EXHIBIT 10.1
$150,000,000
GREY WOLF, INC.
3.75% Contingent Convertible Senior Notes Due 2023
PURCHASE AGREEMENT
May 1, 2003
Deutsche Bank Securities Inc.
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Ladies and Gentlemen:
Grey Wolf, Inc., a Texas corporation (the "Company"), proposes, subject
to the terms and conditions contained herein, to issue and sell to you (the
"Initial Purchaser") $150,000,000 aggregate principal amount of its 3.75%
Contingent Convertible Senior Notes Due 2023 (the "Firm Securities"). The
Company also proposes to issue and sell to the Initial Purchaser at the Initial
Purchaser's option an additional $37,500,000 aggregate principal amount of its
3.75% Contingent Convertible Senior Notes Due 2023 (the "Option Securities" and,
together with the Firm Securities, the "Securities") as set forth below. The
Securities will initially be guaranteed (the "Guarantees") by each of the
subsidiaries of the Company listed on Schedule A (each, a "Guarantor" and
collectively the "Guarantors").
The Securities and the Guarantees are to be issued pursuant to the
terms of an Indenture (the "Indenture") among the Company, the Guarantors and
JPMorgan Chase Bank, a New York banking corporation, as trustee (the "Trustee").
The Securities are convertible into shares of common stock, $0.10 par value per
share (the "Common Stock"), of the Company together with the rights (the
"Rights") evidenced by such Common Stock to the extent provided in the Rights
Agreement (the "Rights Agreement"), dated as of September 21, 1998 between the
Company and American Stock Transfer & Trust Company, as Rights Agent. The Common
Stock and accompanying Rights into which the Securities may be convertible are
referred to herein as the "Underlying Securities."
The sale of the Securities and the Guarantees to the Initial Purchaser
will be made without registration under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance on exemptions from the registration
requirements of the Securities Act. The Initial Purchaser has advised the
Company that it will offer and sell the Securities and Guarantees purchased by
it hereunder (the "Offering") in accordance with Section 3 hereof as soon as it
deems advisable.
In connection with the Offering, the Company and the Guarantors will
prepare an offering memorandum (including Appendix A thereto and the information
incorporated by
reference therein, the "Offering Memorandum"). The Offering Memorandum sets
forth certain information regarding the Company, the Guarantors, the Securities,
the Guarantees and the Underlying Securities. Each of the Company and the
Guarantors hereby confirms that it has authorized the use of the Offering
Memorandum, and any amendment or supplement thereto, in connection with the
Offering by the Initial Purchaser. Unless stated to the contrary, all references
herein to the Offering Memorandum are to the Offering Memorandum and the
information incorporated by reference therein but are not meant to include any
amendment or supplement, or any information incorporated by reference therein
subsequent to the date thereof, and any references herein to the terms "amend,"
"amendment" or "supplement" with respect to the Offering Memorandum shall be
deemed to refer to and include any information filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), subsequent to the date of
the Offering Memorandum which is incorporated by reference therein.
For purposes of this Agreement, "the Company's knowledge" shall mean
the actual knowledge of any of the executive officers (as defined in Rule 405
under the Securities Act) of the Company and the Guarantors.
In connection with the Offering, the Company and the Guarantors also
propose to enter into a Registration Rights Agreement, to be dated as of the
Closing Date (as defined below), among the Company, the Guarantors and the
Initial Purchaser (the "Registration Rights Agreement"), for the benefit of the
Initial Purchaser and its direct and indirect transferees.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
GUARANTORS.
(a) Each of the Company and the Guarantors represents and
warrants to the Initial Purchaser as follows:
(i) the Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Texas, with the corporate power and
authority to own or lease its properties and conduct its
business as described in the Offering Memorandum except where
the failure to have such power or to be so authorized would
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; each of the Company's
subsidiaries has been duly organized and is validly existing
as a corporation or other entity in good standing under the
laws of the jurisdiction of its incorporation or formation,
with the corporate, partnership or company power and authority
to own or lease its properties and conduct its business as
described in the Offering Memorandum, except where the failure
to have such power or to be so authorized would not have a
material adverse effect on the Company and its subsidiaries,
taken as a whole; the Company and each of its subsidiaries are
duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such
qualification and in which the failure to be qualified would
have a material adverse effect upon the Company and its
subsidiaries,
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taken as a whole; the outstanding equity interests of each of
the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are
owned by the Company or one of the Company's subsidiaries free
and clear of all liens, encumbrances and equities and claims
other than those disclosed in the Offering Memorandum; and no
options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any
obligations into equity interests of the Company's
subsidiaries are outstanding;
(ii) the issuance and sale of the Securities have
been duly and validly authorized by all necessary corporate
action on the part of the Company and, when executed,
authenticated and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement and
the Indenture, the Securities will be valid and binding
obligations of the Company, enforceable in accordance with
their terms and will be entitled to the benefits of the
Indenture, subject to the effects of applicable bankruptcy,
insolvency and similar laws affecting creditors' rights
generally and equitable principles of general applicability;
(iii) the issuance and sale of the Guarantees have
been duly and validly authorized by all necessary corporate or
other entity action on the part of each Guarantor and, when
executed, authenticated and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this
Agreement and the Indenture, the Guarantees will be valid and
binding obligations of each Guarantor, enforceable in
accordance with their terms and will be entitled to the
benefits of the Indenture, subject to the effects of
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and equitable principles of
general applicability;
(iv) the execution and delivery of, and the
performance by the Company and each Guarantor of its
obligations under, the Indenture have been duly and validly
authorized by all necessary corporate or other action on the
part of the Company and each Guarantor and, when duly executed
and delivered by the Company, the Guarantors and the Trustee,
the Indenture will be a valid and binding agreement of the
Company and each Guarantor, enforceable against the Company
and each Guarantor in accordance with its terms, subject to
the effects of applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and equitable
principles of general applicability;
(v) the outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and
non-assessable; the shares of Common Stock to be issued upon
conversion of the Securities have been duly authorized and
reserved, and when issued upon conversion of the Securities
will be validly issued, fully paid and non-assessable; no
preemptive rights of stockholders exist with respect to any of
the shares of Common Stock to be issued upon conversion of the
Securities; the Rights have been duly authorized
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and, when and if issued upon conversion in accordance with the
terms of the Indenture and the Rights Agreement, will have
been validly issued;
(vi) the information set forth under the caption
"Capitalization" in the Offering Memorandum is true and
correct; all of the shares of Common Stock and the Rights
conform to the description thereof contained in the Offering
Memorandum; the form of certificate for the shares of Common
Stock conforms to the requirements of the Texas Business
Corporation Act;
(vii) except as described in or contemplated by
the Offering Memorandum, there are no outstanding securities
of the Company convertible or exchangeable into or evidencing
the right to purchase or subscribe for any shares of capital
stock of the Company and there are no outstanding or
authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital
stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares
of such stock;
(viii) all of the Underlying Securities issuable
upon conversion of the Securities will be duly accepted for
listing on The American Stock Exchange, subject to official
notice of issuance in timely compliance with the requirements
of The American Stock Exchange but in no event later than the
Closing Date;
(ix) each document filed, or to be filed prior to
the closing of the Offering, by the Company pursuant to the
Exchange Act and incorporated, or to be incorporated, by
reference in the Offering Memorandum (or any amendment or
supplement thereto) at the time filed with the Securities and
Exchange Commission (the "Commission") conformed, or will
conform, in all material respects with the Exchange Act and
the applicable rules and regulations thereunder; the Offering
Memorandum as of the date thereof did not, and any amendment
or supplement thereto do not contain, and will not contain,
any untrue statement of a material fact and do not omit, and
will not omit, any material fact necessary in order to make
the statements made, in the light of the circumstances under
which they were made, not misleading; provided, however, that
the Company makes no representation or warranty as to
statements or omissions made in the Offering Memorandum or any
amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company
by or on behalf of the Initial Purchaser specifically for use
therein;
(x) the consolidated financial statements of the
Company and its consolidated subsidiaries, together with the
related notes and schedules, incorporated by reference in the
Offering Memorandum, present fairly in all material respects
the financial position and the results of operations and cash
flows of the Company and its consolidated subsidiaries, at the
indicated dates and for the indicated periods; such financial
statements and related schedules have been prepared in
accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except
as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods
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have been made; the summary financial and statistical data of
the Company and its subsidiaries included or incorporated by
reference in the Offering Memorandum together with all other
information included or incorporated by reference in the
Offering Memorandum present fairly in all material respects
the information shown therein and such data has been compiled
on a basis consistent with the financial statements presented
therein and the books and records of the Company;
(xi) KPMG LLP, who has certified the financial
statements incorporated by reference in the Offering
Memorandum, is an independent public accountant as required by
the Securities Act and the applicable rules and regulations
thereunder;
(xii) except as set forth in the Offering
Memorandum, there is no action, suit, claim or proceeding
pending or, to the Company's knowledge, threatened against the
Company or any of its subsidiaries before any court or
administrative agency or otherwise which, if determined
adversely to the Company or any of its subsidiaries, could
reasonably be expected to result in any material adverse
change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and its subsidiaries, taken as a
whole, or prevent the consummation of the transactions
contemplated hereby or in the Indenture, the Securities, the
Guarantees or the Registration Rights Agreement;
(xiii) except as set forth in the Offering
Memorandum, each of the Company and its subsidiaries have good
and indefeasible title to all of the properties and assets
reflected in the consolidated financial statements hereinabove
described or described in the Offering Memorandum, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind
except those reflected in such financial statements or
described in the Offering Memorandum or which are not material
in amount to the Company and its subsidiaries, taken as a
whole, and the Company and its subsidiaries occupy their
leased properties under valid and binding leases;
(xiv) the Company and its subsidiaries have filed
all Federal, State, local and foreign tax returns which have
been required to be filed (or have valid extensions for
filing) and have paid all taxes indicated by such returns and
all assessments received by any of them to the extent that
such taxes have become due other than taxes and assessments
being contested in good faith, and except to the extent that
any such taxes, or the failure so to file or pay, would not be
material to the Company and its subsidiaries, taken as a
whole; all tax liabilities have been adequately provided for
in the financial statements of the Company, and the Company
does not know of any actual or proposed additional material
tax assessments not recorded, or reserved against, in the
financial statements of the Company;
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(xv) since the respective dates as of which
information is given in the Offering Memorandum, there has not
been any material adverse change or any development involving
a prospective material adverse change in or affecting the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise), or prospects
of the Company and its subsidiaries, taken as a whole, whether
or not occurring in the ordinary course of business, and there
has not been any material transaction entered into or any
material transaction that is probable of being entered into by
the Company or its subsidiaries, other than transactions in
the ordinary course of business and changes and transactions
described in the Offering Memorandum; the Company and its
consolidated subsidiaries have no material contingent
obligations that are not disclosed in the Company's financial
statements which are incorporated by reference in the Offering
Memorandum;
(xvi) neither the Company nor any Guarantor is, or
with the giving of notice or lapse of time or both will be, in
violation of or in default under its organizational documents;
neither the Company nor any of its subsidiaries is, or with
the giving of notice or lapse of time or both, will be, in
violation of or in default under any agreement, lease,
contract, indenture or other instrument or obligation to which
it is a party or by which it, or any of its properties, is
bound, which violation or default would have a material
adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial
or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole; the execution and delivery of
this Agreement, the Indenture, the Securities, the Guarantees
and the Registration Rights Agreement, the issuance and sale
of the Securities to the Initial Purchaser by the Company
pursuant to this Agreement, the issuance and sale of the
Guarantees to the Initial Purchaser by the Guarantors pursuant
to this Agreement, the issuance by the Company of the
Underlying Securities issuable upon conversion of the
Securities and the consummation of the transactions herein and
therein contemplated and the fulfillment of the terms hereof
and thereof (1) will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties is bound,
other than any such conflict, breach or default which will not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole, (2) will not result in any
violation of the organizational documents of the Company or
any Guarantor and (3) will not result in the violation of any
law, order, rule or regulation, judgment, order, writ or
decree applicable to the Company or any Guarantor of any court
or of any government, regulatory body or administrative agency
or other governmental body having jurisdiction;
(xvii) the execution and delivery of, and the
performance by the Company and each Guarantor of its
obligations under, this Agreement have been duly and validly
authorized by all necessary corporate or other action on the
part
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of the Company and each Guarantor, and this Agreement has been
duly executed and delivered by the Company and each Guarantor;
(xviii) the execution and delivery of, and the
performance by the Company and each Guarantor of its
obligations under, the Registration Rights Agreement have been
duly and validly authorized by all necessary corporate or
other action on the part of the Company and each Guarantor
and, when duly executed and delivered by the Company, the
Guarantors and the other parties thereto, the Registration
Rights Agreement will be a valid and binding agreement of the
Company and the Guarantors, enforceable against the Company
and each Guarantor in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity
and except as rights to indemnification and contribution set
forth therein may be limited under applicable law;
(xix) each approval, consent, order,
authorization, designation, declaration or filing by or with
any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the
Company and the Guarantors of this Agreement, the Indenture,
the Securities, the Guarantees and the Registration Rights
Agreement, as applicable, the issuance and sale of the
Securities to the Initial Purchaser by the Company pursuant to
this Agreement, the issuance and sale of the Guarantees to the
Initial Purchaser by the Guarantors pursuant to this
Agreement, the issuance of the Underlying Securities issuable
upon conversion of the Securities, and the consummation of the
transactions herein and therein contemplated has been obtained
or made and is in full force and effect, except for (A) the
effectiveness of the Shelf Registration Statement (as such
term is defined in the Registration Rights Agreement) under
the Securities Act, the qualification of the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and compliance with state securities or Blue
Sky laws, in each case as contemplated by the Registration
Rights Agreement, (B) such additional steps as may be
necessary to qualify the Securities for public offering by the
Initial Purchaser under state securities or Blue Sky laws and
(C) such approvals, consents, orders, authorizations,
designations, declarations or filings to be obtained or made
prior to the Closing Date;
(xx) each of the Company and its subsidiaries
hold all material licenses, certificates and permits from
governmental authorities which are necessary to the conduct of
the business of the Company and its subsidiaries, taken as a
whole; except as set forth in the Offering Memorandum, each of
the Company and its subsidiaries own or possess the right to
use all material patents, patent rights, trademarks, trade
names, service marks, service names, copyrights, license
rights, know-how (including trade secrets and other unpatented
and unpatentable proprietary or confidential information,
systems or procedures) and other intellectual property rights
("Intellectual Property") necessary to carry on the business
of the Company and its subsidiaries, taken as a whole, in all
material respects; to the Company's knowledge, neither the
Company nor any of its
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subsidiaries has infringed any Intellectual Property of any
other person or entity; except as set forth in the Offering
Memorandum, neither the Company nor any of its subsidiaries is
a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property of any other person
or entity that are material to the Company and its
subsidiaries, taken as a whole; to the Company's knowledge,
none of the technology employed by the Company or its
subsidiaries has been obtained or is being used by the Company
or its subsidiaries in violation of any contractual obligation
binding on the Company or any of its subsidiaries or any of
its officers, directors or employees or otherwise in violation
of the rights of any persons; to the Company's knowledge,
neither the Company nor any of its subsidiaries has received
any written or oral communications alleging that the Company
or any of its subsidiaries has violated, infringed or
conflicted with, or, by conducting its business as set forth
in the Offering Memorandum, would violate, infringe or
conflict with, any of the Intellectual Property of any other
person or entity, except any such violation, infringement or
conflict that could not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries,
taken as a whole; the Company knows of no infringement by
others of Intellectual Property owned by or licensed to the
Company or its subsidiaries;
(xxi) neither the Company or any Guarantor is, and
after giving effect to the offering and sale of the Securities
and the application of the proceeds as described in the
Offering Memorandum neither of them will be, required to
register as an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the applicable rules and
regulations thereunder;
(xxii) the Company and its subsidiaries comply in
all material respects with all Environmental Laws (as defined
below), except to the extent that failure to comply with such
Environmental Laws would not, individually or in the
aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole; neither the Company, nor
any of its subsidiaries is the subject of any pending or, to
the Company's knowledge, threatened federal, state or local
investigation evaluating whether any remedial action by the
Company or any of its subsidiaries is needed to respond to a
release of any Hazardous Materials (as defined below) into the
environment, resulting from the Company's or any of its
subsidiaries' business operations or ownership or possession
of any of their respective properties or assets or is in
contravention of any Environmental Law that could reasonably
be expected, individually or in the aggregate, to result in
any material adverse effect on the Company and its
subsidiaries, taken as a whole; neither the Company nor any of
its subsidiaries has received any notice or claim known to
management of the Company, nor are there pending or, to the
Company's knowledge, threatened lawsuits against them, with
respect to violations of an Environmental Law or in connection
with any release of any Hazardous Material into the
environment that could reasonably be expected in the aggregate
to result in a material adverse effect on the Company and its
subsidiaries, taken as a whole; as used herein, "Environmental
Laws" means any
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federal, state or local law or regulation presently applicable
to the Company's or any of its subsidiaries' business
operations or ownership or possession of any of their
properties or assets relating to environmental matters, and
"Hazardous Materials" means those substances that are
regulated by or form the basis of liability under any
Environmental Laws;
(xxiii) except as set forth in the Offering
Memorandum, the Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as
is customary for companies engaged in similar businesses;
(xxiv) none of the Company, the Guarantors or any
affiliate (as defined in Rule 501(b) of Regulation D under the
Securities Act, an "Affiliate") of the Company or the
Guarantors has directly, or, to the Company's knowledge,
through any agent, (A) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will
be integrated with the sale of the Securities or the
Guarantees in a manner that would require the registration
under the Securities Act of the Securities or (B) offered,
solicited offers to buy or sold the Securities or the
Guarantees by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act;
(xxv) the Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act;
(xxvi) the Company has timely filed all reports
required pursuant to Section 13 or Section 15(d) of the
Exchange Act during the preceding twelve months;
(xxvii) the Securities, the Guarantees, the Common
Stock, the Rights, the Indenture, and the Registration Rights
Agreement each conform in all material respects to the
description thereof contained in the Offering Memorandum; and
(xxviii) assuming that (A) the representations and
warranties of the Initial Purchaser in Section 3 hereof are
true and correct and (B) the Initial Purchaser complies with
the covenants set forth in Section 3 hereof, the purchase and
sale of the Securities and the Guarantees pursuant hereto
(including the Initial Purchaser's proposed offering of the
Securities and the Guarantees on the terms and in the manner
set forth in the Offering Memorandum and Section 3 hereof) is
exempt from the registration requirements of the Securities
Act and does not require the qualification of an indenture
under the Trust Indenture Act.
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2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set
forth, the Company agrees to issue and sell to the Initial Purchaser
and the Initial Purchaser agrees to purchase from the Company, at a
purchase price of 97.75% of the aggregate principal amount thereof (the
"Purchase Price"), plus accrued interest, if any, from May 7, 2003 to
the Closing Date, the Firm Securities. Each Security will be
convertible at the option of the holder into shares of Common Stock at
the conversion price set forth in the Securities (the "Conversion
Price"), which Conversion Price is subject to adjustment upon the
occurrence of certain events as provided in the Securities and the
Indenture. One or more global securities representing the Firm
Securities shall be registered by the Trustee in the name of the
nominee of The Depository Trust Company ("DTC"), Cede & Co., credited
to the accounts of such of its participants as the Initial Purchaser
shall request, upon notice to the Company at least 48 hours prior to
the Closing Date, with any transfer taxes payable in connection with
the transfer of the Securities to the Initial Purchaser duly paid, and
deposited with the Trustee as custodian for DTC on the Closing Date,
against payment by or on behalf of the Initial Purchaser to the account
of the Company of the aggregate Purchase Price therefor by wire
transfer in immediately available funds. Delivery of and payment for
the Firm Securities shall be made at the offices of Akin Gump ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ LLP, 1900 Pennzoil Place, South Tower, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 9:30 a.m., New York City time, on May
7, 2003, or at such other place, time or date not later than five
business days thereafter as the Initial Purchaser and the Company may
agree upon. Such time and date of delivery against payment are herein
referred to as the "Closing Date." (As used herein, "business day"
means a day on which The American Stock Exchange is open for trading
and on which banks in New York are open for business and are not
permitted by law or executive order to be closed.)
(b) In addition, on the basis of the representations,
warranties, and covenants herein contained, and subject to the terms
and conditions herein set forth, the Company hereby grants an option,
exercisable in whole or from time to time to the Initial Purchaser to
purchase the Option Securities at the Purchase Price set forth in
Section 2(a), plus accrued interest, if any, from May 7, 2003 to the
Option Closing Date (as defined below). The Option Securities may be
purchased in whole or in part (on not more than three occasions) (i) on
the Closing Date or (ii) within 30 days after the Closing Date by the
Initial Purchaser by delivering prior written notice to the Company
setting forth the aggregate principal amount of Option Securities as to
which the Initial Purchaser is exercising the option and the time and
date for delivery of and payment for such Option Securities. The time
and date for delivery of and payment for such Option Securities shall
be determined by the Initial Purchaser but shall not be earlier than
three nor later than 10 full business days after delivery of notice of
the Initial Purchaser's election to exercise the option, nor in any
event prior to the Closing Date or later than 30 days following the
Closing Date (each such time and date being herein referred to as an
"Option Closing Date"). If a date of exercise of the option is two or
more days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date. The Initial Purchaser may
cancel such option at any time prior to its expiration by
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giving written notice of such cancellation to the Company. To the
extent, if any, that the option is exercised, payment for the Option
Securities shall be made on the relevant Option Closing Date to the
account of the Company by wire transfer in immediately available funds.
3. OFFERING BY THE INITIAL PURCHASER.
(a) The Initial Purchaser represents and warrants to the
Company and the Guarantors that it is a qualified institutional buyer
(a "QIB") within the meaning of Rule 144A and an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act. It is
understood that the Initial Purchaser will offer and sell the
Securities in accordance with this Section as soon as it deems it
advisable to do so. The Securities are to be initially offered at the
offering price set forth in the Offering Memorandum. The Initial
Purchaser may from time to time thereafter change the price and other
selling terms.
(b) The Initial Purchaser understands and acknowledges
that the Securities, the Guarantees and the Underlying Securities to be
issued upon conversion of the Securities have not been and will not be
registered under the Securities Act (except as contemplated by the
Registration Rights Agreement) and may not be offered or sold, except
in compliance with the registration requirements of the Securities Act
or pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act; accordingly, the
Initial Purchaser agrees that it will offer and sell the Securities
only in accordance with Rule 144A under the Securities Act ("Rule
144A") to persons it reasonably believes to be QIBs.
(c) The Initial Purchaser represents and agrees that
neither it nor any person acting on its behalf has engaged or will
engage in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act).
(d) The Initial Purchaser also represents and agrees that
it has not entered and will not enter into any contractual arrangement
with any distributor with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written
consent of the Company.
4. COVENANTS OF THE COMPANY AND THE GUARANTORS.
Each of the Company and the Guarantors covenants with the Initial
Purchaser that:
(a) The Company and the Guarantors will furnish to the
Initial Purchaser and counsel for the Initial Purchaser, without
charge, during the period mentioned in paragraph (d) below, as many
copies of the Offering Memorandum, any documents incorporated by
reference therein (other than exhibits thereto) and any supplements or
amendments thereto as it may reasonably request.
(b) The Company and the Guarantors will furnish to the
Initial Purchaser a copy of each proposed amendment or supplement to
the Offering Memorandum, and not use any such proposed amendment or
supplement to which the Initial Purchaser
-11-
reasonably objects in writing; after the date hereof and prior to the
completion of the distribution of the Securities by the Initial
Purchaser (as determined by the Initial Purchaser), neither the Company
nor any Guarantor will file any document under the Exchange Act which
is incorporated by reference in the Offering Memorandum, in each case
unless the Initial Purchaser previously has been advised of, and
furnished with a copy within a reasonable period of time prior to, the
proposed filing, and if such proposed filing contains material
non-public information, the Initial Purchaser agrees to enter into a
confidentiality agreement with respect to such information if
reasonably requested by the Company. The Company and the Guarantors
will advise the Initial Purchaser of the time when any amendment or
supplement to the Offering Memorandum has been made or when any
document filed under the Exchange Act which is incorporated by
reference in the Offering Memorandum has been filed with the Commission
and will provide evidence satisfactory to the Initial Purchaser of each
such amendment, supplement or filing.
(c) The Company and the Guarantors will cooperate with
the Initial Purchaser in endeavoring to qualify the Securities and
Guarantees for sale under the securities laws of such jurisdictions as
the Initial Purchaser may reasonably have designated in writing and
will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided
that neither the Company nor the Guarantors shall be required to
qualify as a foreign corporation or other foreign entity or to file a
general consent to service of process in any jurisdiction (i) where it
is not now so qualified or required to file such a consent or (ii)
where it is not now subject to taxation but would become subject to
taxation as a result of such qualification or filing. The Company and
the Guarantors will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the
Initial Purchaser may reasonably request for distribution of the
Securities.
(d) If at any time prior to the date on which all of the
Securities shall have been sold by the Initial Purchaser, any event
shall occur as a result of which, in the judgment of the Company or in
the reasonable opinion of the Initial Purchaser, it becomes necessary
to amend or supplement the Offering Memorandum in order 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
or supplement the Offering Memorandum to comply with applicable law,
the Company and the Guarantors will promptly prepare an appropriate
amendment or supplement to the Offering Memorandum so that the Offering
Memorandum as so amended or supplemented will not contain statements
that, in the light of the circumstances under which they were made, are
misleading, or so that the Offering Memorandum will comply with
applicable law.
(e) No offering, sale, short sale or other disposition of
any shares of Common Stock or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such) will be made for a period of 60
days after the date of the Offering Memorandum, directly or indirectly,
by the Company otherwise than hereunder or with the prior written
consent
-12-
of the Initial Purchaser. The foregoing sentence shall not apply to the
issuance by the Company of any shares of Common Stock upon (A) the
exercise of outstanding options or warrants or options issued pursuant
to the Company's existing or former stock option plans, or the
Company's proposed incentive plan, described in the Offering
Memorandum, (B) the conversion of the Securities, or (C) the entering
into of matching transactions pursuant to the Company's 401(k) plan.
(f) The Company shall have caused each executive officer
and director of the Company to furnish to the Initial Purchaser, dated
the date of this agreement, a letter or letters, in form and substance
satisfactory to the Initial Purchaser, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose
of any shares of Common Stock or other capital stock of the Company, or
any other securities convertible, exchangeable or exercisable for
Common Stock or derivative of Common Stock owned by such person or
request the registration for the offer or sale of any of the foregoing
(or as to which such person has the right to direct the disposition of)
for a period of 60 days after the date of the Offering Memorandum,
directly or indirectly, except with the prior written consent of the
Initial Purchaser ("Lockup Agreements").
(g) Neither the Company nor any Guarantor will, nor will
it permit any of its Affiliates (as defined in Rule 501(b) under the
Securities Act) to, during the two-year period following the closing of
the Offering, resell any Securities that have been acquired by any of
them.
(h) Except as contemplated by the Registration Rights
Agreement, none of the Company, the Guarantors, any of their respective
Affiliates, or any authorized person acting on its or their behalf
will, directly or indirectly, make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would
require the registration of the Securities, the Guarantees or the
Underlying Securities issuable upon conversion of the Securities under
the Securities Act.
(i) None of the Company, the Guarantors, any of their
respective Affiliates, or any person acting on its or their behalf will
engage in any form of general solicitation or general advertising (as
those terms are used in Rule 502(c) under the Securities Act) in
connection with any offer or sale of the Securities or the Guarantees
in the United States.
(j) So long as any of the Securities, the Guarantees or
the Underlying Securities issuable upon conversion of the Securities
are "restricted securities" within the meaning of Rule 144(a)(3) under
the Securities Act, the Company and the Guarantors will, during any
period in which it is not subject to and in compliance with Section 13
or 15(d) of the Exchange Act, provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder
or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. This covenant is intended to
be for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such restricted
securities.
-13-
(k) The Company will cooperate with the Initial Purchaser
and use all reasonable efforts to (i) permit the Securities to be
eligible for clearance and settlement through the facilities of DTC and
such other clearance and settlement systems that the Initial Purchaser
may designate and (ii) arrange to have the Securities be designated as
PORTAL-eligible securities in accordance with the rules and regulations
of the NASD relating to the PORTAL Market.
(l) The Company will use all reasonable efforts to cause
the Underlying Securities issuable upon conversion of the Securities to
be duly authorized for listing by The American Stock Exchange on or
prior to the Closing Date and ensure that the Underlying Securities
issuable upon conversion of the Securities remain authorized for
listing following the Closing Date.
(m) The Company shall deposit the net proceeds of its
sale of the Securities as set forth in the Offering Memorandum.
(n) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities in
such a manner as would require the Company to register as an
"investment company" under the Investment Company Act.
(o) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or
could reasonably be expected to constitute, the unlawful stabilization
or manipulation of the price of any securities of the Company.
(p) The Company has issued 8-7/8% Senior Notes due 2007
(the "EXISTING NOTES"). On or before the Closing Date, the Company will
deliver to the Trustee a redemption notice in compliance with the terms
of the indentures governing the Existing Notes (the "EXISTING
INDENTURES"). The redemption price will be $165 million in principal,
plus the applicable premium and accrued and unpaid interest through the
redemption date. On the Closing Date, the Company will deposit with the
Paying Agent for the Existing Notes a portion of the redemption price
equal to $150 million in principal, plus the applicable premium and
accrued and unpaid interest through the redemption date. The Company
will deposit the remaining balance of the redemption price with the
Paying Agent for the Existing Notes on or before one business day
preceding the redemption date. If (i) the Initial Purchaser exercises
its option to purchase all or any portion of the Option Securities and
the Company's ability to issue the Option Securities under the Existing
Indentures is subject to its ability to satisfy the Consolidated
Interest Coverage Ratio (as defined in the Existing Indentures), and
(ii) the Company's ability to satisfy the Consolidated Interest
Coverage Ratio requires it to redeem an additional portion of the
Existing Notes, then the Company will redeem an additional portion of
the Existing Notes in an amount sufficient to permit the Company to
satisfy the Consolidated Interest Coverage Ratio and will, immediately
upon the issuance of the Option Securities, deposit the proceeds from
such issuance with the Trustee (together with any additional funds
needed to deposit the total redemption price).
-14-
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of its obligations under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the Company;
the fees and disbursements of counsel for the Company; the cost of printing and
delivering to, or as requested by, the Initial Purchaser copies of the Offering
Memorandum and any supplements or amendments thereto and the printing and
production of all other documents connected with the Offering (including this
Agreement, the Indenture, the Registration Rights Agreement and any other
related agreements); the Listing Fee of The American Stock Exchange; the
expenses arising from having the Securities designated as eligible for trading
in the PORTAL Market; the expenses associated with the preparation, issuance and
delivery to the Initial Purchaser of the Securities; the fees and expenses of
the Trustee; lodging expenses of officers and other representatives of the
Company in connection with the "roadshow" and any other meetings with
prospective investors in the Securities; the costs and expenses of advertising
relating to the Offering (other than advertising costs and expenses that the
Initial Purchaser expressly agrees to pay); and the expenses (not to exceed
$5,000), including the fees and disbursements of counsel for the Initial
Purchaser, incurred in connection with the qualification of the Securities under
State securities or Blue Sky laws. Neither the Company nor the Guarantors shall,
however, be required to pay for any of the Initial Purchaser's expenses (other
than those related to qualification under State securities or Blue Sky laws)
except that, if this Agreement shall not be consummated because the conditions
in Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Initial Purchaser pursuant to Section 9 hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Guarantors to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on their part to be performed, unless such failure,
refusal or inability is due primarily to the default or omission of the Initial
Purchaser, the Company and the Guarantors shall reimburse the Initial Purchaser
for reasonable out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with the Offering; but neither the
Company nor the Guarantors shall in any event be liable to the Initial Purchaser
for damages on account of loss of anticipated profits from the sale by it of the
Securities.
6. CONDITIONS OF OBLIGATIONS OF THE INITIAL PURCHASER.
The obligation of the Initial Purchaser to purchase the Firm Securities
on the Closing Date and any Option Securities on an Option Closing Date are
subject to the accuracy, as of the Closing Date or the relevant Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Guarantors contained herein, and to the performance by the Company and
each Guarantor of its covenants and obligations hereunder and to the following
additional conditions (any of which may be waived in writing by the Initial
Purchaser):
(a) The Initial Purchaser shall have received on the
Closing Date or the relevant Option Closing Date, as the case may be,
an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., outside counsel for the Company,
dated the Closing Date or the relevant Option Closing Date, as the case
may be, addressed to the Initial Purchaser (and stating that it may be
relied upon by counsel to the Initial Purchaser) substantially to the
effect that:
-15-
(i) each of the Company and the Guarantors is
validly existing as a corporation or other entity in good
standing under the laws of the state of its formation, with
the power and authority as a corporation or other entity to
own or lease its properties and conduct its business as
described in the Offering Memorandum; the outstanding shares
of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; to the
knowledge of such counsel except as described in or
contemplated by the Offering Memorandum, there are no
outstanding securities of the Company convertible or
exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and
there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any
shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock;
(ii) the statements under the captions
"Description of Notes," "Description of Capital Stock" and
"Notice to Investors; Transfer Restrictions" in the Offering
Memorandum, insofar as such statements constitute a summary of
the documents referred to therein or matters of law, provide a
fair and accurate summary in all material respects of the
information called for with respect to such documents and
matters;
(iii) this Agreement has been duly authorized,
executed and delivered by the Company and each Guarantor;
(iv) the Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and
each Guarantor and, assuming due authorization, execution and
delivery by the Initial Purchaser, constitutes a valid and
binding obligation of the Company and each Guarantor
enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity
and except as rights to indemnification and contribution set
forth therein may be limited under applicable law;
(v) the Indenture has been duly authorized,
executed and delivered by the Company and each Guarantor, and,
assuming due authorization, execution and delivery by the
Trustee, constitutes a valid and binding obligation of the
Company and each Guarantor enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and general
principles of equity; and the Securities and the Guarantees
have been duly authorized and, when executed by the Company
and each Guarantor, as applicable, and authenticated by the
Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchaser pursuant to
this Agreement, will constitute valid and binding obligations
of the Company and each Guarantor, as applicable, subject to
the effects of applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and equitable
principles of general applicability;
-16-
(vi) assuming (A) the accuracy of the
representations and warranties of the Company, the Guarantors
and the Initial Purchaser contained herein, (B) the Initial
Purchaser complies with the covenants set forth in Section 3
hereof and (C) the Company and the Guarantors comply with the
covenants set forth in Section 4, the purchase and sale of the
Securities and Guarantees pursuant hereto (including the
Initial Purchaser's proposed offering of the Securities on the
terms and in the manner set forth in the Offering Memorandum
and Section 3 hereof) is exempt from the registration
requirements of the Securities Act and does not require the
qualification of an indenture under the Trust Indenture Act,
it being understood that no opinion is expressed as to any
subsequent resale of a Security, Guarantee or shares of Common
Stock issued upon conversion of the Securities;
(vii) the shares of Common Stock initially
issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon conversion of the
Securities by all necessary corporate action of the Company
and when issued will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist
under the statutory laws of Texas, under the articles of
incorporation or bylaws of the Company or, to such counsel's
knowledge, under any contractual arrangement binding upon the
Company with respect to any of the shares of Common Stock to
be issued upon conversion of the Securities; the Rights, if
any, issuable upon conversion of the Securities in accordance
with the terms of the Indenture and the Rights Agreement, will
have been validly issued;
(viii) the execution and delivery of this
Agreement, the Indenture, the Securities, the Guarantees and
the Registration Rights Agreement, and the issuance and sale
of the Securities to the Initial Purchaser by the Company
pursuant to this Agreement, the issuance and sale of the
Guarantees to the Initial Purchaser by the Guarantors pursuant
to this Agreement, the issuance of the Underlying Securities
issuable upon conversion of the Securities, and the
consummation of the transactions herein and therein
contemplated do not and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, the organizational documents of the Company or
the Guarantors, or any indenture, mortgage, deed of trust or
other agreement or instrument known to such counsel that is
material to the Company and its subsidiaries, taken as a
whole, or filed as an exhibit to the Company's most recent
annual report on Form 10-K or any subsequent quarterly report
on Form 10-Q or any law, order, rule or regulation, judgment,
order, writ or decree known to such counsel to be applicable
to the Company or any of its subsidiaries of any court or of
any government, regulatory body or administrative agency or
other governmental body having jurisdiction;
(ix) no approval, consent, order, authorization,
designation, declaration or filing by or with any New York or
Federal regulatory, administrative or other governmental body
is necessary in connection with the execution and delivery of
this Agreement, the Indenture, the Guarantees, the Securities
and the Registration Rights Agreement, the issuance and sale
of the
-17-
Securities to the Initial Purchaser by the Company pursuant to
this Agreement, the issuance and sale of the Guarantees to the
Initial Purchaser by the Guarantors pursuant to this
Agreement, the issuance of the Underlying Securities upon
conversion of the Securities, or the consummation of the
transactions herein and therein contemplated, except (A) such
as have been obtained or made, (B) as may be required by State
securities or Blue Sky laws, the National Association of
Securities Dealers, Inc., The American Stock Exchange and the
PORTAL Market (as to which such counsel need express no
opinion) and (C) the effectiveness of the Shelf Registration
Statement (as such term is defined in the Registration Rights
Agreement) under the Securities Act and the qualification of
the Indenture under the Trust Indenture Act, in each case as
contemplated by the Registration Rights Agreement;
(x) each document filed, or to be filed prior to
the closing of the Offering, by the Company pursuant to the
Exchange Act and incorporated, or to be incorporated, by
reference in the Offering Memorandum (or any amendment or
supplement thereto) at the time filed with the Commission
complied, or will comply, in all material respects with the
Exchange Act and the applicable rules and regulations
thereunder as to form;
(xi) neither the Company nor any Guarantor is,
and after giving effect to the offering and sale of the
Securities and the application of the net proceeds as
described in the Offering Memorandum none of them will be,
required to register as an "investment company" under the
Investment Company Act and the applicable rules and
regulations thereunder;
(xii) the statements under the caption "Certain
U.S. Federal Income Tax Considerations" in the Offering
Memorandum, insofar as such statements constitute a summary of
matters of U.S. Federal tax laws referred to therein, provide
a fair and accurate summary in all material respects of such
matters under current law;
(xiii) such counsel knows of no legal or
governmental proceedings pending or threatened against the
Company or any of its subsidiaries that are required to be set
forth in the Offering Memorandum and that are not so set forth
therein; and
(xiv) nothing has come to the attention of such
counsel which leads them to believe that (A) the Company's
Annual Report on Form 10-K filed with the Commission on March
6, 2003 (including the information contained in the Company's
definitive Proxy Statement incorporated by reference in the
Annual Report (the "Incorporated Proxy Information")), as of
March 6, 2003 (and with respect to the Incorporated Proxy
Information, as of March 28, 2003), contained an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made as of
March 6, 2003 (and as of March 28, 2003 with respect to the
Incorporated Proxy Information), not misleading (except that
such
-18-
counsel need express no view as to financial statements,
schedules and statistical information therein) and (B) the
Offering Memorandum (excluding the information incorporated by
reference therein) as of its date or as of the Closing Date or
the relevant Option Closing Date, as the case may be,
contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading
(except that such counsel need express no view as to financial
statements, schedules and statistical information therein).
With respect to such statement, such counsel may state that
they are not passing upon and are not assuming responsibility
for or the accuracy, completeness or fairness of the
statements in the Offering Memorandum (except as stated in
Section 6(a)(iii)) and that their belief is based upon the
procedures set forth therein (relying as to materiality on
statements of officers and directors of the Company), but is
without independent check and verification.
(b) The Initial Purchaser shall have received from its
counsel, Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, on the Closing Date or the
relevant Option Closing Date, as the case may be, an opinion dated the
Closing Date or the relevant Option Closing Date, as the case may be,
substantially to the effect specified in subparagraphs (iii), (iv),
(v), (vi) and (vii) of paragraph (a) of this Section 6. In addition to
the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that the Offering Memorandum, as of
its date or as of the Closing Date or the relevant Option Closing Date,
as the case may be, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that such counsel
need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Akin
Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(c) The Initial Purchaser shall have received, on each of
the date hereof, the Closing Date and, if applicable, any Option
Closing Date, letters dated the date hereof, the Closing Date or the
relevant Option Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchaser, of KPMG LLP confirming that it
is an independent public accountant within the meaning of the Exchange
Act and the applicable published rules and regulations thereunder and
stating that in its opinion the historical and pro forma financial
statements and schedules of the Company examined by it and incorporated
by reference in the Offering Memorandum comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations; and
containing such other statements and information as is ordinarily
included in accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial and statistical
information contained or incorporated by reference in the Offering
Memorandum.
(d) The Initial Purchaser shall have received on the
Closing Date and, if applicable, any Option Closing Date, as the case
may be, a certificate or certificates of
-19-
the Chief Executive Officer and Chief Financial Officer of the Company
and each Guarantor (or its general partner) to the effect that, as of
the Closing Date or the relevant Option Closing Date, as the case may
be, each of them severally represents as follows:
(i) the representations and warranties of the
Company and the Guarantors contained in Section 1 hereof are
true and correct as of the Closing Date or the relevant Option
Closing Date, as the case may be;
(ii) since the respective dates as of which
information is given in the Offering Memorandum, there has not
been any material adverse change or any development known to
him involving a prospective material adverse change in or
affecting the business, management, properties, assets,
rights, operations, condition (financial or otherwise) or
prospects of the Company and its subsidiaries, taken as a
whole, whether or not arising in the ordinary course of
business; and
(iii) the Company and each Guarantor has performed
all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the
Closing Date or the relevant Option Closing Date, as the case
may be.
(e) The Company and the Guarantors shall have furnished
to the Initial Purchaser such further certificates and documents
confirming the representations and warranties, covenants and conditions
contained herein and related matters as the Initial Purchaser may
reasonably have requested.
(f) The Underlying Securities issuable upon conversion of
the Securities shall have been duly listed, subject to notice of
issuance, on The American Stock Exchange and the Securities shall have
been designated as PORTAL-eligible securities.
(g) Each of the Indenture and the Registration Rights
Agreement shall have been executed and delivered by all the parties
thereto.
(h) The Lockup Agreements described in Section 4(f) shall
be in full force and effect.
(i) The Company shall have given the initial redemption
notice and deposited the portion of the redemption price described in
Section 4(p) above.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Initial Purchaser.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the Initial Purchaser may terminate its obligations hereunder by
notifying the Company of such termination in writing or by telegram at or prior
to the Closing Date or the relevant Option Closing Date, as the case may be. In
such event, the Company and the Guarantors, on the one hand, and the Initial
Purchaser
-20-
on the other hand, shall not be under any obligation to each other (except to
the extent provided in Sections 5 and 7 hereof).
7. INDEMNIFICATION.
(a) Each of the Company and the Guarantors jointly and
severally agrees:
(i) to indemnify and hold harmless the Initial Purchaser
and each person, if any, who controls the Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to
which the Initial Purchaser or any such controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (A) any untrue statement or
alleged untrue statement of any material fact contained in the Offering
Memorandum or any amendment or supplement thereto or (B) 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 in the light of the circumstances under which they were
made; provided, however, that neither the Company nor any Guarantor
will be liable under this subsection (a), 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, or omission or alleged
omission made in the Offering Memorandum, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Initial Purchaser
specifically for use therein; and
(ii) to reimburse the Initial Purchaser and each such
controlling person upon demand for any legal or other out-of-pocket
expenses reasonably incurred by the Initial Purchaser or such
controlling person in connection with investigating or defending any
such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the
offering of the Securities, whether or not the Initial Purchaser or
controlling person is a party to any action or proceeding. In the event
that it is finally judicially determined that the Initial Purchaser was
not entitled to receive payments for legal and other expenses pursuant
to this subparagraph, the Initial Purchaser will promptly return all
sums that had been advanced pursuant hereto.
(b) The Initial Purchaser will indemnify and hold
harmless the Company, the Guarantors, their respective directors and
officers and each person, if any, who controls the Company or the
Guarantors within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities to which the
Company, the Guarantors or any such director, officer or controlling
person may become subject under the Securities Act or the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Offering Memorandum or any amendment or
supplement thereto, or (ii) 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 the light of
the circumstances under which they were made; and will reimburse upon
demand any legal or other expenses reasonably incurred by the Company
or any such director,
-21-
officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding
or in responding to a subpoena or governmental inquiry related to the
offering of the Securities, whether or not the Company, a Guarantor or
any such director, officer or controlling person is a party to any
action or proceeding; provided, however, that the Initial Purchaser
will be liable in each case to the extent, but only to the extent, in
the case of clauses (i) and (ii), that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Offering Memorandum or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by
or on behalf of the Initial Purchaser specifically for use therein.
This indemnity agreement will be in addition to any liability which the
Initial Purchaser may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) shall be available
to any party who shall fail to give notice as provided in this Section
7(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give
such notice shall not relieve the indemnifying party or parties from
any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of Section
7(a) or (b). In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
and shall pay as incurred (or within 30 days of presentation) the fees
and disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to retain
its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have
failed to assume the defense and employ counsel reasonably acceptable
to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all
such indemnified parties. Such firm shall be designated in writing by
the Initial Purchaser in the case of parties indemnified pursuant to
Section 7(a) and by the Company in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final
judgment for the plaintiff,
-22-
the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. In addition, the indemnifying party will not, without the
prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought
hereunder (whether or not any indemnified party is an actual or
potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action or proceeding.
(d) To the extent the indemnification provided for in
this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or (b) above in respect of any
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, except by reason of the
exceptions set forth in Section 7(a) or 7(b) the failure of the
indemnified party to give notice as required in Section 7(c), then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors on the one hand and the Initial
Purchaser on the other from the offering of the Securities. If,
however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Guarantors
on the one hand and the Initial Purchaser on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and
the Initial Purchaser 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 bear to the total discounts
and commissions received by the Initial Purchaser. 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 and the Guarantors on the one hand or the
Initial Purchaser on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Guarantors and the Initial Purchaser agree that it
would not be just and equitable if contributions pursuant to this Section 7(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to above in this Section 7(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim or
enforcing any rights hereunder. Notwithstanding the provisions of this
subsection (d), (i) the Initial Purchaser shall not be required to contribute
any amount in excess of the discounts and commissions applicable to the
Securities purchased by it and (ii) no person
-23-
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.
(e) In any proceeding relating to the Offering Memorandum
or any supplement or amendment thereto, each party against whom
contribution may be sought under this Section 7 hereby consents to the
jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be
served upon it by any other contributing party and consents to the
service of such process and agrees that any other contributing party
may join it as an additional defendant in any such proceeding in which
such other contributing party is a party.
(f) Except as otherwise provided in this Section 7, any
losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or
expenses are incurred (or within 30 days of presentation). The
indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company and the Initial
Purchasers set forth in this Agreement shall remain operative and in
full force and effect, regardless of (i) any investigation made by or
on behalf of the Initial Purchaser or any person controlling the
Initial Purchaser, the Company, the Guarantors, their respective
directors or officers or any persons controlling the Company or the
Guarantors, (ii) acceptance of any Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to
the Initial Purchaser, or any person controlling the Initial Purchaser,
or to the Company, the Guarantors, their respective directors or
officers, or any person controlling the Company or the Guarantors,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 7.
8. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Initial Purchaser, to Deutsche Bank
Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel; if to the Company, to Grey Wolf, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President and Chief Financial Officer.
9. TERMINATION.
(a) This Agreement may be terminated by the Initial
Purchaser by notice to the Company at any time prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and
then only as to the Option Securities to be purchased on such Option
Closing Date) if any of the following has occurred: (i) since the date
as of which information is given in the Offering Memorandum, any
material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and its
subsidiaries,
-24-
taken as a whole, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration
of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the
effect of such outbreak, escalation, declaration, emergency, calamity,
crisis or change on the financial markets of the United States would,
in the Initial Purchaser's reasonable judgment, make it impracticable
or inadvisable to market the Securities or to enforce contracts for the
sale of the Securities, or (iii) suspension of trading in securities
generally on The New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on
either such Exchange, (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in the Initial Purchaser's opinion
materially and adversely affects or could reasonably be expected to
materially and adversely affect the business or operations of the
Company or the Guarantors, (v) the declaration of a banking moratorium
by United States or New York State authorities, (vi) any downgrading,
or placement on any watch list for possible downgrading, in the rating
of any of the Company's or any Guarantor's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Exchange Act); (vii) the suspension
of trading of the Company's common stock by The American Stock
Exchange, the Commission or any other governmental authority or, (viii)
the taking of any action by any governmental body or agency in respect
of its monetary or fiscal affairs which in the Initial Purchaser's
reasonable opinion has a material adverse effect on the securities
markets in the United States and would make it impracticable or
inadvisable to market the Securities or to enforce contracts for the
sale of the Securities; or
(b) as provided in Section 6 of this Agreement.
10. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Initial Purchaser, the Company and the Guarantors and their respective
successors and assigns, and the officers, directors and controlling persons
referred to herein, and no other person will have any right or obligation
hereunder. No purchaser of any of the Securities from the Initial Purchaser
shall be deemed a successor or assign merely because of such purchase.
11. INFORMATION PROVIDED BY THE INITIAL PURCHASER.
The Company, the Guarantors and the Initial Purchaser acknowledge and
agree that the only information furnished or to be furnished by the Initial
Purchaser to the Company and the Guarantors for inclusion in the Offering
Memorandum consists of the name of the Initial Purchaser on the front and back
covers of the Offering Memorandum and the information set forth in the second
sentence of the second paragraph, and the eighth and ninth paragraphs, in each
case under the heading "Plan of Distribution" (insofar as such information
relates to the Initial Purchaser).
-25-
12. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of the
Initial Purchaser or any controlling person thereof, or by or on behalf of the
Company, the Guarantors or their respective directors or officers or any
controlling person of the Company or the Guarantors, and (c) delivery of and
payment for the Securities under this Agreement
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without regard to conflicts
of laws principles thereof.
-26-
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Guarantors
and the Initial Purchaser in accordance with its terms.
Very truly yours,
GREY WOLF, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President and Chief Financial Officer
GREY WOLF DRILLING COMPANY L.P.
By: GREY WOLF HOLDINGS COMPANY,
ITS SOLE GENERAL PARTNER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GREY WOLF LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GREY WOLF HOLDINGS COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
S-1
MURCO DRILLING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive
Vice President and Chief
Financial Officer
GREY WOLF INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive
Vice President and Chief
Financial Officer
DI/PERFENSA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive
Vice President and Chief
Financial Officer
DI ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive
Vice President and Chief
Financial Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANK SECURITIES INC.
By: C. ▇▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Authorized Officer
S-2
SCHEDULE A
INITIAL GUARANTORS
NAME OF GUARANTOR STATE OF INCORPORATION
Grey Wolf Drilling Company L.P. Texas
Grey Wolf LLC Louisiana
Grey Wolf Holdings Company Nevada
Murco Drilling Corp. Delaware
Grey Wolf International, Inc. Texas
DI/Perfensa, Inc. Texas
DI Energy, Inc. Texas