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25,000,000 SHARES
GREY WOLF, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
October ____, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. XXXXX INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
HOWARD, WEIL, LABOUISSE, XXXXXXXXXX INCORPORATED
XXXXXXX RICE & COMPANY L.L.C.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Grey Wolf, Inc., a Texas corporation ("Company")
proposes to issue and sell 12,500,000 shares of its Common Stock, par value
$0.10 per share ("Securities"), and the shareholders listed in Schedule A hereto
("Selling Shareholders") propose severally to sell an aggregate of 12,500,000
outstanding shares of the Securities (such 25,000,000 shares of Securities being
hereinafter referred to as the "Firm Securities"). The Company also proposes to
sell to the Underwriters, at the option of the Underwriters, an aggregate of not
more than 1,875,000 additional shares of its Securities, and certain of the
Selling Shareholders also propose to sell to the Underwriters, at the option of
the Underwriters, an aggregate of not more than 1,875,000 additional outstanding
shares of the Company's Securities, as set forth below (such 3,750,000
additional shares being hereinafter referred to as the "Optional Securities").
The Firm Securities and the Optional Securities are herein collectively called
the "Offered Securities." The Company and the Selling Shareholders hereby agree
with the several Underwriters named in Schedule B hereto ("Underwriters") as
follows:
2. Representations and Warranties of the Company and the Selling
Shareholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement on form S-3 (No. 333-36593) relating
to the Offered Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission") and
either (A) has been declared effective under the Securities Act of
1933, as amended ("Act"), and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If
such registration statement (the "initial registration statement") has
been declared effective, either (A) an additional registration
statement (the "additional registration statement") relating to the
Offered Securities has been filed with the Commission pursuant to Rule
462(b) ("Rule 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
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registration statement and, if applicable, the additional registration
statement or (B) such an additional registration statement is proposed
to be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend it,
and if any post-effective amendment to either such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent amendment (if any) to each
such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c)
("Rule 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement or,
if filed prior to the execution and delivery of this Agreement, the
additional registration statement means (A) if the Company has advised
the Representative that it does not propose to amend such registration
statement, the date and time as of which such registration statement,
or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representative that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared effective by
the Commission. If an additional registration statement has not been
filed prior to the execution and delivery of this Agreement but the
Company has advised the Representative that it proposes to file one,
"Effective Time" with respect to such additional registration statement
means the date and time as of which such registration statement is
filed and becomes effective pursuant to Rule 462(b). "Effective Date"
with respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its
Effective Time including all material incorporated by reference
therein, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form
on which it is filed and including all information (if any) deemed to
be a part of the initial registration statement as of its Effective
Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial Registration Statement." The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if
any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to
as the "Additional Registration Statement." The Initial Registration
Statement and the Additional Registration are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement." The form of prospectus relating to the
Offered Securities, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no
such filing is required) as included in a Registration Statement,
including all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus." No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
("Rules and Regulations") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, (B)
on the Effective Date of the Additional Registration Statement (if
any), each Registration Statement conformed or will conform, in all
material respects to the requirements of the Act and the Rules and
Regulations and did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective
Time of the Additional Registration Statement is prior to the execution
and delivery of this Agreement, the Additional Registration Statement,
each conforms, and at the time of filing of the Prospectus pursuant to
Rule 424(b) or (if no such filing is required) at the Effective Date of
the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform
in all material respects to the requirements of the Act and the Rules
and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
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Agreement: on the Effective Date of the Initial Registration Statement,
the Initial Registration Statement and the Prospectus will conform in
all material respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they are made) not misleading, and no Additional
Registration Statement has been or will be filed. The two preceding
sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the Representative
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Texas, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the financial condition, results of operations or prospects
of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect").
(iv) Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus, and each subsidiary of the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
Material Adverse Effect.
All of the issued and outstanding capital stock of each subsidiary
of the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock of each subsidiary owned
by the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects except as may exist or arise under the
Company's Bank Credit Facility (defined in the Prospectus).
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and conform in all material
respects to the description thereof contained in the Prospectus; and
the shareholders of the Company have no preemptive rights with respect
to the Offered Securities.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the offer and sale of the Offered Securities
(vii) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require
the Company to include such securities in the securities registered
pursuant to a registration statement filed by the Company under the
Act, except where the failure to so include such securities in the
registration statement would not have a Material Adverse Effect or
adversely affect the consummation of the transactions contemplated by
this Agreement.
(viii) The Company's outstanding common stock is listed on the
American Stock Exchange and the Offered Securities have been approved
for listing on the AMEX, subject to official notice of issuance.
(ix) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the sale
of the Offered Securities, except such as have been obtained and made
under the Act and such as may be required under state securities laws.
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(x) The execution, delivery and performance of this Agreement, and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, or any agreement or instrument to
which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the
charter or by-laws of the Company or any such subsidiary, except, in
each such case, for such breaches, violations or defaults as would not
have a Material Adverse Effect.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus or as would not have a
Material Adverse Effect, the Company and its subsidiaries have good and
indefeasible title to all real properties and good and marketable title
to all other properties and assets owned by them, in each case free
from liens, encumbrances and defects; and except as disclosed in the
Prospectus, the Company and its subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
other than those that would not have a Material Adverse Effect.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them except where the failure to have obtained the same would not have
a Material Adverse Effect, and have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them with only such exception as would not have a
Material Adverse Effect, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the Company
nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and the Company is not aware
of any pending investigation which might lead to such a claim.
(xvii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of
its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are, to the Company's knowledge,
threatened or contemplated.
(xviii ) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the
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generally accepted accounting principles in the United States applied
on a consistent basis and the schedules included in each Registration
Statement present fairly the information required to be stated therein;
and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein,
the related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts.
(xix) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(xxi) Grey Wolf Drilling Company, DI International, Inc. and
INDRILLERS, L.L.C. are the Company's only subsidiaries with domestic
operations. Drillers International, C.A. and Drillers Inc., DI de
Venezuela, C.A. are the Company's only subsidiaries with foreign
operations.
(b) Each Selling Shareholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Shareholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Shareholder on such
Closing Date, except for such encumbrances as exist under this
Agreement and the Custody Agreement and Power of Attorney (defined
below) and full right, power and authority to enter into this Agreement
and to sell, assign, transfer and deliver the Offered Securities to be
delivered by such Selling Shareholder on such Closing Date hereunder;
and upon the delivery of and payment for the Offered Securities on each
Closing Date hereunder the several Underwriters will acquire valid and
unencumbered title to the Offered Securities to be delivered by such
Selling Shareholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of
the Act and the Rules and Regulations and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement conformed,
or will conform, in all respects to the requirements of the Act and the
Rules and Regulations did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective
Time of the Additional Registration Statement is prior to the execution
and delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant to
Rule 424(b) or (if no such filing is required) at the Effective Date of
the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform,
in all respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes, or will include,
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any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading. The two
preceding sentences apply only to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by such Selling Shareholder specifically for
use therein.
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Shareholder and any person that would give rise to a valid claim
against such Selling Shareholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
(iv)Except for such as may be required under the Act and state
securities or Blue Sky laws, all consents, approvals, authorizations
and orders necessary for the execution and delivery by such Selling
Shareholder of this Agreement, the Power of Attorney, the Custody
Agreement and the Lock-Up Agreement for the sale and delivery by such
Selling Shareholder of the Offered Securities to be sold by such
Selling Shareholder hereunder have been obtained; and such Selling
Shareholder has full corporate power and authority (if Selling
Shareholder is a corporation) or full right, power and capacity (if
such Selling Shareholder is a partnership) to execute and deliver this
Agreement, the Power of Attorney, the Custody Agreement and the Lock-Up
Agreement and perform such Selling Shareholder's obligations hereunder.
This Agreement, the Power of Attorney, the Custody Agreement and the
Lock-Up Agreement have been duly authorized (if such Selling
Shareholder is a corporation or a partnership), executed and delivered
by such Selling Shareholder and this Agreement, the Custody Agreement
and the Lock-Up Agreement constitute the valid and binding agreements
of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors'
rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(v) Such Selling Shareholder has duly and irrevocably executed and
delivered a Power of Attorney appointing Xxxxxx X. Xxxxxxxx, T. Xxxxx
X'Xxxxx and Xxxxx X. Xxxxxxxx as such Selling Shareholder's
Attorneys-in-Fact upon the terms and subject to the conditions set
forth therein to execute and deliver this Agreement and to take certain
other action on behalf of such Selling Shareholder as may be necessary
or desirable in connection with the transactions contemplated by this
Agreement and the Custody Agreement.
(vi)Each Selling Shareholder agrees to deliver to the
Attorneys-in-Fact such documentation as any Attorney-in-Fact, the
Company or any Underwriter or any of their respective counsel may
reasonably request to effectuate any of the provisions hereof, the
Custody Agreement or the Power of Attorney, all of the foregoing to be
in form and substance reasonably satisfactory to the Attorneys-in-Fact
and the Underwriters.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company and each Selling
Shareholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Shareholder, at a purchase price of $ per share, that number of
Firm Securities (rounded up or down, as determined by Credit Suisse First Boston
Corporation ("CSFBC") in its discretion, in order to avoid fractions) obtained
by multiplying Firm Securities in the case of the Company, and the number of
Firm Securities set forth opposite the name of such Selling Shareholder in
Schedule A hereto in the case of a Selling Shareholder, in each case by a
fraction the numerator of which is the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule B hereto and the denominator
of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Shareholders hereunder have been placed in custody, for delivery
under this Agreement, under Custody Agreements made with the Company, as
custodian ("Custodian"). Each Selling Shareholder agrees that the shares
represented by the certificates held in custody for the Selling Shareholders
under such Custody Agreements are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Shareholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be terminated by operation of law, whether by
the death of any individual Selling Shareholder or the occurrence of any other
event, or in the case of a trust, by the death of any trustee or trustees or the
termination of such trust. If any individual Selling Shareholder or any such
trustee or trustees should die, or if any other such event should occur, or if
any of such trusts should terminate, before the delivery of the Offered
Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of this
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Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Custodian shall have received notice of such
death or other event or termination.
The Company and the Custodian will deliver the Firm Securities against
payment of the purchase price in Federal (same day) funds by official bank check
or checks or wire transfer to an account or accounts at a bank or banks
acceptable to CSFBC, at the office of Xxxxxx & Xxxxxx, L.L.P., Houston, Texas,
at 9:00 A.M., Houston time, on [October ___ , 1997] or at such other time not
later than seven full business days thereafter as CSFBC and the Company
determine, such time being herein referred to as the "First Closing Date." The
Firm Securities shall be issued in book-entry form through the facilities of the
Depository Trust Company ("DTC"). The Company shall deposit the global
certificate representing the Firm Securities to be delivered by it with DTC or
its designated custodian at the Closing Date, and the Company will deliver such
global certificate to the several Underwriters by causing DTC to credit the Firm
Securities to the respective accounts of the Underwriters with DTC. The
certificates for the Firm Securities to be delivered by the Selling Shareholders
will be in definitive form, in such denominations and registered in such names
as CSFBC requests and will be made available for checking and packaging at the
office of CSFBC at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and
the Selling Shareholders from time to time not more than 30 days subsequent to
the date of the Prospectus, the Underwriters may purchase all or less than all
of the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Company and the Selling Shareholders agree, severally and
not jointly, to sell to the Underwriters the respective numbers of Optional
Securities obtained by multiplying the number of Optional Securities specified
in such notice by a fraction the numerator of which is ______ in the case of the
Company, and in the case of the Selling Shareholders, the number of shares set
forth opposite the names of such Selling Shareholders in Schedule A hereto under
the caption "Number of Optional Securities to be Sold" and the denominator of
which is the total number of Optional Securities (subject to adjustment by CSFBC
to eliminate fractions). Such Optional Securities shall be purchased from the
Company and each Selling Shareholder for the account of each Underwriter in the
same proportion as the number of Firm Securities set forth opposite such
Underwriter's name bears to the total number of Firm Securities (subject to
adjustment by CSFBC to eliminate fractions) and may be purchased by the
Underwriters only for the purpose of covering over-allotments made in connection
with the sale of the Firm Securities. No Optional Securities shall be sold or
delivered unless the Firm Securities previously have been, or simultaneously
are, sold and delivered. The right to purchase the Optional Securities or any
portion thereof may be exercised from time to time and to the extent not
previously exercised may be surrendered and terminated at any time upon notice
by CSFBC to the Company and the Selling Shareholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Custodian will deliver
the Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account or accounts at a bank acceptable to
CSFBC at the office of Xxxxxx & Xxxxxx, L.L.P., Houston, Texas. The Optional
Securities shall be issued in book-entry form through the facilities of the DTC.
The Company shall deposit the global certificate representing the Optional
Securities with DTC or its designated custodian at the Closing Date, and the
Company will deliver such global certificate to the several Underwriters by
causing DTC to credit the Optional Securities to the respective accounts of the
Underwriters with DTC. The certificates for the Optional Securities being
purchased on each Optional Closing Date will be in definitive form, in such
denominations and registered in such names as CSFBC requests upon reasonable
notice prior to such Optional Closing Date and will be made available for
checking and packaging at the office of CSFBC at a reasonable time in advance of
such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Shareholders. The
Company agrees with the several Underwriters and the Selling Shareholders that:
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(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance
with subparagraph (1) or (2) (as consented to by CSFBC) of Rule 424(b)
not later than the second business day following the execution and
delivery of this Agreement (or, if applicable and if consented to by
CSFBC, subparagraph (4) or (5)).
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a portion
of the Offered Securities under the Act but the Effective Time thereof
has not occurred as of such execution and delivery, the Company will
file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on or prior to the time
the Prospectus is printed and distributed to any Underwriter, or will
make such filing at such later date as shall have been consented to by
CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any)
or the Prospectus and will not effect such amendment or supplementation
without CSFBC's consent which shall not be unreasonably withheld; and
the Company will also advise CSFBC promptly of the effectiveness of
each Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of
the institution by the Commission of any stop order proceedings in
respect of a Registration Statement and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company will promptly notify CSFBC of such event and will promptly
prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent
to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section
6.
(d) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to
its securityholders an earnings statement covering a period of at least
12 months beginning after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (five of which will be signed and will include
all exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any Underwriter or
dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC requests. The
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial
Registration Statement. All other such documents shall be so furnished
as soon as available. The Company and the Selling Shareholders will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.
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(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year,
a copy of its annual report to shareholders for such year; and the
Company will furnish to the Representatives (i) as soon as available, a
copy of each report and any definitive proxy statement of the Company
filed with the Commission under the Securities Exchange Act of 1934 or
mailed to shareholders, and (ii) from time to time, such other
information concerning the Company as CSFBC may reasonably request;
provided, however, that the Company shall not be obligated to disclose
material, non-public information in response to any such request.
(h) For a period of 120 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or
securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except (1) issuances of Securities pursuant
to the conversion or exchange of convertible or exchangeable securities
or the exercise of warrants or options, in each case outstanding on the
date hereof, (2) grants of employee stock options pursuant to the terms
of a plan in effect on the date hereof and issuances of Securities
pursuant to the exercise of such options or issuances of Securities
pursuant to the Company's dividend reinvestment plan, or (3) pursuant
to registration statements filed with the Commission for the purpose of
registering the issuance and resale of Securities described in the
preceding clauses (1) and (2) or the secondary offering by selling
shareholders of additional shares of Securities.
(i) The Company and each Selling Shareholder agree with the
several Underwriters that the Company and such Selling Shareholder will
pay all expenses incident to the performance of the obligations of the
Company and such Selling Shareholder, as the case may be, under this
Agreement, for any filing fees and other expenses (including fees and
disbursements of counsel) in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates and the printing of memoranda relating thereto, for
the filing fee incident to, and the reasonable fees and disbursements
of counsel to the Underwriters in connection with, the review by the
National Association of Securities Dealers, Inc. of the Offered
Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the
Offered Securities, for any transfer taxes on the sale by the Selling
Shareholders of the Offered Securities to the Underwriters and for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
(ii) each Selling Shareholder agrees to deliver to CSFBC,
attention: Transactions Advisory Group, on or prior to the First
Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
(iii ) each Selling Shareholder agrees, for a period of 120 days
after the date of the initial public offering of the Offered
Securities, not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any additional shares of the
Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or
disposal, without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if
the Effective Time of the Initial Registration Statement is subsequent
to the execution and delivery of this Agreement, shall be prior to the
filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of KPMG
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Peat Marwick LLP for the year ended December 31, 1996 and of Deloitte &
Touche LLP for the years ended December 31, 1994 and 1995 confirming
that they are independent public accountants within the meaning of the
Act and the applicable published Rules and Regulations thereunder and
stating to the effect that:
(i) in their opinion the financial statements and
schedules and summary of earnings examined by them and
included in the Registration Statements comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
the Registration Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements and
summary of earnings included in the Registration
Statements do not comply as to form in all material
respects with the applicable accounting requirements
of the Act and the related published Rules and
Regulations or any material modifications should be
made to such unaudited financial statements and
summary of earnings for them to be in conformity with
generally accepted accounting principles;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net assets, any increase in consolidated
net current liability or any decrease in consolidated
net assets, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(C) for the period from the closing date of
the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year and with
the period of corresponding length ended the date of
the latest income statement gross income included in
the Prospectus, in consolidated operating revenues or
operating income in the total or per share amounts of
consolidated net income;
except in all cases set forth in clauses (iii)(B) and (C)
above for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "Registration Statements" shall mean the
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initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "Registration Statements"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, and (iii) "Prospectus" shall mean the prospectus
included in the Registration Statements. All financial statements and
schedules included in material incorporated by reference into the
Prospectus shall be deemed included in the Registration Statements for
purposes of this subsection.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or such later date as shall
have been consented to by CSFBC. If the Effective Time of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Shareholder, the Company
or the Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company or its subsidiaries which, in the judgment of a majority in
interest of the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii)
any downgrading in the rating of any debt securities of the Company by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating
of any debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company
on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by U.S. Federal or New York authorities; or (v) any
outbreak or escalation of major hostilities in which the United States
or is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Representative, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes
it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date ,of Xxxxxx & Xxxxxx, L.L.P., counsel for the Company,
to the effect set forth in Exhibit I.
(e) The Representatives shall have received the opinion
contemplated in the Power of Attorney executed and delivered by each
Selling Shareholder and an opinion, dated such Closing Date, from
counsel for each of the Selling Shareholders, to the effect that:
(i) Each Selling Shareholder had valid and
unencumbered title to the Offered Securities delivered by such
Selling Shareholder on such Closing Date and had full right,
power and authority to sell, assign, transfer and deliver the
Offered Securities delivered by such Selling Shareholder on
such Closing Date hereunder; and the several Underwriters have
acquired valid and unencumbered title to the Offered
Securities purchased by them from the Selling Shareholders on
such Closing Date hereunder;
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(ii) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required to be obtained or made by any Selling Shareholder
for the consummation of the transactions contemplated by the
Custody Agreement or this Agreement in connection with the
sale of the Offered Securities sold by the Selling
Shareholders, except such as have been obtained and made under
the Act and such as may be required under state securities
laws;
(iii) The execution, delivery and performance of the
Custody Agreement and this Agreement and the consummation of
the transactions therein and herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body
or any court having jurisdiction over any Selling Shareholder
or any of their properties or any agreement or instrument to
which any Selling Shareholder is a party or by which any
Selling Shareholder is bound or to which any of the properties
of any Selling Shareholder is subject, or the charter or
by-laws any Selling Shareholder which is a corporation;
(iv) The Power of Attorney and related Custody
Agreement with respect to each Selling Shareholder has been
duly authorized, executed and delivered by such Selling
Shareholder and constitute valid and legally binding
obligations of each such Selling Shareholder enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
and
(v) This Agreement has been duly authorized, executed
and delivered by each Selling Shareholder.
(f) The Representatives shall have received from Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., counsel for the Underwriters, such
opinion or opinions, dated such Closing Date, with respect to the
incorporation of the Company, the validity of the Offered Securities
delivered on such Closing Date, the Registration Statements, the
Prospectus and other related matters as the Representatives may
require, and the Selling Shareholders and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. may rely as to the
incorporation of the Company and all other matters governed by Texas
law upon the opinion of Xxxxxx & Xxxxxx, L.L.P. referred to above.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that: (i) the representations and warranties
of the Company in this Agreement are true and correct; (ii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing
Date; (iii) no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission;
(iv) the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee
in accordance with Rule 111(a) or (b) under the Act, prior to the time
the Prospectus was printed and distributed to any Underwriter; and (v)
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as
described in such certificate.
(h) The Representatives shall have received a letter, dated
such Closing Date, of KPMG Peat Marwick LLP and Deloitte & Touche LLP
which meets the requirements of subsection (a) of this Section, except
that the specified date referred to in such subsection will be a date
not more than three business days prior to such Closing Date for the
purposes of this subsection.
(i) The Representatives shall have received an opinion, dated
such Closing Date, of Venezuelan counsel to the Company substantially
in the form set forth in Exhibit II.
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The Selling Shareholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably requests. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, any amendment or supplement thereto, or any related preliminary
prospectus in light of the circumstances under which such statements were made)
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below; provided, however, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus that is corrected in the Prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the Offered
Securities to the extent that the fact that there was not sent or given to such
person, if required by law to have been sent or given, at or prior to written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company previously had furnished such quantities thereof
to such Underwriter as reasonably requested on behalf of such Underwriter.
(b) Each Selling Shareholder will severally, but not joint and
severally, indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that a Selling Shareholder will be liable in any
such case only to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Company by the
Selling Shareholder specifically for use therein; and provided, further, that
with respect to any untrue statement or alleged untrue statement in or omission
or alleged omission from any preliminary prospectus the indemnity agreement
contained in this subsection (b) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities, to the extent that a Prospectus
relating to such Offered Securities was required to be delivered by such
Underwriter under the Act in connection with such purchase and any such loss,
claim, damage or liability of such Underwriter results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Offered Securities to such person, a copy of the Prospectus
correcting such untrue statement or alleged untrue statement in or omission or
alleged omission from such preliminary Prospectus if the Company previously had
furnished such quantities thereof to such Underwriter as reasonably requested on
behalf of such Underwriter. Notwithstanding anything herein to the contrary, the
total liability of any Selling Shareholder under this Section 7 shall be limited
to an amount equal to the aggregate net sale price received by such Selling
Shareholder from the sale of such Selling Shareholder's Offered Securities
hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Shareholder against any losses, claims,
damages or liabilities to which the Company or such Selling Shareholder may
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become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and stabilizing on the
inside front cover page following under the caption "Underwriting": (i) the
table contained in the first paragraph, (ii) concession and reallowance figures
in the fourth paragraph and (iii) the fifth, sixth and last paragraphs.
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. An indemnifying
party shall be liable for a settlement of any action only if such settlement is
(i) effected with its written consent or (ii) effected in good faith without its
written consent if the settlement is entered into more than 30 days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request unless within 30 days after such reimbursement
request is received, the indemnifying party shall have made a good faith written
challenge to the reasonableness of the amount or nature of the reimbursement
requested or the sufficiency of the documentation supporting the reimbursement
requested (which challenge shall set forth the amount or nature of the requested
reimbursement which the indemnifying party in good faith believes to be
reasonable or the basis for the good faith claim as to the insufficiency of any
supporting documentation), in which event this clause (ii) shall apply only if,
and to the extent that, such indemnifying party shall not have reimbursed the
indemnified party for the amount which is not being so challenged. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Shareholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Shareholders bear to the total underwriting discounts
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and commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission (ii) no Selling
Shareholder shall be required to contribute any amount in excess of the amount
by which the aggregate net sale price received by such Selling Shareholder from
the sale of the Offered Securities hereunder exceeds the amount of any damages
or indemnification which such Selling Shareholder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint. The Selling
Shareholders' obligations under this subsection (e) to contribute are several
and not joint.
(f) The obligations of the Company and the Selling Shareholders under
this section shall be in addition to any liability which the Company and the
Selling Shareholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Shareholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Shareholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Shareholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Shareholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Shareholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5, and if any Offered Securities have been purchased hereunder the
15
16
representations and warranties in Section 2 and all obligations under Sections 5
and 7 shall also remain in effect. If the purchase of the Offered Securities by
the Underwriters is not consummated for any reason other than solely because of
the termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (iii), (iv) or (v) of Section 6(c), the Company and
the Selling Shareholders will, jointly and severally, reimburse the Underwriters
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representative, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Company or the
Selling Shareholders, will be mailed, delivered or telegraphed and confirmed to
it at 00000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: T.
Xxxxx X'Xxxxx; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. Xxxxxx X. Xxxxxxxx, T. Xxxxx
X'Xxxxx and Xxxxx X. Xxxxxxxx, as attorneys-in-fact, will act for the Selling
Shareholders in connection with such transactions, and any action under or in
respect of this Agreement taken by such persons will be binding upon all the
Selling Shareholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
15. Submission to Jurisdiction. The Company and each Selling
Shareholder hereby submits to the non-exclusive jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
16
17
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Shareholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
GREY WOLF, INC.
By:_________________________________
Title:______________________________
THE SELLING SHAREHOLDERS
NAMED IN SCHEDULE A HERETO
By:_________________________________
Title: Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. XXXXX INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
HOWARD, WEIL, LABOUISSE , XXXXXXXXXX INCORPORATED
XXXXXXX RICE & COMPANY L.L.C.
Acting on behalf of themselves and as the Representatives of the
several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By:______________________________________
Title:___________________________________
17
18
SCHEDULE A
NUMBER OF
NUMBER OF OPTIONAL
FIRM SECURITIES SECURITIES TO
SELLING SHAREHOLDER TO BE SOLD BE SOLD
------------------- --------------- -------------
Somerset Drilling Associates, L.L.C. 5,527,000 829,050
Norex Drilling Ltd. 2,759,000 413,850
U.S. Rig & Equipment, Inc. 633,000 94,950
Xxxxxxxx Family Properties, Ltd. 801,000 120,150
Xxx X. Xxxxxx 2,780,000 417,000
--------- -------
Total...................................... 12,500,000 1,875,000
========== =========
18
19
SCHEDULE B
NUMBER OF
FIRM SECURITIES
TO BE PURCHASED
---------------
Credit Suisse First Boston Corporation.....................
BT Alex. Xxxxx Incorporated................................
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation........
Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated...........
Xxxxxxx Rice & Company L.L.C............................... ___________
Total 25,000,000
===========
20
SCHEDULE C
SHAREHOLDERS SIGNING
LOCK-UP AGREEMENTS
Norex Industries, Inc.
Norex Drilling, Ltd.
Xxxx Xxxx
Somerset Drilling Associates, L.L.C.
Somerset Capital Partners
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxxx Energy Equipment Resources, Inc.
GCT Investments, Inc.
Xxx X. Xxxxxx, Xx.
U.S. Rig & Equipment, Inc.
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxxx Family Properties
Xxxxx Xxxxxx
Felicity Ventures
Xxxxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxxxx
Xxxxx X'Xxxxx
Xxxxxxx Xxxxxx
Xxxxxx XxXxxxx
Xxxx Xxx
Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx
21
EXHIBIT I TO UNDERWRITING AGREEMENT
October ___, 1997
Credit Suisse First Boston Corporation
BT Alex. Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated
Xxxxxxx Rice & Company L.L.C.
as Representatives of the Several Underwriters
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010
Gentlemen:
We have acted as counsel for Grey Wolf, Inc., a Texas corporation (the
"Company"), in connection with the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933, as amended (the "Act"), filed with the
Securities and Exchange Commission (the "Commission") relating to a public
offering of the Company's common stock, par value $.10 per share (the
"Securities"). This opinion is being delivered to you at the request of the
Company pursuant to Section 6(d) of the Underwriting Agreement dated October
____, 1997 (the "Underwriting Agreement") by and among the Company, the Selling
Shareholders, Credit Suisse First Boston Corporation, BT Alex. Xxxxx
Incorporated, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, Howard, Weil,
Labouisse, Xxxxxxxxxx Incorporated and Xxxxxxx Rice & Company L.L.C., as
representatives of the several underwriters (the "Underwriters"). Capitalized
terms used but not defined herein have the meanings assigned to them in the
Underwriting Agreement.
22
In this capacity, we have examined signed copies of (i) the
Registration Statement on Form S-3 filed by the Company with the Commission
under the Act on September 26, 1997 (File No. 333-36593); (ii) Amendment Number
1 to the Registration Statement filed with the Commission on October 6, 1997;
(iii) Amendment Number 2 to the Registration Statement filed with the Commission
on October ___, 1997; and (iv) the related prospectuses. The Registration
Statement as amended at the time it became effective is herein referred to as
the "Registration Statement," and the prospectus dated ______________1997, in
the form filed with the Commission pursuant to Rule 424(b) of the published
rules and regulations of the Commission under the Act is herein referred to as
the "Prospectus." We have also examined: the Underwriting Agreement; the
articles of incorporation and bylaws of the Company and each Domestic Subsidiary
(as defined herein); corporate minutes and resolutions of the Company as
presented to us; and such other agreements and instruments of the Company and
certificates of officers of the Company and each Domestic Subsidiary with
respect to factual matters and of public officials as we believe necessary or
appropriate in order to render the opinions expressed herein. In making our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents presented to us as originals, the conformity to original
documents of all documents presented to us as copies thereof, and the
authenticity of the original documents from which any such copies were made,
which assumptions we have not independently verified.
Based upon all of the foregoing, and subject to the qualifications and
assumptions noted below, we are of the opinion that:
(1) The Company and each Domestic Subsidiary has been duly
incorporated and is validly existing as a corporation and in
good standing under the laws of its state of incorporation and
has the corporate power and authority to carry on its business
as described in the Prospectus. The Company and each Domestic
Subsidiary is duly qualified and is in good standing as a
foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
(2) The Offered Securities and all other outstanding shares of
capital stock of the Company and each Domestic Subsidiary have
been duly authorized and validly issued and are fully paid,
and non-assessable. The Offered Securities conform in all
material respects to the description thereof incorporated by
reference into the Prospectus. The shareholders of the Company
have no preemptive rights under Texas law or, to the best of
our knowledge, similar rights with respect to the Offered
Securities. All of the capital stock of each Domestic
Subsidiary is owned of record (and to the best of our
knowledge, beneficially) by the Company, directly or through
wholly-owned subsidiaries. The issued and outstanding capital
stock of each Domestic Subsidiary is, to the best of our
knowledge, free and clear of any liens, encumbrances and
defects, except as may exist or arise under the Company's Bank
Credit Facility. INDRILLERS, L.L.C., a Michigan limited
liability company which is a partially-owned subsidiary in
23
which Grey Wolf Drilling Company (formerly named Drillers,
Inc.), has the relative management rights, member rights and
economic rights set forth in that certain INDRILLERS L.L.C.
Operating Agreement, a copy of which has been provided to your
counsel.
(3) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be
an "investment company" as defined in the Investment Company
Act of 1940, as amended.
(4) No consent, approval, authorization or order of or filing with
any United States federal or state court or governmental
agency or body is required in connection with the purchase and
distribution of the Offered Securities by the Underwriters,
except as (i) have been obtained under the Act, (ii) may be
required by the NASD, or (iii) may be required under the state
securities or Blue Sky laws of any jurisdiction in the United
States.
(5) The execution, delivery and performance of the Underwriting
Agreement and the Custody Agreement and the consummation of
the transactions contemplated therein by the Company do not
and will not conflict with or constitute a breach or violation
of any of the terms or provisions of, or a default under, the
articles of incorporation or bylaws of the Company or any
Domestic Subsidiary or, to the best of our knowledge, any
agreement, or instrument known to us that is material to the
Company and its respective subsidiaries, taken as a whole, to
which the Company or any Domestic Subsidiary is a party or by
which the Company, or any Domestic Subsidiary or their
respective property is bound, or violate or conflict with any
applicable judgment, order or decree of any United States
federal or state court, or any other domestic governmental
body or agency known to us to be applicable to the Company or
its subsidiaries.
(6) The Registration Statement has become effective under the Act,
and to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose are pending before or
contemplated by the Commission.
(7) The Registration Statement and the Prospectus and any
supplement or amendment thereto comply as to form in all
material respects with the Act, except for financial
statements and schedules and other financial or statistical
data contained or incorporated by reference therein as to
which we express no opinion.
(8) To the best of our knowledge, there are no legal or
governmental proceedings before any United States federal or
state court, or any other governmental body or agency that are
pending or threatened against the Company or any of its
subsidiaries that are required to be described in the
Registration Statement or the Prospectus and are not so
described. To the best of our knowledge, there are no
contracts or other documents that are required to be described
in the Registration Statement or Prospectus, to be filed as
24
exhibits to or incorporated by reference in the Registration
Statement that are not so described, filed or incorporated by
reference.
(9) The statements under the captions "Business--Regulation,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations--Certain Credit Arrangements,"
insofar as such statements constitute a summary of the legal
matters or documents referred to therein, fairly present the
information called for with respect to such legal matters and
documents in all material respects.
(10) The Underwriting Agreement has been duly authorized by all
necessary corporate action, executed and delivered by the
Company.
We note that, although certain portions of the Registration Statement
and the Prospectus (including financial statements and schedules, and related
data) have been included therein on the authority of "experts" within the
meaning of the Act, we are not "experts" within the meaning of the Act with
respect to any portion of the Registration Statement. However, we have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of the Company
and representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus were discussed and, although we are
not passing upon and do not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus (except to the extent stated in paragraph (9)) on the basis of the
foregoing (relying as to materiality to a large extent upon statements of
officers and other representatives of the Company), nothing has come to our
attention that has led us to believe that the Registration Statement at the time
it became effective contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as amended or
supplemented, if applicable, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
It is specifically understood that we express no opinion or belief
herein with respect to the financial statements and schedules and other
financial, or statistical data included in the Registration Statement and
Prospectus or any amendments or supplements thereto.
As used in this opinion, the words "to our knowledge", "known to us",
or words of similar import mean that, during the course of our representation of
the Company, no information has come to the attention of the attorneys of this
firm who have devoted substantive attention to the transactions described herein
which would give such attorneys actual knowledge that the opinions expressed are
factually incorrect. The term "Domestic Subsidiary" as used herein includes each
of Grey Wolf Drilling Company and DI International, Inc. Except as described
herein, we have not undertaken any independent factual investigation for the
purpose of rendering an opinion which is expressed to be to our knowledge.
25
Our opinions expressed herein are limited in all respects to the laws
of the state of Texas and the United States federal law insofar as it is
applicable. This opinion is being delivered to you for your sole use and benefit
in connection with the transaction above, and may not be relied upon by any
other person, except with our prior written consent.
Very truly yours,
XXXXXX & XXXXXX, L.L.P.
26
EXHIBIT II TO UNDERWRITING AGREEMENT
Credit Suisse First Boston Corporation
BT Alex. Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated
Xxxxxxx Rice & Company L.L.C.
as Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We have been retained as special counsel to Grey Wolf, Inc. (the
"Company") and its subsidiaries in connection with the public offering of the
Company's common stock, par value $0.10 per share (the "Securities"), as
described in that certain Underwriting Agreement dated October___, 1997 (the
"Underwriting Agreement") among the Company, the Selling Shareholders, Credit
Suisse First Boston Corporation, BT Alex. Xxxxx Incorporated, Xxxxxxxxx, Lufkin
& Xxxxxxxx Securities Corporation, Howard, Weil, Labouisse, Xxxxxxxxxx
Incorporated and Xxxxxxx Rice & Company L.L.C. Capitalized terms used herein
that are not otherwise defined herein shall have the meaning set forth in the
Underwriting Agreement.
For purposes of this opinion, we have made an examination of matters
of law as we have considered necessary in connection with the opinions
expressed herein. In rendering this opinion, we have reviewed and examined the
charters of Drillers International, C.A. and Drillers Inc., DI de Venezuela,
C.A. (together, the "Venezuelan Subsidiaries") and such other documents,
affidavits, corporate records or certificates or other statements of
government officials and officers of the Company and the Venezuelan
Subsidiaries and such other instruments as we have considered necessary or
appropriate.
27
Based upon and subject to the foregoing, we are the opinion that:
(i) each of the Venezuelan Subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of Venezuela
and has the corporate power and authority to carry on its business and to own,
lease and operate its properties;
(ii) each of the Venezuelan Subsidiaries is duly qualified and is in
good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its ownership or leasing of property
requires such qualification;
(iii) all the outstanding shares of capital stock of the Venezuelan
Subsidiaries have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights;
(iv) neither of the Venezuelan Subsidiaries is in violation of its
respective charter or bylaws and, to the best of such counsel's knowledge after
due inquiry, neither of the Venezuelan Subsidiaries is in default in the
performance of any obligations, agreement, covenant or condition contained in
any indenture, loan agreement, mortgage, lease or other agreement or instrument
to which the Venezuelan Subsidiaries are a party or by which the Venezuelan
Subsidiaries or their respective property are bound;
(v) after due inquiry, we do not know of any legal or governmental
proceedings pending or threatened to which the Venezuelan Subsidiaries is or
could be party or to which any of their respective property is or could be
subject;
(vi) each of the Venezuelan Subsidiaries has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits"), including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease and operate its respective properties and
to conduct its business and is in compliance with all terms and conditions
thereof; and no event has occurred which allows or, after notice or lapse of
time or both, would allow, revocation or termination of such permits or results
or, after notice or lapse of time or both, would result in any other impairment
of the rights of the holder of any such permit; and such permits contain no
restrictions that are burdensome to either of the Venezuelan Subsidiaries;
except where such failure to have, or comply with the terms or conditions of,
such permits, the occurrence of any such event or the presence of any such
restrictions would not, singly or in the aggregate, have a material adverse
effect on the business, prospects, financial condition or results of operations
of either of the Venezuelan Subsidiaries.
28
Subject to the same conditions qualifications, assumptions and other
limitations set forth herein, Xxxxxx & Xxxxxx, L.L.P. may rely on this opinion
with the same effect as if it had been addressed to them.
Sincerely,
ESCRITORIO SISO
Xxxx X. Xxxx
