Escrow Agreement Dated 01/28/98

EXHIBIT 10.1


ESCROW AGREEMENT


This Escrow Agreement, dated as of January __, 1998, is among Dailey International Inc., a Delaware corporation ("Buyer"), Directional Wireline Services, Inc., a Louisiana corporation ("DWS"), DAMCO Services, Inc., a Louisiana corporation ("DSI"), DAMCO Tong Services, Inc., a Louisiana corporation ("DTSI", and collectively with DWS and DSI, the "Companies"), Henry R. J. Cournoyer and Francis I. Bourque, Jr. in their capacity as representatives of the shareholders of the Companies (the "Shareholder Representatives" and each a "Shareholder Representative"), the shareholders listed on the signature pages hereto (the "Shareholders") and U.S. Trust Company of Texas, N.A. (the "Escrow Agent");


W I T N E S S E T H :


WHEREAS, Buyer, the Companies and the shareholders of the Companies have entered into an Asset Purchase Agreement dated effective as of November 30, 1997 (the "Purchase Agreement"), which provides, among other things, for the purchase (the "Purchase") of substantially all of the assets of the Companies by Buyer; and


WHEREAS, the parties hereto desire, pursuant to Section 1.3 of the Purchase Agreement, to set aside a portion of the consideration to be paid to the Companies in connection with the Purchase, subject to the terms and conditions set forth herein; and


WHEREAS, the parties hereto have agreed upon and wish to set forth herein the terms and conditions relating to the escrow of the portion of the consideration for the Purchase to be so delivered to and held by the Escrow Agent; and


WHEREAS, pursuant to Section 9.7 of the Purchase Agreement, the Shareholder Representatives have been appointed to act as the representatives and attorneys-in-fact for the shareholders of the Companies with respect to the Escrow Fund (as hereinafter defined);


NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, the parties hereto hereby agree as follows:


1. Definitions. Except as otherwise defined herein, capitalized terms used in this Escrow Agreement will have the meanings set forth in the Purchase Agreement.


2. Appointment of Escrow Agent. U.S. Trust Company of Texas, N.A. is hereby appointed as Escrow Agent for the purposes set forth herein and the Escrow Agent hereby accepts such appointment on the terms herein provided.


3. Deposit of Escrow Fund for Claims and Classification of Funds. For the purposes herein set forth, Buyer, together with the delivery of this Escrow Agreement, deposits with the Escrow Agent the sum of $6,000,000 in cash. The sum so deposited with the Escrow Agent, together with all income earned thereon pursuant to Section 8 hereof, less payments made for costs and expenses (including taxes) in connection with this Escrow Agreement pursuant to Sections 8 and 11 hereof, is herein called the 2 "Escrow Fund". The Escrow Fund will be held, invested, reinvested and disbursed by the Escrow Agent in accordance with the terms hereof.


4. Satisfaction of Claims with Escrow Fund. The Escrow Fund will be retained by the Escrow Agent and shall be distributed at any time, or from time to time, for the purpose of paying Claims as follows:


a. If Buyer has made a Claim with respect to which funds
from the Escrow Fund may be applied pursuant to the Purchase
Agreement, Buyer may advise the Shareholder Representatives in writing
of such Claim (an "Asserted Claim"), describing such Asserted Claim
(to the extent known) in reasonable detail and shall transmit a copy
of such notice to the Escrow Agent, and in the event such Claim is a
Third Party Claim, such notice shall comply with the provisions of
Section 9.5(a) of the Purchase Agreement relating to Third Party
Claims, provided however, that failure to provide such notice within
an applicable time period shall not affect the Buyer's right to
payment hereunder except to the extent the Companies have been
materially prejudiced as a result of such failure to provide timely
notice;


b. The amount of any Asserted Claim (the "Asserted
Amount") and the amount of Escrow Funds, if any, requested to be
delivered to Buyer pursuant to Section 4.d hereof shall be
simultaneously certified in the notice to be provided in Section 4.a
above to the Escrow Agent and the Shareholder Representatives in
writing by Buyer;


c. In connection with any Asserted Claim, Buyer will
make available to the Shareholder Representatives, counsel thereto and
accountants therefor such records pertaining to the Asserted Claim (to
the extent such Asserted Claim is a Third Party Claim) in accordance
with Section 9.5(a) of the Purchase Agreement, provided however, that
failure to provide such records within an applicable time period shall
not affect the Buyer's right to payment hereunder except to the extent
the Companies have been materially prejudiced as a result of such
failure to timely provide such records;


d. On the 31st day following receipt of the
certification pursuant to the provisions of Section 4.b hereof (or
pursuant to Section 6 hereof as to the certification of a final
Asserted Claim on account of a Third Party Claim) of the Asserted
Amount of any Asserted Claim, subject to Sections 4.e and 4.f hereof,
such Asserted Amount shall be distributed to Buyer in respect of such
Asserted Claim pursuant to Section 4(e) hereof and the other terms of
this Escrow Agreement; provided, however, that, if within 30 days
following receipt of such certification, the Shareholder
Representatives deliver a statement of specific objections thereto to
Buyer and the Escrow Agent (which written notification shall be
received by the Escrow Agent within such 30-day period following the
receipt by them of the above-referenced certification by Buyer) that
they intend to challenge


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Buyer's certification of its Asserted Claim or a specified part
thereof (the "Contested Amount"), then the Contested Amount shall,
notwithstanding the provisions of this Section 4, remain in escrow
with the Escrow Agent until a final resolution (by a written agreement
of Buyer and the Shareholder Representatives or pursuant to the
arbitration provisions hereof, or to the extent applicable, the
determination of a court of competent jurisdiction to the extent the
Claim arises from a Third Party Claim subject to such court's
jurisdiction) of the dispute as to such matters (the amount, if any,
so resolved is herein called the "Resolved Amount");


e. Upon the 31st day following such receipt of a
certificate in accordance with Section 4.b hereof (or upon resolution
of a Contested Amount as provided herein if such a certification shall
be challenged), subject to Section 4.f hereof, the Escrow Agent shall
pay to Buyer the lesser of (i) the Asserted Amount less the Contested
Amount with respect to that Asserted Claim, if such certification
shall have been challenged and such challenge shall not have been
resolved, or the Resolved Amount, if any, if such certification is
challenged and resolved and (ii) the amount then held in the Escrow
Fund.


f. At any time following the notice of challenge to an
Asserted Claim (other than with respect to Sections 5.5 of the
Purchase Agreement) as provided for by Section 4.d hereof, either
Buyer or the Shareholder Representatives may refer the matter to final
and binding arbitration in accordance with the applicable provisions
of the Purchase Agreement. The arbitration shall be conducted before
a single arbitrator in Houston, Texas to be appointed (in the absence
of agreement by the parties as to such appointment) by the American
Arbitration Association ("AAA") and shall be conducted in accordance
with the Commercial Arbitration Rules of the AAA. Such arbitrator
shall, upon completion of such arbitration proceedings, certify the
results of the arbitration to the Escrow Agent, including his decision
with respect to the existence of a Claim and the Resolved Amount
thereof, if any, and the Escrow Agent shall be entitled to rely and
act accordingly with respect to payments to Buyer hereunder, if any,
on the basis of the decision of such arbitrator as so certified. This
arbitration provision is expressly made pursuant to and shall be
governed by the Federal Arbitration Act, 9 U.S.C. Sections 1 - 14 (the
"Arbitration Act"). The parties hereto agree that pursuant to Section
9 of the Arbitration Act that a judgment of the United States District
Court for the Southern District of Texas shall be entered upon the
award made pursuant to the arbitration. The fees, costs and expenses
of the arbitrator shall be borne by the parties in inverse proportion
as they may prevail on the matters resolved by the arbitrator, which
proportionate allocation shall be determined by the arbitrator at the
time the determination is rendered by the arbitrator on the merits of
the matters submitted. All fees, costs and expenses of the arbitrator
borne on behalf of the shareholders of the Companies or any of them,
as


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