<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
REGISTRATION NO. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------------
GREY WOLF, INC.
GREY WOLF DRILLING COMPANY 401(k) PLAN
(Exact name of registrant as specified in its charter)
TEXAS 74-2144774
(STATE OF JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042-4136
(713) 435-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANTS
PRINCIPAL EXECUTIVE OFFICES)
---------------------------
GREY WOLF DRILLING COMPANY 401(k) PLAN
(FULL TITLE OF THE PLAN)
---------------------------
DAVID W. WEHLMANN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042-4136
(713) 435-6100
FAX: (713) 435-6171
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------------------
COPY TO:
NICK D. NICHOLAS
PORTER & HEDGES, L.L.P.
700 LOUISIANA, 35TH FLOOR
HOUSTON, TEXAS 77002
(713) 226-0600
FAX: (713) 226-0237
---------------------------
<TABLE>
<CAPTION>
MAXIMUM
AMOUNT OFFERING PROPOSED AMOUNT OF
TITLE OF TO BE PRICE MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value $0.10 per share)........ 5,000,000 $1.50 $7,500,000 $2,212.50
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus an indeterminate number of additional shares which may be offered and
issued to prevent dilution resulting from stock splits, stock dividends or
similar transactions. In addition, pursuant to Rule 416(c) under the
Securities Act of 1933, as amended (the "Securities Act"), this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan referenced above.
(2) Estimated pursuant to Rule 457(c) under the Securities Act solely for the
purpose of computing the registration fee, based upon the average high and
low price of the securities being registered hereby on the American Stock
Exchange on September 28, 1998.
---------------------------
THIS REGISTRATION STATEMENT INCLUDES A TOTAL OF 54 PAGES.
EXHIBIT INDEX ON PAGE 24.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act, and are incorporated herein by reference.
ITEM 1. PLAN INFORMATION
The information required to be provided to participants pursuant to
this Item is set forth in the Prospectus for the Grey Wolf Drilling Company
401(k) Plan (the "Plan").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The written statement required to be provided to participants pursuant
to this Item is set forth in the Prospectus referenced in Item 1 above.
2
<PAGE> 3
PROSPECTUS
5,000,000 SHARES
[LOGO] GREY WOLF, INC.
COMMON STOCK
------------------
This Prospectus may be used only in connection with the resale of up to
5,000,000 shares (the "Shares") of common stock, par value $0.10 per share (the
"Common Stock"), of Grey Wolf, Inc., a Texas corporation ("Grey Wolf" or the
"Company"). The Shares offered hereby are held on behalf of certain shareholders
of the Company (the "Selling Shareholders"). The interest in the Shares being
offered hereby were acquired by the Selling Shareholders as participants in the
Grey Wolf Drilling Company 401(k) Plan. The Company will not receive any part of
the proceeds of the sale of the Shares offered hereby.
Sales of the Shares by, or on behalf of, the Selling Shareholders may
be made from time to time in one or more transactions, including block
transactions, on the American Stock Exchange ("AMEX"), or any other exchange or
quotation system on which the Common Stock may be listed or quoted (each an
"Exchange" and collectively, the "Exchanges"), pursuant to and in accordance
with the applicable rules of the Exchanges, in the over-the-counter market, in
privately negotiated transactions not crossing an Exchange or other public
securities market or in a combination of any such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Shares may be offered directly, to or through agents designated from time to
time, or to or through brokers or dealers, or through any combination of such
methods of sale. Such agents, brokers or dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). A member
firm of an Exchange may be engaged to act as an agent in the sale of Shares by
the Selling Shareholders. See "Plan of Distribution."
This Prospectus may be used by the Selling Shareholders or by any
broker-dealer who may participate in sales of Shares covered hereby. The Selling
Shareholders and any brokers, dealers, agents or others that participate with
the Selling Shareholders in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commissions or fees received by such persons and any
profit on the resale of the Shares by such persons may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."
The Common Stock is traded on the AMEX under the symbol "GW." On
September 28, 1998, the closing sales price of the Common Stock as reported on
the AMEX was $1.50 per share.
INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS SET FORTH UNDER THE
CAPTION "RISK FACTORS" BEGINNING ON PAGE 9.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITY AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is September 30, 1998
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The Registration
Statement (as defined herein), as well as such reports, proxy statements and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a site on the World Wide Web that contains
certain documents filed with the Commission electronically. The address of such
site is http://www.sec.gov and the Registration Statement may be inspected at
such site. The Common Stock is listed and traded on the AMEX and certain of the
Company's reports, proxy statements and other information can be inspected at
the offices of the AMEX, 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on
Form S-8 (together with any amendments, exhibits or supplements thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and the exhibits thereto. Statements contained in
this Prospectus (or in any document incorporated into this Prospectus by
reference) as to the contents of any contract or other documents referred to
herein (or therein) are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety by
such reference. Copies of the Registration Statement together with exhibits may
be inspected at the offices of the Commission as indicated above without charge
and copies thereof may be obtained therefrom upon payment of a prescribed fee.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended
December 31, 1997, (ii) Definitive Proxy Statement for the 1998 Annual Meeting
of Shareholders, (iii) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998, (iv) Current Reports on Form 8-K filed January
30, 1998, May 6, 1998, May 21, 1998 and September 22, 1998, and (v) the
description of its capital stock contained in the Current Reports on Form 8-K
filed October 6, 1997 and September 27, 1998, which have been filed by the
Company with the Commission pursuant to the Exchange Act, (Commission File No.
1-8226), are incorporated in and made a part of this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
Shares offered hereby have been sold or which deregisters all Shares remaining
unsold, shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the respective dates of filing of such documents.
Any statement contained in a document or information incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is, or is
deemed to be, incorporated herein by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
4
<PAGE> 5
FORWARD-LOOKING STATEMENTS
The Prospectus (including the documents incorporated by reference
herein) contains certain statements that may be deemed "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. All statements, other than statements of historical
facts, that address activities, events or developments that the Company intends,
expects, projects, believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based on certain assumptions and
analyses made by management of the Company in light of its experience and its
perception of historical trends, current conditions, expected future
developments and other factors it believes to be appropriate. The
forward-looking statements included in this Prospectus are also subject to a
number of material risks and uncertainties. Important factors that could cause
actual results to differ materially from the Company's expectations are
discussed herein under the caption "Risk Factors." Prospective investors are
cautioned that such forward-looking statements are not guarantees of future
performance and that actual results, developments and business decisions may
differ from those envisaged by such forward-looking statements.
5
<PAGE> 6
CORE DOMESTIC MARKETS
[Map consisting of the states Texas, Arkansas, Louisiana, Mississippi and
Alabama. This map depicts the Company's core domestic drilling markets and the
areas thereof in which the Company operates.]
6
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere in this Prospectus and incorporated herein by
reference. Unless the context indicates otherwise, references in this Prospectus
to "Grey Wolf" or the "Company" mean Grey Wolf, Inc. and its subsidiaries and
predecessors. In September 1997, the Company changed its corporate name from DI
Industries, Inc. to Grey Wolf, Inc.
THE COMPANY
The Company is a leading provider of contract land drilling services in
the U.S. with a domestic fleet of 120 rigs. In addition to its domestic
operations, the Company operates a fleet of six rigs in Venezuela, giving the
Company a total of 126 rigs, 114 of which are currently marketed. The Company
believes it has the largest fleet of drilling rigs in its Gulf Coast and South
Texas markets and the second largest fleet in its Ark-La-Tex and
Mississippi/Alabama markets. The Company has an inventory of 12 non-marketed
rigs held for refurbishment as demand for drilling services warrants.
The Company's principal office is located at 10370 Richmond Avenue,
Suite 600, Houston, Texas 77042, and its telephone number is (713) 435-6100.
RECENT DEVELOPMENTS
For the six months ended June 30, 1998 and for the month of July 1998,
the Company experienced a continued decline in the average rig utilization in
its four core domestic markets to approximately 75% and 62%, respectively, from
its 1997 average rig utilization of 96% in the three core markets in which it
then operated. For the second quarter of 1998, the Company's average rig
utilization rate in its core domestic markets was approximately 71%.
Additionally, the bid rate received by the Company for new, day rate drilling
contracts in the Company's core domestic markets for June 1998 declined
approximately 20% from the average rates bid during the fourth quarter of 1997
for the same or comparable rigs. This erosion of new contract bid rates
continued through the second quarter of 1998 and at June 30, 1998 the bid rates
received by the Company for new day rate drilling contracts were approximately
25% below those received by the Company during the fourth quarter of 1997 for
the same or comparable rigs. The Company believes that this decline in domestic
utilization and current bid rates is generally attributable to an overall
decline in the demand for drilling services in the Company's core domestic
markets prompted in large part by lower prices for oil and gas production and
substantial uncertainty as to the future level and trend of oil and gas prices.
See "Risk Factors -- Recent Weakening of Demand for Drilling Services."
On September 18, 1998, the Board of Directors of the Company declared a
Common Stock dividend of one preferred share purchase right (each a "Right" and
collectively, the "Rights") per share of Common Stock. The dividend is payable
to the shareholders of record on October 9, 1998 (the "Record Date"). Each Right
entitles a holder of Common Stock to purchase from the Company one
one-thousandth of a share of Series B Junior Participating Preferred Stock,
$1.00 par value per share (the "Preferred Shares"), of the Company at a price of
$11.00 per one one-thousandth of a Preferred Share. The Rights and the Common
Stock are not separately tradeable. Presently, the Rights are not exercisable
and will expire on September 18, 2008, unless the Rights are redeemed or
exchanged by the Company prior to the expiration date or the expiration date is
extended.
On May 8, 1998, the Company completed a private placement of $75.0
million of its 8 7/8% Senior Notes due 2007, Series B (the "Series B Notes"). On
July 6, 1998, the Company commenced an exchange offer offering its 8 7/8% Senior
Notes due 2007, Series C (the "Series C Notes") for any outstanding Series B
Notes. On August 5, 1998, the Company's exchange offer expired and all
outstanding Series B Notes were tendered in exchange for Series C Notes. The
Series B Notes and the Series C Notes rank pari passu in right of payment with
the Company's 8 7/8% Senior Notes
7
<PAGE> 8
due 2007, Series A (collectively with the Series B Notes and the Series C Notes,
the "Notes"). The Notes bear interest at 8 7/8% per annum payable semi-annually
and mature on July 1, 2007. The Notes are general unsecured obligations of the
Company and are guaranteed by the Company's domestic subsidiaries. As of the
date hereof, an aggregate of $250.0 million in principal amount of Notes was
outstanding. The terms and conditions of the Notes are substantially identical
in all material respects.
8
<PAGE> 9
RISK FACTORS
In addition to the other matters described in this Prospectus, the
following should be carefully considered in evaluating the Company and its
business before purchasing the Shares offered hereby.
DEPENDENCE OF OIL AND GAS INDUSTRY; INDUSTRY CONDITIONS
The Company's current business and operations are substantially
dependent upon conditions in the oil and gas industry and, specifically, the
exploration and production expenditures of oil and gas companies. The demand for
contract land drilling and related services is directly influenced by oil and
gas prices, expectations about future prices, the cost of producing and
delivering oil and gas, government regulations, local and international
political and economic conditions, including the ability of the Organization of
Petroleum Exporting Countries ("OPEC") to set and maintain production levels and
prices, the level of production by non-OPEC countries and the policies of the
various governments regarding exploration and development of their oil and gas
reserves. There can be no assurance that current levels of oil and gas
exploration expenditures will be maintained or that demand for the Company's
services will reflect the level of such expenditures.
RECENT WEAKENING OF DEMAND FOR DRILLING SERVICES
During 1997, conditions in the oil and gas industry were such that
demand for land drilling services was generally strong in each of the three core
domestic markets in which the Company then operated. The Company's 1997 average
rig utilization rate for those three core markets was approximately 96%. In the
first quarter of 1998, however, the Company's average rig utilization rate in
its four core domestic markets declined to approximately 81%. For the six months
ended June 30, 1998, the Company's average rig utilization rate in its core
domestic markets declined further to approximately 75% and in July 1998 were
approximately 62%. This decreasing trend in average utilization rate is believed
by the Company to be due to an overall weakening of demand for land drilling
services in its four core domestic markets. The generally reduced demand for
land drilling services in the first six months of 1998 is believed by the
Company to be attributable to lower prices for oil and gas production, and to
widespread uncertainty among potential customers as to the future level and
trend of oil and gas prices. In June 1998, the price for domestic oil production
was reported in the press to have reached the lowest level in over a decade.
Although gas prices have not declined to the same extent as oil prices, gas
prices have generally drifted down from levels at the beginning of the fourth
quarter of 1997. Some potential customers, the Company believes, may also be
postponing their near-term drilling commitments in hopes of obtaining reduced
rates for oil field goods and services, including contract land drilling
services. In the June 1998, the average revenues per rig day worked received by
the Company under its most recently awarded day rate drilling contracts in its
core domestic markets declined to approximately 20% from that received under day
rate contracts entered into during the fourth quarter of 1997 for the same or
comparable rigs. This erosion of new contract bid rates continued through the
second quarter of 1998 and at the end of the second quarter of 1998 the bid
rates received by the Company for new day rate drilling contracts were
approximately 25% below those received by the Company during the fourth quarter
of 1997 for the same or comparable rigs. If these industry conditions persist or
worsen, they could have a material adverse effect on the Company's financial
condition and results of operation.
SIGNIFICANT LEVERAGE AND DEBT SERVICE REQUIREMENTS
The Company has significant debt service requirements related to the
Notes. Additionally, the Company and GW Drilling entered into a bank credit
facility, which is a $50.0 million amended and restated senior secured revolving
credit arrangement (the "Bank Credit Facility") in order to finance possible
future acquisitions and for general corporate purposes. The indentures for the
Notes (the "Indentures") permit the Company to incur additional indebtedness,
including up to $100.0 million of senior indebtedness under the Bank Credit
Facility or one or more credit or revolving credit facilities with banks,
financial institutions or other lenders which may be secured by liens on all of
the assets of the Company and its Subsidiaries, subject to certain limitations.
As of June 30, 1998, the Company had $252.2 million (unaudited) in total
indebtedness and $251.5 million (unaudited) in shareholders' equity.
9
<PAGE> 10
The level of the Company's indebtedness could have several important
effects on the Company's future operations, including, among others, (i) its
ability to obtain additional financing for working capital, acquisitions,
capital expenditures, general corporate and other purposes may be limited, (ii)
a substantial portion of the Company's cash flow from operations will be
dedicated to the payment of principal and interest on its indebtedness, thereby
reducing funds available for other purposes, and (iii) the Company's significant
leverage could make it more vulnerable to economic downturns in the industry.
The Company's ability to meet its debt service obligations and reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to the success of its business strategy, general economic conditions,
industry cycles, levels of interest rates, and financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's business will generate
sufficient cash flow from operations to meet debt service requirements and
payments of principal, and if the Company is unable to do so, it may be required
to sell assets, to refinance all or a portion of its indebtedness, including the
Notes, or to obtain additional financing. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained.
HISTORY OF LOSSES FROM OPERATIONS
Although the Company had net income of $10.2 million and $1.8 million
(unaudited) for the year ended December 31, 1997, and the six months ended June
30,1998, respectively, the Company has a history of losses and had not
previously had a profitable full year since 1991. The Company incurred net
losses of $11.7 million and $13.4 million for the years ended December 31, 1996
and 1995, respectively. The calendar year 1996 loss includes non-recurring
charges of $6.1 million while the 1995 loss includes a provision for asset
impairment of $5.3 million. Profitability in the future will depend upon many
factors, but largely upon utilization rates and day rates for the Company's
drilling rigs. There can be no assurance that current utilization rates and day
rates will not decline further or that the Company will not experience losses.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS; ABILITY TO MAKE CERTAIN PAYMENTS
AND DIVIDENDS
The Indentures contain covenants restricting or limiting the ability of
the Company and certain of its subsidiaries to, among other things: (i) incur
additional indebtedness; (ii) pay dividends or make other restricted payments;
(iii) make asset disposition; (iv) permit liens; (v) enter into sale and
leaseback transactions; (vi) enter into certain mergers, acquisitions and
consolidations; (vii) make certain investments; (viii) enter into transactions
with related persons and (ix) engage in unrelated lines of business.
In addition, the Bank Credit Facility contains certain other and more
restrictive covenants than those contained in the Indentures. These covenants
may adversely affect the Company's ability to pursue its acquisition and rig
refurbishment strategies and limit its flexibility in responding to changing
market conditions. The Bank Credit Facility also requires the Company to
maintain specific financial ratios and satisfy certain financial condition
tests. The Company's ability to meet those financial ratios and financial
condition tests can be affected by events beyond its control, and there can be
no assurance that the Company will meet those tests. The Bank Credit Facility
contains default terms that effectively cross default with the Indentures.
Accordingly, the breach by the Company or its subsidiaries of the covenants
contained in the Indentures likely will result in a default under not only the
Indentures but also the Bank Credit Facility, and possibly certain other then
outstanding debt obligations of the Company or its subsidiaries. If the
indebtedness under the Bank Credit Facility or other indebtedness of the Company
or its Subsidiaries is in excess of $10.0 million and is not paid when due or is
accelerated by the holders thereof, an Event of Default under the Indentures
would occur. In any such case there can be no assurance that the Company's
assets would be sufficient to repay in full all of the Company's and its
subsidiaries' indebtedness.
As of the date of this Prospectus, the Company had the ability to make
restricted payments of $103.2 million under the Indentures. Restricted payments
include, among other things, dividends and other distributions in respect of
capital stock of the Company and its subsidiaries, repayments of subordinated
indebtedness and investments in subsidiaries and other entities.
10
<PAGE> 11
DEPENDENCE ON KEY PERSONNEL
The Company believes that its operations are dependent upon a small
group of management personnel, the loss of any one of whom could have a material
adverse effect on the Company's financial condition and results of operation.
COMPETITION
The land drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Drilling contracts
are usually awarded on a competitive bid basis and, while an operator may
consider factors such as quality of service and type and location of equipment
as well as the ability to provide ancillary services, price and rig availability
are the primary factors in determining which contractor is awarded a job. An
increasingly important competitive factor in the land drilling industry is the
ability to provide drilling equipment adaptable to, and personnel familiar with,
new technologies and drilling techniques as they become available. The land
drilling business is also highly fragmented. As a result, even though the
Company has the largest or second largest rig fleet in its four core domestic
markets, the Company estimates that its market share represents only 14% to 35%
of the overall market share in each of these four core markets. Certain of the
Company's competitors have greater financial and human resources than the
Company, which may enable them to better withstand periods of low rig
utilization, to compete more effectively on the basis of price and technology,
to build new rigs or acquire existing rigs and to provide rigs more quickly than
the Company in periods of high rig utilization. A number of the Company's
competitors have also announced plans to refurbish and reactivate rigs from
their inventory of stacked rigs. The deployment of these additional rigs to the
Company's core markets could further intensify competition based on pricing and
rig availability. There can be no assurance that the Company will be able to
compete successfully against its competitors in the future or that the level of
competition will allow the Company to obtain adequate margins from its drilling
services.
RISKS ASSOCIATED WITH TURNKEY DRILLING
Contract drilling services performed under turnkey drilling contracts
have historically represented, and are expected to continue to represent, a
significant component of the Company's revenues. Under a turnkey drilling
contract, the Company contracts to drill a well to a contract depth under
specified conditions for a fixed price. In addition, the Company provides
technical expertise and engineering services, as well as most of the equipment
required for the well, and is compensated when the contract terms have been
satisfied. On a turnkey well, the Company often subcontracts for related
services and manages the drilling process. The risks to the Company on a turnkey
drilling contract are substantially greater than on a well drilled on a daywork
basis because the Company assumes most of the risks associated with drilling
operations generally assumed by the operator in a daywork contract, including
risk of blowout, loss of hole, stuck drill string, machinery breakdowns,
abnormal drilling conditions and risks associated with subcontractors' services
supplies and personnel. Although the Company has obtained insurance coverage in
the past to reduce certain of the risks inherent in turnkey drilling operations,
there can be no assurance that such coverage will be obtained or available in
the future. The occurrence of an uninsured or under-insured loss could have a
material adverse effect on the Company's financial position and results of
operations.
OPERATING HAZARDS AND INSURANCE
The Company's operations are subject to the many hazards inherent in
the land drilling business, including blowouts, cratering, fires, explosions,
loss of hole, lost or stuck drill strings and damage or loss from adverse
weather. These hazards could also cause personal injury and loss of life,
substantial damage to the equipment involved and damage to producing formations
and surrounding areas. The Company maintains insurance coverage against some but
not all operating hazards. However, such insurance may not be sufficient to
protect the Company against liability for all consequences of well disasters
such as personal injury, damage to the Company's rigs, damage to the property of
others or damage to the environment. The insurance maintained by the Company is
subject to substantial deductibles and provides for premiums adjustments based
on claims. In view of difficulties that may be encountered in renewing such
insurance at reasonable rates, no assurance can be given that the Company will
be able to maintain the type and
11
<PAGE> 12
amount of coverage that it considers adequate. The occurrence of a significant
event for which the Company is not fully insured could have a material adverse
effect on the Company's financial position and results of operations.
RISKS OF ACQUISITION STRATEGY
As a key component of its business strategy, the Company has pursued
and intends to continue to pursue acquisitions of complementary assets and
businesses. Certain risks are inherent in an acquisition strategy, such as
increasing leverage and debt service requirements and combining disparate
company cultures and facilities, which could adversely affect the Company's
operating results. The success of any completed acquisition will depend in part
on the Company's ability to integrate effectively the acquired business into the
Company. The process of integrating such acquired businesses may involve
unforeseen difficulties and may require a disproportionate amount of
management's attention and the Company's financial and other resources. Possible
future acquisitions may be for purchase prices significantly higher than those
paid for recent and pending acquisitions. No assurance can be given that the
Company will be able to continue to identify additional suitable acquisition
opportunities, negotiate acceptable terms, obtain financing for acquisitions on
satisfactory terms or successfully acquire identified targets. The Company's
failure to achieve consolidation savings, to incorporate the acquired businesses
and assets into its existing operations successfully or to minimize any
unforeseen operational difficulties could have a material adverse effect on the
Company's financial condition and results of operations.
GOVERNMENTAL REGULATIONS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous laws and regulations
that may relate directly or indirectly to the contract drilling industry. For
example, drilling operations are subject to extensive and evolving laws and
regulations governing environmental quality, pollution control, remediation of
contamination and preservation of natural resources. Such laws and regulations
pertain, among other things, to air emissions, waste management, spills and
other discharges, wetlands and endangered species protection and cleanup of
contamination. The Company's operations are often conducted in or near
ecologically sensitive areas, such as wetlands, which are subject to protective
measures. The handling of waste materials, some of which are classified as
hazardous substances, is a routine part of the Company's operations.
Consequently, the regulations applicable to the Company's operations include
those with respect to containment, disposal and controlling the discharge of
hazardous oil field waste and other nonhazardous waste material into the
environment, requiring removal and cleanup under certain circumstances, or
otherwise relating to the protection of the environment. Laws and regulations
protecting the environment have become more stringent in recent years and may in
certain circumstances impose strict liability, rendering a party liable for
environmental damage without regard to negligence or fault on the part of such
party. Such laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by others, or for acts of the Company which
were in compliance with all applicable laws at the time such acts were
performed. The Company may also be exposed to environmental or other liabilities
originating from businesses and assets subsequently acquired by the Company.
Compliance with such laws and regulations may require significant capital
expenditures. Although such compliance costs to date have not had a material
effect on the Company, application of these requirements or the adoption of new
requirements could have a material adverse effect on the Company. In addition,
the modification or judicial interpretations of existing laws or regulations or
the adoption of new laws or regulations curtailing exploratory or development
drilling for oil and gas for economic, environmental or other reasons could have
a material adverse effect on the Company's operations by limiting future
contract drilling opportunities.
RISKS OF INTERNATIONAL OPERATIONS
The Company derives revenues from international operations. The
Company's current international operations are conducted only in Venezuela;
however, the Company is pursuing opportunities in other countries, including
Bolivia and Mexico. Risks associated with operating in international markets
include foreign exchange restrictions and currency fluctuations, foreign
taxation, political instability, foreign and domestic monetary and tax policies,
expropriation,
12
<PAGE> 13
nationalization, nullification, modification or renegotiation of contracts, war
and civil disturbances or other risks that may limit or disrupt markets.
Additionally, the ability of the Company to compete in the international
drilling markets may be adversely affected by foreign government regulations
that favor or require the awarding of such contracts to local contractors, or by
regulations requiring foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction. Furthermore, the Company's foreign
subsidiaries may face governmentally imposed restrictions from time to time on
their ability to transfer funds to the Company. No predictions can be made as to
what foreign governmental regulations may be applicable to the Company's
operations in the future.
QUALIFICATION OF THE GWDC ACQUISITION AS A REORGANIZATION FOR U.S. FEDERAL
INCOME TAX PURPOSES
The GWDC Acquisition is intended to qualify as a tax free
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to Common Stock
received by GWDC shareholders. A principal condition for such qualification is
that the former shareholders of GWDC will satisfy the continuity of proprietary
interest standard with respect to Common Stock received in GWDC Acquisition.
Thus, under present Internal Revenue Service ("IRS") guidelines, dispositions of
Common Stock by GWDC shareholders during the five years following the GWDC
Acquisition could cause the IRS to assert that the GWDC Acquisition does not
qualify as a tax free reorganization. The Company has no contractual agreements
with GWDC shareholders preventing the disposition of their shares. If the GWDC
Acquisition fails to qualify as a tax free reorganization for failure to meet
the continuity of interest standard or for any other reason, the receipt of
Common Stock will be taxable to the GWDC shareholders at the time of the GWDC
Acquisition, and GWDC will be deemed to have sold all of its assets in a taxable
exchange triggering a corporate tax liability to GWDC estimated to be in excess
of $30.0 million. The Company's wholly-owned subsidiary, GW Drilling (formerly
Drillers, Inc.), as the surviving corporation of the GWDC Acquisition, would be
liable for any such corporate tax which, if imposed, would have a material
adverse effect on the financial condition of the Company.
SIGNIFICANT CUSTOMER
During the year ended December 31, 1997, the largest customer for the
Company's contract drilling services, Swift Energy Company, accounted for
approximately 10% of total revenues. There was no such significant customer for
the quarter ended June 30, 1998. There can be no assurance that such customer or
any of the Company's other principal customers will continue to employ the
Company's services or that the loss of any of such customers or adverse
developments affecting any of such customers would not have a material adverse
effect on the Company's financial condition and results of operation.
13
<PAGE> 14
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
of Common Stock by Selling Shareholders.
SELLING SHAREHOLDERS
The Company will supplement this Prospectus from time to time to
include certain information concerning the security ownership of the Selling
Shareholders and the position, office or other material relationship which a
Selling Shareholder has had within the past three years with the Company or any
of its predecessors or affiliates.
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Shareholders, including donees and pledgees selling shares received from a
Selling Shareholder after the date of this prospectus. All costs, expenses and
fees in connection with registration of the Shares offered hereby will be borne
by the Company. Brokerage commissions and similar selling expenses, if any,
attributable to the sale of Shares will be borne by the Selling Shareholders.
Sales of Shares may be effected by Selling Shareholders from time to time in one
or more types of transactions (which may include block transactions) on the
AMEX, in the over-the-counter market, in negotiated transactions, through put or
call options transactions relating to the Shares, through short sales of Shares
or a combination of such methods of sale, at market prices prevailing at the
time of sale, or at negotiated prices. Such transactions may or may not involve
brokers or dealers. The Selling Shareholders have advised the Company that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their Shares, nor is there
an underwriter or coordinating broker acting in connection with the proposed
sale of Shares by the Selling Shareholders.
The Selling Shareholders may effect such transactions by selling Shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholders and/or the
purchasers of Shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers that act in connection
with the sale of Shares might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the Shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The Selling Shareholders may agree to indemnify any
agent dealer or broker-dealer that participates in transactions involving sales
of the Shares against certain liabilities, including liabilities arising under
the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Shareholders
will be subject to the prospectus delivery requirements of the Securities Act,
which may include delivery through the facilities of the AMEX pursuant to Rule
153 under the Securities Act.
Selling Shareholders also may resell all or a portion of the Shares in
open market transaction in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such rule.
Upon the Company being notified by a Selling Shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
Shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Shareholder and of
the
14
<PAGE> 15
participating broker-dealer(s), (ii) the number of shares involved, (iii) the
price at which such shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigations to verify the information
set out or incorporated by reference in this prospectus and (vi) other facts
material to the transaction. In addition, upon the company being notified by
Selling Shareholder that a donee or pledgee intends to sell more than 500
Shares, a supplement to this prospectus will be filed.
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 1997 and 1996, and for each of the years then ended have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The financial statements and financial statement schedule for the year
ended December 31, 1995 incorporated by reference in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
15
<PAGE> 16
- -------------------------------------------------------------------------------
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, NOR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION
TO OR FROM ANY PERSON TO OR FROM WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information ........................................... 4
Incorporation of Certain Documents by Reference ................. 4
Forward-Looking Statements ...................................... 5
The Company ..................................................... 7
Recent Developments ............................................. 7
Risk Factors .................................................... 9
Use of Proceeds ................................................. 14
Selling Shareholders ............................................ 14
Plan of Distribution ............................................ 14
Experts ......................................................... 15
</TABLE>
- --------------------------------------------------------------------------------
5,000,000 SHARES
[LOGO]
GREY WOLF, INC.
COMMON STOCK
(PAR VALUE $0.10 PER SHARE)
-------------
PROSPECTUS
-------------
SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
<PAGE> 17
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Grey Wolf, Inc. (the "Registrant") hereby files this registration statement
under the Securities Act (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") on Form S-8 to register 5,000,000 shares
of the Registrant's Common Stock, par value $0.10 per share (the "Common
Stock"), for issuance pursuant to the Plan and such indeterminate number of
additional shares which may be offered and issued to prevent dilution resulting
from stock splits, stock dividends or similar transactions pursuant to the Plan.
This Registration Statement also covers an indeterminate amount of interests to
be offered and sold pursuant to the Plan.
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (Exchange Act
File No. 1-8226) are incorporated by reference herein:
(1) Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) Definitive Proxy Statement for the 1998 Annual Meeting of
Shareholders to be held May 5, 1998;
(3) Current Report on Form 8-K filed January 30, 1998;
(4) Current Report on Form 8-K filed May 6, 1998;
(5) Registrant's Quarterly Report on Form 10-Q for the Quarter
ended March 31, 1998;
(6) Current Report on Form 8-K filed May 21, 1998;
(7) Registrant's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1998;
(8) Current Report on Form 8-K filed September 22, 1998; and
(9) The description of the Registrant's capital stock contained in
its Current Reports on Form 8-K filed October 6, 1997 and
September 22, 1998.
All documents filed with the Commission by the Registrant or the Plan
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered herein have been sold or which deregisters
all securities then unsold, shall be deemed to be incorporated by reference in
the Registration Statement and to be part thereof from the date of filing of
such documents.
Any statement contained herein or made in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which is
also incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable. The Common Stock is registered under Section 12 of the
Exchange Act. See Item 3(9) above.
<PAGE> 18
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article 1302-7.06 of the Texas Miscellaneous Corporation Laws
Act, the articles of incorporation of a Texas corporation may provide that a
director of that corporation shall not be liable, or shall be liable only to the
extent provided in the articles of incorporation, to the corporation or its
shareholders for monetary damages for acts or omissions in the director's
capacity as a director, except that the articles of incorporation cannot provide
for the elimination or limitation of liability of a director to the extent that
the director is found liable for (i) a breach of the director's duty of loyalty
to the corporation or its shareholders, (ii) acts or omissions not in good faith
that constitute a breach of duty of the director to the corporation or an act or
omission that involves intentional misconduct or a knowing violation of the law,
(iii) any transaction from which the director received an improper benefit, or
(iv) an act or omission for which the liability of a director is expressly
provided by an applicable statute. Article XII of the Registrant's Articles of
Incorporation, as amended, states that a director of the Registrant shall not be
liable to the Registrant or its shareholders for monetary damages expect to the
extent otherwise expressly provided by the statutes of the State of Texas.
In addition, Article 2.02-1 of the Texas Business Corporation Act (the
"TBCA") authorizes a Texas corporation to indemnify a person who was, is, or is
threatened to be made a named defendant respondent in a proceeding, including
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative because the person is or
was a director. The TBCA provides that unless a court of competent jurisdiction
determines otherwise, indemnification is permitted only if it is determined that
the person (1) conducted himself in good faith; (2) reasonably believed (a) in
the case of conduct in his official capacity as a director of the corporation,
that his conduct was in the corporation's best interests; and (b) in all other
cases, that his conduct was at least not opposed to the corporation's best
interests; and (3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. A person may be indemnified under
Article 2.02-1 of the TBCA against judgments, penalties (including excise and
similar taxes), fines, settlements, and reasonable expenses actually incurred by
the person (including court costs and attorneys' fees), but if the person is
found liable to the corporation or is found liable on the basis that personal
benefit was improperly received by him, the indemnification is limited to
reasonable expenses actually incurred and shall not be made in respect of any
proceeding in which the person has been found liable for willful or intentional
misconduct in the performance of his duty to the corporation. A corporation is
obligated under Article 2.02-1 of the TBCA to indemnify a director or officer
against reasonable expenses incurred by him in connection with a proceeding in
which he is named defendant or respondent because he is or was a director or
officer if he has been wholly successful, on the merits or otherwise, in the
defense of the proceeding. Under Article 2.02-1 of the TBCA a corporation may
(i) indemnify and advance expenses to an officer, employee, agent or other
persons who are or were serving at the request of the corporation as a director,
officer, partner venturer, proprietor, trustee, employee, agent or similar
functionary of another entity to the same extent that it may indemnify and
advance expenses to its directors, (ii) indemnify and advance expenses to
directors and such other persons identified in (i) to such further extent,
consistent with law, as may be provided in the corporation's articles of
incorporation, bylaws, action of its board of directors, or contract or as
permitted by common law and (iii) purchase and maintain insurance or another
arrangement on behalf of directors and such other persons identified in (i)
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person.
The Bylaws of the Registrant set forth specific provisions for
indemnification of directors, officers, agents and other persons which are
substantially identical to the provisions of Article 2.02-1 of the TBCA
described above.
The Registrant maintains directors' and officers' insurance. The
Registrant has entered into agreements to indemnify certain of its executive
officers regarding liabilities that may result from such officer's service as an
officer or director of the Company.
<PAGE> 19
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Summary Plan Description
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Deloitte & Touche LLP
24.1 Powers of Attorney (included on the signature page of this Registration
Statement)
99.1 Internal Revenue Service Determination Letter
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the registration statement is on Form
S-3, Form S-8 or Form F-3, and the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference into this Registration Statement;
(2) That for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
<PAGE> 20
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and where applicable, each filing of the Plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 21
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below, constitutes and appoints Thomas P. Richards, David W. Wehlmann
and Merrie S. Costley and each of them, our true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, to do any and
all acts and things and execute, in the name of the undersigned, any and all
instruments which said attorneys-in-fact and agents may deem necessary or
advisable in order to enable Grey Wolf, Inc. to comply with the Securities Act
and any requirements of the Commission in respect thereof, in connection with
the filing with the Commission of the Registration Statement on Form S-8 under
the Securities Act, including specifically but without limitation, power and
authority to sign the name of the undersigned to such Registration Statement,
and any amendments to such Registration Statement (including post-effective
amendments), and to file the same with all Exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, to sign
any and all applications, Registration Statements, notices or other documents
necessary or advisable to comply with applicable state securities laws, and to
file the same, together with other documents in connection therewith with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and to perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
SIGNATURES
The Registrant
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 30th day of
September 1998.
GREY WOLF, INC.
By: /s/ DAVID W. WEHLMANN
----------------------------------------
David W. Wehlmann,
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ IVAR SIEM Chairman of the Board and Director September 30, 1998
- -------------------------------------------
Ivar Siem
/s/ WILLIAM R. ZIEGLER Vice Chairman of the Board and September 30, 1998
- ------------------------------------------- Director
William R. Ziegler
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director September 30, 1998
- --------------------------------------------
William T. Donovan
Director September 30, 1998
- --------------------------------------------
Peter M. Holt
/s/ JAMES K. B. NELSON Director September 30, 1998
- --------------------------------------------
James K. B. Nelson
/s/ ROY T. OLIVER, JR. Director September 30, 1998
- --------------------------------------------
Roy T. Oliver, Jr.
/s/ THOMAS P. RICHARDS President, Chief Executive Officer September 30, 1998
- -------------------------------------------- and Director
Thomas P. Richards
- -------------------------------------------- Director September 30, 1998
Steven A. Webster
/s/ DAVID W. WEHLMANN
- -------------------------------------------- Senior Vice President and Chief September 30, 1998
David W. Wehlmann Financial Officer
/s/ MERRIE S. COSTLEY
- -------------------------------------------- Vice President and Controller September 30, 1998
Merrie S. Costley
</TABLE>
<PAGE> 23
The Plan
Pursuant to the requirements of the Securities Act, the Plan has duly
caused this registration statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on September 30, 1998.
GREY WOLF DRILLING COMPANY 401(k) PLAN
By: /s/ GARY D. LEE
---------------------------------------
Gary D. Lee,
Vice President
Human Resources
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
- ------ ------- -------------
<S> <C> <C>
4.1 Summary Plan Description
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Deloitte & Touche LLP
24.1 Powers of Attorney (included on the signature page of
this registration statement)
99.1 Internal Revenue Service Determination Letter
</TABLE>
<PAGE> 1
EXHIBIT 4.1
GREY WOLF DRILLING COMPANY 401(k) PLAN
SUMMARY PLAN DESCRIPTION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. INTRODUCTION..................................................................................................1
2. DEFINITIONS...................................................................................................3
"Compensation".................................................................................................3
"Employer".....................................................................................................4
"Highly Compensated Employee"..................................................................................4
"Hours of Service".............................................................................................4
"Key Employee".................................................................................................5
"One-Year Break in Service"....................................................................................5
"Participant"..................................................................................................6
"Plan Year"....................................................................................................6
"Top Heavy"....................................................................................................6
"Year of Service"..............................................................................................6
"Vesting Year".................................................................................................6
3. BELONGING TO THE PLAN.........................................................................................7
4. CONTRIBUTIONS TO THE PLAN.....................................................................................8
EMPLOYEE CONTRIBUTIONS............................................................................................8
Salary Reduction Contributions.................................................................................8
Rollover Contributions.........................................................................................9
Nondeductible Voluntary Contributions..........................................................................9
EMPLOYER MATCHING CONTRIBUTIONS...................................................................................9
TAXATION OF CONTRIBUTIONS........................................................................................10
VESTING OF CONTRIBUTIONS.........................................................................................10
TERMINATION OF EMPLOYMENT........................................................................................11
5. BENEFITS AND DISTRIBUTIONS FROM THE PLAN.....................................................................13
TIMING OF DISTRIBUTIONS..........................................................................................13
Normal Distribution Time......................................................................................13
Other Distribution Times......................................................................................13
In-Service Withdrawal Provisions..............................................................................13
Hardship Distributions........................................................................................14
Consent to Distribution.......................................................................................15
FORMS OF DISTRIBUTIONS...........................................................................................16
WITHHOLDING ON DISTRIBUTIONS.....................................................................................18
DISTRIBUTIONS OF BENEFITS UPON YOUR DEATH........................................................................20
Pre-retirement Death Benefits.................................................................................20
Post-retirement Death Benefits................................................................................21
6. MISCELLANEOUS................................................................................................21
Nondiscrimination Testing.....................................................................................21
Investment of the Trust Fund..................................................................................22
Loans.........................................................................................................22
Qualified Domestic Relations Orders...........................................................................22
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
Top-Heavy Plan................................................................................................23
Amendment and Termination of Plan.............................................................................23
Administration................................................................................................24
Claims and Review Procedure...................................................................................24
"Spendthrift" Provisions......................................................................................25
Trust Fund Not Insured........................................................................................26
Inability to Locate Person to Receive Payment, Incompetent Beneficiary........................................26
Special Rights under ERISA....................................................................................27
7. REFERENCES...................................................................................................30
</TABLE>
<PAGE> 3
I. INTRODUCTION
This is a summary of the Grey Wolf Drilling Company 401(k) Plan (the
"Plan") which has recently been amended. The purpose of the Plan is to provide
retirement income for those eligible to participate by permitting employees to
make pre-tax contributions to the Plan. The effective date of the amendment is
October 1, 1997.
We prepared this Summary to comply with a legal requirement for a
"summary plan description," describing your rights and obligations as a
Participant in the Plan in language which should be easy for you to understand.
This Plan is intended to comply with Section 404(c) of the Employee
Retirement Income Security Act of 1974 (ERISA). Under Section 404(c), employees
who make investment decisions for the Plan assets are responsible for those
investment decisions. Plan fiduciaries (including the Employer and the Plan
Trustee) may be relieved of liability for any losses which are the result of
investment decisions made by you. Also, since you make the investment decisions,
any proxies relating to any of the investment choices will be forwarded to you
for your vote.
Under the Grey Wolf Drilling Company 401(k) Plan, you are responsible
for investing all Contributions made to the Plan on your behalf. The current
investment choices are:
Scudder Stable Value Fund Scudder Value Fund
Scudder Income Fund Scudder Small Company Value Fund
Scudder Balanced Fund Scudder International Fund
Scudder Growth and Income Fund Grey Wolf, Inc. Stock Fund
The following information about these investment choices is provided in
the Plan materials with which you have been provided:
investment objectives
1
<PAGE> 4
risk and return characteristics.
Investment instructions may be made by calling Scudder Pilot Voice
Response System at 1-800-541-7705, or any other means acceptable to the Plan
Administrator. For more information, including any of the following, please
contact your Benefits Office:
Annual operating expenses and expense ratios for investment
alternatives; Copies of prospectuses, reports, and financial
statements of investment alternatives; List of assets within an
investment alternative (other than mutual funds); Information on the
share/unit value of each investment alternative; Information on the
performance of the investment alternatives; and Information on the
value of shares/units in the investment alternatives held by you.
Please remember that this is only a Summary and therefore cannot cover
all the details of the Plan or act as a substitute for the Plan document which
contains all of the provisions of the Plan. In addition, we may have
unintentionally left out or misstated some items. If there is any inconsistency
between this Summary and the actual provisions of the Plan, the actual
provisions set forth in the Plan document will control.
If you have any questions about the Plan or about your benefits under
the Plan, please contact your Plan Administrator, Grey Wolf, Inc.
2. DEFINITIONS
Listed below are definitions for some terms that are used throughout
this Summary and the Plan. Since these words may have technical meanings
slightly different from their ordinary meanings, please refer to these
definitions when you are reading this Summary or the Plan document.
2
<PAGE> 5
"COMPENSATION"
Compensation means W-2 Compensation. This definition of Compensation
will apply for allocating or determining Salary Reduction
Contributions, Employer Matching Contributions.
For the purposes of allocating or determining Employer Matching
Contributions, Compensation shall include a Participant's Salary
Reduction Contributions and other amounts which are excluded from an
Employee's gross income pursuant to Code Sections 125, 402(a)(8),
402(h)(1)(B) and 403(b).
However, for the purposes of allocating or determining Employer
Matching Contributions, Compensation shall include amounts only for the
period for which a Matching Contribution is made.
The maximum amount of Compensation which may be considered for most
purposes under the Plan is limited to $160,000 per Plan Year (as
indexed for inflation).
"EMPLOYER"
Employer means Grey Wolf, Inc. any successor organization adopting this
Plan, and all organizations and entities which are required by the
Internal Revenue Code to be aggregated with Grey Wolf, Inc.
"HIGHLY COMPENSATED EMPLOYER"
Highly Compensated Employee is an employee who: owns or owned more than
5% of the Employer during the Plan Year or the preceding Plan
3
<PAGE> 6
Year; or
earned more than $80,000 (indexed annually) in annual Compensation from the
Employer during the preceding Plan Year. (The Employer may elect to
include only those employees who earned more than $80,000 and who were
in the "top-paid group" of employees for the same year. "Top-paid
group" means the top 20% of employees, based on Compensation for the
year.)
"HOURS OF SERVICE"
Hours of Service means any hours for which you are either paid or
entitled to be paid by the Employer for performing duties or for other
reasons such as vacation, holidays, sick days, maternity or paternity
leave, disability, jury or military duty, layoff or authorized leave of
absence.
Hours of Service are used when determining whether you have met the
eligibility and vesting requirements of the Plan.
Please note that Hours of Service you may have accumulated for reasons
other than performing duties, such as vacation, maternity leave, etc.,
cannot exceed 501 hours for each continuous period during which you do
not perform any duties.
"KEY EMPLOYEE"
Key Employee is an employee who at any time during the Plan Year, or
any of the preceding four Plan Years, is one or more of the following:
An individual owning more than 5% of the business;
4
<PAGE> 7
An individual owning more than 1% of the business and earning more than
$160,000; An officer of the business earning more than $60,000 (as
indexed for inflation); or One of the 10 employees earning more than
$30,000 and owning the largest interest in the business.
"ONE-YEAR BREAK IN SERVICE"
One-Year Break in Service is a 12 month period during which you
complete 500 or fewer Hours of Service (see definition above). The 12
month periods are measured from the day you began working for the
Employer in the same manner as Years of Service are determined.
"PARTICIPANT"
Participant means an employee who has satisfied the eligibility
requirements of the Plan and is thereby eligible to participate in the
Plan. See Section 3 of this Summary for the Plan's eligibility
requirements.
"PLAN YEAR"
Plan Year means the 12-month period ending on the last day of December
over which Plan records are maintained.
"TOP HEAVY"
Top Heavy describes a Plan in which the sum of account balances of Key
Employees (defined above) exceeds 60% of the sum of account balances of
all Participants.
5
<PAGE> 8
"YEAR OF SERVICE"
A Year of Service is a 12-consecutive-month period during which you
complete 1,000 Hours of Service. A Year of Service will be measured
beginning on the first day you complete an Hour of Service or an
anniversary of that date.
"VESTING YEAR"
Vesting Year means a year to be accrued on the vesting schedule (see
"VESTING OF CONTRIBUTIONS," below). A Vesting Year will be credited to
you for the appropriate measuring period during which you complete 1000
Hours of Service. A Vesting Year will be measured on the 12-
consecutive-month period beginning on the first day you complete an
Hour of Service or an anniversary of that date.
When calculating your Vesting Years, the Employer will include your
employment before this Plan or a predecessor plan was established. The
Employer will also include prior service with any company acquired by
the Employer.
3. BELONGING TO THE PLAN
Before you become a Participant in the Plan, you must satisfy certain
eligibility requirements. These requirements are explained in this section.
Employees hired on or before December 31, 1997, are immediately
eligible to make Salary Reduction Contributions and Nondeductible Voluntary
Contributions and to receive an allocation of Employer Matching Contributions
made to the Plan on your behalf. All other employees must meet the requirements
set forth below.
6
<PAGE> 9
You have the right to make Salary Reduction Contributions and
Nondeductible Voluntary Contributions and to receive an allocation of Employer
Matching Contributions made to the Plan on your behalf after you complete One
Year of Service for the Employer.
You must complete 1000 Hours of Service during the year in order for
the year to count as a Year of Service. A Year of Service is measured over
12-month periods beginning on your initial date of employment or reemployment
for the Employer, or an anniversary of that date. When calculating your Hours of
Service for each week during which you work at least one hour for the Employer,
your Employer will credit you with the actual number of hours for which you
performed services for the Employer during that week.
All employees who have completed the necessary length of service stated
above and who are at least 18 years of age are eligible to participate except
non-resident aliens who work for the Employer outside of the United States,
individuals covered by a collective bargaining contract (please refer to Plan
document for specific details), and third-country national employees.
You will become a Participant for Salary Reduction Contributions,
Nondeductible Voluntary Contributions and Employers Matching Contributions on
the first day of the next quarter of the Plan Year after you complete all of the
above applicable requirements.
4. CONTRIBUTIONS TO THE PLAN
EMPLOYEE CONTRIBUTIONS
SALARY REDUCTION CONTRIBUTIONS
You may elect to have part of your Compensation contributed to the Plan
through salary reductions.
7
<PAGE> 10
These contributions are called "Salary Reduction Contributions." The minimum
percent of your Compensation that you may contribute is 1%, and the maximum
percent of your Compensation that you are allowed to contribute is 15%.
Contributions must be made in 1% increments.
Your Salary Reduction Contributions are limited for each calendar year
to $10,000, as indexed for inflation. For 1998, the indexed limit is $10,000. If
you contribute more than is allowed for any year, you should notify your
Employer between January 1 and March 1 of the following year so that the
Employer will be able to have the excess removed by April 15th of that same
following year to avoid any tax penalty.
ROLLOVER CONTRIBUTIONS
If the Plan Administrator allows it, you may make a Rollover
Contribution to the Plan from another tax-qualified plan. You must either make a
Rollover Contribution within 60 days of receiving the Rollover amount or have
the amount directly rolled over from your prior plan (or a conduit IRA). In most
cases, the Plan Administrator will require that you state in writing that the
amount is eligible for a Rollover according to the Internal Revenue Code
requirements. Any Rollover Contributions and their earnings are always 100%
vested, and you may withdraw all or a portion of your Rollover Contributions and
any earnings on those contributions at any time.
NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS
You may make Nondeductible Voluntary Contributions on your own behalf.
You may contribute a maximum of 15% of Compensation on a combined basis between
Salary Reduction Contributions and Nondeductible Voluntary Contributions. These
Nondeductible Voluntary Contributions and their earnings are always 100% vested.
There will be no Employer Matching Contributions on Nondeductible Voluntary
Contributions. You may withdraw all or a portion of your Non-deductible
Voluntary Contributions and any earnings on those contributions at any time.
8
<PAGE> 11
EMPLOYER MATCHING CONTRIBUTIONS
Each Plan Year, the Employer will match 100% of your Salary Reduction
Contributions up to the first 3% of your Compensation, plus 50% of your Salary
Reduction Contributions of your next 3% of your Compensation.
The explanation of how Compensation is defined for the purpose of
Employer Matching Contributions can be found on pages 3-4 of this Summary.
TAXATION OF CONTRIBUTIONS
All contributions made to your Account (other than Non-Deductible
Voluntary Contributions, if any) are not currently subject to federal, and most
state, income taxes, but will be subject to federal, and possibly state and
local, income taxation along with their earnings when benefits are later paid to
you or your beneficiaries. Also, any distributions you receive before reaching
the age of 59 1/2 will be subject to a 10% IRS early withdrawal penalty, unless
the distribution is:
1) Paid on account of your disability;
2) Paid to you after you separate from service, in substantially equal
payments based on your life expectancy or the joint life expectancy
of you and your beneficiary (provided that the payments continue
without modification until the later of 5 years or age 59 1/2);
3) Paid to you on account of a separation from service after you have
reached age 55;
4) Paid on account of your death;
5) Paid to a spouse, ex-spouse or other party pursuant to a qualified
domestic relations order; or
6) Paid for medical expenses (only to the extent such expenses would be
deductible).
9
<PAGE> 12
VESTING OF CONTRIBUTIONS
All contributions you make (e.g., Salary Reduction Contributions,
Rollover Contributions and Nondeductible Voluntary Contributions) are fully
vested and non-forfeitable when made. To the extent assets are "vested," they
are "non-forfeitable" and may not be lost or taken away, even if you leave your
job.
All Matching Contributions made by the Employer on your
behalf, and any earnings on those contributions, will vest and become
non-forfeitable at the following rate:
Vesting Years Percent Vested
1 20%
2 40%
3 60%
4 80%
5 100%
Additionally, any Employer Profit Sharing Contributions made prior to October 1,
1997 and any earnings on those contributions will vest according to the above
schedule. Notwithstanding the foregoing, individuals who were participants in
the Grey Wolf Drilling Co. Employee's 401(k) & Profit Sharing Plan will become
100% vested upon attaining age 55.
TERMINATION OF EMPLOYMENT
If you are a Plan Participant and you leave your job with the Employer,
you will no longer be eligible to participate in the Plan. You may, however, be
entitled to receive an allocation of any Employer Contributions for the Plan
Year during which you terminated employment (see "EMPLOYER MATCHING
CONTRIBUTIONS," above). If you return to work for the Employer, you will
immediately become a Participant in the Plan again (provided you are a member of
an eligible class of employees).
10
<PAGE> 13
If you separate from service before you are 100% vested, you will be
entitled to take distribution of only the vested portion of your account(s) .
The non-vested portion will be forfeited. However, if you return to work before
incurring five (5) consecutive One-Year Breaks in Service, and you repay to the
Plan the entire amount of your distribution from the Plan account(s) which was
not fully vested, the Employer will reinstate your account(s), including the
amount that was forfeited. You will generally have 5 years measured from the
date you received your distribution during which to repay the amount you took as
a distribution. You should check with the Plan Administrator for more detailed
information concerning these rules and their application to your situation.
If you decide to leave your account balance(s) in the Plan, the
Employer will not forfeit the non-vested portion until you have incurred five
(5) consecutive One-Year Breaks in Service, or until you elect to take a
distribution of your vested portion, whichever is earlier.
Forfeitures will be applied to reduce the Employer's obligation to make
future Matching Contributions.
If you return to work for the Employer, and again participate in the
Plan, any Vesting Years you accumulated before you left your job will be used in
determining the vested portion of any subsequent Employer Contributions you may
receive. The extent to which your future service with the Employer may be used
to increase the vested portion of Employer Contributions you received prior to
separation depends on how many One-Year Breaks in Service you incur before you
are re-hired. If you were not fully vested at the time you left your job but you
did not incur five (5) consecutive One-Year Breaks in Service, any Vesting
Service you accumulate after re-hire will be counted in determining the vested
portion of the Employer Contributions you received prior to your separation from
service. If you did incur five (or more) consecutive One-Year Breaks in Service,
the vested portion of the Employer Contributions you received
11
<PAGE> 14
prior to separation will not be increased on account of your subsequent service
and the non-vested portion will remain forfeited.
5. BENEFITS AND DISTRIBUTIONS FROM THE PLAN
TIMING OF DISTRIBUTIONS
NORMAL DISTRIBUTION TIME
Your Normal Retirement Date will be when you reach the age of 65.
Unless you elect otherwise, distribution of your account balance generally will
begin following the end of the Plan Year in which you either reach your Normal
Retirement Date or you stop working for the Employer, whichever is later.
If you are not a 5% owner, you are required to begin receiving required
minimum distributions ("RMDs") not later than April 1st of the calendar year
following the later of (i) the date you attain age 70 1/2, or (ii) the date you
retire from service for the Employer. If you are a 5% owner, however, you are
required to begin receiving RMDs not later than April 1st of the calendar year
following the year in which you attain age 70 1/2 -- regardless of whether you
are still employed by the Employer. In any event, you must continue receiving
RMDs by December 31st of each subsequent year.
If you do not receive your RMD for any year, you will be subject to an
IRS penalty equal to 50% of the amount you did not timely receive.
OTHER DISTRIBUTION TIMES
You may elect an earlier time for distribution to begin, provided that
distributions do not begin before you have reached your Normal Retirement Date,
become disabled, or separated from service with the Employer.
12
<PAGE> 15
IN-SERVICE WITHDRAWAL PROVISIONS
PARTICIPANTS OF THE FORMER GREY WOLF DRILLING CO. EMPLOYEE'S 401(k) & PROFIT
SHARING PLAN
If you were a participant in this Plan on September 30, 1997, you may
withdraw 25%, 50%, 75% or 100% of your vested profit sharing account balance by
providing 30 days written notice to the Plan Administrator (not to exceed 100%
of the amount credited to your profit sharing account for Plan Years ending more
than two (2) years before the date of such written notice).
PARTICIPANTS OF THE DI INDUSTRIES, INC. SALARY DEFERRAL PLAN
If you were a participant in this Plan, your vested account balances as
of September 30, 1997 (including earnings), may be withdrawn for any reason upon
attainment of age 59 1/2.
HARDSHIP DISTRIBUTIONS
You are also eligible to receive in-service distributions from your
account if you encounter financial hardship. Hardship distributions will be
available only in the event of an immediate and heavy financial need resulting
from one or more of the following ("Hardship Distributions"):
1. Certain medical expenses for you, your spouse, or any of your
dependents;
2. Purchase of your principal residence (this does not include mortgage
payments);
3. Payment of tuition and certain related expenses for the next twelve
months of post-secondary education for you, your spouse, your
children or other dependents; or
4. Payment to prevent your eviction from your principal residence or to
prevent foreclosure on the mortgage on your principal residence.
Hardship Distributions may be taken from Salary Reduction Contributions
and from Employer Matching Contribution and Employer Profit Sharing Contribution
account balances if you are 100% vested in these accounts. Earnings on Salary
Reduction Contribution amounts contributed will not be
13
<PAGE> 16
available for Hardship Distributions.
You must also satisfy the following conditions to receive a hardship
distribution:
1. You must have taken all other permissible distributions or
nontaxable loans from this Plan or any other plan of the Employer.
2. You will not be permitted to make Salary Reduction Contributions or
Nondeductible Voluntary Contributions for twelve months after you
receive a hardship distribution.
3. The hardship distribution may not exceed the amount of your
immediate and heavy financial need (including amounts necessary to
pay any federal, state, or local income taxes or penalties likely to
result from the distribution).
4. For the year following the year in which you took the hardship
distribution, the maximum amount that you will be able to contribute
to the Plan by Salary Reduction Contributions will be the difference
between (a) the limit on Salary Reduction Contributions for that
year ($10,000 as indexed for inflation) and (b) the amount you
contributed to the Plan by Salary Reduction in the year you took the
hardship distribution.
CONSENT TO DISTRIBUTION
If your Plan account balance (excluding your Rollover Account) is
$5,000 or less, the Plan Administrator may authorize distribution of your Plan
accounts in a single lump sum payment without your consent, once you have
reached a time when distributions can begin (e.g., your termination of
employment). If your account balance (excluding your Rollover Account) is over
$5,000, distributions cannot be made without your consent (except in the case of
required minimum distributions, described in "NORMAL DISTRIBUTION TIME," above).
14
<PAGE> 17
FORMS OF DISTRIBUTIONS
For Account Balances (including earnings) on and after October 1, 1997, under
the Grey Wolf Drilling Company 401(k) Plan
Your vested account balances under the Plan will be distributed to you
in the form of a single lump sum cash payment or, you may also choose to receive
any Grey Wolf Drilling Company stock in your accounts, in the shares of stock.
FOR ACCOUNT BALANCES (INCLUDING EARNINGS) AS OF SEPTEMBER 30, 1997, FOR FORMER
PARTICIPANTS OF THE GREY WOLF DRILLING CO. EMPLOYEES 401(k) AND PROFIT SHARING
PLAN
The "Normal Distribution Form" for account balances as of September 30,
1997, will be in the form of a joint and survivor annuity if you are married,
unless you waive this requirement (See below). The qualified joint and survivor
annuity must equal at least 50% but no more than 100% of your vested account
balance. This annuity will be purchased with your vested account balance and
will provide payment to you and your spouse for your lives. After your death,
the payments will be equal to 50% of the payments made during your lifetime.
If you are unmarried, the "Normal Distribution Form" will be a life
annuity, unless you waive this requirement (See below). A life annuity will
provide payments to you for your life.
If you wish to elect an "Optional Distribution Form" for this portion
of your vested account balance, you must execute a waiver of joint and survivor
annuity and obtain the written consent of your spouse if married. You will be
given an opportunity to waive the joint and survivor annuity with your spouse's
consent approximately three (3) months before the annuity would otherwise be
distributed to you.
You may choose one of the "Optional Distribution Forms" listed below:
15
<PAGE> 18
1. Lump Sum payment in cash, or in shares of Grey Wolf Drilling Company
stock that you hold in your accounts.
2. Substantially equal monthly installments over a ten year period (or
your actuarially determined life expectancy, or that of you and your
designated beneficiary.
3. Life annuity payment
4. Life annuity payment with a full cash refund
5. Life annuity payment made on a monthly basis for a minimum of 120
months.
6. 50%, 66 2/3 or 100% qualified joint and survivor annuity for your
life and the life of your spouse or designated beneficiary.
FOR ACCOUNT BALANCES (INCLUDING EARNINGS ) AS OF SEPTEMBER 30, 1997, FOR FORMER
PARTICIPANTS UNDER THE DI INDUSTRIES, INC. SALARY DEFERRAL PLAN
The "Normal Distribution Form" for account balances as of September 30,
1997, will be in the form of a 50%, 75% or 100% qualified joint and survivor
annuity if you are married, unless you waive this requirement (See below). This
annuity will be purchased with your vested account balance and will provide
payment to you and your spouse for your lives. After your death, the payments
will be equal to 50%, 75% or 100% of the payments made during your lifetime
(depending on the form chosen).
If you are unmarried, the "Normal Distribution Form" will be a life
annuity, unless you waive this requirement (See below). A life annuity will
provide payments to you for your life.
If you wish to elect an "Optional Distribution Form" for this portion
of your vested account balance, you must execute a waiver of joint and survivor
annuity and obtain the written consent of your spouse if married. You will be
given an opportunity to waive the joint and survivor annuity with your
16
<PAGE> 19
spouse's consent approximately three (3) months before the annuity would
otherwise be distributed to you.
You may choose one of the "Optional Distribution Forms" listed below:
1. Lump sum payment in cash, or in shares of Grey Wolf, Inc. stock
that you hold in your accounts.
2. Payments over a period certain in monthly, quarterly, semiannual or
annual cash installments.
3. Annuity for the life expectancy of the participant or the life of
the participant and his or her designated beneficiary.
WITHHOLDING ON DISTRIBUTIONS
Most distributions paid directly to you will be subject to a 20%
federal income tax withholding requirement. (Certain state income tax
withholding obligations may also apply.) This requirement cannot be waived.
However, the withholding requirement can be avoided under the following
circumstances:
1. If you receive substantially equal installment payments designed
a) to be paid over a period of at least 10 years; or
b) to be paid for the duration of your life (or life expectancy)
or the joint lives (or joint life expectancies) of you and your
beneficiary
the 20% withholding requirement will not apply.
2. If all or a portion of the distribution is a "required minimum
distribution" under Section 401(a)(9) of the Internal Revenue Code,
the 20% withholding requirement will not apply to the portion that
is a required minimum distribution.
3. If your distribution is eligible for rollover treatment, you can
have your distribution directly
17
<PAGE> 20
rolled over into an IRA or another qualified retirement plan (i.e.,
not paid to you) and the distribution will not be subject to the 20%
withholding.
Check with the Human Resources Department for more information on these
rules.
18
<PAGE> 21
DISTRIBUTIONS OF BENEFITS UPON YOUR DEATH
PRE-RETIREMENT DEATH BENEFITS
For Account Balances (including earnings) under the Grey Wolf Drilling Company
401(k) Plan
If you are married and you die before distribution of your vested
account balances have begun, your vested account balances will be distributed to
your spouse, unless you designate an alternative Beneficiary (or Beneficiaries)
for all or a portion of your account. To designate a Beneficiary (or
Beneficiaries) other than your spouse, you must obtain your spouse's written
consent. If you are unmarried at the time of your death, your vested account
balances will be paid to your designated Beneficiary (or Beneficiaries).
FOR ACCOUNT BALANCES (INCLUDING EARNINGS) AS OF SEPTEMBER 30, 1997, FOR FORMER
PARTICIPANTS OF THE GREY WOLF DRILLING CO. EMPLOYEES 401(k) AND PROFIT SHARING
PLAN AND DI INDUSTRIES, INC. SALARY DEFERRAL PLAN
If you are married and you die before distributions of the portion of
your vested account balances attributable to your September 30, 1997 account
balances have begun, 50% of this portion of your vested account balances will be
applied to purchase a pre-retirement survivor annuity for the life of your
living spouse, unless you waive this requirement with your spouse's consent.
(See below). The remainder of your vested account balances will be paid to the
beneficiary or beneficiaries that you designated during your lifetime.
You will be given the opportunity to waive the requirement of a
pre-retirement survivor annuity with your spouse's written consent. After
waiving the annuity, you may designate a beneficiary or beneficiaries to receive
the portion of your vested account balance which would otherwise be paid to your
spouse in the form of a pre-retirement survivor annuity. The distribution of
benefits other than the pre-retirement survivor annuity will be made in a form
to be determined by the beneficiary.
19
<PAGE> 22
Distribution(s) to your spouse or Beneficiary (or Beneficiaries) will
be made in the form(s) elected by your spouse or each Beneficiary, unless you
previously designated the form of distribution.
POST-RETIREMENT DEATH BENEFITS
If you die after the distribution of your vested account balance has
commenced, the remainder of the distributions will continue to be paid, in the
same manner, to your spouse or any Beneficiary (or Beneficiaries) you properly
designated before your death.
6. MISCELLANEOUS
NONDISCRIMINATION TESTING
Each year the Employer is required to test the Plan for
nondiscrimination. The test is performed by comparing the average percentage of
compensation contributed on behalf of the Highly Compensated Employees with the
average percentage of compensation contributed on behalf of the non-Highly
Compensated Employees. The average percentage for the Highly Compensated cannot
exceed the average percentage for the non-Highly Compensated by more than a
certain amount.
If the Plan fails the nondiscrimination test, or any other test
required by the IRS, the Employer will be required to take steps, such as
returning some of the contributions made on behalf of certain Highly Compensated
Employees, to bring the Plan into compliance with the various nondiscrimination
and related rules. You will be informed if any contributions need to be removed
from the Plan and paid to you.
INVESTMENT OF THE TRUST FUND
All contributions made on your behalf are held in a Trust Fund, in a
separate account maintained in your name and invested by the Trustee. The Trust
Fund is maintained strictly for the benefit of Participants
20
<PAGE> 23
and their Beneficiaries; the Trustee is required to act only in their interests.
Decisions with respect to the investment of the assets in your particular
account will be made by you.
LOANS
Loans are permitted. Loans are made only from your account and are
subject to the nondiscriminatory terms and conditions prescribed by the
Administrator, as described in the loan policy attached to this Summary.
QUALIFIED DOMESTIC RELATIONS ORDERS
While Federal law protects your Plan assets from creditors, qualified
domestic relations orders are an exception. A qualified domestic relations order
is a court order that gives an alternate payee (such as a spouse, former spouse,
or child) a right to part or all of your Plan assets. Such an order can force
payment of benefits while you are working even though the Plan may otherwise
prohibit distributions earlier than retirement, termination, death or
disability. The Plan Administrator will notify you if the Plan receives a
domestic relations order relating to you and must determine, within a reasonable
time, if the order is qualified. If you have any questions about qualified
domestic relations orders, you should contact the Plan Administrator.
TOP-HEAVY PLAN
For any Plan Year the Plan is determined to be Top-Heavy, the Employer
may be required to make additional minimum contributions on behalf of the
non-Key Employees and/or to accelerate vesting.
AMENDMENT AND TERMINATION OF PLAN
The Employer intends to maintain the Plan indefinitely. Nevertheless,
the Employer does have the right to amend or terminate the Plan at any time. In
the event the Plan is ever amended or terminated, the Plan contains the
following provisions designed to protect your benefits: Once the Employer has
made a
21
<PAGE> 24
valid contribution to the Trust, the Employer cannot recover it. Similarly, once
you have a vested benefit, it cannot be taken away. Finally, unless the law
requires it, or the government gives special permission, the amount in your
account cannot be reduced and the Plan's distribution options cannot be
restricted.
Once you become a Participant in the Plan, you will maintain your
interest in all future Employer contributions regardless of whether the Employer
changes the Plan's eligibility and/or vesting requirements. If the Plan's
vesting schedule is changed, Participants with three (3) or more Vesting Years
(five (5) or more Vesting Years for Participants who have not been credited with
an Hour of Service in a Plan Year beginning after 12/31/88) may choose to keep
the old vesting schedule for their accounts.
If the Plan is combined in any way with another plan, your benefit
under the combined plan will not be less than it would have been if the Plan had
terminated, instead of being combined with the other plan.
If the Plan terminates or the Employer completely discontinues
contributions, the Plan Administrator will instruct the Trustee as to whether
and how to distribute Participants' accounts.
The Employer has delegated a limited power to amend the Plan to Scudder
Investor Services, Inc.
ADMINISTRATION
The individual or entity whose name appears on page 30 will serve as
Plan Administrator. It is the Plan Administrator's job to keep lists of
Participants and their Beneficiaries, to process disbursement orders, to take
care of bookkeeping and recordkeeping, and to prepare reports for employees and
government agencies. The Plan Administrator will also have the authority to
decide all questions about the interpretation of Plan provisions and to hold
hearings on disputed claims for benefits.
22
<PAGE> 25
CLAIMS AND REVIEW PROCEDURE
The Plan Administrator will administer the Plan to provide benefits to
you as soon as you are entitled to receive them. The following procedure is,
however, available to you if you feel that you are entitled to a benefit you are
not receiving:
(a) Making a Claim
You must make a claim to the Plan Administrator in writing unless
the Plan Administrator agrees that this formality is not required.
(b) Notice of Reason For Denial
If the Plan Administrator denies your claim to a benefit, you must
receive written notice of the denial within 60 days after the day you
filed your claim. This notice must give you the reasons for the denial
and a description of what your rights are for review of the denial.
(c) Review
You will have 60 days from the day you received a denial from the
Plan Administrator to make a written application for review. You may
have a hearing at that review session if you ask for it. If you request
a hearing, you may have a lawyer with you, you may examine the Plan
documents, and you may submit your own comments in writing.
The Plan Administrator must make a decision on the review within 60
days of your
23
<PAGE> 26
application, except that up to 60 more days may be taken if the Plan
Administrator finds that special circumstances exist, such as the need
to hold a hearing. You will receive the Plan Administrator's decision
in writing, including reasons for that decision.
"SPENDTHRIFT" PROVISIONS
Generally, the Plan does not allow you to pledge, give away or sell
your rights to your account. Except to the extent that the Plan permits you to
take out loans on your account, and except as ordered by a court pursuant to a
qualified domestic relations order, your account balance may not be reduced for
any reason.
TRUST FUND NOT INSURED
The funds in the Plan are not insured because insurance is not
available for this type of retirement plan. Pension insurance is available only
for plans in which the actual dollar amount of the benefits is known. In this
Plan, the actual dollar amount of the contributions varies from year to year,
and the amount in your account depends on the investment results in the Trust
Fund. The value in dollars of your benefits will therefore not be known until
you are entitled to receive them. Consequently, the Plan is not eligible for
insurance.
INABILITY TO LOCATE PERSON TO RECEIVE PAYMENT, INCOMPETENT BENEFICIARY
If the person eligible to receive any benefit from the Plan is unable
to be located or identified, the Plan Administrator, in his/her discretion, may
direct the Trustee to: (1) forfeit and reallocate the benefit to the remaining
Participants, (2) retain the benefit in the Trust, or (3) pay the benefit to a
court pending judicial determination of who is entitled to the benefit. If the
benefit is forfeited and reallocated, however, the Employer will be required to
reinstate the benefit if the person eligible to receive the benefit is later
located or identified.
24
<PAGE> 27
If the Plan Administrator decides that any person to whom a benefit is
payable is physically or mentally incapable of handling his or her financial
affairs, the Plan Administrator may direct the Trustee to make payments that
would normally be due to that individual, either to the individual's legal
representative or custodian, or to apply such payments directly for the
individual's support and maintenance.
SPECIAL RIGHTS UNDER ERISA
As a participant in the Plan, you are entitled to certain rights and
protection under ERISA (Employee Retirement Income Security Act of 1974). ERISA
provides that all participants will be entitled to:
(a) Examine without charge, at the Plan Administrator's office, all
Plan documents including insurance contracts and copies of all
documents filed by the Plan with the U.S. Department of Labor, such
as annual reports and Plan descriptions.
(b) Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator
may make a reasonable charge for the copies.
(c) Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each participant with a
copy of this summary financial report.
(d) Obtain a statement telling you whether you have a right to receive
a pension at normal retirement age, and if so, what your benefits
would be at normal retirement age if you stop working under the
Plan now. If you do not have a right to a benefit, the statement
will tell you how many more years you have to work to have a right
to a benefit. You must request this statement in writing. The Plan
Administrator is not required to provide this statement more than
once a year, but must provide the statement free of charge.
25
<PAGE> 28
(e) In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate the Plan, the Plan
Administrator and the Trustee, are called "fiduciaries" of the
Plan, and have a duty to act prudently and in the interest of you
and other Plan Participants and Beneficiaries.
No one, including the fiduciaries, your Employer, your union or any
other person, may fire you or otherwise discriminate against you in
any way to prevent you from obtaining a pension benefit or
exercising your rights under ERISA. If your claim for a pension
benefit is denied in whole or in part, the Plan Administrator must
provide you with a written explanation of the reason for the
denial. You also have the right to have the Plan Administrator
review and reconsider your claim.
You can take the following steps to enforce the above rights under
ERISA:
1. If you request materials from the Plan Administrator and do not
receive them within 30 days, you may file suit in a federal
court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were
not sent because of reasons beyond the control of the Plan
Administrator.
2. If you have a claim for benefits which is denied or
ignored, in whole or in part, you may file suit in a state or
federal court.
3. If the Plan fiduciaries misuse the Plan's money, or
if you are discriminated against for asserting your rights, you
may ask for assistance from the U.S. Department of Labor,
26
<PAGE> 29
or you may file suit in a federal court. The court will decide
who should pay court costs and legal fees. If you are
successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to
pay these costs and fees if, for example, it finds your claim is
frivolous.
If you have any questions about the Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
27
<PAGE> 30
7. REFERENCES
Name of Plan: Grey Wolf Drilling Company 401(k)
Plan
Plan Number: 002
Plan Year: The 12-month period ending on
the last day of December.
Name, Address and Phone Number Grey Wolf, Inc.
of Employer: 10370 Richmond Avenue, Suite
600
Houston, TX 77042
(713) 435-6100
Employer Identification Number: 74-2144774
Employer's Fiscal Year: The 12-month period ending on
the last day of December.
Name and Address of Plan Administrator: Grey Wolf, Inc.
10370 Richmond Avenue, Suite
600
Houston, TX 7042
Name and Address of Agent for
Service of Legal Process:
Name and Address of Trustee: Scudder Trust Company
11 Northeastern Blvd.
Salem, NH 03079
28
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
Grey Wolf, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
September 29, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Grey Wolf, Inc. on Form S-8 of our report dated March 28, 1996, appearing in the
Annual Report on Form 10K of Grey Wolf, Inc. for the year ended December 31,
1997 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Houston, Texas
September 30, 1998
<PAGE> 1
EXHIBIT 99.1
<TABLE>
<CAPTION>
INTERNAL REVENUE SERVICE Department of the Treasury
<S> <C>
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA
FFN: 50350523204-002 Case: 9500003 EIN: 04-2321686 WASHINGTON DC 20224
BPD: 04 Plan: 002 Letter Serial No.: D365922a
PERSON TO CONTACT: Ms. Arrington
SCUDDER INVESTOR SERVICES INC.
TELEPHONE NUMBER: (202) 622-8173
TWO INTERNATIONAL PLACE
REFER REPLY TO: CP:E:EP:T1
BOSTON, MA 02110
DATE: 05/09/96
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03 of
Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
Because you submitted this plan or after July 1, 1994, it does not meet the
requirements for the extension of the remedial amendment period provided by
Rev. Proc. 95-12, 1995-3 I.R.B. 24.
This letter may not be relied upon with respect to whether the plan satisfies
the qualification requirements as amended by Uruguay Round Agreements Act, Pub.
L. 103-465.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding the plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
[/s/ SIGNATURE ILLEGIBLE]
Chief, Employee Plans Technical Branch 1
