UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 13, 1995
BONRAY DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 0-9953
Delaware 73-1086424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4701 N. E. 23rd Street, Oklahoma City, Oklahoma 73121
(Address of principal executive offices, including zip code)
405/424-4327
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 31, 1995 the Company purchased oil and gas drilling equipment from
M.E.L. Oil & Gas Corporation for $1,741,000. Of that amount, $913,000 was
paid in cash, with the balance of $828,000 financed by the seller, payable
in monthly installments of principal and interest in the amount of $50,000
until paid in full with interest at a rate 1% above the national prime
lending rate and secured by the drilling equipment purchased. An
independent appraisal of the Company's drilling fleet completed
approximately eighteen months ago and the monitoring of recent sales of
similar equipment were used to determine the purchase price. The equipment
was formerly used for the drilling of oil and gas wells. The Company
intends to utilize the equipment in the same activity.
Item 7. Financial Statements and Exhibits.
(c) Exhibits filed herewith:
10(a) Purchase and Sale Agreement dated March 31, 1995.
10(b) Promissory Note dated March 31, 1995.
10(c) Security Agreement dated March 31, 1995.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BONRAY DRILLING CORPORATION
Date: April 13, 1995 By: /s/ RICHARD B. HEFNER
-------------------------------
Richard B. Hefner, President and
Chief Executive Officer
Exhibit 10(a)
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT has been made and entered into this 31st
day of March, 1995 by and between BONRAY DRILLING CORPORATION
("Bonray") and M.E.L. OIL & GAS CORPORATION ("MEL"), with
reference to the following circumstances:
A. MEL is the owner of that certain oil and gas
drilling equipment described on Exhibit A attached hereto (the
"Drilling Equipment").
B. Bonray desires to purchase the Drilling Equipment
as set forth in this agreement. MEL is willing to sell the
Drilling Equipment to Bonray under the terms and conditions of
this agreement.
ACCORDINGLY, premises considered and for the purpose of
prescribing the terms and conditions for the purchase and sale of
the Drilling Equipment, the parties have entered into this
agreement.
1. Sale of the Drilling Equipment.
1.1 Sale and Delivery of the Drilling Equipment.
Subject to the terms and conditions herein set forth, MEL will,
at the closing provided for in Section 2 hereof (the "Closing"),
sell, transfer, assign and deliver to Bonray the Drilling
Equipment and Bonray agrees to purchase, receive, accept delivery
of and pay MEL for the Drilling Equipment.
1.2 Purchase Price. Subject to the terms and
conditions of this agreement, and in consideration of the sale,
assignment, transfer and delivery of the Drilling Equipment,
Bonray will pay MEL $1,741,000 as provided in Section 1.3 below.
1.3 Payment. Bonray shall pay MEL $912,950 at
Closing by bank cashier's check and $828,050 by means of a
promissory note in the form attached hereto as Exhibit B (the
"Note"). The Note shall be secured by that portion of the
Drilling Equipment described in Exhibit A under the heading
"Category One Equipment" and "Category Two Equipment" pursuant to
the terms of a security agreement in the form attached hereto as
Exhibit C (the "Security Agreement"). MEL agrees to release its
security interest in the Category Two Equipment at such time as
the unpaid principal amount of the Note is $500,000 or less.
2. The Closing. The Closing shall be held on the
31st day of March, 1995 at 11:00 a.m. at the offices of McAfee &
Taft, 10th Floor, Two Leadership Square, Oklahoma City, Oklahoma
or at such other date, time and place as may be agreed upon
between the parties (such date and time being herein referred to
as the "Closing Date").
3. Representations and Warranties of MEL. MEL
represents and warrants to Bonray as of the Closing Date as
follows:
3.1 Organization. MEL is a corporation duly
organized and existing under the laws of the State of Oklahoma.
3.2 Agreement Authorized. This agreement has
been duly authorized, executed and delivered by MEL and all
instruments required hereunder to be delivered by MEL at the
Closing shall be duly authorized, executed and delivered by MEL.
All requisite corporate action necessary to close the
transactions contemplated by this agreement has been taken.
3.3 Valid Agreement. This agreement, including,
but not limited to, MEL's representations, warranties and
indemnities herein contained, constitute the valid and binding
agreement of MEL enforceable against it in accordance with its
terms. All instruments required hereunder to be executed by MEL
at the Closing shall constitute valid and binding agreements of
MEL enforceable against it in accordance with its terms.
3.4 Title to the Drilling Equipment. MEL has
good, valid, subsisting and enforceable title to the Drilling
Equipment free and clear of all liens, security interests or
other encumbrances.
3.5 Status of the Drilling Equipment. The
Drilling Equipment is being sold by MEL "AS IS, WHERE IS AND WITH
ALL FAULTS".
3.6 Brokers and Finders. MEL has incurred no
liability, contingent or otherwise, for brokers' or finders' fees
with respect to this transaction for which Bonray shall have any
responsibility whatsoever.
4. Representations and Warranties of Bonray. Bonray
represents and warrants to MEL as of the Closing Date, as
follows:
4.1 Authority to Purchase. Bonray has good right
and lawful authority to purchase and pay for the Drilling
Equipment as contemplated by this agreement and to execute and
deliver the Note and Security Agreement contemplated hereby.
4.2 Brokers and Finders. Bonray has incurred no
liability, contingent or otherwise, for brokers' or finders' fees
in respect of this transaction for which MEL shall have any
responsibility whatever.
5. Purchase Price Allocation. The parties have
agreed that a portion of the purchase price for the Drilling
Equipment is properly allocable $700,000 to the Category One
Equipment and $1,000,000 to the Category Two Equipment. Bonray
agrees that if it should sell the Category One or Category Two
Drilling Equipment within two years of the Closing Date, it will
pay MEL 50% of the net sales price (gross sales price less all
commissions and expenses of sale) in excess of $700,000 in the
case of the Category One Equipment and $1,000,000 the case of the
Category Two Equipment.
6. Confidentiality and Announcements. The parties
agree to treat this agreement as confidential except as may be
required by applicable laws or the applicable rules, regulations
or guidelines of any government agency or stock exchange. To the
extent disclosure is required by virtue of such applicable laws,
rules, regulations or guidelines, Bonray and MEL will consult
with each other with regard to all press releases and contacts
with journalists, broadcasters or other media concerning this
agreement or the transactions contemplated hereby. The parties
have agreed that Bonray will make a press release after the
Closing as set forth in Exhibit D attached hereto.
7. Transactions at Closing. At the Closing:
(a) MEL shall execute and deliver to Bonray a
bill of sale and assignment in the form of Exhibit E hereto.
(b) MEL shall deliver physical possession of the
Drilling Equipment to Bonray at its present location.
(c) Bonray shall deliver to MEL (i) a cashier's
check in the sum of $912,950 and (ii) a cashier's check in the
sum of $87,050 in payment of the sales tax due on the
transaction.
(d) Bonray shall execute and deliver the Note (in
the principal amount of $828,050); and
(e) Bonray shall execute and deliver to MEL the
Security Agreement and applicable financing statements on Form
UCC-1.
8. Miscellaneous.
8.1 Notices. All communications required or
permitted under this agreement shall be in writing, sent by
facsimile or delivered personally or by courier or sent by
registered or certified mail, postage prepaid, addressed as set
forth below.
(a) Notices to Bonray:
Bonray Drilling Corporation
P. O. Box 50128
Oklahoma City, Oklahoma 73140
Attention: Mr. Don Thummel
FAX No. (405) 424-0027
(b) Notice to MEL:
M.E.L. Oil & Gas Corporation
P. O. Box 639
Jenks, Oklahoma 74037
Attention: Mr. M. E. Lambert
Any party may change its address for purposes of this section by
giving written notice of the change of address to the other party
in the manner herein provided for giving notice. Any notice or
communication hereunder shall be deemed to have been given when
(i) deposited in the United States Mail, if by certified or
registered mail, and (ii) received, if delivered personally or by
courier or by facsimile transmission.
8.2 Binding Effect. This agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
8.3 Counterparts. This agreement may be executed
in any number of counterparts, which taken together shall
constitute one and the same instrument and all of which shall be
considered an original for all purposes.
8.4 Expenses. Each party will bear and pay its
own expenses in negotiating and consummating the transactions
contemplated hereby.
8.5 Section Headings. The section headings
contained in this agreement are for convenient reference only and
shall not in any way affect the meaning or interpretation of this
agreement.
8.6 Superseding Effect. This agreement
supersedes all prior agreements and understandings between the
parties with respect to the subject matter of this agreement.
8.7 Governing Law. This agreement shall be
governed by and construed in accordance with the laws of the
State of Oklahoma applicable to contracts made and performed
entirely therein.
EXECUTED as of the day and year first above written.
BONRAY DRILLING CORPORATION
By /s/ Richard B. Hefner
----------------------------
Richard B. Hefner, President
M.E.L. OIL & GAS CORPORATION
By /s/ M.E. Lambert
----------------------------
M. E. Lambert, President
Exhibit 10(b)
Bonray/MEL
PROMISSORY NOTE
(VARIABLE RATE)
$828,050
FOR VALUE RECEIVED, BONRAY DRILLING CORPORATION (the "Maker") promises
to pay to the order of M.E.L. OIL & GAS CORPORATION, an Oklahoma corporation,
at P.O. Box 639, Jenks Oklahoma 74037, or at such other place as may be
designated in writing by the holder of this Note, the principal amount of
Eight Hundred Twenty-Eight Thousand Fifty Dollars ($828,050) with
interest thereon at the rate specified below, in lawful money of the United
States of America, as follows:
The unpaid principal amount of this Note from time to time outstanding
shall bear interest from the date hereof to maturity at a rate per annum equal
to the Prime Rate plus 1%. The term "Prime Rate" means the rate of interest
published from time to time by The Wall Street Journal and designated as the
Prime Rate in the "Money Rates" section of that publication. If the publi-
cation describes the Prime Rate as a range of rates, for purposes of this
Note, the Prime Rate shall be the highest rate designated in such range. The
Prime Rate is a reference rate which describes the base rate on corporate loans
and does not necessarily represent actual transactions or the best or lowest
rate of interest actually charged to any borrower. The interest rate under
this Note shall be adjusted on each date that the published Prime Rate
changes. Interest shall be computed on the basis of a year consisting of
365 days.
The Maker acknowledges that the Prime Rate effective on the date of execu-
tion of this Note is nine percent (9%) per annum, and that the amount out-
standing under this Note on this date will initially bear interest at the rate
of ten percent (10%) per annum.
This Note shall be payable in monthly installments of principal and
interest in the amount of Fifty Thousand and No/100 DOLLARS ($50,000), com-
mencing on May 1, 1995, and continuing on the same day of each and every month
thereafter, except for those months that the Maker elects to defer a payment,
as provided below, until paid in full. All payments shall be applied first to
accrued interest and the balance to principal. The last monthly payment may
be in an amount less than $50,000, if a lesser payment pays the unpaid
principal and accrued interest in full. The foregoing notwithstanding, the
Maker may, after making the first two monthly payments, defer at its election
any four monthly payments, but not more than two consecutive monthly payments.
The Maker may prepay this Note in whole or in part at any time without
penalty or premium. All partial prepayments will be applied in payment of
the last maturing principal installments and will not postpone the due date of
any subsequent monthly installments or change the amount of such installments,
unless the holder otherwise agrees in writing.
This Note is secured by a Security Agreement of even date herewith.
On the failure to make any payment on this Note within 10 days of its due
date, or on the breach of or default under any other provision of this Note,
the Security Agreement or any other agreement now or hereafter securing payment
of this Note, at the option of the holder, the entire indebtedness evidenced
hereby will become due, payable and collectible then or thereafter as the
holder may elect, regardless of the date of maturity hereof. Notice of the
exercise of such option is hereby expressly waived. Failure by the holder to
exercise such option shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default.
The acceptance by the holder of any payment that is less than the total of
all amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any remedies or options at that time or any
subsequent time, or nullify any prior exercise of such remedy or option,
without the express consent of the holder.
After maturity and at any time while any default exists in the making of
any of the payments herein, whether principal or interest, or both, or in the
performance or observance of any other covenants, agreements, or conditions of
this Note or of any agreement now or hereafter securing the indebtedness evi-
denced hereby, the Maker shall pay interest on the principal balance of this
Note then outstanding from the date of maturity or the date of such default
until paid at the annual rate equal to the sum of five percent (5%) plus the
Prime Rate from time to time in effect. During the existence of any default,
the holder of this Note may apply payments received on any amounts due here-
under, or under the terms of any instrument now or hereafter evidencing or
securing such indebtedness, as the holder may determine. Any additional
interest that has accrued shall be payable at the time of, and as a condition
precedent to, the curing of any default.
If and as often as this Note is placed in the hands of an attorney for
collection or to defend or enforce any of the holder's rights hereunder, the
Maker shall pay to the holder hereof reasonable attorneys' fees, to the extent
allowed by law, together with all court costs and other expenses incurred in
connection therewith, whether or not an action shall be instituted to en-
force this Note.
All agreements between the Maker and the holder hereof are expressly
limited so that in no event whatsoever shall the amount of interest or finance
charge paid or agreed to be paid by the Maker hereunder exceed the highest
lawful contractual rate of interest or the maximum finance charge permis-
sible under the law which a court of competent jurisdiction, by final non-
appealable order, determines to be applicable hereto. If fulfillment of any
agreement between the Maker and the holder, at the time the performance of
such agreement becomes due, involves exceeding such highest lawful contractual
rate or such maximum permissible finance charge, then the obligation to fulfill
the same shall be reduced to the maximum amount that does not exceed such high-
est lawful contractual rate or maximum permissible finance charge. If by any
circumstance the holder shall ever receive as interest or finance charge an
amount that would exceed the amount allowed by applicable law, the amount
that may be deemed excessive shall be deemed applied to the principal of the
indebtedness evidenced hereby and not to interest. All interest and finance
charges paid or agreed to be paid to the holder shall be prorated, allocated,
and spread throughout the full period of this Note. The terms and provisions
of this paragraph shall control all other terms and provisions contained herein
and in any of the other documents executed in connection herewith. If any
provision of this Note or the application thereof to any party or circumstance
is held invalid or unenforceable, the remainder of this Note and the applica-
tion of such provision to other parties or circumstances shall not be affected
thereby, the provisions of this Note being severable in any such instance.
The Maker and the endorsers, sureties, guarantors, and all other persons
who may become liable for all or any part of this obligation severally waive
presentment for payment, protest, and notice of nonpayment. Such parties
consent to any extension of time of payment hereof, whether one or more, any
renewal hereof, whether one or more, release of all or any part of the
security for the payment hereof and any release of any party liable for
payment of this obligation. Any such extension, renewal, or release may be
made at any time and from time to time without notice to any such party and
without discharging such party's liability hereunder.
EXECUTED the day and year first written above.
BONRAY DRILLING CORPORATION
By /s/ Richard B. Hefner
------------------------------
Richard B. Hefner, President
Exhibit 10(c)
Bonray/MEL
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is executed and delivered this 31st day of
March, 1995, by BONRAY DRILLING CORPORATION, an Oklahoma corporation
("Debtor"), in favor of M.E.L. OIL & GAS CORPORATION, an Oklahoma corporation
("Secured Party"), with reference to the following:
A. Pursuant to a certain Agreement of Purchase and Sale (the
"Purchase Agreement") of even date between Debtor and Secured Party, Secured
Party agreed to sell certain drilling equipment to Debtor for cash and a
purchase money secured loan (the "Loan").
B. The Loan is evidenced by a promissory note of Debtor of even
date herewith, in the aggregate principal amount of $828,050 (the "Note") and
is secured by certain drilling equipment.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Debtor and Secured Party agree as
follows:
1. Security Interest. Debtor does hereby grant, bargain, sell, and
convey unto Secured Party a security interest in and to the Category One
Equipment and the Category Two Equipment described on Exhibit A to the Purchase
Agreement, together with all proceeds and products thereof and replacements
therefor (the "Collateral").
2. Obligations Secured. The security interest created hereby is
given to secure the due, punctual, and complete performance by Debtor of all
of Debtor's obligations under the Note and hereunder.
3. Sale or Encumbrance. Except as consented to in writing by the
Secured Party, Debtor shall neither (a) create or permit the existence of
any lien, encumbrance, or security interest of any kind on any of the Col-
lateral, nor (b) sell, transfer, lease, or otherwise dispose of the
Collateral.
4. Insurance. Debtor shall continuously maintain insurance on
the Collateral consistent with Debtor's existing policies on its other drilling
equipment with loss payable clause in favor of Secured Party.
5. Representations and Warranties. Debtor represents and warrants
to Secured Party as follows:
5.1 Debtor's Place of Business. Debtor's principal place of
business and the location of its chief executive office (and the place where
all books and records relating to the Collateral are maintained) is set forth
below the signature of the Debtor at the end of this Security Agreement.
The Debtor will not change the principal place of business, its name, or
the place where its books and records relating to the Collateral are maintained
without at least 10 days prior written notice to Secured Party.
5.2 Financing Statements. Debtor shall execute and deliver
to Secured Party such financing statements, continuation statements, certifi-
cates, and other documents or instruments as Secured Party shall require to en-
able Secured Party to perfect or from time to time renew the security interest
created hereby including, without limitation, such financing statements,
certificates, and other documents as Secured Party shall require to
perfect the security interest created hereby in the Collateral or in any
replacements or proceeds of the Collateral.
5.3 Location of Collateral. Debtor shall not permit any of
the Collateral to be removed from the State of Oklahoma without the prior
written consent of Secured Party; provided, however, Debtor may move the Col-
lateral to the Texas panhandle for a period not exceeding six months.
6. Waiver. No waiver or modification by Secured Party of any of
the terms and conditions hereof shall be effective unless reduced to writing
and signed by Secured Party. No waiver or indulgence by Secured Party as to
any required performance by Debtor hereunder shall constitute a waiver as to
any subsequent required performance or any other obligation of Debtor
hereunder.
7. Performance by Secured Party. If Debtor at any time fails to
perform any obligation for which it is obligated hereunder, including, without
limitation, any payment of taxes, insurance premiums, or other sums of money
required to be paid hereunder, Secured Party may, but shall be under no obli-
gation to do so, pay such amount as is required to be paid, in which event
Secured Party shall be immediately reimbursed therefore by Debtor. Such
amounts paid by Secured Party shall be deemed a portion of the indebtedness
secured hereby, and such items shall bear interest from the date incurred by
Secured Party until paid by Debtor at the rate specified in the Notes for
interest accruing after an Event of Default. The accrual of interest hereunder
shall not prejudice any other remedies that may be available to Secured Party
hereunder.
8. Default. Debtor shall be in default hereunder in the event
Debtor is in default under the Note or if Debtor fails to perform any obliga-
tion required to be performed hereunder. The occurrence of any such events
shall herein be referred to as an "Event of Default."
9. Remedies. If an Event of Default occurs, Secured Party shall
have all remedies available under law. Without limitation of the foregoing, at
the request of Secured Party, Debtor shall assemble the Collateral and make it
available to Secured Party at a place designated by Secured Party reasonably
convenient to both parties. Debtor acknowledges that a period of ten days
from the time the notice is sent shall be a reasonable period for notifica-
tion of any sale or other disposition of Collateral by or for the Secured
Party. Debtor shall pay, on demand, all expenses reasonably incurred by
Secured Party in protecting, preserving, storing, and selling the Collateral.
If this Security Agreement or any obligation secured by it is referred to
an attorney for protecting, defending, or enforcing the provisions thereof,
Debtor shall pay attorneys' fees, expenses of title search, and all court costs
and costs of public officials and all costs (including, but not limited to,
attorneys' fees and expenses) incurred by Secured Party in the taking posses-
sion of, preservation, maintenance, and sale of the Collateral, which
amounts shall be deemed a portion of the indebtedness secured hereby. Any
and all such items shall bear interest from the date incurred by Secured Party
until repaid by Debtor at the rate specified in the Notes for interest accruing
after an Event of Default.
10. Notices. All notices, requests, demands, instructions, and other
communications called for hereunder or contemplated hereby shall be given in
the manner and to the addresses set forth in the Purchase Agreement.
11. Whole Agreement; No Oral Modification. This Agreement may not
be modified except by an instrument in writing signed by the parties hereto.
12. Remedies Cumulative. The various rights, powers, elections,
and remedies of the parties hereto shall be considered as cumulative and no one
of them is exclusive of the others or exclusive of any right or remedy allowed
by law, and no right shall be exhausted by being exercised on one or more
occasions.
13. Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
14. Section Headings. The section headings in this Agreement are
for convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
EXECUTED AND DELIVERED the day and year first written above.
BONRAY DRILLING CORPORATION
By /s/ Richard G. Hefner
----------------------------
Richard B. Hefner, President
"Debtor"
Address:
4701 N.E. 23rd Street
Oklahoma City, Oklahoma 73140
