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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
GREY WOLF DRILLING COMPANY
AS BUYER,
GREY WOLF INC.
AS GREY WOLF
MURCO DRILLING CORPORATION
AS THE COMPANY,
AND
THOSE OTHER PERSONS WHOSE NAMES
ARE SET FORTH IN SCHEDULE 3.1(b) HEREOF,
AS SELLERS
Dated as of December 30, 1997
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TABLE OF CONTENTS
1. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 1
2. Closing; Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price and Payment at Closing . . . . . . . . . . . . 2
2.3 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . 2
2.4 Employee Trust . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . 4
3.1 Representations and Warranties of the Sellers . . . . . . . . 4
(a) Due Organization; Good Standing and Power . . . . . . . 4
(b) Validity of Agreement; Capitalization . . . . . . . . . 5
(c) No Approvals or Notices Required; No Conflict with
Instruments . . . . . . . . . . . . . . . . . . . . . . 5
(d) Financial Information and Absence of Certain Changes . 6
(e) Title to Properties; Absence of Liens and Encumbrances 8
(f) Properties, Contracts, Permits and Other Data . . . . . 8
(g) Defects . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Accounts Receivable; Inventory . . . . . . . . . . . . 9
(i) Legal Proceedings . . . . . . . . . . . . . . . . . . . 10
(j) Insurance . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Intellectual Property . . . . . . . . . . . . . . . . . 11
(l) Conduct of Business in Compliance with Regulatory and
Contractual Requirements . . . . . . . . . . . . . . . . 11
(m) Certain Fees . . . . . . . . . . . . . . . . . . . . . 11
(n) Environmental, Health and Safety Compliance . . . . . . 11
(o) Books and Records . . . . . . . . . . . . . . . . . . . 12
(p) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 13
(q) Additional Information . . . . . . . . . . . . . . . . 13
(r) Labor Matters . . . . . . . . . . . . . . . . . . . . . 13
(s) Employee Benefit Plans and Arrangements . . . . . . . . 14
(t) Transactions With Affiliates . . . . . . . . . . . . . 16
(u) Investment Representations . . . . . . . . . . . . . . 16
(v) Disclosure . . . . . . . . . . . . . . . . . . . . . . 17
(w) Foreign Corrupt Practices Act . . . . . . . . . . . . . 18
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3.2 Representations and Warranties of Buyer . . . . . . . . . . . 18
(a) Due Organization; Good Standing and Power . . . . . . . 18
(b) Authorization and Validity of Agreement . . . . . . . . 18
(c) No Approvals or Notices Required; No Conflict with
Instruments . . . . . . . . . . . . . . . . . . . . . . 18
(d) Certain Fees . . . . . . . . . . . . . . . . . . . . . . 18
(e) Authorization of Common Stock . . . . . . . . . . . . . 19
(f) SEC Filings . . . . . . . . . . . . . . . . . . . . . . 19
4. Covenants; Actions Prior to Closing . . . . . . . . . . . . . . . . . 19
4.1 Access to Information . . . . . . . . . . . . . . . . . . . . . 19
4.2 Inspection of Rigs . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Conduct of the Business . . . . . . . . . . . . . . . . . . . . 20
4.4 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . 21
4.7 Xxxx-Xxxxx-Xxxxxx Act . . . . . . . . . . . . . . . . . . . . . 21
4.8 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . 22
4.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . 22
4.10 Distribution of Assets . . . . . . . . . . . . . . . . . . . . 22
4.11 Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . 22
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Conditions Precedent to Obligations of All Parties . . . . . . 22
(a) No Governmental Action . . . . . . . . . . . . . . . . . 22
(b) Termination under Xxxx-Xxxxx-Xxxxxx Act . . . . . . . . 23
(c) Establishment of Trust . . . . . . . . . . . . . . . . . 23
5.2 Conditions Precedent to Obligations of Buyer . . . . . . . . . 23
(a) Accuracy of Representations and Warranties . . . . . . . 23
(b) Performance of Agreements . . . . . . . . . . . . . . . 23
(c) Actions and Proceedings . . . . . . . . . . . . . . . . 23
(d) Title . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Licenses and Consents . . . . . . . . . . . . . . . . . 23
(f) Environmental Matters . . . . . . . . . . . . . . . . . 23
(g) Opinion of Counsel to Sellers . . . . . . . . . . . . . 24
(h) Operation . . . . . . . . . . . . . . . . . . . . . . . 24
(i) Material Adverse Change . . . . . . . . . . . . . . . . 24
(j) Facts or Omissions . . . . . . . . . . . . . . . . . . . 24
(k) Audit . . . . . . . . . . . . . . . . . . . . . . . . . 24
(l) Financial Report . . . . . . . . . . . . . . . . . . . . 24
(m) Redemption of Preferred Stock . . . . . . . . . . . . . 24
(n) Conveyance of Real Estate . . . . . . . . . . . . . . . 24
(o) Termination of Shareholders Agreement . . . . . . . . . 25
(p) Resignation of Directors and Officers . . . . . . . . . 25
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5.3 Conditions Precedent to the Obligations of the Sellers . . . . 25
(a) Accuracy of Representations and Warranties . . . . . . 25
(b) Performance of Agreements . . . . . . . . . . . . . . . 25
(c) Actions and Proceedings . . . . . . . . . . . . . . . . 26
(d) Opinion of Counsel to Buyer . . . . . . . . . . . . . . 26
5.4 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 No Liabilities in Event of Termination . . . . . . . . . . . . 26
6.3 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . 26
7. Covenants; Action Subsequent to Closing . . . . . . . . . . . . . . . 27
7.1 Sellers' Covenants Not to Compete . . . . . . . . . . . . . . . 27
7.2 Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Registration Rights . . . . . . . . . . . . . . . . . . . . . 28
7.4 Access to Books and Records . . . . . . . . . . . . . . . . . . 33
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Indemnification by the Sellers . . . . . . . . . . . . . . . . 33
8.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . 33
8.3 Monetary Limit on Indemnification Liability . . . . . . . . . . 34
8.4 Indemnification Procedures . . . . . . . . . . . . . . . . . . 34
8.5 Time Limits on Liability . . . . . . . . . . . . . . . . . . . 35
8.6 Seller Representative . . . . . . . . . . . . . . . . . . . . . 35
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Payment of Certain Fees and Expenses . . . . . . . . . . . . . 36
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . 37
9.5 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . 37
9.7 Limitation on Interest . . . . . . . . . . . . . . . . . . . . 37
9.8 Section Headings; Index . . . . . . . . . . . . . . . . . . . . 38
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 38
9.12 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 38
(a) Good Faith Negotiations . . . . . . . . . . . . . . . . 38
(b) Mediation . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Arbitration . . . . . . . . . . . . . . . . . . . . . . 38
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10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . 40
10.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
SCHEDULES
Schedule 3.1(a) - State of Incorporation and Foreign Qualification
Schedule 3.1(b) - Ownership of Stock
Schedule 3.1(c) - Consents and Approvals
Schedule 3.1(d) - Financial Information
Schedule 3.1(e) - Liens and Encumbrances
Schedule 3.1(f) - Properties, Contracts, Permits and Other Data
Schedule 3.1(h) - Accounts Receivable; Inventory
Schedule 3.1(i) - Legal Proceedings
Schedule 3.1(j) - Insurance
Schedule 3.1(k) - Intellectual Property
Schedule 3.1(l) - Conduct of Business in Compliance with Regulatory
and Contractual Requirements
Schedule 3.1(n) - Environmental Compliance
Schedule 3.1(p) - Taxes
Schedule 3.1(q) - Additional Information
Schedule 3.1(s) - Employee Benefit Plans
Schedule 3.1(t) - Affiliate Transactions
Schedule 3.2(c) - Buyer Consents
Schedule 4.10 - Distribution of Assets
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EXHIBITS
Exhibit 1 - Allocation of Purchase Price
Exhibit 2 - Opinion of Counsel to Sellers and Company
Exhibit 3 - Deed
Exhibit 4 - Opinion of Counsel to Buyer
Exhibit 5 - Rigs
Exhibit 6 - Escrow Agreement
Exhibit 7 - Trust Agreement
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of December 30, 1997 by and among those persons whose names are set
forth in Schedule 3.1(b) hereof (collectively, the "Sellers" and individually,
a "Seller"), Murco Drilling Corporation, a Delaware corporation (the
"Company"), Grey Wolf, Inc., a Texas corporation ("Grey Wolf") and Grey Wolf
Drilling Company, a Texas corporation ("Buyer").
R E C I T A L S:
1. The Sellers own all of the issued and outstanding common stock
("Stock") of Company, which is engaged in the land drilling business (the
"Business"); and
2. The Sellers desire to sell to Buyer and Buyer desires to acquire
from the Sellers, the Stock, in consideration of the payment by Buyer of the
purchase price provided for herein, all upon the terms and subject to the
conditions hereinafter set forth; and
3. The Company joins in the execution of this Agreement for the
purpose of evidencing its consent to consummation of the foregoing transaction
and for the purpose of making certain representations and warranties to and
covenants and agreements with Buyer.
AGREEMENT
In consideration of the premises and of the respective representations,
warranties, covenants, agreements and conditions of the parties contained
herein, it is hereby agreed as follows:
1. Purchase and Sale.
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers shall sell and deliver to Buyer and Buyer
shall purchase from Sellers all of the Stock, free and clear of all
Encumbrances. At the Closing, each of the Sellers shall deliver to Buyer
certificates evidencing the Stock owned by such Seller (which, in the
aggregate, shall constitute all of the Stock), duly endorsed for transfer or
accompanied by duly executed stock powers.
1.2 Further Assurances. From time to time after the Closing, the
Sellers will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance,
assignment, transfer and delivery and will take such other actions as Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to Buyer, and to place Buyer in possession and control of any of the
Stock or to enable Buyer to exercise and enjoy all rights and benefits of the
Sellers with respect thereto.
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2. Closing; Purchase Price.
2.1 Closing Date. The closing of the transactions provided for in
this Agreement (the "Closing") shall take place (i) at the offices of Gardere
Xxxxx Xxxxxx & Xxxxx, L.L.P., 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, at
10:00 a.m., local time, on the later of (x) February 28, 1998, or (y) the third
business day following the satisfaction or waiver (subject to Applicable Law)
of each of the conditions of the obligations of the parties set forth in
Section 5, or (ii) at such other time or place or on such other date as the
parties hereto shall agree. The date on which the Closing is required to take
place is herein referred to as the "Closing Date".
2.2 Purchase Price and Payment at Closing. The aggregate purchase
price for the Stock shall be $56,310,000 (the "Purchase Price"), subject to
adjustment pursuant to Section 2.3 below. The Purchase Price shall be payable
at the Closing and shall consist of:
(a) $56,310,000 in cash (the "Cash Amount") less the Stock
Amount and Escrow Fund (as defined below). The portion of the Cash
Amount set forth beside the name of each Seller on Exhibit 1 shall be
paid to such Seller at the Closing in the form of a bank cashier's check
payable to the order of such Seller or, if requested by such Seller, in
immediately available funds by confirmed wire transfer to a bank account
to be designated by such Seller (such designation to occur no later than
the second business day prior to the Closing Date).
(b) At the option of Grey Wolf, up to $10,000,000 in shares of
Grey Wolf common stock (the "Grey Wolf Stock") (the "Stock Amount").
The number of shares of Grey Wolf Stock deliverable to each Seller shall
be equal to (i) the aggregate "Value of Shares of Grey Wolf Stock"
multiplied by the percentage set forth beside such Seller's name on
Exhibit 1, divided by (ii) the average of the closing price of the Grey
Wolf Stock (as reported on AMEX) for the 10 trading days ending on the
second business day prior to the Closing Date ("Average Price"), with
the result of such division being rounded to the nearest whole number of
shares. Buyer will notify Sellers of the number of Grey Wolf Stock, if
any which will be issued as part of the Purchase Price, two days prior
to the Closing Date.
(c) The Escrow Fund by Escrow Agent's delivery of the Escrow
Fund to the Sellers in accordance with the Escrow Agreement.
Sellers acknowledge and agree that the allocation of the Purchase Price
among them as set forth on Exhibit 1 is the sole responsibility of the Sellers,
and Buyer and the Company shall have no obligation or other responsibility with
respect to such allocation.
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2.3 Purchase Price Adjustment. The Purchase Price shall be subject
to adjustment as follows:
(a) The Company shall prepare statements of the Company's Net
Financial Assets as of January 31,1998 (the "Preliminary Statement") and
the Closing Date (the "Statement"). For purposes hereof, Net Financial
Assets shall mean the net book value of all assets and liabilities of
the Company determined in accordance with GAAP excluding property, plant
and equipment (including but not limited to drilling equipment,
vehicles, floats, trailers, mobile homes and all office equipment and
furniture used by employees retained by Grey Wolf and all real property
and leasehold improvements known as the Murco Service Facility, located
on 18.2 acres, more or less) and excluding from liabilities the
liabilities in connection with the Employee Trust.
(b) The Purchase Price shall be adjusted up or down at the
Closing based on the Preliminary Statement, subject to final adjustments
in accordance with the Statement as hereinafter provided.
(c) The parties hereto shall use their reasonable best efforts
to cause the Company to complete and deliver the Statement to Sellers
and Buyer within 90 days after the Closing Date.
(d) If the Net Financial Assets is a positive amount, the
Purchase Price (as adjusted by the Preliminary Statement) shall be
increased by such amount, with such increase being payable in cash by
Buyer within fifteen business days of the date of the delivery to Buyer
of the Statement (the "Determination Date"). The amount of any such
increase shall be allocated among the Sellers as set forth on Exhibit 1
hereto. If the Net Financial Assets is a negative amount, then the
Purchase Price (as adjusted by the Preliminary Statement) shall be
reduced by such amount, and the Sellers, jointly and severally, shall
pay such amount to Buyer within fifteen (15) business days of the
Determination Date.
(e) In the event that Buyer, on the one hand, or Sellers on
the other, disagrees with the Statement, such party shall have fifteen
(15) days from the Determination Date to attempt to resolve such dispute
with the other. In the event such dispute cannot be resolved, either
Buyer or Sellers can request, by the delivery of a notice to the other
specifying in reasonable detail the nature of the dispute, within three
(3) days of the expiration of such fifteen day period, that the dispute
be resolved by an independent nationally-recognized accounting firm that
has no business relationship with either party (the "Accounting
Arbitrator") selected by the party delivering the notice. The
Accounting Arbitrator shall review any disputed items and resolve any
such disputes within thirty (30) days of the date the Accounting
Arbitrator is retained. The decision of the Accounting Arbitrator shall
be final and binding between the parties for the purpose of determining
any Purchase Price adjustment pursuant to this Section 2.3. The fees
and expenses of the Accounting Arbitrator shall be borne one-half by
Buyer and one-half by Sellers.
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(f) In the event Buyer determines for any reason that the
Buyer does not want to purchase the Real Estate, the Cash Amount shall
be reduced by $582,000 and the Company shall distribute such Real Estate
to the Sellers on or before the Closing, and the Sellers shall indemnify
and hold the Company and Buyer harmless from and against all obligations
and liabilities related to such assets.
(g) Buyer shall use all reasonable efforts to collect accounts
receivable related to work performed before the Closing Date. All funds
received shall be applied to the oldest xxxx unless the third party
payor otherwise indicates or the amount paid relates to a specific
invoice.
2.4 Employee Trust. After the satisfaction or waiver of the
conditions set forth in Section 5.1 hereof, and on the date (the "Trust
Establishment Date") which is the Closing Date, if:
(i) the conditions precedent set forth in
Sections 5.2 and 5.3 hereof would be satisfied if the Trust
Establishment Date were the Closing Date, or, if applicable, the
party or parties entitled to do so have irrevocably agreed to
waive satisfaction of any such condition precedent which would
not thus be satisfied; and
(ii) none of the conditions or circumstances
authorizing termination of this Agreement under Section 6.1
hereof have occurred or exist as of the Trust Establishment Date,
or if applicable, the Company, Grey Wolf and the Buyer have all
agreed to waive any right to terminate this Agreement pursuant to
Section 6.1 by reason of the occurrence or existence of any such
condition or circumstance which has occurred or exists as of the
Trust Establishment Date,
the Company shall establish an irrevocable trust (the "Employee Trust") by
execution of a Trust Agreement (the "Trust Agreement") with Bank One Texas,
N.A. as trustee (in such capacity being herein called the "Trustee") in the
form of Exhibit 7 attached hereto and incorporated herein, and will be
obligated to contribute and pay to the Trustee for inclusion in the principal
of the Employee Trust the sum of $8,600,000 in cash on the Closing Date. As
more fully set forth in and subject to the provisions of the Trust Agreement,
the Employee Trust shall be for the benefit of those employees and retired,
disabled and former employees of the Company identified in Exhibit A to the
Murco Drilling Corporation Deferred Compensation Plan (the "Plan") attached to
the Trust Agreement who remain employed (other than the retired, disabled and
former employees) by the Company on the date of establishment of the Employee
Trust (the "Murco Employees"), subject to addition and deletion by the Company
up until the funding of the Employee Trust. The Buyer will cause the Employee
Trust to be funded contemporaneously with Closing.
In the event the purchase and sale contemplated by this Agreement does
not close for any reason, the Plan and the Employee Trust may be terminated at
the option of the Company.
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3. Representations and Warranties.
3.1 Representations and Warranties of the Sellers and the Company.
The Company and the Sellers, jointly and severally, represent and warrant to
Buyer as of the date hereof and as of the Closing Date, as follows:
(a) Due Organization; Good Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation. The Company has the
corporate power and authority to own, lease and operate its assets and
to conduct its business as now conducted. The Company is duly
authorized, qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
right, title or interest in or to any of its assets, or the conduct of
its business, requires such authorization, qualification or licensing,
except where the failure to so qualify or to be in good standing in such
other jurisdictions would not have a material adverse effect on the
assets taken as a whole, the business or the results of operations of
the Company. The jurisdiction of incorporation of the Company and
jurisdictions in which the Company is qualified or licensed to do
business are set forth on Schedule 3.1(a). No actions or proceedings to
dissolve the Company are pending. The Company has delivered to Buyer
true and complete copies of the minute books and stock transfer books of
the Company, each of which is accurate and complete.
(b) Validity of Agreement; Capitalization. This Agreement has
been duly executed and delivered by the Sellers and the Company and
constitutes a legal, valid and binding obligation of each of them,
enforceable against them in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity principles.
The Company's authorized capital consists of (i) 10,000 shares of Common
Stock, no par value, of which 4,622 2/9 shares are issued and
outstanding, (ii) 5,000 shares of Class A 8% Cumulative Preferred
Stock, par value $1,000 per share, of which no shares are issued and
outstanding and (iii) 1,000 shares Class B 4% Cumulative Preferred
Stock, par value $1,000, of which 900 shares are issued and outstanding.
The record and beneficial ownership of such shares is as set forth on
Schedule 3.1(b) hereto. All of the issued and outstanding shares of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, have not been issued in violation of any preemptive or
similar rights, and have been issued in compliance with all Applicable
Laws (including state and federal securities laws). The Stock
constitutes all shares of the outstanding common stock of the Company.
Except as set forth on Schedule 3.1(b), there are (and as of the Closing
Date there will be) outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company
convertible into or exchangeable for shares of the capital stock or
other voting securities of the Company , (iii) no options, warrants or
other rights to acquire from the Company, and no obligation of the
Company to issue or sell, any shares of its capital stock or other
voting securities or any securities of the Company convertible into or
exchangeable for such capital stock or voting securities, (iv) no equity
equivalents, interest in the ownership or earnings, or other similar
rights of or with respect to the Company, and (v) no shares of any other
entity owned by the Company. There are (and as of the Closing Date
there will be) no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any
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shares, securities, options, equity equivalents, interests or rights.
Each Seller is (and at the Closing Date will be) the record and
beneficial owner of, and upon consummation of the transactions
contemplated hereby Buyer will acquire, good, valid and marketable title
to, the number of shares of Stock set forth opposite the name of such
Seller on Schedule 3.1(b), free and clear of all Encumbrances, other
than (i) those that may arise by virtue of any actions taken by or on
behalf of Buyer or its affiliates or (ii) restrictions on transfer that
may be imposed by federal or state securities laws. The Company has no
subsidiaries.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as described in Schedule 3.1(c) hereto, the
execution, delivery and performance of this Agreement by the Sellers and
the Company and the consummation by them of the transactions
contemplated hereby (i) will not violate (with or without the giving of
notice or the lapse of time or both) or require any consent, approval,
filing or notice under, any provision of any Applicable Law and (ii)
will not result in the creation of any Encumbrance on the Stock under,
conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or result in the acceleration of the
performance of the obligations of the Sellers or the Company under, or
result in the creation of an Encumbrance upon any portion of the assets
of the Company pursuant to, the charters or by-laws of the Company, or
any indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which the Sellers or the
Company are a party or by which any of them or any of their assets is
bound or affected other than any provision in any drilling contract to
which the Company is a party which may require the consent of the
operator to a change of control of the Company. The Stock is
transferable and assignable to Buyer as contemplated by this Agreement
without the waiver of any right of first refusal or the consent of any
other party being obtained, and there exists no preferential right of
purchase in favor of any person with respect of any of the Stock or the
Business or any of the assets of the Company except for the Agreement
for Restriction on Sale of Shares of Murco Drilling Corporation, dated
December 20, 1973 (the "Shareholders Agreement") which shall be
terminated prior to Closing.
(d) Financial Information and Absence of Certain Changes. The
Company has delivered to Buyer accurate and complete copies of (i) the
Company's audited balance sheets as of June 30, 1997, June 30, 1996,
June 30, 1995, June 30, 1994, and June 30, 1993, and the related audited
statements of income, stockholders' equity and cash flows for each of
the years then ended, and the notes and schedules thereto, prepared in
conformity with GAAP, together with the unqualified reports thereon of
Xxxxxx & Xxxxx, independent public accountants (the "Audited Financial
Statements"), and (ii) the Company's unaudited balance sheet as of
October 31, 1997 (the "Latest Balance Sheet"), and the related unaudited
statements of income, stockholders' equity and cash flows for the four
month period then ended (together with the Latest Balance Sheet, the
"Unaudited Financial Statements"), certified by the Company's Finance
Manager (collectively, the "Financial Statements"). The Financial
Statements (i) represent actual bona fide transactions, (ii) have been
prepared from the books and records of the Company in conformity with
GAAP applied on a basis consistent with preceding years throughout the
periods involved, except that the Unaudited Financial Statements are not
accompanied by notes or other textual disclosure required by GAAP, and
(iii) accurately, completely and fairly present the Company's financial
position
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14
as of the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended in all material
respects, except that the Unaudited Financial Statements are subject to
normal year-end adjustments consistent with past practice, which will
not be material in the aggregate. To the knowledge of Sellers and the
Company, the Company has no liability or obligation that would
materially and adversely affect the business, assets, financial
condition or results of operations of the Company, whether accrued,
absolute, contingent, or otherwise, except as set forth on the Latest
Balance Sheet or on Schedule 3.1(d). Except as disclosed on Schedule
3.1(d), since the date of the Latest Balance Sheet, there has not been
nor will there be any change in the assets, liabilities, financial
condition, or operations of the Company from that reflected in the
Financial Statements, other than changes in the ordinary course of
business, none of which individually or in the aggregate have had or
will have a material adverse effect on such assets, liabilities,
financial condition, or operations. Without limiting any of the
foregoing, since the date of the Latest Balance Sheet and until the
Closing Date, except as disclosed on Schedule 3.1(d) the Company has not
and, except as specifically contemplated in Section 4.10 below, will not
have:
(i) incurred or become subject to, or agreed to
incur or become subject to, any obligation or liability, absolute
or contingent, except current liabilities incurred in the
ordinary course of business;
(ii) mortgaged, pledged, or subjected to any
Encumbrance (or agreed to do so with respect to) any of their
assets, or discharged or satisfied any Encumbrance, or paid or
satisfied any obligation or liability other than in the ordinary
course of business and consistent with past practice;
(iii) sold or transferred, or agreed to sell or
transfer, any of their assets, or canceled or agreed to cancel,
any debts due them or claims therefor, except, in each case, for
full consideration and in the ordinary course of business;
(iv) engaged in any transactions adversely
affecting the Business or their assets or suffered any
extraordinary losses or waived any rights of substantial value
not in the ordinary course of business;
(v) purchased or agreed to purchase any
securities, bonds, or any other capital stock or assets of any
other entity with cash or liquid assets, or used cash or liquid
assets to incur debts, for matters not within the ordinary course
of business or not for appropriate corporate purposes;
(vi) increased any salaries or granted or agreed
to grant, or paid, or agreed to pay, any bonus, loan, incentive
payment or other item of value or made any other similar
agreement, to or with any of its directors, officers or agents
except as compensation in the ordinary course of business for
appropriate services performed except for creation of the
Employee Trust pursuant to Section 2.4 of this Agreement;
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15
(vii) declared or paid any dividend (except for
dividends declared and paid for Class B Preferred Stock) or made
any other distribution to their shareholders;
(viii) made or authorized any capital expenditure
of more than $10,000 in the aggregate except in the ordinary
course of business and approved by Buyer;
(ix) made or agreed to make any changes in their
Articles of Incorporation, bylaws, or capital structure;
(x) entered into any representative,
distributorship, service, installation, support and maintenance,
agency or other similar agreement except in the ordinary course
of business and approved by Buyer;
(xi) incurred or suffered any damage,
destruction, or loss, whether or not covered by insurance,
materially affecting the Business or any of their respective
assets;
(xii) made or applied to make any change in
accounting methods or practices, including for tax purposes; or
(xiii) entered into any agreement, commitment or
understanding, whether or not in writing, with respect to any of
the foregoing.
(e) Title to Properties; Absence of Liens and Encumbrances.
The Company owns (except as described in Schedule 3.1(e) hereto) good,
marketable and indefeasible title to all of its assets, free and clear
of all Encumbrances and other restrictions of any kind and nature, other
than the Encumbrances specifically set forth on Schedule 3.1(e) hereto
or Permitted Encumbrances on the Real Estate as set out in Section
5.2(n) hereof.
(f) Properties, Contracts, Permits and Other Data.
(i) Schedule 3.1(f) hereto contains a complete and
correct list of, and summaries of all the material specifications
and details of, all contracts, contract proposals, outstanding
bids, maintenance and service agreements, purchase commitments
for materials and other services, and contracts under which the
Company is a lessor or lessee and other agreements pertaining to
the Business to which the Company or an affiliate of the Company
is a party, the benefits of which are enjoyed in the Business or
to which any of the assets of the Company is subject;
(ii) Schedule 3.1(f) hereto contains a complete and
correct list of the Company's owned and leased real estate (the
"Real Estate"); and
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16
(iii) Schedule 3.1(f) hereto contains a complete and
correct list of all Permits relating to the development, use,
maintenance or occupation of the Company's properties, Real
Estate, or the operation of the Business (other than sales and
use tax Permits and franchise tax registrations).
True and complete copies of all documents (including all amendments
thereto) referred to in Schedule 3.1(f) hereto have been delivered to or
made available for inspection by Buyer. All rights, licenses, leases,
registrations, applications, contracts, commitments, Permits and other
arrangements by the Sellers or the Company referred to in Schedules
3.1(f) are in full force and effect and are valid and enforceable in
accordance with their respective terms, except where the failure to be
in full force and effect and valid and enforceable would not in the
aggregate have a material adverse effect on the assets of the Company or
on its results of operations. The Company and its affiliates are not in
breach or default in the performance of any material obligation
thereunder and to the best knowledge of the Sellers and the Company, no
event has occurred or has failed to occur whereby any of the other
parties thereto have been or will be released therefrom or will be
entitled to refuse to perform thereunder. Except as set forth in
Schedule 3.1(f) hereto, there are no contracts, agreements, licenses,
Permits, franchises or rights to which the Company or its affiliates is
a party which are material to the ownership of any of the Company's
assets, or to the conduct of the Business as conducted by the Company.
Except as described on Schedule 3.1(f) hereto, the Company has and will
have following the Closing, all licenses, Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities
required for the conduct of the business as presently conducted. There
are no outstanding powers of attorney relating to or affecting the
Company. The Company is not a guarantor for or otherwise liable for any
liability or obligation (including indebtedness of any other person).
(g) Defects. The buildings, plants, structures, equipment and
Rigs of the Company are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, equipment or
Rigs, is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The
building, plants, structures, equipment and Rigs of the Company are
sufficient for the continued conduct of the Company's Business after the
Closing in substantially the same manner as conducted prior to the
Closing. Pursuant to this Agreement, Buyer has the right prior to the
Closing Date to inspect the buildings, plants, structures, equipment and
Rigs of the Company. As of the Closing Date, the Sellers disclaim all
warranties, express or implied, as to the condition of the buildings,
plants, structures, equipment and Rigs of the Company (including any
warranty as to the merchantability or fitness for any particular
purpose), and Buyer shall acquire all right, title and interest to such
buildings, plants, structures, equipment and Rigs of the Company on an
"as is, where is" basis.
(h) Accounts Receivable; Inventory. Except as provided on
Schedule 3.1(h), all accounts receivable reflected on the Latest Balance
Sheet or on the accounting records of the Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts
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17
Receivable are or will be as of the Closing Date current and collectible
net of the respective reserve shown on the Balance Sheet or on the
accounting records of the Company as of the Closing Date (which reserves
are adequate and calculated consistently with past practice and, in the
case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the
reserve reflected in the Latest Balance Sheet represented of the
Accounts Receivables reflected therein and will not represent a material
adverse change in the composition of such Accounts Receivable in terms
of aging). The inventories and work in progress reflected on the Latest
Balance Sheet and those items of inventory constructed or acquired by
the Company and the work performed by the Company after the date of the
Latest Balance Sheet, except to the extent disposed of or billed since
such date in the ordinary conduct of the business by the Company, are,
in the case of such inventory, in good, merchantable and usable
condition, and, in the case of such work in progress, represent work
completed in accordance with the requirements of any applicable
contract, and, in each case, have been reflected on the books of the
Company in accordance with GAAP. Except as set forth on Schedule 3.1(e)
hereto, all such inventories and work in progress are owned by the
Company free and clear of any Encumbrances. Pursuant to this Agreement,
Buyer has the right prior to the Closing Date to inspect the inventory
of the Company. As of the Closing Date, the Sellers disclaim all
warranties, express or implied, as to the condition of the inventory of
the Company (including any warranty as to the merchantability or fitness
for any particular purpose), and Buyer shall acquire all right, title
and interest to such inventory of the Company on an "as is, where is"
basis.
(i) Legal Proceedings. Except as described in Schedule 3.1(i)
hereto, (i) there is no litigation, proceeding, claim or governmental
investigation pending or, to the knowledge of any of the Sellers or the
Company, threatened seeking relief or damages which, if granted, would
adversely affect the Company, any of its assets, or the ability of Buyer
to use and operate the assets of the Company or which would prevent the
consummation of the transactions contemplated by this Agreement and (ii)
neither the Sellers nor the Company has been charged with any violation
of or, to the knowledge of either the Sellers or the Company, threatened
with a charge or violation of, nor is either of the Sellers or the
Company aware of any facts or circumstances that, if discovered by third
parties, could give rise to a charge or a violation of, any provision of
Applicable Law or regulation which charge or violation, if determined
adversely to either the Sellers or the Company, would materially
adversely affect the Business or the results of operations of the
Company or that might reasonably be expected to affect the right of
Buyer to own the Stock or operate the Company's Business after the
Closing Date in substantially the manner in which it is currently
operated. Neither the Company, nor any of its directors, officers,
employees or agents has, directly or indirectly, paid or delivered any
fee, commission or other sum of money or item of property however
characterized to any broker, finder, agent, governmental official or
other person, in any matter related to the Business of the Company which
the Company or any such director, officer, employee or agent knows or
has reason to believe to have been illegal under any Applicable Law.
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18
(j) Insurance.
(i) Schedule 3.1(j) hereto sets forth a list and brief
description of the insurance policies relating to the insurable
properties of the Company and the conduct of the Business of the
Company. All premiums due and arising thereon have been paid and
such policies are in full force and effect.
(ii) The Company maintains, with financially sound and
reputable insurers, insurance policies covering such perils and
in such amounts as are usually maintained with respect to
drilling rigs and equipment; and such workmen's compensation or
longshoremen's and harbor workers' insurance as shall be required
by applicable law, including endorsements for borrowed servant,
voluntary compensation and in rem claims;
(iii) Schedule 3.1(j) is a complete and accurate list of
all pending or outstanding insurance claims ("Outstanding
Insurance Claims") of the Company against the Company's insurance
companies and the amount, if any, of each Outstanding Insurance
Claim that is reflected in the Financial Statements as an account
receivable or other asset.
(k) Intellectual Property. Schedule 3.1(k) contains a
complete list of all of the Company's right, title or interest in or to
any Intellectual Property. Except as described on Schedule 3.1(k)
hereto, the Company owns and possesses all of the Intellectual Property
needed for the conduct of the Business as presently conducted. To the
best knowledge of the Sellers and the Company, there is no basis for the
assertion by any person of any claim against Buyer or the Company with
respect to the use by the Company or Buyer of any of the Intellectual
Property. Neither the Sellers nor the Company is infringing or
violating, and to the best knowledge of the Sellers and the Company,
neither the Sellers nor the Company have infringed or violated, any
rights of any person with respect to any of the Intellectual Property,
and the Intellectual Property is not subject to any order, injunction or
agreement respecting its use.
(l) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(l)
hereto, the Company has conducted the Business so as to comply with all
Applicable Laws, rights of concession, licenses, know-how or other
proprietary rights of others, the failure to comply with which would
individually or in the aggregate have a material adverse effect on the
Business, the Rigs or the results of operations of the Company.
(m) Certain Fees. None of the Company, its officers,
directors or employees or the Sellers, on behalf of the Company, has
employed any broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
(n) Environmental, Health and Safety Compliance. Except as
described on Schedule 3.1(n) hereto,
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19
(i) the Company is, and has continuously been,
in substantial compliance with all Environmental Laws;
(ii) all material notices, Permits, licenses or
similar authorizations, if any, required to be obtained or filed
under any Environmental Law in connection with the operation of
the Business have been obtained or filed;
(iii) there are no past, pending or threatened
investigations, proceedings or claims against the Company
relating to the presence, release or remediation of any Hazardous
Material or for non-compliance with any Environmental Law;
(iv) Hazardous Materials have not been treated,
stored or disposed of on, to or from any property relating in any
way to the Company or that is or was owned or leased by the
Company;
(v) none of the properties owned, leased or
operated by the Company have been used as landfill or waste
disposal sites or contain any underground storage tanks;
(vi) no conditions or circumstances are known to
the Company or the Sellers to exist or to have existed with
respect to the Company, including without limitation the off-site
disposal of Hazardous Materials, that could give rise to any
remedial action under, or impose any material liability on the
Company or Buyer with respect to any Environmental Law;
(vii) neither the Sellers nor the Company has
received any notice or claim, and none of them is aware of any
facts suggesting, that the Company is or may be liable to any
person in any material amount as a result of any Hazardous
Material generated, treated or stored at any real estate at any
time owned or leased by the Company or discharged, emitted,
released or transported from any real estate at any time owned or
leased by the Company or any other source in the conduct of the
Business of the Company;
(viii) no conditions or circumstances are known by
the Sellers or the Company to exist or to have existed, and no
activities are known by the Sellers or the Company to be
occurring or to have occurred, that are resulting or have
resulted in the exposure of any person or property to a Hazardous
Material such that the owner of the Real Estate or of the
Business may in the future be liable to such persons or to the
owners of such property for personal or other injuries or damages
resulting from such exposure; and
(ix) there are no federal or state air emission
credits or air or water discharge Permits related to the Real
Estate.
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20
For purposes of this Agreement, the term "Environmental Laws" shall
mean, as to any given asset or operation of the Company, all applicable
laws, statutes, ordinances, rules and regulations of any Governmental
Entity pertaining to protection of the environment in effect as of the
Closing Date. For purposes of this Agreement, the term "Hazardous
Material" shall mean any substance which is listed or defined as a
hazardous substance, hazardous constituent or solid waste pursuant to
any Environmental Law.
(o) Books and Records. All of the books and records of the
Company have been prepared and maintained in accordance with good
business practices and, where applicable, in conformity with GAAP and,
to the best of Company's and Sellers' knowledge, in compliance with all
Applicable Laws and other requirements.
(p) Taxes. The Company and the Sellers have caused to be
timely filed with appropriate federal, state, local, foreign, provincial
and other Governmental Entities all Tax Returns required to be filed
with respect to the Company or the conduct of the Business and have
paid, caused to be paid, or adequately reserved in the Financial
Statements all Taxes due or claimed to be due from or with respect to
such Tax Returns or which are or will become payable with respect to all
periods prior to Closing. Except as set forth on Schedule 3.1(p), no
extension of time has been requested or granted with respect to the
filing of any Tax Return or payment of any Taxes, and no issue has been
raised or adjustment proposed by the IRS or any other taxing authority
in connection with any of the Company's Tax Returns, and there are no
outstanding agreements or waivers that extend any statutory period of
limitations applicable to any federal, state, local, foreign, or
provincial Tax Returns that include or reflect the use and operation of
the Company or the conduct of the Business. Except as set forth on
Schedule 3.1(p), neither the Sellers nor the Company have received or
have knowledge of any notice of deficiency, assessment, audit,
investigation, or proposed deficiency, assessment or audit with respect
to the Company or the conduct of the Business from any taxing authority.
The Company has not taken action which is not in accordance with past
practice that could defer any liability for Taxes from any taxable
period ending on or before the Closing Date to any taxable period ending
after such date. The Company has not consented to the application of
Section 341(f) of the Code.
(q) Additional Information. Schedule 3.1(q) hereto contains
accurate lists and summary descriptions of the following:
(i) the name and address of every bank and other
financial institution at which the Company maintains an account
(whether checking, savings or otherwise), lock box or safe
deposit box for the Business, and the account numbers and names
of persons having signing authority or other access thereto;
(ii) the names and titles of and current hourly
rates and/or salaries for all employees of the Company, together
with the vacation and severance benefits to which each such
person is entitled; and
(iii) all names under which the Company has
conducted any business or otherwise used.
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21
(r) Labor Matters. The Company has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of
employees. The Company is not a party to any collective bargaining
agreement; no such agreement determines the terms and conditions of
employment of any employee of the Company; no collective bargaining
agent has been certified as a representative of any of the employees of
the Company; and no representation campaign or election is now in
progress with respect to any of the employees of the Company. Neither
the Sellers nor any officers of the Company has any knowledge that the
Company has taken or failed to take any action that would cause Buyer to
incur any liability in the event Buyer chooses to dismiss from its
employment any of the Company's employees following the Closing. The
Company has complied in all material respects with all laws relating to
the employment of labor in the conduct of the Business, including
provisions thereof relating to wages, hours, equal opportunity and the
payment of pension contributions, social security and other taxes.
(s) Employee Benefit Plans and Arrangements.
(i) Schedule 3.1(s) hereto lists all material
employee benefit plans and collective bargaining, labor and
employment agreements and severance agreements or other similar
arrangements, whether or not in writing (together with all
documents or instruments establishing or constituting any related
trust, annuity contract or other funding instrument) to which the
Company is (or within the last ten (10) years has been) a party
or by which the Company is (or within the last ten (10) years has
been) bound, including, without limitation, (1) any profit-
sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance,
or incentive compensation plan, agreement or arrangement, (2) any
welfare benefit plan, agreement or arrangement or any plan,
agreement or arrangement providing for "fringe benefits" or
perquisites to employees, officers, directors or agents,
including but not limited to benefits relating to automobiles,
clubs, vacation, child care, parenting or maternity leave,
sabbaticals, sick leave, medical expenses, dental expenses,
disability, accidental death or dismemberment, hospitalization,
life insurance and other types of insurance, (3) any employment
agreement, or (4) any other "employee benefit plan" (within the
meaning of Section 3(3) of ERISA).
(ii) The Sellers and the Company have delivered
to Buyer true, correct and complete copies of all material plan
documents and/or contracts (including, where applicable, any
documents and/or instruments establishing or constituting any
related trust, annuity contract or funding instrument) and
summary plan descriptions with respect to the plans, agreements
and arrangements listed in Schedule 3.1(s) hereto, or summary
descriptions of any such plans, agreements or arrangements not
otherwise in writing. The Sellers and the Company have provided
Buyer with true, correct and complete copies of the Form 5500
filed with respect to each plan identified in Schedule 3.1(s)
hereto that was required to file an annual report for the plan
year immediately preceding the Closing Date. Each of such Forms
5500 accurately reflects the financial status of the plan to
which it relates as of the dates specified therein. In addition,
the Sellers and the Company have
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22
provided Buyer with (a) true, correct and complete copies of any
and all written communications notices or claims that the Sellers
or the Company have received from the IRS, the Department of
Labor and/or the Pension Benefit Guaranty Corporation concerning
any plan, arrangement or agreement identified in Schedule 3.1(s)
hereto that give notice of possible imposition of a fine, penalty
or liability with respect to such plan, arrangement or agreement
and (b) true, correct and complete copies of any complaints,
petitions, claims or other notices of liability relating to any
such plan, arrangement or agreement that have been filed by any
other party.
(iii) For each of the plans, agreements and
arrangements identified in Schedule 3.1(s) hereto, there are no
negotiations, demands or proposals that are pending or have been
made since the dates of the respective items furnished pursuant
to Section 3.1(s)(ii) hereto which concern matters now covered,
or that would be covered, by plans, agreements or arrangements of
the type described in this Section.
(iv) The Company and each of the plans,
agreements and arrangements identified in Schedule 3.1(s) hereto
are in full compliance with the applicable provisions of the Code
and ERISA, the regulations and published authorities thereunder,
and all other laws applicable with respect to all such employee
benefit plans, agreements and arrangements. The Sellers and the
Company have performed all of their respective obligations under
all such plans, agreements and arrangements including, but not
limited to, the full payment when due of all amounts required to
be made as contributions thereto or otherwise. There are no
actions, suits or claims (other than routine claims for benefits)
pending or threatened against such plans or their assets, or
arising out of such plans, agreements or arrangements, and, to
the best knowledge of the Sellers and the Company, no facts exist
which could give rise to any such actions, suits or claims that
might have a material adverse effect on such plans, agreements or
arrangements.
(v) Except as specified in Schedule 3.1(s)
hereto, each of the plans, agreements or arrangements can be
terminated by the Company within a period of 30 days, without
payment of any additional compensation or amount or the
additional vesting or acceleration of any such benefits.
(vi) With respect to each plan identified in
Schedule 3.1(s) hereto which is an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or a "plan" (within
the meaning of Section 4975(e)(1) of the Code), no transaction
has occurred which is prohibited by Section 406 of ERISA or which
could give rise to a material liability under Section 4975 of the
Code or Sections 502(i) or 409 of ERISA.
(1) Qualified Plans. Except as
specifically identified in Schedule 3.1(s) hereto, the
Company has not now, or has not within the last ten (10)
years previously maintained, a stock bonus, pension or
profit-sharing plan which is or was intended to meet the
requirements of Section 401(a) of the Code.
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23
(2) Title IV Plans. Except as
specifically identified in Schedule 3.1(s) hereto, the
Company does not have, and has not at any time previously
maintained, a plan subject to Title IV of ERISA.
(3) Multiemployer Plans. No plan listed
in Schedule 3.1(s) hereto is or ever has been a
"multiemployer plan" (within the meaning of Section 3(37)
of ERISA).
(4) Welfare Benefit Plans. All group
health plans of the Company have been operated in
compliance with the group health plan continuation
coverage requirements of Sections 601 through 608 of ERISA
and 4980B of the Code to the extent such requirements are
applicable. Except to the extent required under Section
4980B of the Code, the Company does not provide health or
welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees.
(5) Fines and Penalties. There has been
no act or omission by the Company or the Sellers or any
ERISA affiliate that has given rise to or may give rise to
fines, penalties, taxes, or related charges under Sections
502 and 4071 of ERISA or Chapter 43 of the Code.
(vii) The Company at one time maintained a
"defined benefit plan". Such plan has been terminated in
accordance with ERISA and the Company has no further liability
under such plan.
(t) Transactions With Affiliates. No shareholder, director or
officer of the Company and no associate of any such shareholder,
director or officer is currently, directly, or indirectly, a party to
any transaction with the Company, including any agreement, arrangement
or understanding, written or oral, providing for the employment of,
furnishing of services by, rental of real or personal property from, or
otherwise requiring payment to any such shareholder, director, officer
or associate, except as disclosed on Schedule 3.1(t). No shareholder,
director or officer of the Company, and no associate of such
shareholder, director or officer owns, directly or indirectly, any
interest in, or serves as a director, officer, or employee of, any
customer, supplier or competitor of the Company. For the purposes of
this Section 3.1(t) only, an "associate" of any shareholder, director or
officer means a member of the immediate family of such shareholder,
director or officer or any corporation, partnership, trust or other
entity in which such shareholder, director, officer or employee has a
substantial ownership or beneficial interest or is a director, officer,
partner or trustee, or person holding a similar position.
(u) Investment Representations.
(i) Each Seller is acquiring the Grey Wolf Stock for
his own account for investment and not with a view to, or for sale or
other disposition in connection with, any distribution of all or any
part thereof, except pursuant to an applicable exemption under the
Securities Act. In acquiring the Grey Wolf Stock, each Seller is not
offering or selling, and
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24
will not offer or sell, for Grey Wolf in connection with any
distribution of the Grey Wolf Stock and each Seller does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable
federal and state securities laws.
(ii) Each Seller acknowledges that he or his
representatives have been furnished with substantially the same kind of
information regarding Grey Wolf and its business, assets, results of
operations and financial condition as would be contained in a
registration statement prepared in connection with a public sale of the
Grey Wolf Stock. Each Seller further represents that he has had an
opportunity to ask questions of and receive answers from Grey Wolf
regarding Buyer and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of the
Grey Wolf Stock. The foregoing, however, shall not limit or modify the
representations and warranties of Buyer in Section 3, shall not limit
the rights of a Seller prior to and in anticipation of any issuance of
the Grey Wolf Stock pursuant hereto, and shall not limit the disclosure
requirements of applicable federal and state securities laws.
(iii) Each Seller acknowledges that he is able to fend
for himself, can bear the economic risk of his investment in the Grey
Wolf Stock, and has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of an investment in the Grey Wolf Stock and is an "accredited investor"
as defined in Regulation D under the Securities Act.
(iv) Each Seller understands that the Grey Wolf Stock,
when issued to such Seller, will not have been registered pursuant to
the Securities Act or any applicable state securities laws, that the
Grey Wolf Stock will be characterized as "restricted securities" under
federal securities laws, and that under such laws and applicable
regulations the Grey Wolf Stock cannot be sold or otherwise disposed of
without registration under the Securities Act or an exemption therefrom.
In this connection, each Seller represents that he is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act. Stop transfer instructions may be issued accordingly to the
transfer agent for the Grey Wolf Stock.
(v) It is agreed and understood by each Seller that the
certificates representing the Grey Wolf Stock shall each conspicuously
set forth on the face or back thereof, in addition to any legends
required by Applicable Law or other agreement, a legend in substantially
the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND SAID
SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SHARES
ARE REGISTERED UNDER THE ACT OR THE CORPORATION SHALL HAVE
RECEIVED A WRITTEN OPINION OF COUNSEL SATISFACTORY TO IT THAT
SUCH SALE, ASSIGNMENT OR OTHER TRANSFER WILL NOT RESULT IN A
VIOLATION OF ANY APPLICABLE LAW OR
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REGULATION, STATE OR FEDERAL. TRANSFER OF THE SHARES IS
PROHIBITED OTHER THAN IN ACCORDANCE WITH REGULATIONS PROMULGATED
UNDER THE ACT.
(v) Disclosure. No representation or warranty in this Section
3.1 or in any Schedule or Exhibit to this Agreement, or in any written
statement, certificate or other document furnished to Buyer contains or
will contain any untrue statement of a material fact or omits or will
omit a material fact necessary to make the statements therein not
misleading. Except for facts generally affecting companies engaged in
land drilling business, there is no fact known to either the Sellers or
the Company that has, or in the future may have, a material adverse
effect on the Business or the results of operations of the Company,
which fact has not been set forth in this Agreement or in the Schedules
hereto.
(w) Foreign Corrupt Practices Act. To the knowledge of the
Sellers and the Company, there have been no violations of the Foreign
Corrupt Practices Act by the Company or any of its agents.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Sellers as follows:
(a) Due Organization; Good Standing and Power. Buyer and Grey
Wolf are corporations duly organized, validly existing and in good
standing under the laws of Texas. Buyer and Grey Wolf have all
corporate power and authority to enter into this Agreement (and each
other agreement expressly provided for herein) and to perform their
respective obligations hereunder and thereunder.
(b) Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Buyer and Grey Wolf and
the consummation by Buyer and Grey Wolf of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate
action on its part. No other corporate action is necessary for the
authorization, execution, delivery and performance by Buyer and Grey
Wolf of this Agreement and the consummation by Buyer and Grey Wolf of
the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by Buyer and Grey Wolf and constitute a
legal, valid and binding obligation of Buyer and Grey Wolf, enforceable
against Buyer and Grey Wolf in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and by general equity
principles.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as disclosed on Schedule 3.2(c), the execution,
delivery and performance of this Agreement by Buyer and Grey Wolf and
the consummation by it of the transactions contemplated hereby (i) will
not violate (with or without the giving of notice or the lapse of time
or both), or require any consent, approval, filing or notice under any
provision of any law, rule or regulation, court order, judgment or
decree applicable to Buyer and Grey Wolf, and (ii) will not conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of Buyer and
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Grey Wolf, under, the charter or bylaws of Buyer and Grey Wolf or any
indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which Buyer and Grey Wolf is
a party or by which Buyer or any of its assets or properties is bound.
(d) Certain Fees. None of Buyer, Grey Wolf nor any of their
respective officers, directors or employees, on behalf of it, has
employed any broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
(e) Authorization of Common Stock. The shares of Grey Wolf
stock, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable.
(f) SEC Filings. Grey Wolf has filed all reports,
registrations, and statements, together with any required amendments
thereto, with the SEC including, but not limited to, its quarterly
report on Form 10-Q for the fiscal quarter ended September 30, 1997 and
any filings required by applicable state securities authorities. All
such reports and statements filed, with any such regulatory authority or
body are collectively referred to in this Agreement as the "Reports." As
of their respective dates, the Reports filed comply with the respective
rules and regulations promulgated by the SEC and state securities
authorities and did not contain at the time filed, any untrue statement
of a material fact or any omission to state a material fact required to
be stated therein or necessary in order to make the statements in light
of the circumstances under which they were made clear and not
misleading.
4. Covenants; Actions Prior to Closing.
4.1 Access to Information. During the period beginning on the date
hereof and ending on the Closing Date, the Sellers and the Company will (a)
give or cause to be given to Buyer and its representatives such access, during
normal business hours, to the plant, properties, books and records of the
Company as Buyer shall from time to time reasonably request and (b) furnish or
cause to be furnished to Buyer such financial and operating data and other
information with respect to the Company as Buyer shall from time to time
reasonably request (the "Information"). Buyer and its representatives shall be
entitled, in consultation with the Sellers, to such access to the
representatives, officers and employees of the Company as Buyer may reasonably
request. The Sellers shall permit Buyer and its representatives to confirm, on
reasonable notice and on the basis of agreed methods, with the Company's
principal vendors, customers, and trade affiliates, that the acquisition by
Buyer of the Company will be acceptable to such vendors, customers, and trade
affiliates and that the acquisition will not adversely affect the relationship
of such vendors, customers and trade affiliates with the Business. The Sellers
and the Company agree that such access by Buyer and its representatives shall
include the right to perform a soil and groundwater analysis of the Real Estate
and to conduct such other environmental investigations of the Real Estate as
Buyer shall deem necessary or appropriate to determine on-site conditions and
the presence or absence of any Hazardous Materials. In connection with such
environmental investigations, the Sellers and the Company will provide to or
make available for inspection by Buyer and its representatives (i) all records
relating to the disposal of waste materials generated at the Real Estate; (ii)
all environmental Permits and records relating to compliance with such Permits;
(iii) all records of spills or other
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releases; (iv) all records relating to employee exposure to workplace
chemicals; (v) all environmental audits or assessments; (vi) all insurance
records relating to coverage for environmental incidents affecting the Real
Estate; (vii) all chemical inventories and reports of chemical emissions;
(viii) all correspondence relating to pending or threatened environmental
claims; and (ix) all records obtained from prior owners or operators of the
Real Estate relating to environmental conditions. The Sellers agree to
remediate any environmental problems discovered by the environmental
investigations and disclosed to Sellers before closing provided, however,
Sellers shall not be obligated to expend more than $100,000 for such
remediation. The Information will be used by Buyer and Grey Wolf solely for
the purpose of evaluating the acquisition of the Company, and will be kept
confidential by Buyer and Grey Wolf and their respective officers, directors,
employees, representatives, agents and advisors; provided that (i) any of such
Information may be disclosed to Buyer's or Grey Wolf's officers, directors,
employees, representatives, agents, and advisers who need to know such
Information for the purpose of evaluating the acquisition of the Company, (ii)
any disclosure of such Information may be made to which the Company consents in
writing and (iii) such Information may be disclosed if so required by law. Any
such Information may also be disclosed by Buyer and Grey Wolf to the extent
such Information is (x) now publicly known or hereafter becomes public
knowledge other than by any action of Buyer or Grey Wolf, (y) known by Buyer or
Grey Wolf at the time of disclosure by the Company independent of any
investigation by Buyer or Grey Wolf in connection with this transaction or (z)
hereinafter obtained by Buyer or Grey Wolf in a non-confidential manner from a
third party not under a confidentiality obligation to the Company. Upon any
termination of this Agreement pursuant to Section 6 hereof, Buyer and Grey Wolf
will return to the Company all material containing or reflecting the
Information and will not retain any copies, extracts, or other reproductions
thereof.
4.2 Inspection of Rigs. The Buyer shall have the right, at its sole
cost, risk, liability and expense, to inspect the Rigs at any time and from
time to time prior to the Closing Date, provided that such inspection shall be
conducted in a manner that does not unreasonably interfere with the operation
of the Rigs. Any such inspection may include the opening up of machinery and
equipment. The Company shall keep the Buyer advised of the location and
whereabouts of each Rig to facilitate such an inspection.
4.3 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Buyer, during the period commencing on the date hereof and ending on the
Closing Date, the Company will and the Sellers will cause the Company to:
(a) conduct the Business only in the usual, regular and
ordinary manner consistent with current practice and, to the extent
consistent with such operation, use its reasonable best efforts to keep
available the services of the present employees of the Company and
preserve the Company's present relationships with persons having
business dealings with the Company;
(b) maintain the Company's books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with past
practice, and comply in all material respects with all Applicable Laws
and other obligations of the Company;
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(c) not (i), except as provided in Section 4.10 hereof, sell,
lease or otherwise dispose of any of the assets of the Company other
than in the ordinary course of its business in accordance with past
practices, (ii) modify or change in any material respect any contract of
the Company, other than in the ordinary course of business or (iii)
agree, whether in writing or otherwise, to do any of the foregoing; and
(d) not (i) permit or allow any of the assets of the Company
to become subject to any liens or Encumbrances, (ii) waive any claims or
rights relating to the Business, except in the ordinary course of
business and consistent with past practice, (iii) grant any increase in
the compensation of any employees employed in the conduct of the
Business, except for reasonable increases in the ordinary course of
business and consistent with past practice or as required by contractual
arrangements existing on the date hereof, and reasonable payments in
normal sales compensation plans, including bonuses, (iv) enter into any
agreements giving rise to trade and barter obligations relating to the
assets of the Company, or (v) agree, whether in writing or otherwise, to
do any of the foregoing.
4.4 Further Actions. Subject to the terms and conditions hereof, the
Sellers, Company and Buyer will each use their reasonable best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using reasonable best
efforts: (i) to obtain prior to the Closing Date all licenses, Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities and parties to contracts with the Company as are necessary for the
consummation of the transactions contemplated hereby; (ii) to effect all
necessary registrations and filings; and (iii) to furnish to each other such
information and assistance as reasonably may be requested in connection with
the foregoing. Where the consent of any third party is required under the
terms of any of the Company's leases or contracts to the transactions
contemplated by this Agreement, the Sellers and the Company will use reasonable
best efforts to obtain such consent on terms and conditions not less favorable
than as in effect on the date hereof. The Sellers and Buyer shall cooperate
fully with each other to the extent reasonably required to obtain such
consents.
4.5 Notification. The Sellers and the Company shall promptly notify
Buyer in writing and keep it advised as to (i) any litigation or administrative
proceeding filed or pending against the Company or, to their knowledge,
threatened against any of them, including any such litigation or administrative
proceeding that challenges the transactions contemplated hereby; (ii) any
material damage or destruction of any of the assets of the Company; (iii) any
material adverse change in the results of operations of the Company; and (iv)
any variance from the representations and warranties contained in Section 3.1
hereof or of any failure or inability on the part of the Sellers or the Company
to comply with any of their respective covenants contained in this Section 4.
4.6 No Inconsistent Action. Subject to Sections 6.1 and 6.2 hereof,
no party hereto shall take any action inconsistent with its obligations under
this Agreement or which could materially hinder or delay the consummation of
the transactions contemplated by this Agreement.
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4.7 Xxxx-Xxxxx-Xxxxxx Act. Buyer and Sellers will file the
Notification and Report Forms and related material that they are required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, will use their reasonable
efforts to obtain an early termination of the applicable waiting period, and
will make any further filings pursuant thereto that may be necessary, proper,
or advisable, provided, however, that the reasonable efforts of Buyer shall not
include (a) proffering Buyer's willingness to accept an order providing for the
divestiture of such of the properties, assets, operations, or business of the
Company (or, in lieu thereof, such properties, assets, operations, or business
of Buyer or any of Buyer's affiliates) as are necessary to permit the
consummation of the transactions contemplated by this Agreement, including an
offer to hold separate such properties, assets, operations or businesses
pending any such divestiture, (b) proffering Buyer's willingness to accept any
other conditions, restrictions, limitations or agreements affecting the full
rights of ownership of the Company's assets (or any portion thereof) as may be
necessary to permit the consummation of the transactions contemplated by this
Agreement, or (c) entering into or continuing any litigation relating to this
Agreement or the transactions contemplated hereby.
4.8 Acquisition Proposals. Neither the Sellers nor the Company, nor
any affiliate, director, officer, employee or representative of any of them,
shall, directly or indirectly (i) solicit, initiate or knowingly encourage any
Acquisition Proposal or (ii) engage in discussions or negotiations with any
person that is considering making or has made an Acquisition Proposal. Sellers
and the Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any persons conducted heretofore
with respect to any Acquisition Proposal and shall promptly request each such
person who has heretofore entered into a confidentiality agreement in
connection with Acquisition Proposal to return to Sellers and the Company all
confidential information hereto furnished to such person by or on behalf of any
Seller or the Company. The term "Acquisition Proposal," as used herein, means
any offer or proposal for or any indication of interest in, a merger or other
business combination involving the Company or any of its affiliates, or the
acquisition of an equity interest in or substantial portion of the assets of,
the Company or affiliate of the Company, other than the transactions
contemplated by this Agreement.
4.9 Public Announcements. Except as may be required by Applicable
Law or the American Stock Exchange, neither Buyer, on the one hand, nor Sellers
and the Company, on the other, shall issue any press release or otherwise make
any public statements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party.
4.10 Distribution of Assets. Company shall distribute or dispose of
the Assets described in Schedule 4.10 on or prior to the Closing Date and the
Sellers shall indemnify and hold Company and Buyer harmless from and against
all obligations and liabilities related to such assets.
4.11 Office Lease. The Sellers shall either provide a release of the
Company's current office lease or shall indemnify the Company and the Buyer
from any liability associated with the office lease.
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5. Conditions Precedent.
5.1 Conditions Precedent to Obligations of All Parties. The
respective obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by each party) at or prior to the Closing Date of each of the following
conditions:
(a) No Governmental Action. No action of any private party or
Governmental Entity shall have been taken or threatened and no statute,
rule, regulation or executive order shall have been proposed,
promulgated or enacted by any Governmental Entity which seeks to
restrain, enjoin or otherwise prohibit or to obtain damages or other
relief in connection with this Agreement or the transactions
contemplated hereby.
(b) Termination under Xxxx-Xxxxx-Xxxxxx Act. The termination
or early termination of the applicable waiting period under the HSR Act
shall have occurred.
(c) Establishment of Trust. The Employee Trust shall have
been established in accordance with Section 2.4 hereof.
5.2 Conditions Precedent to Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the satisfaction (or waiver by Buyer)
at or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Sellers and the Company contained
herein or in any certificate or document delivered to Buyer pursuant
hereto shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date, except as contemplated or permitted by this Agreement.
(b) Performance of Agreements. The Sellers and the Company
shall have, in all material respects, performed all obligations and
agreements, and complied with all covenants and conditions, contained in
this Agreement to be performed or complied with by them prior to or at
the Closing Date.
(c) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
counsel for Buyer, and such counsel shall have been furnished with such
certified copies of such corporate actions and proceedings and such
other instruments and documents as it shall have reasonably requested.
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(d) Title. On the Closing Date, Buyer shall be satisfied in
its reasonable discretion as to the Sellers' ownership of the Stock,
free and clear of all liens, easements, claims, charges and
Encumbrances.
(e) Licenses and Consents. All licenses, Permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities (including, without limitation, any air and water discharge
permits required by the United States Environmental Protection Agency)
which are reasonably necessary to enable Buyer to own the Stock and
assets of the Company and conduct the Business after the Closing in
substantially the same manner as the assets of the Company are owned and
the Business is being conducted as of the date hereof shall be in full
force and effect. All consents of the lenders to Grey Wolf or the Buyer
necessary to consummate this transaction shall have been obtained and
shall be in full force and effect.
(f) Environmental Matters. Buyer shall have obtained one or
more Environmental Assessments and shall not have discovered any events,
occurrences or conditions at or affecting the Company's Real Estate or
the Business, other than as described on Schedule 3.1(n) hereto, which
in the aggregate could reasonably be expected to cause the Company to
incur expenses in excess of $100,000 for remediation of existing
environmental conditions or for past exposure on-site or off-site of any
person or property to any Hazardous Materials. For purposes of this
Section 5.2(f), an "Environmental Assessment" is an environmental report
or reports on the Company's Real Estate by an environmental engineering
firm or firms selected by Buyer.
(g) Opinion of Counsel to Sellers and the Company. Xxxx, Xxxx
& Xxxx, L.L.P., counsel for the Sellers and the Company, shall have
furnished to Buyer its written opinion, dated the Closing Date,
substantially in the form attached as Exhibit 2.
(h) Operation. The Business shall have been operated and
maintained substantially in the manner in which it has been operated and
maintained previously in the ordinary course of business and the Company
shall not enter into or renew any material agreements or other
commitments extending a substantial term beyond the Closing Date or take
any action which is not in the ordinary course of business, except for
the transactions otherwise contemplated herein, without the prior
written approval of Buyer.
(i) Material Adverse Change. There shall have been no
material adverse change in the Business from the date of this Agreement
until the Closing Date.
(j) Facts or Omissions. Buyer shall not have discovered any
fact or omission materially adverse to the condition, results of
operations or prospects of the Company.
(k) Audit. Buyer shall have reviewed (i) the Rigs and
equipment of the Company and, in its sole discretion, found such
equipment to be in good and usable condition and to have been reflected
on the books of the Company in accordance with GAAP and (ii) the
accounts receivable of the Company, net of any reserves, and, in its
sole discretion, found such receivables to be good and collectible.
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(l) Financial Report. Buyer shall have received a report from
KPMG Peat Marwick in form and substance satisfactory to Buyer with
respect to the Net Financial Assets of the Company.
(m) Redemption of Preferred Stock. The Company shall have
redeemed all of its outstanding preferred stock at its par value.
(n) Conveyance of Real Estate. The Sellers shall have caused
the owners of approximately 9 acre tract of land to convey such land to
the Company by a deed in the form attached hereto as Exhibit 3. On or
before the Closing Date, Seller shall execute and deliver to Purchaser
an instrument of conveyance satisfactory to Seller's counsel and
Purchaser's counsel and the Title Company, conveying the Real Estate
together with all of the improvements located thereon, and all rights,
ways, servitudes and advantages thereunto belonging or in anywise
appertaining, duly executed and acknowledged and in proper form for
recording, subject only to the Permitted Exceptions. Seller shall also
deliver to Purchaser all other documents in its possession pertaining to
the Real Estate, including without limitation all surveys of the Real
Estate, all plans, specifications, engineering and environmental reports
and audits with respect to the Real Estate and the improvements located
thereon; all certificates of occupancy, other certificates, permits,
licenses, variances and zoning documentation with respect to the Real
Estate and the operation thereof; and all sewer, water and utility
reservations with respect to the Real Estate.
On the Closing Date, Seller, at Seller's sole expense, shall
cause United General Title Insurance Company ("Title Company") to issue
a title commitment ("Commitment") committing to issue an owner's title
policy ("Title Policy") to Purchaser in the amount of the Purchase Price
allocated to the Real Estate insuring that Purchaser owns fee simple
title to the Real Estate, subject to no exceptions other than (i) the
Permitted Exceptions; and (ii) the restrictive covenant exception, with
respect to which the notation "None of Record" (except for any Permitted
Exceptions) shall be entered; and (iii) the standard printed exception
as to taxes which shall have inserted the year of closing and be
followed by the words: "Not yet due and payable". Seller shall also
execute and deliver any Seller's/Owners affidavit and indemnity required
by the Title Company to delete the standard exceptions. The Commitment
shall specify all easements, servitudes, liens, encumbrances,
restrictions, conditions or covenants with respect to the Real Estate,
and shall also deliver to Purchaser copies of all documents referred to
as exceptions to title in the Commitment. The "Permitted Exceptions"
shall be those exceptions to title and contained on the Commitment which
are acceptable to Purchaser. The Commitment shall also contain a
commitment to issue the following endorsements to the Title Policy, if
applicable to the Real Estate: Encroachment endorsement; Contiguity
endorsement; Land the same as survey endorsement; zoning endorsement;
REM endorsement; Environmental Lien endorsement; and a specific access
endorsement.
(o) Termination of Shareholders Agreement. The Shareholders
Agreement shall have been terminated by all parties to such agreement in
form and substance satisfactory to Buyer.
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(p) Resignation of Directors and Officers. The Company shall
have delivered to Buyer the resignations of all officers and directors
of the Company.
5.3 Conditions Precedent to the Obligations of the Sellers. The
obligations of the Sellers under this Agreement are subject to the satisfaction
(or waiver by the Sellers) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Sellers pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date, except as contemplated or permitted by
this Agreement.
(b) Performance of Agreements. Buyer shall have performed all
obligations and agreements, and complied with all covenants and
conditions contained in this Agreement to be performed or complied with
by it prior to or at the Closing Date.
(c) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
counsel for the Sellers, and such counsel shall have been furnished with
such certified copies of such corporate actions and proceedings and such
other instruments and documents as it shall have reasonably requested.
(d) Opinion of Counsel to Buyer. Gardere Xxxxx Xxxxxx & Xxxxx,
L.L.P., counsel for Buyer, shall have furnished to Sellers its written
opinion, dated the Closing Date, substantially in the form attached as
Exhibit 4.
5.4 Knowledge. In the event either party has, on or before the
Closing Date, actual knowledge of a breach of a representation, warranty or
covenant by the other party, the party having such knowledge shall have as its
sole remedy for such breach, the right to terminate this Agreement.
6. Termination.
6.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned (a) by mutual written consent of Buyer and
the Sellers, or (b) by any party by notice to the other parties in the event
that the Closing Date shall not have occurred on or before February 28, 1998;
provided, however, that if the Closing Date shall not have occurred on or
before such date due to a breach of this Agreement by one of the parties or an
affiliate of such party, that party may not terminate this Agreement.
6.2 No Liabilities in Event of Termination. Except as set forth in
Section 6.3 below, in the event of any termination of this Agreement as
provided above, this Agreement shall forthwith become wholly void and of no
further force or effect, except that the provisions of Sections 4.9, 8.6, 9.1,
9.11 and 9.12 hereof shall remain in full force and effect, and provided that
nothing
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contained herein shall release any party from liability hereinafter provided in
this paragraph for any failure to comply with any provision, covenant or
agreement contained herein.
6.3 Failure to Close. On the date of this Agreement, Buyer has
delivered $2,500,000 to Texas Commerce Bank National Association, as Escrow
Agent (the "Escrow Agent"), on the terms and conditions set forth in the Escrow
Agreement attached hereto as Exhibit E (the "Escrow Agreement"). The
$2,500,000 plus any interest earned thereon, less any fees and expenses of the
Escrow Agent (the "Escrow Fund") shall serve as a non-refundable deposit and
liquidated damages to secure the performance of Buyer's obligations hereunder.
Buyer acknowledges that in agreeing to negotiate this Agreement, the Sellers
have foregone the opportunity to negotiate with other potential purchasers of
the Stock. Therefore, the Buyer and the Sellers agree that if there is a
failure to close the acquisition of the Stock, the Sellers shall be entitled to
retain the Escrow Fund as a commitment fee and liquidated damages and not as a
penalty, unless, (a) the Closing does not occur as a result of a condition in
Sections 5.1 or 5.2 not being satisfied through no fault of Buyer or (b) the
Agreement is terminated through mutual agreement of Buyer and the Sellers. The
Escrow Fund shall be the Sellers' SOLE and EXCLUSIVE remedy for a breach of the
Buyer's obligations under this Agreement, and Buyer shall have no other
liability to the Sellers or under this Agreement or otherwise.
7. Covenants; Action Subsequent to Closing.
7.1 Sellers' Covenants Not to Compete. In order to allow Buyer to
realize the full benefit of its bargain in connection with the purchase of the
Stock and the payment by Buyer of $30,000 to each of them at Closing, Xxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx and Xxxxxxx X. Xxxxxx, III will not at any
time for a period of three years following the Closing Date, directly or
indirectly, acting alone or as a member of a partnership or as a holder of in
excess of 5% of any security of any class, or as a consultant to or
representative of, any corporation or other business entity,
(a) engage in any business in competition with the Business as
conducted by the Company, at the date hereof in those geographic areas
in which such Business is conducted or has been conducted within five
years prior to the Closing Date; or
(b) request any present or future customer or supplier of the
Company or of the Business as conducted by Buyer to curtail or cancel
its business with the Company or the Buyer; or
(c) unless otherwise required by law, disclose to any person,
firm or corporation any details of organization or business affairs of
the Company or the Business, any names of past or present customers of
the Company or any other non-public information concerning the Business
or the Company; or
(d) induce or attempt to influence any employee of Buyer or
the Company assigned to the conduct of the Business to terminate his or
her employment.
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Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and Xxxxxxx X. Xxxxxx, III acknowledge
that in the event the scope of the covenants set forth in this Section 7.1 is
deemed to be too broad in any court proceeding, the court may reduce such scope
to that which it deems reasonable under the circumstances. The parties hereto
agree and acknowledge that Buyer would not have any adequate remedy at law for
the breach or threatened breach by Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and
Xxxxxxx X. Xxxxxx, III or of the covenants and agreements set forth in this
Section 7.1 and, accordingly, Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and
Xxxxxxx X. Xxxxxx, III further agree that Buyer may, in addition to the other
remedies which may be available to it hereunder, file suit in equity to enjoin
Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and Xxxxxxx X. Xxxxxx, III from such
breach or threatened breach and consent to the issuance of injunctive relief
hereunder. Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and Xxxxxxx X. Xxxxxx, III
understand and agree that the act of Buyer in entering into this Agreement, and
Buyer's covenants and payments hereunder, the redemption of Xxxxxxx X. Xxxxxx
III's Preferred Stock shall and do constitute sufficient consideration for Xxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxx Xxxxxx, and Xxxxxxx X. Xxxxxx, III to agree not to
compete against Buyer as set out in this Section 7.1.
7.2 Use of Names. After the Closing Date, the Sellers each agrees
that neither they, nor any of their affiliates shall use the names, trademarks,
slogans, trade names, logos or labels of the Company; provided, however,
Sellers may use the "Murco" logo and name so long as they are not used in
connection with any business similar to the Business.
7.3 Registration Rights. After the Closing, Sellers will be accorded
the following registration rights with respect to the Grey Wolf Stock to be
issued hereunder:
(a) Within five days following the Closing Date, Grey Wolf
shall (i) prepare and file with the Commission a registration statement
on Form S-3 (the "Shelf Registration Statement") covering the shares of
Grey Wolf Stock issued to the Sellers pursuant to the Stock Purchase
Agreement (and references in this Section 7.3 to "Grey Wolf Stock" shall
be deemed to include any shares of Grey Wolf Stock or other securities
received by the Sellers on account of any stock split, stock dividend or
merger of Grey Wolf) for the nonunderwritten offering and sale by the
Sellers of the such Grey Wolf Stock on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, and (ii) use its best
efforts to cause the Shelf Registration Statement to become effective as
soon as possible after the filing thereof so as to permit the secondary
resale of such Grey Wolf Stock by the Sellers or any of them.
(b) Notwithstanding the provisions of the foregoing paragraph
(a), if the Board of Directors of Grey Wolf determines in good faith,
that the secondary offer and resale of the Grey Wolf Stock by the
Sellers as contemplated by the foregoing paragraph (a), would materially
and adversely affect a pending or proposed public offering of securities
of Grey Wolf, an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction relating to Grey Wolf or
negotiations, discussions or pending proposals with respect thereto or
require premature disclosure of information to the potential detriment
of Grey Wolf, then upon written notice of such determination to each of
the Sellers, Grey Wolf shall be entitled to require the suspension by
the Sellers of any distribution of the Grey Wolf Stock under the Shelf
Registration Statement for a period of time which, for purposes of this
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paragraph (b), shall not exceed 60 days nor 45 days after the
abandonment or consummation of the proposal or transaction. Such
written notice shall contain a general statement of the reasons for such
suspension. Grey Wolf shall promptly notify each of the Sellers of the
expiration or earlier termination of such suspension. Grey Wolf hereby
represents and warrants that, as of the date of this Agreement, Grey
Wolf has not entered into any transaction described in this Section
7.3(b) that will likely cause the suspension of any distribution of the
Grey Wolf Stock under the Shelf Registration Statement.
(c) Notwithstanding the provisions of paragraph (a), if Grey
Wolf shall file a registration statement with respect to an offering by
it through an underwriter or group of underwriters (an "Underwritten
Registration Statement") of Grey Wolf Stock or securities convertible
into or exchangeable or exercisable for Grey Wolf Stock, and the
managing underwriter or underwriters advise Grey Wolf that a sale or
distribution of the Grey Wolf Stock covered by the Shelf Registration
Statement would adversely affect such offering, then upon written notice
to each of the Sellers, the Sellers shall suspend the distribution of
any shares of the Grey Wolf Stock pursuant to the Shelf Registration
Statement during a period specified by or on behalf of such
underwriters, which period shall not be greater than 10 days prior to or
90 days following the effective date of such Underwritten Registration
Statement. The period following the effective date of such Underwritten
Registration Statement shall be subject to early termination by the
managing underwriter or underwriters. Grey Wolf hereby represents and
warrants that, as of the date of this Agreement, Grey Wolf has not filed
and does not presently intend to file an Underwritten Registration
Statement that will likely cause the suspension of any distribution of
the Grey Wolf Stock under the Shelf Registration Statement.
(d) If and when Grey Wolf is required by the provisions of
this Section 7.3 to use its reasonable efforts to effect the
registration of any Grey Wolf Stock under the Securities Act, Grey Wolf
will:
(i) as expeditiously as reasonably practicable,
prepare and file with the Commission a registration statement on
the appropriate form with respect to such Grey Wolf Stock and use
reasonable efforts to cause such registration statement to become
effective and remain effective until the first anniversary of the
Closing Date or such shorter period of time until the transfer or
sale of all Grey Wolf Stock so registered has been completed;
(ii) as expeditiously as reasonably practicable,
prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of such Grey Wolf Stock covered by such registration statement in
accordance with the intended method of distribution set forth in
such registration statement;
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(iii) as expeditiously as reasonably practicable,
furnish to each of the Sellers selling Grey Wolf Stock
registered, or to be registered under the Securities Act, such
number of copies of prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act, and such
other documents as such Seller may reasonably request, in order
to facilitate the public sale or other disposition of such Grey
Wolf Stock owned by such Seller; provided, however, that the
obligation of Grey Wolf to deliver copies of prospectuses or
preliminary prospectuses to such Sellers shall be subject to the
receipt by Grey Wolf of reasonable assurances from such Sellers
that they will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be
applicable in connection with any use by it of any prospectuses
or preliminary prospectuses;
(iv) as expeditiously as practicable, use its
reasonable efforts to register or qualify Grey Wolf Stock covered
by such registration statement under such other securities laws
of such United States jurisdictions as the Sellers making such
request shall reasonably request (considering the nature and size
of the offering) and do any and all other acts and things which
may be necessary or desirable to enable the Sellers making such
request to consummate the public sale or other disposition in
such jurisdictions of Grey Wolf Stock owned by such Sellers;
provided, however, that Grey Wolf shall not be required to
qualify to transact business as a foreign corporation in any
jurisdiction in which it would otherwise not be required to be so
qualified or to take any action which would subject it to general
service of process or to taxation in any jurisdiction in which it
is not then so subject; and
(v) bear all Registration Expenses (as defined
below) in connection with all registrations hereunder; provided,
however, that all Selling Expenses (as defined below) of Grey
Wolf Stock held by the Sellers and all fees and disbursements of
counsel for the Sellers in connection with each registration
pursuant to this Section 7.3 shall be borne by such Sellers pro
rata in proportion to the number of shares of Grey Wolf Stock
covered thereby being sold or in such proportion as they may
agree. All (A) registration and filing fees; (B) printing
expenses; (C) fees and disbursements of counsel for Grey Wolf;
(D) blue sky fees and expenses; and (E) fees and expenses of
accountants for Grey Wolf are herein referred to as "Registration
Expenses". All underwriting fees and discounts and brokerage and
selling commissions and fees and expenses of the counsel for the
Sellers and any underwriter's counsel applicable to the sales in
connection with any such registration are herein referred to as
"Selling Expenses".
(e) (i) To the extent permitted by law, Grey Wolf will
indemnify and hold harmless each Seller against any losses,
claims, damages, liabilities or expenses, joint or several, to
which any such person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out
of or are based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration
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Statement, or any post-effective amendment thereof, or any
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (B) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the Shelf
Registration Statement and not corrected in the final prospectus,
or contained in the final prospectus (as amended or supplemented,
if Grey Wolf shall have filed with the Commission any amendment
thereof or supplement thereto), or any omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading; and will reimburse any such person for any legal or
other expenses reasonably incurred by such person in connection
with investigating or defending any such loss, claim, damage,
liability or expense; provided, however, that the indemnity
agreement contained in this Section 7.3(e)(i) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the
consent of Grey Wolf (which consent shall not be unreasonably
withheld); and provided further that Grey Wolf shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (1)
any such untrue statement or omission or alleged untrue statement
or omission which has been made in the Shelf Registration
Statement, preliminary prospectus, prospectus or amendment or
supplement or omitted therefrom in reliance upon and in
conformity with information furnished in writing to Grey Wolf by
the Sellers specifically for use in the preparation thereof, and
(2) the fact that the Sellers sold the Grey Wolf Stock to a
person to whom there was not sent or given, at or before written
confirmation of such sale, a copy of the prospectus (excluding
documents incorporated by reference), or of the prospectus as
then amended or supplemented (excluding documents incorporated by
reference) if Grey Wolf has previously furnished copies thereof
to the Sellers in compliance with the Agreement and the loss,
claim, damage, liability or expense of the Sellers results from
an untrue statement of material fact contained in such
preliminary prospectus which was corrected in the prospectus (or
the prospectus as amended or supplemented).
(ii) To the extent permitted by law, each Seller will
indemnify and hold harmless Grey Wolf, each of its directors,
each of its officers who has signed the registration statement,
each person, if any, who controls Grey Wolf within the meaning of
Section 15 of the Securities Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which Grey
Wolf or any such person may become subject under the Securities
Act or otherwise, and will reimburse Grey Wolf or any such person
for any legal or other expenses reasonably incurred by Grey Wolf
or such person in connection with investigating or defending any
such loss, claim, damage, liability or expense, but only insofar
as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon (A)
any untrue statement or omission or alleged untrue statement or
omission of a material fact referred to in clause (A) or (B) of
Section 7.3(e)(i) hereof, in each case to the extent (and only to
the extent) that such untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in
conformity with information furnished in writing by or on behalf
of Sellers specifically for use
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in connection with such registration; (B) any violation by
Sellers of any federal, state or common law rule or regulation
applicable to Sellers and relating to action of or inaction by
Sellers in connection with such registration, and (C), with
respect to any preliminary prospectus, the fact that Sellers sold
Grey Wolf Stock to a person to whom there was not sent or given,
at or before written confirmation of such sale, a copy of the
prospectus (excluding the documents incorporated by reference) or
of the prospectus as then amended or supplemented (excluding
documents incorporated by reference) if Grey Wolf has previously
furnished copies thereof to Sellers in compliance with this
Agreement and the loss, claim, damage, liability or expense of
Grey Wolf or such person result from an untrue statement or
omission of a material fact contained in such preliminary
prospectus which was corrected in the prospectus (or the
prospectus as amended or supplemented); provided, however, that
the indemnity agreement contained in this Section 7.3(e)(ii)
shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is
effected without the consent of the Sellers, which consent shall
not be unreasonably withheld.
(iii) Promptly after receipt by an indemnified party
under this Section 7.3(e) of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
an indemnifying pay under this Section 7.3(e), notify the
indemnifying party in writing of the commencement thereof;
provided, however, that the failure to so notify the indemnifying
party shall not relieve the indemnifying party from any liability
hereunder except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. The
indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, to assume the
defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding.
(iv) If the indemnification provided for in this Section
7.3(e) from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party
and the indemnified parties, the relative fault of the
indemnifying party and indemnified parties in connection with the
actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material
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fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7.3(e)(iii)
hereof, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7.3(e)(iv) were
determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to in this paragraph. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(f) If Rule 144 or Rule 145 as promulgated under the
Securities Act or any successor or similar rule or statute shall permit
the sale by a Seller at any time over a period of 90 consecutive days of
all the shares of Grey Wolf Stock received by the Sellers in compliance
with the provisions thereof, then the rights of the Sellers as to
registration provided for in this Section 7.3 with respect to all of
that Seller's Grey Wolf Stock shall terminate immediately.
(g) The Registration Rights granted pursuant to this Section
7.3 and the obligations of Sellers related thereto may be assigned by
any Seller to any assignee or transferee of all or any part of such
Seller's Grey Wolf Stock; provided, however, that (i) any such assignee
or transferee is a direct descendant of such Seller or is an entity
wholly-owned by Seller and/or any direct descendants of Seller, (ii) any
such assignment or transfer occurs on or before the date the Shelf
Registration Statement is filed with the Commission, and (iii) any such
assignment or transfer does not violate any provision of the Securities
Act.
7.4 Access to Books and Records. After the Closing Date, Sellers
shall have access to the books and records of the Company as they existed prior
to the Closing Date for tax purposes, accounting purposes, verification of the
Purchase Price adjustment calculations, and any other necessary purposes;
provided however, access shall be granted only after reasonable notice and
during business hours.
8. Indemnification.
8.1 Indemnification by the Sellers. Subject to the provisions of
this Section 8, the Sellers, jointly and severally, (without any right of
contribution from the Company) shall protect, indemnify and hold harmless
Buyer, each officer, director and agent of Buyer and each person who controls
Buyer in respect of any losses, claims, damages, liabilities, deficiencies,
delinquencies, defaults, assessments, fees, penalties or related costs or
expenses, including, but not limited to, court costs and attorneys', and
accountants' fees and disbursements, and any federal, state or local income or
franchise taxes payable in respect of the receipt of cash or money in discharge
of the foregoing, but reduced by any net amount paid to Buyer on account of
such loss by any insurance policies (collectively referred to herein as
"Damages") to which Buyer may become subject if such Damages
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arise out of or are based upon (a) the breach of any of the environmental
representations and warranties (whether such breach occurred as of the date of
execution of this Agreement or as of the Closing Date) made by the Sellers or
the Company in Section 3.1(n) of this Agreement, including the Exhibits and
Schedules hereto, or in any certificate or instrument delivered by or on behalf
of the Sellers or the Company pursuant to Section 3.1(n) of this Agreement, and
(b) the breach of any of the other representations and warranties (whether such
breach occurred as of the date of execution of this Agreement or as of the
Closing Date), covenants or agreements made by the Sellers or the Company in
this Agreement, including the Exhibits and Schedules hereto, or in any
certificate or instrument delivered by or on behalf of the Sellers or the
Company pursuant to this Agreement. Notwithstanding the foregoing, Sellers
shall not be obligated to indemnify Buyer for any Damages pursuant to this
Section 8.1 that arise out of or are based upon the breach of the environmental
representations and warranties made by Sellers or the Company in Section 3.1(n)
of this Agreement with respect to any part of the Real Estate.
8.2 Indemnification by Buyer. Subject to the provisions of this
Section 8, Buyer shall protect, indemnify and hold harmless the Sellers, in
respect of any Damages to which the Sellers may become subject if such Damages
arise out of or are based upon the breach of any of the representations,
warranties, covenants or agreements made by Buyer in this Agreement, including
the Exhibits and Schedules hereto, or in any certificate delivered by or on
behalf of Buyer pursuant to this Agreement.
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8.3 Monetary Limit on Indemnification Liability. Notwithstanding any
other provisions to the contrary in this Agreement, the liability under Section
8.1(a) of a Seller shall be limited to (a) $5,000,000, multiplied by (b) a
fraction, the numerator of which shall be his or her respective share of the
Purchase Price as shown on Exhibit 1 and the denominator of which shall be the
Purchase Price. Notwithstanding any other provisions to the contrary in this
Agreement, the liability under Section 8.1(b) of a Seller shall be limited to a
percentage of the total of Damages equal to his or her respective percentage of
the Purchase Price as shown on Exhibit 1 hereto. The Sellers shall not have
any obligation to indemnify the Buyer from and against any Damages until the
Buyer has suffered Damages by reason of all such breaches (or alleged breaches)
in excess of a $325,000 aggregate threshold, at which point the Sellers will be
obligated to indemnify the Buyer from and against all such Damages relating
back to the first dollar.
8.4 Indemnification Procedures. The obligations and liabilities of
each indemnifying party hereunder with respect to claims resulting from the
assertion of liability by the other party or third parties shall be subject to
the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to a
claim for indemnification (a "Claim") against Buyer or the Sellers (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against
the entirety (subject to any limitations contained in Section 8) of any
Damages the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of or caused by the Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Claim and
fulfill its indemnification obligations hereunder, (iii) the Claim
involves only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with
respect to, the Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense
of the Claim actively and diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Claim without the prior written
consent of the Indemnifying Party (not
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to be withheld unreasonably), and (iii) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b) above
is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Party will remain responsible for any
damages the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Claim to the fullest
extent provided in this Section 8.
8.5 Time Limits on Liability. Anything contained in this Agreement
to the contrary notwithstanding, the indemnity liability of any party for
indemnity shall only extend to matters for which a bona fide claim has been
asserted by written notice of such claim delivered to the Indemnifying Party on
or before two (2) years from the Closing Date except for (i) breaches of
representations with respect to title to the Shares, authority and finders fees
which will survive indefinitely, (ii) breaches of representations with respect
to taxes and ERISA which will survive for statutory limitation periods, and
(iii) breaches of the representations and warranties with respect to
environmental matters contained in Section 3.1(n) which shall survive for five
years.
8.6 Seller Representative. The Sellers hereby appoint Xxxxxx X.
Xxxxxx as their representative (the "Seller Representative"), who shall have
full power and authority to make all decisions relating to the Statement
provided in Section 2.3 and the defense and/or settlement of any claims for
which the Sellers may be required to so indemnify the Buyer (and vice versa)
and to take such other actions (and any other actions reasonably related or
ancillary thereto) provided herein to be taken by the Seller Representative.
If the Seller Representative shall die, become totally incapacitated or resign
from such position, the remaining Sellers shall select another member from
among the selling group (or their heirs, executors, administrators or personal
representatives) to fill such vacancy. All decisions and actions by the Seller
Representative, including, without limitation, any agreement between the Seller
Representative and the Buyer relating to the determination of Net Financial
Assets, the defense or settlement of any claims for which the Sellers may be
required to so indemnify Buyer, any amendment to this Agreement or any other
action provided herein to be taken by the Seller Representative, shall be
binding upon all of the Sellers, and no Seller shall have the right to object,
dissent, protest or otherwise contest the same. By their execution of this
Agreement, the Sellers shall be deemed to have agreed that (i) the provisions
of this Section 8.6 are independent and severable, are irrevocable and coupled
with an interest and shall be enforceable notwithstanding any rights or
remedies that any Seller may have in connection with the transactions
contemplated by this Agreement, (ii) the remedy at law for any breach of the
provisions of this Section 8.6 would be inadequate, (iii) the Buyer shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving damages if it brings an action to enforce the provisions of this
Section 8.6, (iv) the provisions of this Section 8.6 shall be binding upon the
heirs, executors, administrators, personal representatives and successors of
each Seller and (v) any references in this Agreement to a Seller or Sellers
shall mean and include the successors to the Sellers' rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and
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distribution or otherwise. All fees and expenses incurred by the Seller
Representative shall be paid by the Sellers.
9. Miscellaneous.
9.1 Payment of Certain Fees and Expenses.
Each of the parties hereto shall pay the fees and expenses incurred by
it in connection with the negotiation, preparation, execution and performance
of this Agreement, including, without limitation, brokers' fees, attorneys'
fees and accountants' fees; provided, however, that Sellers shall be
responsible for all such fees and expenses incurred by the Company.
Buyer shall be responsible for the payment of filing fees under the HSR
Act.
9.2 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed,
first class mail, postage prepaid, return receipt requested, or sent by
telecopier, as follows:
(a) If to the Company:
Murco Drilling Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxx, Xx.
Pugh, Pugh & Pugh, L.L.P.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
(b) If to Buyer:
Grey Wolf Drilling Company
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Telecopier No.: (000) 000-0000
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with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(c) If to a Seller, to the address shown on his or her
signature page.
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
9.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
9.4 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, personal representatives,
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
9.5 Assignability. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer without the
prior written consent of the Sellers; provided, however, that Buyer shall be
entitled to assign this Agreement to an affiliate without the consent of
Sellers.
9.6 Amendment; Waiver. This Agreement may be amended, supplemented
or otherwise modified only by a written instrument executed by the parties
hereto. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and executed by the party so
waiving or his or her personal representative under Section 8.6. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
9.7 Limitation on Interest. Regardless of any provision contained
herein or any other document executed in connection with this Agreement, the
parties hereto shall not be obliged to pay, and the parties hereto shall never
be entitled to charge, reserve, receive, collect or apply, as interest (it
being understood that interest shall be calculated as the aggregate of all
charges that are contracted for, charged, reserved, received, collected,
applied or paid which constitute interest under Applicable Law) payable
hereunder any amount in excess of the maximum nonusurious contract rate of
interest
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allowed from time to time by Applicable Law, and in the event any of the
parties hereto ever charges, reserves, receives, collects or applies, as
interest, any such excess, at the option of the payor of such interest, such
amount shall be deemed a partial prepayment of the amount payable hereunder or
promptly refunded to the payor of such interest.
9.8 Section Headings; Index. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.9 Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.11 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Texas.
9.12 Dispute Resolution. Any dispute, difference or question
("Dispute") between Buyer and the Sellers ("Disputing Parties"), shall be
resolved in accordance with the following dispute resolution procedures:
(a) Good Faith Negotiations. The Disputing Parties shall
endeavor, in good faith, to resolve the Dispute through negotiations.
If the Parties fail to resolve the Dispute within a reasonable time,
each Party shall nominate a senior officer or officers of its management
to meet at any mutually agreed location to resolve the Dispute.
(b) Mediation. In the event that the negotiations do not
result in a mutually acceptable resolution, either Disputing Party may
require that the Dispute shall be referred to mediation in Houston,
Texas. One mediator shall be appointed by the agreement of the Parties.
The mediator shall be suitably qualified person having no direct or
personal interest in the outcome of the Dispute. Mediation shall be
held within thirty (30) days of referral to mediation. In the event the
Disputing Parties are unable to agree on a mediator, the Parties agree
to the appointment of a mediator pursuant to the Commercial Mediation
Rules of the American Arbitration Association.
(c) Arbitration. In the event the Parties are unsuccessful in
their mediation of the Dispute, or if there is any Dispute about the
scope of or the compliance by any Party with the provisions of Section
9.12, either Disputing Party may request that the Dispute be settled by
arbitration by an arbitrator mutually acceptable to the Disputing
Parties in an arbitration proceeding conducted in the City of Houston,
Texas in accordance with the rules existing at the date hereof of the
American Arbitration Association. If the Disputing Parties hereto
cannot agree on an arbitrator within ten (10) business days of the
initiation of the arbitration proceeding, an arbitrator shall be
selected for the Disputing Parties by the American Arbitration
Association. The Disputing Parties shall use their reasonable best
efforts to have
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the arbitral proceeding concluded and a judgment rendered by the
arbitrator within forty (40) business days of the initiation of the
arbitration proceeding. The decision of such arbitrator shall be final,
and judgment upon the award rendered by the arbitration may be entered
in any court having jurisdiction thereof, and the costs (including,
without limitation, reasonable fees and expenses of counsel and experts
for the Disputing Parties) of such arbitration (including the costs to
enforce or preserve the rights awarded in the arbitration) shall be
borne by the Disputing Party whom the decision of the arbitrator is
against. If the decision of the arbitrator is not clearly against one
of the disputing Parties or the decision of the arbitrator is against
more than one Disputing Party on one or more issues, the costs of such
arbitration shall be borne equally by the Disputing Parties.
Notwithstanding the foregoing, Buyer may apply to any court of competent
jurisdiction for injunctive relief under Sections 7.1 or 8.6 without
breach of this Section 9.12 and this Section 9.12 shall be of no force
and effect with respect to such applicant for injunctive relief only.
10. Definitions.
10.1 Defined Terms. As used in this Agreement, each of the following
terms has the meaning given it below:
"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
person.
"Applicable Law" means any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect on the Closing Date.
"Commission" means the Securities and Exchange Commission.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition or otherwise), licenses,
sublicenses, easements and other encumbrances of every type and
description, whether imposed by law, agreement, understanding or
otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" means generally accepted accounting principles as in
effect on the date of this Agreement.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality (domestic or foreign).
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00
"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Intellectual Property" means patents, trademarks, service marks,
trade names, copyrights, trade secrets, know-how, inventions, and
similar rights, and all registrations, applications, licenses and rights
with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from Governmental Entities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Entity.
"reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Rigs" means those drilling rigs described in Exhibit 5.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation more than 30 percent of whose
outstanding voting securities, or any partnership, joint venture, or
other entity more than 30 percent of whose total equity interests is
owned, directly or indirectly, by the Company.
"Taxes" means any income taxes or similar assessments or any
sales, value-added excise, occupation, use, ad valorem, property,
production, severance, transportation, employment, payroll, franchise,
import or custom duties or taxes or other tax imposed by any United
States federal, state or local (or any foreign or provincial) taxing
authority, including any interest, penalties or additions attributable
thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United
States.
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10.2 Certain Additional Defined Terms. In addition to such
terms as are defined in Section 10.1, the following terms are used in
this Agreement as defined in the Sections of this Agreement referenced
opposite such terms:
Defined Terms Reference
------- ----- ---------
Accounting Arbitrator Section 2.3(d)
Accounts Receivable Section 3.1(h)
Acquisition Proposal Section 4.8
Agreement Preamble
Appraiser Section 2.3(f)
Audited Financial Statements Section 3.1(d)
Average Price Section 2.2(b)
Business Recital 1
Buyer Preamble
Cash Amount Section 2.2(a)
Claim Section 8.4(a)
Closing Section 2.1
Closing Date Section 2.1
Commitment Section 5.2(n)
Company Preamble
Damages Section 8.1
Determination Date Section 2.3(c)
Dispute Section 9.12
Disputing Parties Section 9.12
Employee Trust Section 2.4
Environmental Assessment Section 5.2(f)
Environmental Laws Section 3.1(n)
Escrow Agreement Section 6.3
Escrow Funds Section 6.3
Financial Statements Section 3.1(d)
Grey Wolf Preamble
Grey Wolf Stock Section 2.2(b)
Hazardous Material Section 3.1(n)
Indemnified Party Section 8.4(a)
Indemnifying Party Section 8.4(a)
Information Section 4.1
Latest Balance Sheet Section 3.1(d)
Murco Employees Section 2.4
Net Financial Assets Section 2.3(a)
Outstanding Insurance Claims Section 3.1(j)
Plan Section 2.4
Preliminary Statement Section 2.3(a)
Purchase Price Section 2.2
Real Estate Section 3.1(f)
Registration Expenses Section 7.3(d)(v)
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Seller Representative Section 8.6
Sellers Preamble
Selling Expenses Section 7.3(d)(v)
Shareholders Agreement Section 3.1(c)
Shelf Registration Statement Section 7.3(a)
Statement Section 2.3(a)
Stock Recital 1
Stock Amount Section 2.2(b)
Title Commitment Section 5.2(n)
Title Company Section 5.2(n)
Trust Agreement Section 2.4
Trust Establishment Date Section 2.4
Trustee Section 2.4
Unaudited Financial Statements Section 3.1(d)
Underwritten Registration Statement Section 7.3(c)
10.3 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes" and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit or Annex to
this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
MURCO DRILLING CORPORATION
By: /s/ XXXXXX XXXXX XXXXXX
-----------------------
Xxxxxx Xxxxx Xxxxxx,
President
GREY WOLF DRILLING COMPANY
By: /s/ XXXXXX X. XXXXXXXX
-----------------------
Xxxxxx X. Xxxxxxxx,
President and Chief
Executive Officer
GREY WOLF INC.
By: /s/ XXXXXX X. XXXXXXXX
-----------------------
Xxxxxx X. Xxxxxxxx,
President and Chief
Executive Officer
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52
COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
XXXX XXXXX XXXXXX
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated December 30, 1997 among Grey Wolf Inc., Grey Wolf
Drilling Company, Murco Drilling Corporation and others.
/s/ XXXX XXXXX XXXXXX
-----------------------
XXXX XXXXX XXXXXX
Date: as of December 30, 1997
Address:
------------------------------
------------------------------
------------------------------
Accepted and Agreed:
GREY WOLF DRILLING COMPANY
By: /s/ XXXXXX X. XXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
GREY WOLF INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
53
COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
XXXXXX XXXXX XXXXXX
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated December 30, 1997 among Grey Wolf Inc., Grey Wolf
Drilling Company, Murco Drilling Corporation and others.
/s/ XXXXXX XXXXX XXXXXX
------------------------------
XXXXXX XXXXX XXXXXX
Date: as of December 30, 1997
Address:
------------------------------
------------------------------
------------------------------
Accepted and Agreed:
GREY WOLF DRILLING COMPANY
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
GREY WOLF INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
54
COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
XXXXX XXXXX XXXXXX XXXXXXX
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated December 30, 1997 among Grey Wolf Inc., Grey Wolf
Drilling Company, Murco Drilling Corporation and others.
/s/ XXXXX XXXXX XXXXXX XXXXXXX
------------------------------
XXXXX XXXXX XXXXXX XXXXXXX
Date: as of December 30, 1997
Address:
------------------------------
------------------------------
------------------------------
Accepted and Agreed:
GREY WOLF DRILLING COMPANY
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
GREY WOLF INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
55
COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
XXXXXXX X. XXXXXX III
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated December 30, 1997 among Grey Wolf Inc., Grey Wolf
Drilling Company, Murco Drilling Corporation and others, for the purpose of
agreeing to the provisions of Sections 7.1 and 5.2(m).
/s/ XXXXXXX X. XXXXXX III
------------------------------
XXXXXXX X. XXXXXX III
Date: as of December 30, 1997
Address:
------------------------------
------------------------------
------------------------------
Accepted and Agreed:
GREY WOLF DRILLING COMPANY
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
GREY WOLF INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
