to time
and all amounts charged thereto to compensate or reimburse the Escrow Agent
from time to time for amounts owing to it hereunder shall from the time of such
loss or charge no longer constitute part of the Deposit.
<PAGE> 34
3. Investment of the Deposit. Escrow Agent shall invest and
reinvest the Deposit in the Vista Treasury Plus Money Market Fund, unless
otherwise instructed in writing by the Other Parties. Such written
instructions, if any, referred to in the foregoing sentence shall specify the
type and identity of the investments to be purchased and/or sold and shall also
include the name of the broker-dealer, if any, which the Other Parties direct
the Escrow Agent to use in respect of such investment, any particular
settlement procedures required, if any (which settlement procedures shall be
consistent with industry standards and practices), and such other information
as Escrow Agent may require. Escrow Agent shall not be liable for failure to
invest or reinvest funds absent sufficient written direction. Unless Escrow
Agent is otherwise directed in such written instructions, Escrow Agent may use
a broker-dealer of its own selection, including a broker-dealer owned by or
affiliated with Escrow Agent or any of its affiliates. It is expressly agreed
and understood by the parties hereto that Escrow Agent shall not in any way
whatsoever be liable for losses on any investments, including, but not limited
to, losses from market risks due to premature liquidation or resulting from
other actions taken pursuant to this Escrow Agreement.
Receipt, investment and reinvestment of the Deposit shall be confirmed
by Escrow Agent as soon as practicable by account statement, and any
discrepancies in any such account statement shall be noted by Other Parties to
Escrow Agent within 30 calendar days after receipt thereof. Failure to inform
Escrow Agent in writing of any discrepancies in any such account statement
within said 30 day period shall conclusively be deemed confirmation of such
account statement in its entirety. For purposes of this paragraph, (a) each
account statement shall be deemed to have been received by the party to whom
directed on the earlier to occur of (i) actual receipt thereof and (ii) three
"Business Days" (hereinafter defined) after the deposit thereof in the United
States Mail, postage prepaid and (b) the term "Business Day" shall mean any day
of the year, excluding Saturday, Sunday and any other day on which national
banks are required or authorized to close in Houston, Texas.
4. Disbursement of Deposit. Escrow Agent is hereby authorized to
make disbursements of the Deposit only as follows:
(a) Upon receipt of written instructions signed by both Buyer
and the Company and otherwise in form and substance satisfactory to
Escrow Agent, in accordance with such instructions;
(b) As permitted by this Escrow Agreement, to Escrow Agent;
and
(c) Into the registry of the court in accordance with Sections
8 or 15 hereof.
Notwithstanding anything contained herein or elsewhere to the contrary, the
Other Parties hereby expressly agree that the Escrow Agent shall be entitled to
charge the Deposit for, and pay and set-off from the Deposit, any and all
amounts, if any, then owing to it pursuant to this Escrow Agreement prior to
the disbursement of the Deposit in accordance with clauses (a) through (d)
(both inclusive) of this Section 4.
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5. Tax Matters. Buyer and the Company shall each provide Escrow
Agent with its taxpayer identification number documented by an appropriate Form
W 8 or Form W 9 upon execution of this Escrow Agreement. Failure so to provide
such forms may prevent or delay disbursements from the Deposit and may also
result in the assessment of a penalty and Escrow Agent's being required to
withhold tax on any interest or other income earned on the Deposit. Any
payments of income shall be subject to applicable withholding regulations then
in force in the United States or any other jurisdiction, as applicable. The
Other Parties agree, as between themselves, that the party entitled to the
Deposit shall be liable for, and shall indemnify and hold the other harmless
from and against any liabilities for, income taxes arising from or attributable
to income earned on the Deposit.
6. Scope of Undertaking. Escrow Agent's duties and responsibilities
in connection with this Escrow Agreement shall be purely ministerial and shall
be limited to those expressly set forth in this Escrow Agreement. Escrow Agent
is not a principal, participant or beneficiary in any transaction underlying
this Escrow Agreement and shall have no duty to inquire beyond the terms and
provisions hereof. Escrow Agent shall have no responsibility or obligation of
any kind in connection with this Escrow Agreement or the Deposit and shall not
be required to deliver the Deposit or any part thereof or take any action with
respect to any matters that might arise in connection therewith, other than to
receive, hold, invest, reinvest and deliver the Deposit as herein provided.
Without limiting the generality of the foregoing, it is hereby expressly agreed
and stipulated by the parties hereto that Escrow Agent shall not be required to
exercise any discretion hereunder and shall have no investment or management
responsibility and, accordingly, shall have no duty to, or liability for its
failure to, provide investment recommendations or investment advice to the
Other Parties or either of them. Escrow Agent shall not be liable for any
error in judgment, any act or omission, any mistake of law or fact, or for
anything it may do or refrain from doing in connection herewith, except for,
subject to Section 7 hereinbelow, its own willful misconduct or gross
negligence. It is the intention of the parties hereto that Escrow Agent shall
never be required to use, advance or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or the exercise of
any of its rights and powers hereunder.
7. Reliance; Liability. Escrow Agent may rely on, and shall not
be liable for acting or refraining from acting in accordance with, any written
notice, instruction or request or other paper furnished to it hereunder or
pursuant hereto and believed by it to have been signed or presented by the
proper party or parties. Escrow Agent shall be responsible for holding,
investing, reinvesting and disbursing the Deposit pursuant to this Escrow
Agreement; provided, however, that in no event shall Escrow Agent be liable for
any lost profits, lost savings or other special, exemplary, consequential or
incidental damages in excess of Escrow Agent's fee hereunder and provided,
further, that Escrow Agent shall have no liability for any loss arising from
any cause beyond its control, including, but not limited to, the following: (a)
acts of God, force majeure, including, without limitation, war (whether or not
declared or existing), revolution, insurrection, riot, civil commotion,
accident, fire, explosion, stoppage of labor, strikes and other differences
with employees; (b) the act, failure or neglect of any Other Party or any agent
or correspondent or any other person selected by Escrow Agent; (c) any delay,
error, omission or default of any mail, courier, telegraph, cable or wireless
agency or operator; or (d) the acts or edicts of any government or governmental
agency or other group or entity exercising governmental powers. Escrow Agent
is not responsible or liable in any
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manner whatsoever for the sufficiency, correctness, genuineness or validity of
the subject matter of this Escrow Agreement or any part hereof or for the
transaction or transactions requiring or underlying the execution of this
Escrow Agreement, the form or execution hereof or for the identity or authority
of any person executing this Escrow Agreement or any part hereof or depositing
the Deposit.
8. Right of Interpleader. Should any controversy arise involving
the parties hereto or any of them or any other person, firm or entity with
respect to this Escrow Agreement or the Deposit, or should a substitute escrow
agent fail to be designated as provided in Section 15 hereof, or if Escrow
Agent should be in doubt as to what action to take, Escrow Agent shall have the
right, but not the obligation, either to (a) withhold delivery of the Deposit
until the controversy is resolved, the conflicting demands are withdrawn or its
doubt is resolved or (b) institute a petition for interpleader in any court of
competent jurisdiction to determine the rights of the parties hereto. In the
event Escrow Agent is a party to any dispute, Escrow Agent shall have the
additional right to refer such controversy to binding arbitration. Should a
petition for interpleader be instituted, or should Escrow Agent be threatened
with litigation or become involved in litigation or binding arbitration in any
manner whatsoever in connection with this Escrow Agreement or the Deposit, the
Other Parties hereby jointly and severally agree to reimburse Escrow Agent for
its attorneys' fees and any and all other expenses, losses, costs and damages
incurred by Escrow Agent in connection with or resulting from such threatened
or actual litigation or arbitration prior to any disbursement hereunder.
9. Indemnification. The Other Parties hereby jointly and
severally indemnify Escrow Agent, its officers, directors, partners, employees
and agents (each herein called an "Indemnified Party") against, and hold each
Indemnified Party harmless from, any and all expenses, including, without
limitation, attorneys' fees and court costs, losses, costs, damages and claims,
including, but not limited to, costs of investigation, litigation and
arbitration, tax liability (except any income tax liability of Escrow Agent for
the fee payable hereunder) and loss on investments suffered or incurred by any
Indemnified Party in connection with or arising from or out of this Escrow
Agreement, except such acts or omissions as may result from the willful
misconduct or gross negligence of such Indemnified Party. IT IS THE EXPRESS
INTENT OF EACH OF BUYER AND THE COMPANY TO INDEMNIFY EACH OF THE INDEMNIFIED
PARTIES FOR, AND HOLD THEM HARMLESS AGAINST, THEIR OWN NEGLIGENT ACTS OR
OMISSIONS.
10. Compensation and Reimbursement of Expenses. Buyer and the
Company each agree that whoever is entitled to the Deposit shall pay Escrow
Agent the fee for Escrow Agent's services hereunder in accordance with Escrow
Agent's fee schedule as in effect from time to time and to pay all expenses
incurred by Escrow Agent in connection with the performance of its duties and
enforcement of its rights hereunder and otherwise in connection with the
preparation, operation, administration and enforcement of this Escrow
Agreement, including, without limitation, attorneys' fees, brokerage costs and
related expenses incurred by Escrow Agent. The foregoing notwithstanding, the
Other Parties shall be jointly and severally liable to Escrow Agent for the
payment of all such fees and expenses. In the event the Other Parties for any
reason fail to pay any
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such fees and expenses as and when the same are due, such unpaid fees and
expenses shall be charged to and set-off and paid from the Deposit by Escrow
Agent without any further notice.
11. Lien. Each of the Other Parties hereby grants to Escrow Agent
a lien upon, and security interest in, all its right, title and interest in and
to all of the Deposit as security for the payment and performance of its
obligations owing to Escrow Agent hereunder, including, without limitation, its
obligations of payment, indemnity and reimbursement provided for hereunder,
which lien and security interest may be enforced by Escrow Agent without notice
by charging and setting-off and paying from, the Deposit any and all amounts
then owing to it pursuant to this Escrow Agreement or by appropriate
foreclosure proceedings.
12. Notices. Any notice or other communication required or
permitted to be given under this Escrow Agreement by any party hereto to any
other party hereto shall be considered as properly given if in writing and (a)
delivered against receipt therefor, (b) mailed by registered or certified mail,
return receipt requested and postage prepaid or (c) sent by telefax machine, in
each case to the address or telefax number, as the case may be, set forth
below:
If to Escrow Agent:
Texas Commerce Bank National Association
600 Travis Street, 10th Floor
Houston, Texas 77002
Attn: Ms. May Ng
Corporate Trust/Escrow Section
Telefax No.: (713) 216-5476
If to Buyer:
Grey Wolf Drilling Company
10370 Richmond Avenue
Suite 600
Houston, Texas 77042-4136
Attn: Mr. Thomas P. Richards
Telefax No.: (713) 435-6170
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay, Suite 800
Houston, Texas 77002
Attn: Mr. Frank Putman
Telefax No.: (713) 308-5555
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If to the Company:
Justiss Oil Company, Inc.
1810 East Oak Street
P.O. Box 1385
Jena, Louisiana 71342
Attn: President
Telefax No.: (318) 992-7201
Except to the extent otherwise provided in the second paragraph of Section 3
hereinabove, delivery of any communication given in accordance herewith shall
be effective only upon actual receipt thereof by the party or parties to whom
such communication is directed. Any party to this Escrow Agreement may change
the address to which communications hereunder are to be directed by giving
written notice to the other party or parties hereto in the manner provided in
this section.
13. Consultation with Legal Counsel. Escrow Agent may consult with
its counsel or other counsel satisfactory to it concerning any question
relating to its duties or responsibilities hereunder or otherwise in connection
herewith and shall not be liable for any action taken, suffered or omitted by
it in good faith upon the advice of such counsel.
14. Choice of Laws; Cumulative Rights. This Escrow Agreement shall
be construed under, and governed by, the laws of the State of Texas, excluding,
however, (a) its choice of law rules and (b) the portions of the Texas Trust
Code Sec. 111.001, et seq. of the Texas Property Code concerning fiduciary
duties and liabilities of trustees. All of Escrow Agent's rights hereunder are
cumulative of any other rights it may have at law, in equity or otherwise. The
parties hereto agree that the forum for resolution of any dispute arising under
this Escrow Agreement shall be Harris County, Texas, and each of the Other
Parties hereby consents, and submits itself, to the jurisdiction of any state
or federal court sitting in Harris County, Texas.
15. Resignation. Escrow Agent may resign hereunder upon ten (10)
days' prior notice to the Other Parties. Upon the effective date of such
resignation, Escrow Agent shall deliver the Deposit to any substitute escrow
agent designated by the Other Parties in writing. If the Other Parties fail to
designate a substitute escrow agent within ten (10) days after the giving of
such notice, Escrow Agent may institute a petition for interpleader. Escrow
Agent's sole responsibility after such 10-day notice period expires shall be to
hold the Deposit (without any obligation to reinvest the same) and to deliver
the same to a designated substitute escrow agent, if any, or in accordance with
the directions of a final order or judgment of a court of competent
jurisdiction, at which time of delivery Escrow Agent's obligations hereunder
shall cease and terminate.
16. Assignment. This Escrow Agreement shall not be assigned by
either of the Other Parties without the prior written consent of Escrow Agent
(such assigns of the Other Parties to which Escrow Agent consents, if any, and
Escrow Agent's assigns being hereinafter referred to collectively as "Permitted
Assigns").
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17. Severability. If one or more of the provisions hereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect
under applicable law, such invalidity, illegality or unenforceability shall not
affect any other provisions hereof, and this Escrow Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein, and the remaining provisions hereof shall be given full force
and effect.
18. Termination. This Escrow Agreement shall terminate upon the
disbursement, in accordance with Sections 4 or 15 hereof, of the Deposit in
full; provided, however, that in the event all fees, expenses, costs and other
amounts required to be paid to Escrow Agent hereunder are not fully and finally
paid prior to termination, the provisions of Section 10 hereof shall survive
the termination hereof and, provided further, that the last two sentences of
Section 8 hereof and the provisions of Section 9 hereof shall, in any event,
survive the termination hereof.
19. General. The section headings contained in this Escrow
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement. This Escrow Agreement and
any affidavit, certificate, instrument, agreement or other document required to
be provided hereunder may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument. Unless the context shall otherwise
require, the singular shall include the plural and vice-versa, and each pronoun
in any gender shall include all other genders. The terms and provisions of
this Escrow Agreement constitute the entire agreement among the parties hereto
in respect of the subject matter hereof, and neither the Other Parties nor
Escrow Agent has relied on any representations or agreements of the other,
except as specifically set forth in this Escrow Agreement. This Escrow
Agreement or any provision hereof may be amended, modified, waived or
terminated only by written instrument duly signed by the parties hereto. This
Escrow Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, devisees, executors, administrators,
personal representatives, successors, trustees, receivers and Permitted
Assigns. This Escrow Agreement is for the sole and exclusive benefit of the
Other Parties and the Escrow Agent, and nothing in this Escrow Agreement,
express or implied, is intended to confer or shall be construed as conferring
upon any other person any rights, remedies or any other type or types of
benefits.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement to be effective as of the date first above written.
GREY WOLF DRILLING COMPANY
BY: -------------------------------
Thomas P. Richards, President
JUSTISS OIL COMPANY, INC.
BY:
------------------------------
NAME:
------------------------
TITLE:
-----------------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
BY:
------------------------------
NAME:
------------------------
TITLE:
-----------------------
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EXHIBIT C
SUPPLEMENTAL
GENERAL CONVEYANCE AND BILL OF SALE
This SUPPLEMENTAL GENERAL CONVEYANCE AND BILL OF SALE ("Supplemental
General Conveyance") is made effective as of the ______ day of _________, 1997
by Justiss Oil Company, Inc., a Louisiana corporation (the "Company").
RECITALS
1. Pursuant to the terms of an Asset Purchase Agreement (the
"Agreement") dated September 15, 1997 by and between the Grey Wolf Drilling
Company, a Texas corporation ("Buyer"), the Company conveyed the Assets (except
the Turnkey Rigs) to Buyer, pursuant to a General Conveyance in order to
evidence the conveyance of all of the tangible and intangible personal property
(except the Turnkey Rigs) included in the Assets.
2. The Company having met the requirements of Section 1.7 of the
Agreement with respect to the Rig described in Exhibit A hereto makes this
Supplemental General Conveyance of the property described in Exhibit A hereto.
3. All capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Agreement.
ASSIGNMENT
NOW, THEREFORE, for and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00) in hand paid, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company does
hereby BARGAIN, GRANT, SELL, CONVEY, TRANSFER, DELIVER, and ASSIGN unto Buyer
the property described in Exhibit A attached hereto (the "Conveyed Property").
The Conveyed Property is hereby conveyed free and clear of all liens,
claims, security interests, charges, leases, encumbrances, licenses, or
sublicenses and other restrictions of any kind or nature. EXCEPT AS
SPECIFICALLY SET FORTH IN THE AGREEMENT, THE COMPANY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE CONVEYED PROPERTY (INCLUDING ANY
WARRANTY AS TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE) AND
BUYER IS ACQUIRING THE CONVEYED PROPERTY "AS IS, WHERE IS".
<PAGE> 42
TO HAVE AND TO HOLD the Conveyed Property unto Buyer and its successors
and assigns forever; and the Company does hereby bind itself and its successors
and assigns to WARRANT AND FOREVER DEFEND good and marketable title to the
Conveyed Property and the terms of the Agreement.
From time to time hereafter, the Company will execute and deliver, or
cause to be executed and delivered, without further consideration, such other
instruments of conveyance, assignment, transfer and delivery and will take such
other actions as Buyer may reasonably request in order to more effectively
transfer, convey, assign and deliver to Buyer, and to place Buyer in possession
and control of any of the Conveyed Property or to enable Buyer to exercise and
enjoy all rights and benefits of the Company with respect thereto.
This Supplemental General Conveyance is delivered pursuant to the
Agreement, and in the event of any conflict or inconsistency between any of the
terms of the Agreement and this Supplemental General Conveyance, the terms of
the Agreement shall prevail.
IN WITNESS WHEREOF, the Company has executed this Supplemental General
Conveyance effective as of the date set forth above.
JUSTISS OIL COMPANY, INC.
By:
--------------------------------
W. B. McCartney, Jr.
Executive Vice President
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