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Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-39683
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 6, 1997
GREY WOLF LOGO
4,000,000 SHARES
GREY WOLF, INC.
COMMON STOCK
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The selling stockholders identified in this prospectus supplement are
selling 4,000,000 shares of our common stock which are currently issued and
outstanding or are issuable by us upon exercise of options held by selling
stockholders. These shares are being sold in block transactions on the American
Stock Exchange at a price of $4.50 per share before deduction of expenses and
commissions payable by the selling stockholders, as described in "Plan of
Distribution."
We are not offering any shares of our common stock for sale under this
prospectus supplement and we will not receive any of the proceeds from the sale
of shares by selling stockholders under this prospectus supplement.
Our common stock is traded on the American Stock Exchange under the symbol
"GW." On May 15, 2000, the last reported sale price of our common stock was
$4 13/16 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-5 IN THIS PROSPECTUS
SUPPLEMENT.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus supplement is dated May 16, 2000.
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TABLE OF CONTENTS
<TABLE>
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PROSPECTUS SUPPLEMENT PAGE
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Where You Can Find More Information.... S-3
Grey Wolf, Inc......................... S-4
Forward-looking Statements............. S-4
Risk Factors........................... S-5
Selling Stockholders................... S-11
Plan of Distribution................... S-11
PROSPECTUS PAGE
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Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Recent Developments.................... 3
Risk Factors........................... 4
Forward-Looking Statements............. 9
Selling Shareholders................... 10
Plan of Distribution................... 13
Experts................................ 13
Legal Matters.......................... 13
</TABLE>
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You should rely on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement and prospectus constitute a part of a
registration statement on Form S-3 that we filed with the SEC under the
Securities Act. This prospectus supplement and prospectus do not contain all the
information set forth in the registration statement. You should refer to the
registration statement and its related exhibits and schedules for further
information with respect to Grey Wolf, Inc. and the shares offered in this
prospectus supplement and prospectus. Statements contained in this prospectus
supplement and prospectus concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
that document filed as an exhibit to the registration statement or otherwise
filed with the SEC and each such statement is qualified by this reference. The
registration statement and its exhibits and schedules are on file at the offices
of the SEC and may be inspected without charge.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at l-800-SEC-0330 for
further information on the operation of the Public Reference Room. Our public
filings are also available from commercial document retrieval services and at
the Internet World Wide Web site maintained by the SEC at "http://www.sec.gov."
SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to other
documents we file with them. That means we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus supplement and prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. In addition to the documents referred to under
"Incorporation of Certain Documents by Reference" in the accompanying
prospectus, this prospectus supplement incorporates:
- our Annual Report on Form 10-K for the year ended December 31, 1999;
- our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
- our Current Report on Form 8-K filed on March 31, 2000;
- our Definitive Proxy Statement on Schedule 14A dated April 4, 2000; and
- the description of our preferred stock purchase rights contained in our
registration statement on Form 8-A/A filed with the SEC on October 9,
1998.
You may request a copy of these filings, which we will provide to you at no
cost, by writing or telephoning us at the following address:
Grey Wolf, Inc.
10370 Richmond Avenue, Suite 600
Houston, Texas 77042-4136
(713) 435-6100
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GREY WOLF, INC.
We are a leading provider of contract land drilling services in the United
States with a domestic fleet of 120 rigs, of which 108 are marketable. Of the
108 marketable rigs, 75 rigs are marketed while 33 are cold-stacked. We also
have an inventory of 12 non-marketed rigs located in the United States which are
held for refurbishment as demand for drilling services warrants. In addition to
our domestic operations, we maintain a fleet of five non-marketed rigs in
Venezuela, giving us a total of 125 rigs. Our core markets are in Ark-La-Tex,
the Gulf Coast, Mississippi/Alabama and South Texas markets. Our customers are
independent oil and gas producers and major oil companies. We conduct our
operations through our subsidiaries.
Our principal office is located at 10370 Richmond Avenue, Suite 600,
Houston, Texas 77042-4136, and our telephone number is (713) 435-6100.
FORWARD-LOOKING STATEMENTS
The statements in this prospectus supplement, prospectus and the documents
incorporated by reference that relate to matters that are not historical facts
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Forward-looking statements
are subject to risks, uncertainties and assumptions, including those discussed
elsewhere in this prospectus supplement and prospectus. When used in this
prospectus supplement, prospectus and the documents incorporated by reference,
words such as "anticipate," "believe," "expect," "plan," "intend," "estimate,"
"project," "will," "could," "may," "predict," and similar expressions are
intended to identify forward-looking statements. Future events and actual
results may differ materially from the results expressed in or implied by the
forward-looking statements. Factors that might cause such a difference include:
- fluctuations in prices and demand for oil and gas;
- fluctuations in levels of oil and gas exploration and development
activities;
- fluctuations in the demand for contract land drilling services;
- the existence and competitive responses of our competitors;
- technological changes and developments in the industry;
- the existence of operating risks inherent in the contract land drilling
industry; and
- U.S. and global economic conditions.
The information contained in this prospectus supplement under the heading
"Risk Factors," identifies additional factors that could affect our operating
results and performance. We urge you to carefully consider those factors.
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RISK FACTORS
An investment in our common stock is very risky. You should carefully
consider the following risk factors and all of the other information set forth
or incorporated by reference in this prospectus supplement and prospectus before
you purchase our common stock.
OUR BUSINESS CAN BE ADVERSELY AFFECTED BY LOW OIL AND GAS PRICES AND
EXPECTATIONS OF LOW PRICES.
As a supplier of land drilling services, our business depends on the level
of drilling activity by oil and gas exploration and production companies
operating in the geographic markets where we operate. The number of wells they
choose to drill is strongly influenced by past trends in oil and gas prices,
current prices, and their outlook for future oil and gas prices within those
geographic markets. Low oil and gas prices, or the perception among oil and gas
companies that future prices are likely to remain low or decline further, can
materially and adversely affect us in many ways, including:
- our revenues, cash flows and earnings;
- the fair market value of our rig fleet;
- our ability to maintain or increase our borrowing capacity;
- our ability to obtain additional capital to finance our business and make
acquisitions, and the cost of that capital; and
- our ability to retain skilled rig personnel who we would need in the
event of a upturn in the demand for our services.
Oil and gas prices have been volatile historically and, we believe, will
continue to be so in the future. Many factors beyond our control affect oil and
gas prices, including:
- weather conditions in the United States and elsewhere;
- economic conditions in the United States and elsewhere;
- actions by OPEC, the Organization of Petroleum Exporting Countries;
- political stability in the Middle East and other major producing regions;
- governmental regulations, both domestic and foreign;
- the pace adopted by foreign governments for exploration of their national
reserves;
- the price of foreign imports of oil and gas; and
- the overall supply and demand for oil and gas.
WE OPERATE IN A HIGHLY COMPETITIVE, FRAGMENTED INDUSTRY IN WHICH PRICE
COMPETITION HAS INTENSIFIED AS EXCESS DRILLING RIG CAPACITY HAS INCREASED.
We operate in a highly competitive business. The drilling contracts we
compete for are usually awarded on the basis of competitive bids. Pricing and
rig availability are the primary factors considered by our potential customers
in determining which drilling contractor to select. We believe other factors are
also important. Among those factors are:
- the type and condition of drilling rigs;
- the quality of service and experience of rig crews;
- the safety record of the rig;
- the offering of ancillary services; and
- the ability to provide drilling equipment adaptable to, and personnel
familiar with, new technologies and drilling techniques.
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While we must generally be competitive in our pricing, our competitive
strategy generally emphasizes the quality of our equipment, the safety record of
our rigs and the experience of our rig crews to differentiate us from our
competitors. This strategy was less effective as lower demand for drilling
services intensified price competition and made it more difficult for us to
compete on the basis of factors other than price. In all of the markets in which
we compete there is an over supply of rigs which has caused greater price
competition.
Contract drilling companies compete primarily on a regional basis, and the
intensity of competition may vary significantly from region to region at any
particular time. If demand for drilling services improves in a region where we
operate, our competitors might respond by moving in suitable rigs from other
regions. An influx of rigs from other regions could rapidly intensify
competition and make any improvement in demand for drilling rigs short-lived.
We face competition from many competitors. Certain of our competitors have
greater financial and human resources than we do. Their greater capabilities in
these areas may enable them to:
- better withstand periods of low rig utilization;
- compete more effectively on the basis of price and technology;
- retain skilled rig personnel; and
- build new rigs or acquire and refurbish existing rigs so as to be able to
place rigs into service more quickly than us in periods of high drilling
demand.
OUR DRILLING OPERATIONS INVOLVE INHERENT RISKS OF LOSS WHICH IF NOT INSURED OR
INDEMNIFIED AGAINST COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Our business is subject to the many hazards inherent in the land drilling
business including the risks of:
- blowouts;
- fires and explosions;
- collapse of the borehole;
- lost or stuck drill strings; and
- damage or loss from natural disasters.
We attempt to obtain indemnification from our customers by contract for
certain of these risks under daywork contracts but are not always able to do so.
We also seek to protect ourselves from some but not all operating hazards
through insurance coverage.
If these hazards occur they can produce substantial liabilities to us from,
among other things:
- suspension of drilling operations;
- damage to the environment;
- damage to, or destruction of our property and equipment and that of
others;
- personal injury and loss of life; and
- damage to producing or potentially productive oil and gas formations
through which we drill.
The indemnification we receive from our customers and our own insurance
coverage may not, however, be sufficient to protect us against liability for all
consequences of disasters, personal injury and
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property damage. Additionally, our insurance coverage generally provides that we
bear a portion of the claim through substantial insurance coverage deductibles.
The premiums we pay for insurance policies are also subject to substantial
increase based upon our claims history, which may increase our operating costs.
We can offer you no assurance that our insurance or indemnification arrangements
will adequately protect us against liability from all of the hazards of our
business. We are also subject to the risk that we may be unable to obtain or
renew insurance coverage of the type and amount we desire at reasonable rates.
If we were to incur a significant liability for which we were not fully insured
or indemnified it could have a material adverse effect on our financial position
and results of operations.
OUR OPERATIONS ARE SUBJECT TO DOMESTIC AND FOREIGN ENVIRONMENTAL LAWS THAT MAY
EXPOSE US TO LIABILITIES FOR NONCOMPLIANCE WHICH COULD ADVERSELY AFFECT US.
Many aspects of our operations are subject to domestic and foreign laws and
regulations. For example, our drilling operations are typically subject to
extensive and evolving laws and regulations governing:
- environmental quality;
- pollution control; and
- remediation of environmental contamination.
Our operations are often conducted in or near ecologically sensitive areas,
such as wetlands which are subject to special protective measures and which may
expose us to additional operating costs and liabilities for noncompliance with
applicable laws. The handling of waste materials, some of which are classified
as hazardous substances, is a necessary part of our operations. Consequently,
our operations are subject to stringent regulations relating to protection of
the environment and waste handling which may impose liability on us for our own
noncompliance and, in addition, that of other parties without regard to whether
we were negligent or otherwise at fault. We may also be exposed to environmental
or other liabilities originating from businesses and assets which we purchased
from others. Compliance with applicable laws and regulations may require us to
incur significant expenses and capital expenditures which could have a material
and adverse affect on our operations by increasing our expenses and limiting our
future contract drilling opportunities.
DESPITE RECENT IMPROVEMENTS, WE ARE STILL EXPERIENCING RELATIVELY WEAK DEMAND
FOR OUR SERVICES DUE, WE BELIEVE, TO UNCERTAINTY ABOUT OIL AND GAS PRICES.
Volatility in oil and gas prices can produce wide swings in the levels of
overall drilling activity in the markets we serve and affect the demand for our
drilling services and the dayrates we can charge for our rigs. Pronounced
downturns in oil and gas prices can adversely affect our business.
We believe our operating and financial performance illustrates this risk.
Oil and gas prices generally dropped beginning in late 1997, with generally
lower commodity prices extending well into 1999. Beginning in the first quarter
of 1998, drilling activity in the markets we serve also dropped significantly,
and we experienced significant declines both in the utilization rates for our
rigs and in the dayrates we could charge for them. Our rig utilization in our
core domestic markets was 81% during the first quarter of 1998 but declined to
an average of 41% for the year 1999. Our average revenue per rig day worked was
$9,407 in the first quarter of 1998, declining to $7,825 for the quarter ended
June 30, 1999.
Future demand for our rigs may remain the same or may decline and we can
offer you no assurance otherwise. If drilling activity does increase in the
areas where we operate, we cannot assure you that demand for our rigs will also
increase.
IN ADDITION TO TRADE LIABILITIES, WE HAVE $250.0 MILLION IN PRINCIPAL AMOUNT OF
INDEBTEDNESS UNDER OUR SENIOR NOTES AND OUR RECENT OPERATIONS HAVE NOT GENERATED
SUFFICIENT CASH FLOW TO COVER OUR SEMI-ANNUAL INTEREST PAYMENTS OF APPROXIMATELY
$11.1 MILLION.
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We are indebted for a total of $250.0 million in principal amount under our
8 7/8% Senior Notes due 2007. Semi-annual interest payments on the senior notes
of approximately $11.1 million are due on January 1 and July 1 of each year. For
the year ended December 31, 1999, however, our operating activities, investing
activities and financing activities each consumed net cash rather than provided
additional cash. To meet our debt service obligations under the senior notes and
provide necessary cash, we were required to use our cash on hand.
Our ability in the future to meet our debt service obligations and reduce
our total indebtedness will depend on a number of factors including:
- oil and gas prices;
- demand for our drilling services;
- whether our business strategy is successful;
- levels of interest rates; and
- other financial and business factors that affect us.
Many of these factors are beyond our control.
If we do not generate sufficient cash flow to pay debt service and repay
principal in the future, we will likely be required to use one or more of the
following measures:
- further diminish our cash balances;
- use our existing credit facility;
- obtain additional external financing;
- refinance our indebtedness; and
- sell our assets.
We can give no assurance that any such sources of funds will be adequate to
meet our needs or be available on terms acceptable to us.
WE HAVE HAD ONLY ONE PROFITABLE YEAR SINCE 1991.
We have a history of losses with our only profitable year since 1991 being
1997 in which we had net income of $10.2 million. Whether we are able to become
profitable in the future will depend on many factors, but primarily on whether
we are able to obtain substantially higher utilization rates for our rigs and
the rates we charge for them. Whether we can achieve those goals will largely
depend on oil and gas prices which are beyond our control.
UNEXPECTED COST OVERRUNS ON OUR TURNKEY AND FOOTAGE DRILLING JOBS COULD
ADVERSELY AFFECT US.
We have historically derived a significant portion of our revenues from
turnkey and footage drilling contracts and we expect that they will continue to
represent a significant component of our revenues. The occurrence of uninsured
or under-insured losses or operating cost overruns on our turnkey and footage
jobs could have a material adverse effect on our financial position and results
of operations. Under a typical turnkey or footage drilling contract, we agree to
drill a well for our customer to a specified depth and under specified
conditions for a fixed price. We typically provide technical expertise and
engineering service, as well as most of the equipment required for the drilling
of turnkey and footage wells. We often subcontract for related services. Under
typical turnkey drilling arrangements, we do not receive progress payments and
are entitled to be paid by our customer only after we have performed the terms
of the drilling contract in full. For these reasons, the risk to us under
turnkey and footage drilling contracts is substantially greater than for wells
drilled on a daywork basis because we must assume most of the risks associated
with drilling operations that are generally assumed by our customer under a
daywork contract.
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Although we attempt to obtain insurance coverage to reduce certain of the risks
inherent in our turnkey and footage drilling operations, we can offer no
assurance that adequate coverage will be obtained or will be available in the
future.
WE COULD BE ADVERSELY AFFECTED IF WE LOST THE SERVICES OF CERTAIN OF OUR SENIOR
MANAGERS.
Our business is dependent to a significant extent on a small group of our
executive management personnel. The loss of any one of these individuals could
have a material adverse effect on our financial condition and results of
operations.
OUR INDENTURES AND CREDIT AGREEMENTS MAY PROHIBIT US FROM PARTICIPATION IN
CERTAIN TRANSACTIONS THAT WE MAY CONSIDER ADVANTAGEOUS.
The indentures under which we issued our senior notes contain restrictions
on our ability and the ability of certain of our subsidiaries to engage in
certain types of transactions. These restrictive covenants may adversely affect
our ability to pursue business acquisitions and rig refurbishments. These
include covenants prohibiting or limiting our ability to:
- incur additional indebtedness;
- pay dividends or make other restricted payments;
- sell material assets;
- grant or permit liens to exist on our assets;
- enter into sale and lease-back transactions;
- enter into certain mergers, acquisitions and consolidations;
- make certain investments;
- enter into transactions with related persons; and
- engage in lines of business unrelated to our core land drilling business.
Our senior secured credit facility also contains covenants restricting our
ability and our subsidiaries' ability to undertake many of the same types of
transactions, and contains financial ratio covenants. They may also limit our
ability to respond to changes in market conditions. Our ability to meet the
financial ratio covenants of our credit agreement can be affected by events and
conditions beyond our control and we may be unable to meet those tests.
Our senior secured credit facility contains default terms that effectively
cross default with the indentures covering our senior notes. If we breach the
covenants in the indentures it could cause our default on our senior notes, and
also under our senior secured credit agreement, and possibly under other then
outstanding debt obligations owed by us or our subsidiaries. If the indebtedness
under our senior secured credit agreement or other indebtedness owed by us or
our subsidiaries is more than $10.0 million and is not paid when due, or is
accelerated by the holders of the debt, then an event of default under the
indenture covering our senior notes would occur. If circumstances arise in which
we are in default under our various credit agreements, our cash and other assets
may be insufficient to repay our indebtedness and that of our subsidiaries.
WE COULD BE ADVERSELY AFFECTED IF SHORTAGES OF EQUIPMENT, SUPPLIES OR PERSONNEL
OCCUR.
While we are not currently experiencing any shortages, from time to time
there have been shortages of drilling equipment and supplies which we believe
could reoccur. During periods of shortages, the cost and delivery times of
equipment and supplies are substantially greater. In the past, in response to
such shortages, we have formed alliances with various suppliers and
manufacturers that enabled us to reduce our exposure to price increases and
supply shortages. Although we have formed many informal supply alliances with
equipment manufacturers and suppliers, and are attempting to establish
arrangements to
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assure adequate availability of certain necessary equipment and supplies on
satisfactory terms, there can be no assurance that we will be able to do so or
to maintain existing alliances. Shortages of drilling equipment or supplies
could delay and adversely affect our ability to return to service our
cold-stacked or inventory rigs and obtain contracts for our marketable rigs,
which could have a material adverse effect on our financial condition and
results of operations.
Although we have not encountered material difficulty in hiring and
retaining qualified rig crews, such shortages are occurring in the industry. We
may experience shortages of qualified personnel to operate our rigs, which could
have a material adverse effect on our financial condition and results of
operations.
OUR EXISTING DIVIDEND POLICY AND CONTRACTUAL RESTRICTIONS LIMIT OUR ABILITY TO
PAY DIVIDENDS.
We have never declared a cash dividend on our common stock and do not
expect to pay cash dividends on our common stock for the foreseeable future. We
expect that all cash flow generated from our operations in the foreseeable
future will be retained and used to develop or expand our business, pay debt
service and reduce outstanding indebtedness. Furthermore, the terms of our
senior secured credit facility prohibit the payment of dividends without the
prior written consent of the lenders and the terms of the indentures under which
our senior notes are issued also restrict our ability to pay dividends under
certain conditions.
CERTAIN PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS, SECURITIES AND CREDIT
AGREEMENTS HAVE ANTI-TAKEOVER EFFECTS WHICH MAY PREVENT OUR STOCKHOLDERS FROM
RECEIVING THE MAXIMUM VALUE FOR THEIR SHARES.
Our articles of incorporation, bylaws and securities and credit agreements
contain certain provisions intended to delay or prevent entirely a change of
control transaction not supported by our board of directors, or which may have
that general effect. These measures include:
- classification of our board of directors into three classes, with each
class serving a staggered three year term;
- giving our board of directors the exclusive authority to adopt, amend or
repeal our bylaws and thus prohibiting stockholders from doing so;
- requiring our stockholders to give advance notice of their intent to
submit a proposal at the annual meeting; and
- limiting the ability of our stockholders to call a special meeting and
act by written consent.
Additionally, the indentures under which our senior notes are issued,
require us to offer to repurchase all senior notes then outstanding at a
purchase price equal to 101% of the principal amount of the senior notes plus
accrued and unpaid interest to the date of purchase in the event that the we
become subject to a change of control, as defined in the indentures. This
feature of the indentures could also have the effect of discouraging potentially
attractive change of control offers.
In addition, we have adopted a stockholder rights plan which may have the
effect of impeding a hostile attempt to acquire control of us.
LARGE AMOUNTS OF OUR COMMON STOCK MAY BE RESOLD INTO THE MARKET IN THE FUTURE
WHICH COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP SIGNIFICANTLY,
EVEN IF OUR BUSINESS IS DOING WELL.
If we issue a significant amount of common stock, convertible preferred
stock or warrants, the market price of our common stock may be adversely
affected.
As of May 15, 2000, 178.6 million shares of our common stock were issued
and outstanding. 150.9 million of these shares, or 84.5% are freely tradeable.
The remaining 27.7 million shares, or 15.5% of our issued and outstanding common
stock are restricted shares, but are available for resale in the public market
under our currently effective registration statements or exemptions from the
registration requirements of the Securities and Exchange Commission. In
addition, as of May 15, 2000, we had issued
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options to purchase 8.6 million shares of common stock and these options are
currently exerciseable for 3.5 million shares of common stock. The market price
of our common stock could drop significantly if future sales of substantial
amounts of our common stock occur, or if the perception exists that substantial
sales may occur.
SELLING STOCKHOLDERS
The following table sets forth certain information concerning each of the
selling stockholders who is selling common stock in the transaction described in
"Plan of Distribution." These shares were registered to permit the selling
stockholders to offer the shares from time to time. See the section captioned
"Plan of Distribution" in this prospectus supplement for a description of the
sale of shares by the selling stockholders.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY
BENEFICIALLY SHARES OFFERED OWNED AFTER
NAME OF BENEFICIAL OWNER OWNED HEREBY THE OFFERING
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<S> <C> <C> <C>
Somerset Capital Partners(1)............................. 9,779,849 2,000,000 7,779,849
Roy T. Oliver, Jr.(2).................................... 9,695,462 1,500,000 8,195,462
Thomas P. Richards(3).................................... 1,900,000 250,000(4) 1,650,000
Richards Brothers Interests, L. P.(5).................... 1,000,000 250,000 750,000
</TABLE>
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(1) Somerset Capital Partners is an affiliate of two of our directors, Stephen
A. Webster and William R. Ziegler. Messrs. Webster and Ziegler are general
partners of Somerset Capital Partners.
(2) Roy T. Oliver, Jr. is one of our directors.
(3) Mr. Richards is Chairman of our Board of Directors and our President and
Chief Executive Officer.
(4) Represents 250,000 shares acquired upon exercise of options.
(5) Richards Brothers Interests, L.P. is a limited partnership and an affiliate
of Mr. Richards, our President and Chief Executive Officer. The limited
partners of the partnership are Mr. Richards' sons.
PLAN OF DISTRIBUTION
We have registered the resale of shares of our common stock by some of our
stockholders, including Somerset Capital Partners, Roy T. Oliver, Jr., Thomas P.
Richards and the Richards Brothers Interests, L.P. These selling stockholders
have advised us that they are selling an aggregate of 4,000,000 shares of our
common stock in one or more block transactions on the American Stock Exchange
that were arranged by Johnson Rice & Company, L.L.C. We have been advised by the
selling stockholders that the shares were sold at a price of $4.50 per share and
that these selling stockholders paid a commission of $0.04 per share. In
connection with this transaction the brokers did not conduct any investigation
to verify the information set out or incorporated by reference in this
prospectus supplement or prospectus.
Each selling stockholder is responsible for paying the brokerage
commissions or other charges and expenses incurred on the resales of his or its
shares, except the expenses relating to the preparation of this prospectus
supplement and prospectus which we are paying.
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