<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
R&B FALCON CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1381 76-0544217
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
901 THREADNEEDLE
HOUSTON, TEXAS 77079
(281) 496-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
LEIGHTON E. MOSS
R&B FALCON CORPORATION
901 THREADNEEDLE
HOUSTON, TEXAS 77079
(281) 496-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
W. MARK YOUNG
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
THREE ALLEN CENTER
333 CLAY AVENUE, SUITE 800
HOUSTON, TEXAS 77002-4086
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this registration
statement and upon consummation of the exchange offer described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the offering. [ ]
- ------------------
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6 1/2% Senior Notes due 2003...... $250,000,000 100% $250,000,000 $73,750
- ------------------------------------------------------------------------------------------------------------------
6 3/4% Senior Notes due 2005...... $350,000,000 100% $350,000,000 $103,250
- ------------------------------------------------------------------------------------------------------------------
6.95% Senior Notes due 2008....... $250,000,000 100% $250,000,000 $73,750
- ------------------------------------------------------------------------------------------------------------------
7 3/8% Senior Notes due 2018...... $250,000,000 100% $250,000,000 $73,750
- ------------------------------------------------------------------------------------------------------------------
Total Exchange Notes.............. $1,100,000,000 100% $1,100,000,000 $324,500
==================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 15, 1998
PROSPECTUS
R&B FALCON CORPORATION
OFFER TO EXCHANGE
6 1/2% SENIOR NOTES DUE 2003, SERIES B
FOR ALL OUTSTANDING 6 1/2% SENIOR NOTES DUE 2003, SERIES A,
6 3/4% SENIOR NOTES DUE 2005, SERIES B
FOR ALL OUTSTANDING 6 3/4% SENIOR NOTES DUE 2005, SERIES A,
6.95% SENIOR NOTES DUE 2008, SERIES B
FOR ALL OUTSTANDING 6.95% SENIOR NOTES DUE 2008, SERIES A,
AND
7 3/8% SENIOR NOTES DUE 2018, SERIES B
FOR ALL OUTSTANDING 7 3/8% SENIOR NOTES DUE 2018, SERIES A
---------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED
---------------------
R&B Falcon Corporation, a Delaware corporation (the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal, to
exchange, in a transaction registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as defined
herein) of which this Prospectus constitutes a part, up to $250 million in
aggregate principal amount of its 6 1/2% Senior Notes due 2003, Series B (the
"5-Year Exchange Notes") for $250 million in aggregate principal amount of its
outstanding 6 1/2% Senior Notes due 2003, Series A (the "5-Year Private Notes"),
up to $350 million in aggregate principal amount of its 6 3/4% Senior Notes due
2005, Series B, (the "7-Year Exchange Notes") for $350 million in aggregate
principal amount of its outstanding 6 3/4% Senior Notes due 2005, Series A (the
"7-Year Private Notes"), up to $250 million in aggregate principal amount of its
6.95% Senior Notes due 2008, Series B (the "10-Year Exchange Notes") for $250
million in aggregate principal amount of its outstanding 6.95% Senior Notes due
2008, Series A (the "10-Year Private Notes"), and up to $250 million in
aggregate principal amount of its 7 3/8% Senior Notes due 2018, Series B (the
"20-Year Exchange Notes," and together with the 5-Year Exchange Notes, the
7-Year Exchange Notes and the 10-Year Exchange Notes, the "Exchange Notes"), for
$250 million in aggregate principal amount of its outstanding 7 3/8% Senior
Notes due 2018, Series A (the "20-Year Private Notes," and together with the
5-Year Private Notes, 7-Year Private Notes and 10-Year Private Notes, the
"Private Notes"). The Exchange Notes and the Private Notes are referred to
herein collectively as the "Notes," and each of the 5-Year Exchange Notes, the
5-Year Private Notes, the 7-Year Exchange Notes, the 7-Year Private Notes, the
10-Year Exchange Notes, the 10-Year Private Notes, the 20-Year Exchange Notes
and the 20-Year Private Notes are referred to herein as a "series" of Notes.
(continued on next page)
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
(continued from previous page)
The Company will accept for exchange any and all Private Notes that are
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the date the Exchange Offer expires, which will be , 1998 unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Private Notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Private Notes being tendered for exchange. However, the
Exchange Offer is subject to certain conditions that may be waived by the
Company and to the terms and provisions of the Registration Rights Agreement (as
defined herein). See "The Exchange Offer." Private Notes may be tendered only in
denominations of $1,000 and integral multiples thereof. The Company has agreed
to pay the expenses of the Exchange Offer.
The Exchange Notes will be obligations of the Company entitled to the
benefits of the Indenture dated April 14, 1998 between the Company, as issuer,
and Chase Bank of Texas, National Association, as trustee (the "Trustee"),
relating to the Notes (the "Indenture"). The form and terms of the Exchange
Notes are identical in all material respects to the form and terms of the
Private Notes, except that (i) the offering of the Exchange Notes has been
registered under the Securities Act, (ii) the Exchange Notes will not be subject
to transfer restrictions and (iii) the Exchange Notes will not be entitled to
registration or other rights under the Registration Rights Agreement including
the provision in the Registration Rights Agreement for payment of Liquidated
Damages (as defined in the Registration Rights Agreement) upon failure by the
Company to consummate the Exchange Offer or the occurrence of certain other
events. Following the Exchange Offer, any holders of Private Notes will continue
to be subject to the existing restrictions on transfer thereof and, as a general
matter, the Company will not have any further obligation to such holders to
provide for registration under the Securities Act of transfers of the Private
Notes held by them. To the extent that Private Notes are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered and tendered but
unaccepted Private Notes could be adversely affected. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer." The Exchange Notes are being
offered hereby in order to satisfy the obligations of the Company under a
Registration Rights Agreement dated April 8, 1998 among the Company and the
Initial Purchasers (as defined herein) relating to the Private Notes (the
"Registration Rights Agreement").
The 5-Year Exchange Notes will bear interest at a rate of 6 1/2% per annum,
the 7-Year Exchange Notes will bear interest at a rate of 6 3/4% per annum, the
10-Year Exchange Notes will bear interest at a rate of 6.95% per annum, and the
20-Year Exchange Notes will bear interest at a rate of 7 3/8% per annum.
Interest on the Exchange Notes is payable semi-annually on April 15 and October
15 of each year, commencing October 15, 1998. Holders of Exchange Notes of
record on October 1, 1998 will receive on October 15, 1998 an interest payment
in an amount equal to (i) the accrued interest on such Exchange Notes from the
date of issuance thereof to October 15, 1998, plus (ii) the accrued interest on
the previously held Private Notes from the date of issuance of such Private
Notes (April 14, 1998) to the date of exchange thereof. Interest will not be
paid on Private Notes that are accepted for exchange. The 5-Year Exchange Notes
mature on April 15, 2003, the 7-Year Exchange Notes mature on April 15, 2005,
the 10-Year Exchange Notes mature on April 15, 2008 and the 20-Year Exchange
Notes mature on April 15, 2018.
Based on an interpretation of the Securities Act by the staff of the
Securities and Exchange Commission (the "Commission"), Exchange Notes issued
pursuant to the Exchange Offer in exchange for Private Notes may be offered for
resale, resold and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who purchased such Private Notes directly from the Company for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an "affiliate" (within the meaning of
Rule 405 of the Securities Act) of the Company), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder is acquiring the Exchange Notes in its ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the Exchange Notes. Holders of
Private Notes wishing to accept the Exchange Offer must represent to the Company
that such conditions have been met.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The
i
<PAGE> 4
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Private
Notes where such Private Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of up to 180 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Private Notes. The Exchange Notes will not be listed on any securities exchange,
but the Private Notes are, and the Exchange Notes will be, eligible for trading
in the National Association of Securities Dealers, Inc.'s Private Offerings,
Resales and Trading through Automatic Linkages ("PORTAL") market. There can be
no assurance that an active market for the Notes will develop. To the extent
that a market for the Notes does develop, the market value of the Notes will
depend on market conditions (such as yields on alternative investments), general
economic conditions, the Company's financial condition and certain other
factors. Such conditions might cause the Notes, to the extent that they are
traded, to trade at a significant discount from face value. See "Risk
Factors -- Absence of Market for the Notes."
The Company will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection with
this Exchange Offer. See "The Exchange Offer -- Solicitation of Tenders; Fees
and Expenses."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT
FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH
FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR
A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH
THE PROVISIONS OF THIS PARAGRAPH.
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to the Exchange Offer
will be issued in the form of one or more fully registered global notes that
will be deposited with, or on behalf of, the Depository Trust Company ("DTC" or
the "Depositary") and registered in its name or in the name of Cede & Co., as
its nominee. Beneficial interests in the global notes representing the Exchange
Notes will be shown on, and transfers thereof will be effected
ii
<PAGE> 5
only through, records maintained by the Depositary and its participants. After
the initial issuance of such global notes, Exchange Notes in certificated form
will be issued in exchange for the global notes only in accordance with the
terms and conditions set forth in the Indenture. See "Description of the
Notes -- Book Entry; Delivery and Form."
---------------------
FORWARD-LOOKING STATEMENTS
Certain statements contained herein and in the documents incorporated
herein by reference, including statements of the Company's and management's
expectations, intentions, plans and beliefs, are forward-looking statements, as
defined in Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are dependent on
certain events, risks and uncertainties that may be outside of the Company's
control. When used or incorporated in this Prospectus, the words "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "plan," "project" and
similar expressions are intended to identify forward-looking statements.
Although the Company believes that its expectations, intentions, plans and
beliefs reflected in such forward-looking statements are reasonable, it can give
no assurance that they will be achieved. Such statements are subject to certain
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Among the key factors that have a direct bearing on the Company's
results of operations are the levels of activity in oil and gas exploration,
development and production, the success of the Company's strategy of expanding
its deepwater fleet, the success of the Company's construction and upgrade
projects, competition in the marine drilling market, operational risks inherent
in the marine drilling business, governmental regulation, unanticipated repairs
to the Company's rig fleet and risks associated with doing business outside the
U.S. These forward-looking statements speak only as of the date of this
Prospectus. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statement
contained in this Prospectus to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) under the Securities Act with respect
to the Exchange Notes offered hereby. As permitted by the rules and regulations
of the Commission, this Prospectus omits certain information, exhibits and
undertakings contained in the Registration Statement. For further information
with respect to the Company and the Exchange Notes offered hereby, reference is
made to the Registration Statement, including the exhibits thereto and the
financial statements, notes and schedules filed as a part thereof. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. All such information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington D.C. 20549 and at the following
Regional Offices of the Commission: Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material may also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. The Commission also maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
(http://www.sec.gov). In addition, the Company's common stock, par value $.01
per share, is listed for trading on the New York Stock Exchange and reports,
proxy statements and other information
iii
<PAGE> 6
concerning the Company may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company has agreed that, whether or not it is required to do so by the
rules and regulations of the Commission, for so long as any of the Notes remain
outstanding, it will furnish to the holders of the Notes all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company were required to file
such forms pursuant to the Exchange Act including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and, with respect to
the annual financial statements only, a report thereon by the Company's
independent accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference certain documents relating to the
Company that are not presented herein or delivered herewith. These documents
(other than the exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents) are available
without charge, on request by any person to whom this Prospectus is delivered,
from the Company, 901 Threadneedle, Houston, Texas 77079, attention: Charles R.
Ofner, telephone number (281) 496-5000. The Company incorporates herein by
reference the following documents:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
(b) Current Report on Form 8-K dated March 25, 1998;
(c) Quarterly Report on Form 10-Q dated May 15, 1998; and
(d) All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof
and prior to termination of the Exchange Offer made hereby.
Any statement contained herein or in a document all or a portion of which
is incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superceded.
iv
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information in this Prospectus, including
the consolidated financial statements of the Company and notes thereto
incorporated herein by reference in this Prospectus. Unless the context
otherwise requires, references to the "Company" and "R&B Falcon" shall mean R&B
Falcon Corporation and its subsidiaries.
THE COMPANY
The Company owns and operates the world's largest fleet of marine drilling
rigs. The fleet is one of the most diverse in the industry, capable of drilling
in shallow to ultra-deepwater depths in most of the world's major offshore
hydrocarbon producing regions. The Company provides contract drilling and
related services, primarily in three markets determined by general equipment
type and water depth: Deepwater (12 drillships, including seven under
construction; 11 semisubmersible rigs, including two under construction; one
dynamically positioned floating production vessel); Shallow Water (26 jack-up
rigs; three submersible rigs; two drilling tenders); and Transition Zone (60
barge and workover rigs; inland tugs and utility barges).
The Company, through its predecessors, has provided contract drilling
services to the oil and gas industry since 1956. Through a business combination
that became effective December 31, 1997, (the "Merger"), Falcon Drilling
Company, Inc. ("Falcon") and Reading & Bates Corporation ("R&B") became wholly
owned subsidiaries of R&B Falcon Corporation. The principal executive office of
the Company is located at 901 Threadneedle, Houston, Texas 77079, and its phone
number at such location is (281) 496-5000.
The Company's overall strategy is to enhance its competitive positions in
markets that generate superior long-term returns. This strategy has included
expanding its rig fleet during periods of weak demand, which has enabled the
Company to significantly increase its rig asset base at attractive prices. The
Company focuses on equipment types that serve growing markets, can benefit from
consolidation, or are characterized by long-term contracts.
As a result of this strategy, the Company has become one of the largest
providers of deepwater drilling services and the leading contractor to the
domestic transition zone market. The Company intends to continue to pursue its
overall strategy through the following initiatives:
EXPAND DEEPWATER FLEET
A primary element of the Company's strategy is to further develop its
deepwater drilling business. Upon completion of current rig construction or
upgrade projects, the Company expects to have the world's largest fleet of rigs
capable of drilling in water depths greater than 3,000 feet. The Company
believes that active bidding in recent deepwater lease sales and the
demonstrated willingness of major oil companies to enter into long-term
contracts for deepwater rigs indicate that these companies intend to undertake
substantial exploration efforts in deepwater environments. Drilling in these
environments, particularly the ultra-deepwater regions beyond 5,000 feet, poses
technological challenges far greater than those encountered in shallower waters.
The Company believes that its leadership in the ultra-deepwater market and its
highly experienced deepwater management team give it the capability to meet
these challenges and provide a strong marketing advantage when competing for
long-term contracts.
The Company has seven drillships and two semisubmersible rigs under
construction or major upgrade. All are committed under contracts except for one
semisubmersible that is subject to a letter of intent. The Company expects these
projects, upon completion, to generate substantial revenues and cash flows.
1
<PAGE> 8
DEEPWATER CONSTRUCTION PROGRAM
<TABLE>
<CAPTION>
WATER
DEPTH EXPECTED
RIG CAPABILITY CUSTOMER TERM DELIVERY
--- ---------- -------- ---- --------
(FEET)
<S> <C> <C> <C> <C>
DRILLSHIPS
Deepwater Pathfinder(1)..................... 10,000 Conoco 5 years 4Q98
Deepwater Frontier(2)....................... 10,000 Conoco 2.5 years 1Q99
Drillship III............................... 10,000 Statoil 2.5 years 3Q99
Peregrine IV................................ 9,200 Petrobras 6 years 1Q99(3)
Peregrine VI................................ 10,000 Mobil/Phillips 3 years 2Q99(3)
Peregrine VII............................... 8,200 Amoco 3 years 1Q99(3)
Peregrine VIII.............................. 10,000 Texaco 3 years 3Q99(3)
SEMISUBMERSIBLE RIGS
RBS-6....................................... 8,000 Shell 5 years 1Q00
Falcon 100.................................. 2,450 Petrobras 4 years 1Q99(3)
</TABLE>
- ---------------
(1) 50% owned by the Company.
(2) 60% owned by the Company.
(3) Expected delivery is later than the required commencement date of the
drilling contract. See "Risk Factors -- Risks of Construction and Upgrade
Projects."
Execution of the Company's strategy requires substantial amounts of
capital, primarily for the upgrade and refurbishment of deepwater rigs.
CAPITALIZE ON LEADING TRANSITION ZONE FRANCHISE
The Company has established the leading position in the domestic transition
zone market (marshes, lakes, bays, and shallow coastal waters, generally not
exceeding 20 feet in water depth) and owns virtually all of the domestic
market's excess capacity. The Company also operates barge rigs in Venezuela. The
Company has the opportunity to increase its revenue base by refurbishing
non-operational barge rigs in response to increases in demand. The Company
returned four barge rigs to service in 1997. If increased demand warrants
placing additional barge rigs in service, the Company believes that it will have
a significant cost and timing advantage over competitors who would have to
construct new rigs in order to increase their capacity. In addition, the Company
will evaluate the deployment of barge rigs to other geographic markets which may
yield more attractive economic returns.
EXPLOIT FLEET AND GEOGRAPHIC DIVERSITY
The Company operates one of the most diverse fleets in the industry, both
in terms of rig type and geographic deployment. The Company's fleet currently
ranges from barge rigs capable of drilling in water depths of less than 10 feet
to ultra-deepwater drillships capable of drilling in water depths up to 7,500
feet. In addition, the Company is currently constructing drillships which are
designed to drill in water depths up to 10,000 feet.
The Company currently operates in most of the world's major offshore
hydrocarbon producing regions. The Company believes that this diversity allows
it to mitigate revenue and cash flow impacts associated with a major downturn in
any single geographic region. Additionally, the Company believes that its
existing worldwide operations, as well as its established customer
relationships, provide a strong competitive advantage in bidding for contracts
in a particular region over operators that would have to mobilize a rig into
that region in order to perform that contract.
2
<PAGE> 9
The Company also seeks opportunities to provide additional services which
are complementary to its core contract drilling business. In 1997, the Company
entered the inland marine transportation business, purchasing tugs and utility
barges which are primarily used in conjunction with the Company's domestic barge
rig fleet. The Company has also recently acquired offshore supply vessels for
use in connection with its drillship operations and offshore tugs capable of
towing jack-up rigs from location to location.
3
<PAGE> 10
SUMMARY OF TERMS OF EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $1,100,000,000
aggregate principal amount of Exchange Notes for up to an equal aggregate
principal amount of outstanding Private Notes. The Exchange Notes will be
obligations of the Company entitled to the benefits of the Indenture. The form
and terms of the Exchange Notes are identical in all material respects to the
form and terms of the Private Notes, except that (i) the offering of the
Exchange Notes has been registered under the Securities Act, (ii) the Exchange
Notes will not be subject to transfer restrictions and (iii) the Exchange Notes
will not be entitled to any rights under the Registration Rights Agreement. See
"Description of the Notes."
THE PRIVATE NOTES.......... The Company issued and sold $250 million aggregate
principal amount of its 5-Year Private Notes, $350
million aggregate principal amount of its 7-Year
Private Notes, $250 million aggregate principal
amount of its 10-Year Private Notes, and $250
million aggregate principal amount of its 20-Year
Private Notes to Credit Suisse First Boston, Chase
Securities, Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Morgan Stanley Dean
Witter (the "Initial Purchasers") on April 14, 1998
pursuant to a Purchase Agreement dated April 8,
1998 (the "Purchase Agreement") in a transaction
not registered under the Securities Act in reliance
upon the exemption provided in Section 4(2) of the
Securities Act (the "Private Offering"). The
Initial Purchasers placed the Private Notes with
qualified institutional buyers (as defined in Rule
144A under the Securities Act) ("Qualified
Institutional Buyers" or "QIBs"), each of whom
agreed to comply with certain transfer restrictions
and other restrictions. Accordingly, the Private
Notes may not be reoffered, resold or otherwise
transferred in the United States unless such
transaction is registered under the Securities Act
or an applicable exemption from the registration
requirements of the Securities Act is available.
THE EXCHANGE OFFER......... $1,000 principal amount of Exchange Notes of a
series will be issued in exchange for each $1,000
principal amount of Private Notes of the
corresponding series validly tendered and accepted
pursuant to the Exchange Offer. As of the date
hereof, $1,100,000,000 in aggregate principal
amount of Private Notes are outstanding. The
Company will issue the Exchange Notes to tendering
holders of Private Notes promptly following the
Expiration Date. The terms of the Exchange Notes of
a series are identical in all material respects to
the Private Notes of the corresponding series
except for certain transfer restrictions and
registration rights relating to the Private Notes.
No federal or state regulatory requirements must be
complied with or approval obtained in connection
with the Exchange Offer, other than the
registration requirements under the Securities Act.
The 5-Year Private Notes and the 5-Year Exchange
Notes are sometimes referred to herein individually
and collectively as the "5-Year Notes," the 7-Year
Private Notes and the 7-Year Exchange Notes are
sometimes referred to herein individually and
collectively as the "7-Year Notes," the 10-Year
Private Notes and the 10-Year Exchange Notes are
sometimes referred to herein individually and
collectively as the "10-Year Notes," and the
20-Year Private Notes and the 20-Year Exchange
Notes are sometimes referred to herein individually
and collectively as the "20-Year Notes."
REGISTRATION RIGHTS
AGREEMENT.................. Pursuant to the Purchase Agreement, the Company and
the Initial Purchasers entered into the
Registration Rights Agreement which, among other
things, grants the holders of the Private Notes
certain
4
<PAGE> 11
exchange and registration rights. The Exchange
Offer is intended to satisfy certain obligations of
the Company under the Registration Rights
Agreement.
RESALE..................... Based on existing interpretations of the Securities
Act by the staff of the Commission set forth in
several no-action letters to third parties, and
subject to the immediately following sentence, the
Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for
Private Notes may be offered for resale, resold and
otherwise transferred by a holder thereof (other
than (i) a broker-dealer who purchased such Private
Notes directly from the Company for resale pursuant
to Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an
"affiliate" (within the meaning of Rule 405 of the
Securities Act) of the Company), without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that the
holder is acquiring the Exchange Notes in its
ordinary course of business and is not
participating, and has no arrangement or
understanding with any person to participate, in
the distribution of the Exchange Notes. Each
broker-dealer that receives Exchange Notes for its
own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. See "Plan of Distribution."
EXPIRATION DATE............ 5:00 p.m., New York City time, on
, 1998, unless the Exchange
Offer is extended, in which case the term
"Expiration Date" means the latest date and time to
which the Exchange Offer is extended. See "The
Exchange Offer -- Expiration Date; Extensions;
Amendments."
ACCRUED INTEREST ON THE
EXCHANGE NOTES AND THE
PRIVATE NOTES............ The 5-Year Exchange Notes will bear interest at a
rate of 6 1/2% per annum, the 7-Year Exchange Notes
will bear interest at a rate of 6 3/4% per annum,
the 10-Year Exchange Notes will bear interest at a
rate of 6.95% per annum, and the 20-Year Exchange
Notes will bear interest at a rate of 7 3/8% per
annum. Interest on the Exchange Notes is payable
semi-annually on April 15 and October 15 of each
year, commencing October 15, 1998. Holders of
record of Exchange Notes on October 1, 1998 will
receive on October 15, 1998 an interest payment in
an amount equal to (i) the accrued interest on such
Exchange Notes from the date of issuance thereof to
October 15, 1998, plus (ii) the accrued interest on
the previously held Private Notes from the date of
issuance of such Private Notes (April 14, 1998) to
the date of exchange thereof. Interest will not be
paid on Private Notes that are accepted for
exchange. The 5-Year Exchange Notes mature on April
15, 2003, the 7-Year Exchange Notes mature on April
15, 2005, the 10-Year Exchange Notes mature on
April 15, 2008 and the 20-Year Exchange Notes
mature on April 15, 2018.
CONDITIONS TO THE EXCHANGE
OFFER.................... The Company may terminate the Exchange Offer if it
determines that its ability to proceed with the
Exchange Offer could be materially impaired
5
<PAGE> 12
due to the occurrence of certain conditions. The
Company does not expect any of such conditions to
occur, although there can be no assurance that such
conditions will not occur. Holders of Private Notes
will have certain rights under the Registration
Rights Agreement should the Company fail to
consummate the Exchange Offer. See "The Exchange
Offer -- Conditions to the Exchange Offer."
PROCEDURES FOR TENDERING
PRIVATE NOTES.............. Each holder of Private Notes wishing to accept the
Exchange Offer must either (i) complete, sign and
date the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Private Notes to be
exchanged and any other required documentation, to
Chase Bank of Texas, National Association, as
Exchange Agent, at the address set forth herein and
therein or effect a tender of Private Notes
pursuant to the procedures for book-entry transfer
as provided for herein and therein, or (ii) effect
tenders by book-entry transfer by complying with
DTC's Automated Tender Offer Program ("ATOP"),
including the delivery of an Agent's message to the
Exchange Agent. By executing the Letter of
Transmittal, each holder will represent to the
Company that, among other things, the Exchange
Notes acquired pursuant to the Exchange Offer are
being acquired in the ordinary course of business
of the person receiving such Exchange Notes,
whether or not such person is the holder, that
neither the holder nor any such other person has
any arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes and that neither the holder nor any such
other person is an "affiliate," as defined in Rule
405 under the Securities Act, of the Company. See
"The Exchange Offer -- Procedures for Tendering."
Following consummation of the Exchange Offer,
holders of Private Notes not tendered will not as a
general matter have any further registration
rights, and the Private Notes will continue to be
subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the
Private Notes could be adversely affected. See
"Risk Factors -- Absence of Market for the Notes"
and "-- Failure to Exchange Private Notes" and "The
Exchange Offer -- Consequences of Failure to
Exchange."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......... Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender in the Exchange Offer should
contact such registered holder promptly and
instruct such registered holder to tender on his
behalf. If such beneficial owner wishes to tender
on his own behalf, such beneficial owner must,
prior to completing and executing the Letter of
Transmittal and delivering his Private Notes,
either (a) make appropriate arrangements to
register ownership of the Private Notes in such
holder's name or (b) obtain a properly completed
bond power from the registered holder or endorsed
certificates representing the Private Notes to be
tendered. The transfer of record ownership may take
considerable time, and completion of such transfer
prior to the Expiration Date may not be possible.
See "The Exchange Offer -- Procedures for
Tendering."
6
<PAGE> 13
GUARANTEED DELIVERY
PROCEDURES................. Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available, or who cannot deliver their
Private Notes (or complete the procedure for
book-entry transfer) and deliver a properly
completed Letter of Transmittal and any other
documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date may
tender their Private Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS.......... Tenders of Private Notes may be withdrawn at any
time prior to the Expiration Date by furnishing a
written or facsimile transmission notice of
withdrawal to the Exchange Agent containing the
information set forth in "The Exchange
Offer -- Withdrawal of Tenders."
ACCEPTANCE OF PRIVATE NOTES
AND DELIVERY OF EXCHANGE
NOTES.................... Subject to certain conditions (as summarized above
in "Conditions to the Exchange Offer" and described
more fully in "The Exchange Offer -- Conditions to
the Exchange Offer"), the Company will accept for
exchange any and all Private Notes that are
properly tendered in the Exchange Offer prior to
the Expiration Date. See "The Exchange
Offer -- Procedures for Tendering." The Exchange
Notes issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
EXCHANGE AGENT............. Chase Bank of Texas, National Association, the
trustee under the Indenture, is serving as the
Exchange Agent (the "Exchange Agent") in connection
with the Exchange Offer. The mailing address of the
Exchange Agent is Chase Bank of Texas, National
Association, c/o The Chase Manhattan Bank, 55 Water
Street, North Building, Room 234, Windows 20 and
21, New York, New York 10041. For requests for
additional copies of the Prospectus, the Letter of
Transmittal or the Notice of Guaranteed Delivery,
the telephone number for the Exchange Agent is
(212) 638-0454, and the facsimile number for the
Exchange Agent is (212) 638-7380 or (212) 638-7381
(Eligible Institutions only). For other inquiries,
call (713) 216-6686.
EFFECT ON HOLDERS OF
PRIVATE NOTES.............. Holders of Private Notes who do not tender their
Private Notes in the Exchange Offer will continue
to hold their Private Notes and will be entitled to
all the rights and limitations applicable thereto
under the Indenture. All untendered, and tendered
but unaccepted, Private Notes will continue to be
subject to the restrictions on transfer provided
for in the Private Notes and the Indenture. To the
extent that Private Notes are tendered and accepted
in the Exchange Offer, the trading market, if any,
for any untendered and tendered but unaccepted
Private Notes could be adversely affected. See
"Risk Factors -- Failure to Exchange Private
Notes."
See "The Exchange Offer" for more detailed information concerning the terms
of the Exchange Offer.
7
<PAGE> 14
SUMMARY OF TERMS OF EXCHANGE NOTES
SECURITIES OFFERED......... $250 million aggregate principal amount of 6 1/2%
Senior Notes due 2003, Series B, of the Company;
$350 million aggregate principal amount of 6 3/4%
Senior Notes due 2005, Series B, of the Company;
$250 million aggregate principal amount of 6.95%
Senior Notes due 2008, Series B, of the Company;
and
$250 million aggregate principal amount of 7 3/8%
Senior Notes due 2018, Series B, of the Company.
MATURITY DATES............. April 15, 2003 for the 5-Year Exchange Notes;
April 15, 2005 for the 7-Year Exchange Notes;
April 15, 2008 for the 10-Year Exchange Notes; and
April 15, 2018 for the 20-Year Exchange Notes.
INTEREST PAYMENT DATES..... April 15 and October 15 of each year, commencing
October 15, 1998.
OPTIONAL REDEMPTION........ The 5-Year Exchange Notes will not be redeemable.
Each other series of Exchange Notes may be redeemed
at any time, at the option of the Company, in whole
or in part, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid
interest (if any) to the applicable date of
redemption plus the applicable Make-Whole Premium
relating to the then prevailing applicable Treasury
Yield and the remaining life of such series of
Exchange Notes. See "Description of the
Notes -- Optional Redemption."
RANKING AND GUARANTEES..... The Exchange Notes will be senior unsecured
indebtedness of the Company and will rank pari
passu in right of payment with all other existing
and future senior unsecured indebtedness of the
Company, including obligations under its New Bank
Facility (as defined herein), and senior in right
of payment to any existing and future indebtedness
of the Company that is, by its terms, expressly
subordinated to the Exchange Notes. The indenture
governing the Notes will provide that any
subsidiary that guarantees funded indebtedness of
the Company after the issue date of the Notes
(including indebtedness under the New Bank
Facility) will be required to equally and ratably
guarantee the Exchange Notes. The guarantee of the
Exchange Notes by any subsidiary may be released
if, but only so long as, no other funded
indebtedness of the Company is guaranteed by such
subsidiary. See "Description of the
Notes -- Ranking and Guarantees." The Exchange
Notes will be structurally subordinated to
indebtedness and other liabilities of the Company's
subsidiaries. The Company's subsidiaries have
substantial liabilities, primarily trade payables.
COVENANTS.................. The Indenture contains covenants that limit the
Company's ability to incur indebtedness for
borrowed money secured by certain liens and to
engage in certain sale/leaseback transactions.
These limitations are subject to certain
qualifications and exceptions. See "Description of
the Notes -- Certain Covenants."
USE OF PROCEEDS............ The Company will not receive any proceeds from the
Exchange Offer.
8
<PAGE> 15
RISK FACTORS
See "Risk Factors," beginning on page 11 hereof, for a discussion of
certain factors that should be considered in evaluating an investment in the
Exchange Notes.
9
<PAGE> 16
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth summary consolidated financial data for the
Company as of and for the three months ended March 31, 1998 and 1997 and as of
and for each of the years in the five-year period ended December 31, 1997,
giving effect to the Merger under the "pooling-of-interests" method of
accounting. The summary consolidated financial data as of and for the three
months ended March 31, 1998 and 1997 have been derived from the unaudited
condensed consolidated financial statements of the Company. The summary
consolidated financial data as of and for the five-year period ended December
31, 1997 have been derived from the Company's audited consolidated financial
statements and, with respect to 1994 and 1993, the separate audited consolidated
financial statements of R&B and Falcon. The following data should be read in
conjunction with the historical consolidated financial statements of the Company
incorporated herein by reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1998 1997
--------- -------
(IN MILLIONS, EXCEPT
PER SHARE AND RATIO
AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $ 279.4 $203.1
Operating income............................................ 126.0 69.8
Income from continuing operations before income tax expenses
and minority interest..................................... 113.5 61.0
Net income.................................................. 69.8 38.9
Income from continuing operations per common share:
Basic..................................................... .42 .27
Diluted................................................... .42 .27
OTHER DATA:
Ratio of earnings to fixed charges(2)....................... 5.5x 4.6x
Depreciation................................................ $ 20.9 $ 18.5
Capital expenditures and acquisitions....................... $ 237.4 $ 69.1
BALANCE SHEET DATA AS OF MARCH 31, 1998:
Working capital............................................. $ 96.6
Total assets................................................ 2,226.1
Total debt.................................................. 1,038.5
Stockholders' equity........................................ 822.2
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $ 942.1 $ 609.6 $390.3 $307.6 $245.6
Operating income............................................ 293.3 180.7 64.9 22.4 26.4
Income (loss) from continuing operations before
extraordinary gain........................................ 156.0 106.4 23.5 (12.7) 8.5
Net income (loss)(1)........................................ (6.2) 106.7 26.9 (12.7) 8.5
Income (loss) from continuing operations per common share:
Basic..................................................... .95 .70 .16 (.18) .06
Diluted................................................... .94 .67 .15 (.18) .05
OTHER DATA:
Ratio of earnings to fixed charges(2)....................... 4.5x 3.5x 1.8x -- 1.5x
Depreciation and amortization............................... $ 82.9 $ 62.3 $ 46.9 $ 38.4 $ 32.8
Capital expenditures and acquisitions....................... $ 601.2 $ 383.2 $186.9 $124.7 $ 42.5
BALANCE SHEET DATA:
Working capital............................................. $ (14.9) $ 195.3 $ 57.7 $ 9.2 $ 90.5
Total assets................................................ 1,928.4 1,455.8 946.8 810.9 722.4
Total debt.................................................. 827.4 514.2 296.7 288.6 166.3
Stockholders' equity........................................ 728.0 716.7 472.6 356.3 350.5
</TABLE>
- ---------------
(1) After income (loss) from discontinued operations of ($162.2) million in 1997
and $0.3 million in 1996 and extraordinary gain of $3.4 million in 1995.
(2) For the purpose of this calculation "earnings" represent income (loss) from
continuing operations before income tax expense, minority interest, and
extraordinary gain, plus fixed charges exclusive of interest capitalized.
"Fixed charges" consist of interest, whether expensed or capitalized,
amortization of debt expense and an estimated portion of rentals
representing interest expense. As a result of the loss incurred in 1994,
earnings were insufficient to cover fixed charges by $3.4 million in that
year. Fixed charges for the year ended December 31, 1997 and the three
months ended March 31, 1998 and 1997 exclude interest cost of $7.3 million,
$4.5 million and $1.2 million, respectively, related to the debt of joint
venture companies guaranteed by R&B. Pro forma ratio of earnings to fixed
charges for the three months ended March 31, 1998 and for the year ended
December 31, 1997 was 6.2x and 5.1x, respectively.
10
<PAGE> 17
RISK FACTORS
Prior to making an investment in the Exchange Notes, prospective purchasers
should carefully consider all of the information contained and incorporated by
reference in this Prospectus and, in particular, should evaluate the following
risk factors.
DEPENDENCE ON OIL AND GAS INDUSTRY
The Company's operations are materially dependent upon the level of
activity in offshore oil and gas exploration and production. The level of such
activity is affected by both short-term and long-term trends in oil and gas
prices. Oil and gas prices and, therefore, the level of drilling, exploration
and production activity, can be volatile. Worldwide military, political and
economic events, including initiatives by the Organization of Petroleum
Exporting Countries, have contributed to, and are likely to continue to
contribute to, price volatility. The Company believes that any prolonged
reduction in oil and gas prices will depress the level of exploration and
production activity and result in a corresponding decline in the demand for the
Company's services and, therefore, have a material adverse effect on the
Company's revenues, cash flows and profitability. There can be no assurances as
to the future level of demand for the Company's services or future conditions in
the drilling industry. In May 1998, the Company began to experience a downturn
in demand for the Company's drilling rigs that the Company believes is
attributable in large part to declines in oil and gas prices that began in 1997
and have persisted into 1998. See "Recent Developments." Decreased demand
adversely affects the Company by lowering utilization of the Company's rigs and
reducing the dayrates the Company is able to charge for its rigs.
COMMITMENT TO DEEPWATER DRILLING MARKET
The Company has made a significant commitment to the deepwater drilling
market. Its current projects include the construction or major upgrade of seven
drillships and two semisubmersible rigs. The Company has long-term contracts or
letters of intent for the use of each deepwater rig that is currently undergoing
construction or upgrade. However, the cost of these projects will exceed the
cash flow the Company will derive from contractual commitments currently in
place. Upon completion of the initial contract term for each such rig, there is
no assurance that the Company will be able to obtain contracts for the further
use of the rig, or, if a contract can be obtained, that it will be at a dayrate
as high as the initial contract dayrate. In addition, these contracts may be
terminated in certain instances if the Company fails to perform.
The deepwater market requires the use of floating rigs utilizing more
sophisticated technologies than those of the bottom-supported rigs that
previously constituted the majority of the Company's fleet. The Company and
other drilling contractors have experienced problems with subsea well control
systems designed for drilling in deeper waters. If this equipment fails to
function properly, the rig cannot engage in drilling operations. To the extent
these problems are encountered in a system installed on one of the Company's
rigs, the Company will experience lost revenues and in certain cases may be
subject to contract termination by the customer.
The Company will be required to hire and retain additional personnel
capable of operating effectively in a deepwater environment. Other drilling
contractors are expanding their deepwater fleets, and will compete with the
Company for qualified personnel to operate its deepwater rigs. As a result,
there can be no assurance that the Company will be successful in these efforts.
RISKS OF CONSTRUCTION AND UPGRADE PROJECTS
The Company's deepwater rig construction and upgrade projects are subject
to the risks of delay and cost overruns inherent in any large construction
project, including shortages of equipment, unforeseen engineering problems, work
stoppages, weather interference, unanticipated cost increases and shortages of
materials or skilled labor. In particular, there is a current shortage of
certain types of drilling equipment that could delay and increase the cost of
the deepwater projects. Significant cost overruns or delays would adversely
affect the Company's financial condition and results of operations. Significant
delays could also result in penalties under, or the termination of, most of the
long-term contracts under which the Company plans to operate these
11
<PAGE> 18
deepwater rigs. The currently scheduled delivery dates for five of the Company's
deepwater rigs are later than the commencement date under the initial drilling
contracts for such drillships.
The contracts for the Peregrine VI and the Peregrine VII are subject to
cancellation if the rigs are delivered at the currently estimated delivery
dates. The currently estimated delivery dates for the Peregrine IV, Peregrine
VIII and Falcon 100 do not subject the Company to cancellation of the contracts
on such rigs. However, such contracts provide for late delivery penalties
(approximately $41,500 per day for the Peregrine IV, $3,000 per day for the
Peregrine VIII, and $26,500 per day for the Falcon 100).
COMPETITION
The marine drilling market is highly competitive and no one competitor is
dominant. During periods when the supply of rigs exceeds demand, this
competition results in significant downward pressure on the dayrates at which
the Company may contract its rigs. See "Recent Developments." Because the
Company's cost of operating its rigs cannot be materially reduced, any reduction
in dayrates has a negative impact on the Company's results of operations. Even
in an environment of increased drilling activity, construction of new rigs could
lead to an oversupply of rigs and adversely affect dayrates for the Company's
rigs.
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to the hazards inherent in the marine
drilling business, including blowouts, craterings, fires, collisions, capsizings
and adverse weather. These hazards could result in (i) substantial damage to the
environment; (ii) personal injury and loss of life; (iii) suspension of drilling
operations; or (iv) damage to property and producing formations. The Company may
incur substantial liabilities or losses as a result of these hazards. The
Company maintains insurance protection that it deems prudent, including
liability insurance and insurance against damage to or loss of equipment. In
addition, the Company generally seeks to obtain indemnity agreements whenever
possible from the Company's customers, requiring such customers to hold the
Company harmless in the event of loss of production, reservoir damage, or
liability for pollution that originates below the water surface. There is no
assurance that such insurance or contractual indemnity protection will be
sufficient or effective under all circumstances or against all hazards to which
the Company may be subject. Further, there is no assurance that the Company will
be able to obtain adequate insurance coverage at rates it deems reasonable in
the future.
FOREIGN OPERATIONS
The Company currently conducts operations worldwide. Operations in foreign
countries generally are subject to various risks associated with doing business
outside the United States, including risk of war, general strikes, civil
disturbances, guerrilla activity, foreign exchange restrictions, currency
fluctuations and devaluations, and foreign governmental activities that may
limit or disrupt markets, restrict payments or the movement of funds or result
in the deprivation of contract rights or expropriation of property. The Company
may also encounter difficulty in enforcing its contract rights in foreign
countries, particularly against state-owned oil companies. No prediction can be
made as to what foreign governmental regulations may be enacted in the future
that could be applicable to the Company.
Fluctuations in the value of the currencies in which the Company conducts
its business relative to the U.S. dollar could cause currency translation losses
with respect to the Company's foreign operations. The Company cannot predict the
effect of exchange rate fluctuations upon future operating results.
RIG FLEET AGE
The majority of the Company's rigs were built between 1978 and 1983. With
increasing age, the likelihood increases that a rig will require major repairs
in order to remain operational. These repairs may result in rigs being
unavailable for service from time to time, potentially reducing the Company's
revenues, and may require increasing amounts of capital.
12
<PAGE> 19
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and foreign
laws and regulations controlling the discharge of materials into the environment
or otherwise relating to the protection of the environment, the safety of its
personnel and vessels and other matters. Environmental laws and regulations
could impose significant liability on the Company for damages, clean-up costs
and penalties in the event of the occurrence of oil spills or similar discharges
of pollutants in the course of the Company's operations, in certain
circumstances without regard to negligence or fault on the Company's part.
Environmental and other laws and regulations (and any new laws and regulations)
may negatively impact the Company by increasing the Company's costs of doing
business and discouraging the Company's clients from exploring for hydrocarbons,
thus reducing demand for the Company's services. The Company does not believe
that environmental regulations have had any material adverse effect on its
capital expenditures, results of operations or competitive position, and does
not anticipate that any material expenditures will be required to enable it to
comply with existing laws and regulations. Most of the Company's operations
require its customers to obtain governmental permits to conduct such operations,
and delays or increased costs in obtaining such permits could adversely affect
the Company's results of operations.
LEVERAGE AND LIQUIDITY
The Company has substantial debt and significant leverage and will require
substantial cash flow to meet its debt service requirements. The Company's
ability to meet its debt obligations will depend on the Company's future
performance, which is subject to general economic and business factors beyond
the Company's control. The degree of the Company's leverage may affect (i) the
Company's vulnerability to adverse economic, regulatory and industry conditions;
(ii) the Company's ability to obtain additional financing to fund future working
capital requirements, capital expenditures, acquisitions or other general
corporate requirements; and (iii) the portion of the Company's cash flow from
operations that must be dedicated to debt service requirements, thereby reducing
the funds available for operations and future business opportunities. To the
extent that the Company is unable to repay the principal amount of the Exchange
Notes at maturity out of cash on hand, it will need to refinance the Exchange
Notes, or repay the Exchange Notes with the proceeds of an equity offering or
from sales of assets. There can be no assurance that future borrowings or equity
financing will be available for the refinancing or repayment of the Exchange
Notes or that the Company will be able to sell assets at acceptable prices.
The New Bank Facility bears interest at variable rates. While the Company
may enter into one or more interest rate protection agreements to limit its
exposure to increases in such interest rates, such agreements would not entirely
eliminate such exposure. Any increase in the interest rate on the Company's
indebtedness will reduce funds available to the Company for its operations and
future business opportunities.
HOLDING COMPANY STRUCTURE
All of the Company's operating income and cash flow is generated by its
subsidiaries. As a result, the Company expects that funds necessary to meet its
debt service obligations will be provided primarily by distributions or advances
from the subsidiaries. Under certain circumstances, contractual and legal
restrictions, as well as the financial condition and operating requirements of
the subsidiaries, could limit the Company's ability to obtain cash from the
subsidiaries for the purpose of meeting its debt service obligations, including
the payment of principal and interest on the Exchange Notes. The subsidiaries
will not be obligated with respect to the Exchange Notes unless any subsidiary
guarantees any funded indebtedness of the Company on or after the date the
Private Notes were issued (April 14, 1998), in which case such subsidiary will
be obligated to equally and ratably guarantee the Notes. As a result, the claims
of creditors of the subsidiaries effectively have priority with respect to the
assets and earnings of the subsidiaries over the claims of the holders of the
Exchange Notes. In the event of an insolvency, liquidation or reorganization of
a subsidiary, any creditors of such subsidiary, including trade creditors, would
be entitled to payment in full from the assets of such subsidiary before the
Company, as a stockholder, would be entitled to receive any distribution from
the subsidiary. The Company's subsidiaries have substantial liabilities,
primarily trade payables, all of which effectively rank senior to the Exchange
Notes.
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<PAGE> 20
ABSENCE OF MARKET FOR THE NOTES
The Private Notes have not been registered under the Securities Act or any
state securities law and, unless so registered, may not be offered or sold
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any applicable state
securities laws.
Although the Exchange Notes may be resold or otherwise transferred by the
holders (who are not affiliates of the Company) without compliance with the
registration requirements under the Securities Act, they will be new securities
for which there is currently no established trading market. The Company does not
intend to apply for listing of the Exchange Notes on a national securities
exchange or for quotation of the Exchange Notes on an automated dealer quotation
system. Although the Initial Purchasers in the offering of the Private Notes
have informed the Company that they currently intend to make a market in the
Exchange Notes, they are not obligated to do so, and any such market-making, if
initiated, may be discontinued at any time without notice. The liquidity of any
market for the Exchange Notes will depend upon the number of holders of the
Notes, the interest of securities dealers in making a market in the Exchange
Notes and other factors. Accordingly, there can be no assurance as to the
development or liquidity of any market for the Exchange Notes. If an active
trading market for the Exchange Notes does not develop, the market price and
liquidity of the Exchange Notes may be adversely affected. If the Exchange Notes
are traded, they may trade at a discount from their face value, depending upon
prevailing interest rates, the market for similar securities, the performance of
the Company and certain other factors. The Exchange Notes will be eligible for
trading in PORTAL.
Notwithstanding the registration of the Exchange Notes in the Exchange
Offer, holders who are "affiliates" (as defined under Rule 405 of the Securities
Act) of the Company may publicly offer for sale or resell the Exchange Notes
only in compliance with provisions of Rule 144 under the Securities Act.
FAILURE TO EXCHANGE PRIVATE NOTES
Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly completed
and duly executed Letter of Transmittal and all other required documentation.
Therefore, holders of Private Notes desiring to tender such Private Notes in
exchange for Exchange Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof. In addition, any
holder of Private Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer as a result of market-making
activities or any other trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer may be deemed to be an "underwriter" within the meaning of
the Securities Act. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. To the extent
that Private Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Private Notes could be
adversely affected due to the limited amount, or "float," of the Private Notes
that are expected to remain outstanding following the Exchange Offer. Generally,
a lower "float" of a security could result in less demand to purchase such
security and could, therefore, result in lower prices for such security. For the
same reason, to the extent that a large amount of Private Notes are not tendered
or are tendered and not accepted in the Exchange Offer, the trading market for
the Exchange Notes could be adversely affected. See "Plan of Distribution" and
"The Exchange Offer."
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<PAGE> 21
RECENT DEVELOPMENTS
FINANCING
In April 1998, the Company issued the Private Notes, resulting in net
proceeds to the Company of $1,082 million. A portion of the proceeds was used as
follows:
1. $327.7 million was used to retire $274.4 million principal amount of
senior unsecured indebtedness of Falcon and to pay accrued interest, redemption
premium and expenses incurred in connection with such redemption.
2. $615 million was used to retire two existing bank credit facilities.
In April 1998, the Company entered into a $500 million revolving credit
facility with a group of bank lenders ("New Bank Facility"). The New Bank
Facility matures April 24, 2002, and bears interest at LIBOR plus 0.75%. At June
9, 1998, no amounts had been drawn under the New Bank Facility.
MARKET CONDITIONS
In May 1998, the Company began to experience decreasing demand for its
drilling rigs, primarily in the domestic market and most particularly in the
domestic barge rig market. From July 1996 until May 1998, the Company
experienced essentially full utilization of its domestic drilling rigs that were
in operating condition. During the same period, dayrates for the Company's
domestic drilling rigs had also increased significantly. As of June 9, 1998, the
Company's domestic drilling fleet had nine barge drilling rigs and two jackup
drilling rigs that were operational but without a contract. In addition, the
Company's domestic workover fleet, which has experienced less than full
utilization at most times since the Company entered that market, has experienced
decreased utilization during 1998. Although there has been a recent decrease in
demand for the Company's rigs in the international market, the impact on the
Company has been less pronounced in that market because most of the Company's
international rigs are working under term contracts.
The Company believes that its competitors in the domestic jackup market are
experiencing similar decreasing demand and that certain of them are offering
their rigs at lower dayrates in order to obtain drilling contracts. In bidding
for recent contract opportunities, the Company has had to lower its dayrates in
order to compete effectively for these opportunities.
The Company believes that the decline in demand for its rigs is primarily
attributable to the decline in oil and gas prices which began in 1997. The
Company cannot predict whether demand for its rigs will decline further, remain
the same, or increase, nor can the Company predict the time frames during which
any future changes in demand might occur. Any decline in rig utilization
adversely effects the Company by reducing the Company's revenues. Further,
declining demand for rigs generally results in reduced dayrates, which also
adversely effects the Company. In the short term, the Company's costs are not
significantly lower by reduced utilization of its rigs.
DEEPWATER CONSTRUCTION PROGRAM
The Company currently has nine deepwater rigs under construction or major
upgrade. The Company believes that five of these projects are behind the
original schedules for completion. In the event of a prolonged downturn in the
oil and gas business, an operator who has contracted for a rig under
construction may determine not to proceed with all or portion of its deepwater
drilling program, and in such event may seek to use late delivery of a rig as a
basis for canceling the contract. Further, any delays in completion of a rig
will adversely effect the Company by delaying realization of the revenues which
such rig is expected to generate.
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<PAGE> 22
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on April 14, 1998 to the Initial
Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold all of the Private Notes to Qualified Institutional Buyers,
each of whom agreed to comply with certain transfer restrictions and other
conditions. As a condition to the purchase of the Private Notes by the Initial
Purchasers, the Company entered into the Registration Rights Agreement with the
Initial Purchasers, which requires, among other things, that promptly following
the issuance and sale of the Private Notes, the Company file with the Commission
the Registration Statement with respect to the Exchange Notes, use its best
efforts to cause the Registration Statement to become effective under the
Securities Act and, upon the effectiveness of the Registration Statement, offer
to the holders of the Private Notes the opportunity to exchange their Private
Notes for a like principal amount of Exchange Notes, which will be issued
without a restrictive legend and may be reoffered and resold by the holder
without restrictions or limitations under the Securities Act subject to certain
exceptions described below. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The term "holder" with respect to the Exchange Offer means any person in
whose name Private Notes are registered on the Company's books or any other
person who has obtained a properly completed bond power from the registered
holder or any person whose Private Notes are held of record by the Depositary
who desires to deliver such Private Notes by book-entry transfer of the
Depositary.
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters issued to third parties, the
Company believes that Exchange Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) a broker-dealer who purchased
such Private Notes directly from the Company for resale pursuant to Rule 144A or
any other available exemption under the Securities Act or (ii) a person that is
an "affiliate" (within the meaning of Rule 405 of the Securities Act) of the
Company), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the holder is acquiring the
Exchange Notes in its ordinary course of business and is not participating, does
not intend to participate, and has no arrangement or understanding with any
person to participate, in the distribution of the Exchange Notes. However, if
any holder acquires the Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in the distribution of the Exchange Notes or is a
broker-dealer, such holder cannot rely on the position of the staff of the
Commission enumerated in certain no-action letters issued to third parties and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is available. Each broker-dealer that receives Exchange Notes
for its own account in exchange for Private Notes, where such Private Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to make this Prospectus, as it may be amended or supplemented from
time to time, available to broker-dealers for use in connection with any resale
for a period of 180 days after the Expiration Date. See "Plan of Distribution."
As a result of the filing and effectiveness of the Registration Statement
of which this Prospectus is a part, the Company will not be required to pay an
increased interest rate on the Private Notes. Following the consummation of the
Exchange Offer, holders of Private Notes not tendered will not have any further
registration rights, except in certain limited circumstances requiring the
filing of a Shelf Registration Statement (as defined herein), and the Private
Notes will continue to be subject to certain restrictions on
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<PAGE> 23
transfer. See "-- Consequences of Failure to Exchange." Accordingly, the
liquidity of the market for the Private Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept all Private Notes
properly tendered and not withdrawn prior to 5:00 p.m. New York City time, on
the Expiration Date. After authentication of the Exchange Notes by the Trustee
or an authenticating agent, the Company will issue and deliver $1,000 principal
amount of Exchange Notes of a series in exchange for each $1,000 principal
amount of outstanding Private Notes of the corresponding series accepted in the
Exchange Offer. Holders may tender some or all of their Private Notes pursuant
to the Exchange Offer in denominations of $1,000 and integral multiples thereof.
Each holder of Private Notes who wishes to exchange Private Notes for
Exchange Notes in the Exchange Offer will be required to represent that (i) any
Exchange Notes to be received by such holder are being acquired in the ordinary
course of business, (ii) such holder has no arrangements or understandings with
any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes, (iii) such holder is not an affiliate of
the Company, as defined in Rule 405 of the Securities Act, (iv) if such holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Notes, and (v) if such holder is a
broker-dealer, that it will receive the Exchange Notes for its own account in
exchange for the Private Notes that were acquired as a result of market-making
activities.
Each broker-dealer that receives Exchange Notes of a series for its own
account in exchange for Private Notes of the corresponding series, where such
Private Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. See "Plan of
Distribution."
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Private Notes, except that (i) the
offering of the Exchange Notes has been registered under the Securities Act,
(ii) the Exchange Notes will not be subject to transfer restrictions and (iii)
certain provisions relating to an increase in the stated interest rate on the
Private Notes provided for under certain circumstances will be eliminated. The
Exchange Notes will evidence the same debt as the Private Notes. The Exchange
Notes will be issued under and entitled to the benefits of the Indenture.
As of the date of this Prospectus, $1,100,000,000 aggregate principal
amount of the Private Notes is outstanding. In connection with the issuance of
the Private Notes, the Company arranged for the Private Notes to be issued and
transferable in book-entry form through the facilities of the Depositary, acting
as depositary. The Exchange Notes will also be issuable and transferable in
book-entry form through the Depositary.
This Prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of the Private Notes as of the
close of business on , 1998. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act, and the rules and regulations of the Commission thereunder, including Rule
14e-1, to the extent applicable. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Private Notes being tendered, and holders
of the Private Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of the State of Delaware or under the Indenture in
connection with the Exchange Offer. The Company shall be deemed to have accepted
validly tendered Private Notes when, as and if the Company has given oral or
written notice thereof to the Exchange Agent. See "-- Exchange Agent." The
Exchange Agent will act as agent for the tendering holders for the purpose of
receiving Exchange Notes from the Company and delivering Exchange Notes to such
holders.
If any tendered Private Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Private Notes will be returned, at the
Company's cost, to the tendering holder thereof as promptly as practicable after
the Expiration Date.
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<PAGE> 24
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Solicitation of Tenders; Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF PRIVATE NOTES AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ALL OR ANY PORTION OF THEIR PRIVATE NOTES PURSUANT TO THE
EXCHANGE OFFER. MOREOVER, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF PRIVATE NOTES MUST MAKE THEIR OWN DECISION WHETHER TO
TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF
PRIVATE NOTES TO TENDER.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998 unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date to
which the Exchange Offer is extended. The Company may extend the Exchange Offer
at any time and from time to time by giving oral or written notice to the
Exchange Agent and by timely public announcement.
The Company expressly reserves the right, in its sole discretion (i) to
delay acceptance of any Private Notes, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Private Notes not
previously accepted, if any of the conditions set forth herein under
"-- Conditions of the Exchange Offer" shall have occurred and shall not have
been waived by the Company (if permitted to be waived by the Company), by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent and (ii) to amend the terms of the Exchange Offer in any manner. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof by the Company to the
registered holders of the Private Notes. If the Exchange Offer is amended in a
manner determined by the Company to constitute a material change, the Company
will promptly disclose such amendment in a manner reasonably calculated to
inform the holders of such amendment and the Company will extend the Exchange
Offer to the extent required by law.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the Exchange Offer, the Company shall have no obligation to publish, advise, or
otherwise communicate any such public announcement, other than by making a
timely release thereof to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The 5-Year Exchange Notes will bear interest at a rate of 6 1/2% per annum,
the 7-Year Exchange Notes will bear interest at a rate of 6 3/4% per annum, the
10-Year Exchange Notes will bear interest at a rate of 6.95% per annum, and the
20-Year Exchange Notes will bear interest at a rate of 7 3/8% per annum.
Interest on the Exchange Notes is payable semi-annually on April 15 and October
15 of each year, commencing October 15, 1998. Holders of Exchange Notes of
record on October 1, 1998 will receive on October 15, 1998 an interest payment
in an amount equal to (i) the accrued interest on such Exchange Notes from the
date of issuance thereof to October 15, 1998, plus (ii) the accrued interest on
the previously held Private Notes from the date of issuance of such Private
Notes (April 14, 1998) to the date of exchange thereof. Interest will not be
paid on Private Notes that are accepted for exchange. The 5-Year Exchange Notes
mature on April 15, 2003, the 7-Year Exchange Notes mature on April 15, 2005,
the 10-Year Exchange Notes mature on April 15, 2008 and the 20-Year Exchange
Notes mature on April 15, 2018.
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<PAGE> 25
PROCEDURES FOR TENDERING
Each holder of Private Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such facsimile, together with
the Private Notes to be exchanged and any other required documentation, to Chase
Bank of Texas, National Association, as Exchange Agent, at the address set forth
herein and therein or effect a tender of Private Notes pursuant to the
procedures for book-entry transfer as provided for herein and therein. By
executing the Letter of Transmittal, each holder will represent to the Company,
that, among other things, the Exchange Notes acquired pursuant to the Exchange
Offer are being acquired in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is the holder, that
neither the holder nor any such other person has any arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and that neither the holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company.
Any financial institution that is a participant in the Depositary's
Book-Entry Transfer Facility system may make book-entry delivery of the Private
Notes by causing the Depositary to transfer such Private Notes into the Exchange
Agent's account in accordance with the Depositary's procedure for such transfer.
Although delivery of Private Notes may be effected through book-entry transfer
into the Exchange Agent's account at the Depositary, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at its address set forth herein under "-- Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date. Alternatively, holders
may tender by book-entry by complying, prior to 5:00 p.m., New York City time,
on the Expiration Date, with DTC's ATOP procedures, including transmitting an
Agent's Message to the Exchange Agent in which the holder of the Private Notes
acknowledges and agrees to be bound by the terms of the Letter of Transmittal,
which will confirm on behalf of the participant in ATOP and the beneficial
owners of such Private Notes all provisions of the Letter of Transmittal
applicable to it and such beneficial owners as fully as if it had completed the
information required in the Letter of Transmittal and executed and transmitted
the Letter of Transmittal to the Exchange Agent. See "-- Book-entry Transfer."
DELIVERY OF DOCUMENTS TO THE DEPOSITARY IN ACCORDANCE WITH ITS PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Only a holder may tender its Private Notes in the Exchange Offer. To tender
in the Exchange Offer, a holder must complete, sign and date the Letter of
Transmittal or a facsimile thereof, have the signatures thereof guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver such Letter
of Transmittal or such facsimile, together with the Private Notes (unless such
tender is being effected pursuant to the procedure for book-entry transfer) and
any other required documents, to the Exchange Agent, prior to 5:00 p.m., New
York City time, on the Expiration Date.
The tender by a holder will constitute an agreement between such holder,
the Company and the Exchange Agent in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal. If less than
all of the Private Notes of a series held by a holder are tendered, the
tendering holder should fill in the amount of Private Notes of such series being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Private Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
THE LETTER OF TRANSMITTAL WILL INCLUDE REPRESENTATIONS TO THE COMPANY THAT,
AMONG OTHER THINGS, (1) THE EXCHANGE NOTES ACQUIRED PURSUANT TO THE EXCHANGE
OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF BUSINESS OF THE PERSON
RECEIVING SUCH EXCHANGE NOTES (WHETHER OR NOT SUCH PERSON IS THE HOLDER), (2)
NEITHER THE HOLDER NOR ANY SUCH OTHER PERSON IS ENGAGED IN, INTENDS TO ENGAGE IN
OR HAS ANY ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN THE
DISTRIBUTION OF SUCH EXCHANGE NOTES, (3) NEITHER THE HOLDER NOR ANY SUCH OTHER
PERSON IS AN "AFFILIATE," AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT, OF
THE COMPANY AND (4) IF THE TENDERING HOLDER IS A BROKER OR DEALER (AS DEFINED IN
THE EXCHANGE ACT)
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(A) IT ACQUIRED THE PRIVATE NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-
MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND (B) IT HAS NOT ENTERED INTO
ANY ARRANGEMENT OR UNDERSTANDING WITH THE COMPANY OR ANY "AFFILIATE" THEREOF
(WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT) TO DISTRIBUTE THE
EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IN THE CASE OF A
BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR
PRIVATE NOTES WHICH WERE ACQUIRED BY IT AS A RESULT OF MARKET-MAKING OR OTHER
TRADING ACTIVITIES, THE LETTER OF TRANSMITTAL WILL ALSO INCLUDE AN
ACKNOWLEDGMENT THAT THE BROKER-DEALER WILL DELIVER A COPY OF THIS PROSPECTUS IN
CONNECTION WITH THE RESALE BY IT OF EXCHANGE NOTES RECEIVED PURSUANT TO THE
EXCHANGE OFFER. HOWEVER, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS,
SUCH HOLDER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT. SEE "PLAN OF DISTRIBUTION."
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS
MAY ALSO REQUEST THAT THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES EFFECT SUCH TENDER FOR HOLDERS, IN EACH CASE AS SET FORTH
HEREIN AND IN THE LETTER OF TRANSMITTAL.
Any beneficial owner whose Private Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Private Notes, either
make appropriate arrangements to register ownership of the Private Notes in such
owner's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution"), unless the
Private Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" of the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If the Letter of Transmittal is signed by a
person other than the registered holder listed therein, such Private Notes must
be endorsed or accompanied by appropriate bond powers which authorize such
person to tender the Private Notes on behalf of the registered holder, in either
case signed as the name of the registered holder or holders appears on the
Private Notes. If the Letter of Transmittal or any Private Notes or bond powers
are signed or endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such person should so indicate when signing, and unless
waived by the Company, evidence satisfactory to the Company of their authority
to so act must be submitted with such Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Private Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding, The Company reserves the absolute right to reject any and all
Private Notes not properly tendered or any Private Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any
irregularities or conditions
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<PAGE> 27
of tender as to particular Private Notes. The Company's interpretation of the
terms, and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Private Notes must
be cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Private Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Private Notes will not be
deemed to have been made until such irregularities have been cured or waived.
Any Private Notes received by the Exchange Agent that the Company determines are
not properly tendered or the tender of which is otherwise rejected by the
Company and as to which the defects or irregularities have not been cured or
waived by the Company will be returned by the Exchange Agent to the tendering
holder unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion (a) to
purchase or make offers for any Private Notes that remain outstanding subsequent
to the Expiration Date, and (b) to the extent permitted by applicable law, to
purchase Private Notes in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers may differ from the
terms of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Private Notes at the DTC (the "Book-Entry Transfer Facility") for the
purpose of facilitating the Exchange Offer, and subject to the establishment
thereof, any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Private Notes by
causing such Book Entry Transfer Facility to transfer such Private Notes into
the Exchange Agent's account with respect to the Private Notes in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. ALTHOUGH
DELIVERY OF PRIVATE NOTES MAY BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE
EXCHANGE AGENT'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY, AN APPROPRIATE
LETTER OF TRANSMITTAL PROPERLY COMPLETED AND DULY EXECUTED WITH ANY REQUIRED
SIGNATURE GUARANTEE AND ALL OTHER REQUIRED DOCUMENTS MUST IN EACH CASE BE
TRANSMITTED TO AND RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT AT ITS ADDRESS
SET FORTH BELOW ON OR PRIOR TO THE EXPIRATION DATE, OR, IF THE GUARANTEED
DELIVERY PROCEDURES DESCRIBED BELOW ARE COMPLIED WITH, WITH THE TIME PERIOD
PROVIDED UNDER SUCH PROCEDURES. ALTERNATIVELY, HOLDERS MAY TENDER BY BOOK-ENTRY
BY COMPLYING, PRIOR TO THE EXPIRATION DATE, WITH DTC'S ATOP PROCEDURES,
INCLUDING TRANSMITTING AN AGENT'S MESSAGE TO THE EXCHANGE AGENT. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available, or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, or (iii) who cannot complete the procedure for
book-entry transfer on a timely basis, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmittal, mail or hand delivery)
setting forth the name and address of the holder, the certificate number or
numbers of such holder's Private Notes and the principal amount of such
Private Notes tendered, stating that the tender is being made thereby, and
guaranteeing that, within three New York Stock Exchange ("NYSE") trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof),
21
<PAGE> 28
together with the certificate(s) representing the Private Notes to be
tendered in proper form for transfer (or confirmation of a book-entry
transfer into the Exchange Agent's account at the Depositary of Private
Notes delivered electronically) and any other documents required by the
Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Private Notes in proper form for transfer (or confirmation of a
book-entry transfer into the Exchange Agent's account at the Depositary of
Private Notes delivered electronically) and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within three
NYSE trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
deposited the Private Notes to be withdrawn (the "Depositor"), (ii) identify the
Private Notes to be withdrawn (including the series, certificate number or
numbers and principal amount of such Private Notes or, in the case of Private
Notes transferred by book-entry transfer, the name and number of the account at
the Depositary to be credited, the principal amount and the series of Private
Notes to be credited), (iii) be signed by the Depositor in the same manner as
the original signature on the Letter of Transmittal, by which such Private Notes
were tendered (including any required signature guarantee) or be accompanied by
documents of transfer sufficient to permit the Trustee with respect to the
Private Notes to register the transfer of such Private Notes into the name of
the Depositor withdrawing the tender and (iv) specify the name in which any such
Private Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such withdrawal notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Private Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Exchange Notes will be issued with respect thereto unless
the Private Notes so withdrawn are validly retendered. Any Private Notes that
have been tendered but are not accepted for exchange will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Private Notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates applicable
law, rules or regulations or an applicable interpretation of the staff of the
Commission.
If the Company reasonably determines that such condition (that the Exchange
Offer not violate applicable law, rules, regulations or interpretation of the
Staff) is not satisfied, the Company may (i) refuse to accept any Private Notes
and return all tendered Private Notes to the tendering holders or (ii) extend
the Exchange Offer and retain all Private Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Private Notes (see "-- Withdrawal of Tenders").
22
<PAGE> 29
SHELF REGISTRATION
If, because of any change in law or in applicable interpretations thereof
by the staff of the Commission, the Company is not permitted to effect the
Exchange Offer, the Exchange Offer is not consummated by October 12, 1998, any
Initial Purchaser so requests with respect to Private Notes not eligible to be
exchanged for Exchange Notes in the Exchange Offer and held by it following
consummation of the Exchange Offer, or any holder of Private Notes is not
eligible to participate in the Exchange Offer or does not receive freely
tradable Exchange Notes in the Exchange Offer, the Company, will, at its cost,
(a) as promptly as practicable, file a shelf registration statement (the "Shelf
Registration Statement") with the Commission covering resales of the Private
Notes or the Exchange Notes, as the case may be, (b) use its best efforts to
cause the Shelf Registration Statement to be declared effective under the
Securities Act and (c) keep the Shelf Registration Statement effective until the
earlier of (i) the time when the Notes covered by the Shelf Registration
Statement can be sold pursuant to Rule 144 without any limitations under clauses
(c), (e), (f) and (h) of Rule 144 and (ii) two years from the Issue Date. If a
Shelf Registration Statement is filed, the Company will provide to each holder
for whom such Shelf Registration Statement was filed copies of the prospectus
which is a part of the Shelf Registration Statement, notify each such holder
when the Shelf Registration Statement has become effective and take certain
other actions as are required to permit unrestricted resales of the Private
Notes or the Exchange Note, as the case may be. A holder selling such Private
Notes or Exchange Notes pursuant to the Shelf Registration Statement generally
would be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities Act in connection with
such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such holder (including certain indemnification
obligations).
LIQUIDATED DAMAGES
If (i) by October 12, 1998, neither the Exchange Offer is consummated nor,
if required in lieu thereof, the Shelf Registration Statement is declared
effective; or (ii) after either the Registration Statement or the Shelf
Registration Statement is declared effective, such Registration Statement
thereafter ceases to be usable (subject to certain exceptions) in connection
with resales of Private Notes or Exchange Notes in accordance with and during
the periods specified in the Registration Rights Agreement (each such event
referred to in clauses (i) and (ii) being herein called a "Registration Default"
and each period during which a Registration Default has occurred and is
continuing, a "Registration Default Period"), additional cash interest will
accrue on the Private Notes and the Exchange Notes at the rate of 0.25% per
annum for the first 90 days of the Registration Default Period and at the rate
of 0.50% per annum thereafter for the remaining portion of the Registration
Default Period, calculated on the principal amount of the Notes as of the date
on which such interest is payable. Such interest is payable in addition to any
other interest payable from time to time with respect to the Notes.
If the Company effects the Exchange Offer, it will be entitled to close the
Exchange Offer 30 business days after the commencement thereof provided that it
has accepted all Notes theretofore validly tendered in accordance with the terms
of the Exchange Offer.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Private Notes eligible to participate in the Exchange
Offer will terminate upon consummation of the Exchange Offer except with respect
to the Company's continuing obligations (i) to indemnify such holders (including
any broker-dealers) and certain parties related to such holders against certain
liabilities (including liabilities under the Securities Act), (ii) to provide,
upon the request of any holder of a transfer-restricted Private Note, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Private Notes pursuant to Rule 144A, (iii) use its best
efforts to keep the Registration Statement effective and to amend and supplement
the prospectus in order to permit the prospectus to be lawfully delivered by all
persons subject to the prospectus delivery requirements of the Securities Act
for such period of time as such persons must comply with such requirement in
order to resell the Exchange Notes and
23
<PAGE> 30
(iv) to provide copies of the latest version of the Prospectus to broker-dealers
upon their request for a period of not less than 180 days after the Expiration
Date.
EXCHANGE AGENT
Chase Bank of Texas, National Association, the Trustee under the Indenture,
has been appointed as Exchange Agent for the Exchange Offer. In such capacity,
the Exchange Agent has no fiduciary duties and will be acting solely on the
basis of directions of the Company. Requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail or By Facsimile:
Overnight Delivery (212) 638-0454
Chase Bank of Texas, National Association Confirm by Telephone
c/o The Chase Manhattan Bank (212) 638-7380
55 Water Street, North Building For inquiries:
Room 234, Windows 20 and 21 Mauri Cowen
New York, New York 10041 (713) 216-6686
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation pursuant to the Exchange Offer
is being made by mail. Additional solicitations may be made by officers and
regular employees of the Company and its affiliates in person, by telegraph,
telephone or telecopier.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company will, however,
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket costs and expenses
in connection therewith and will indemnify the Exchange Agent for all losses and
claims incurred by it as a result of the Exchange Offer. The Company may also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
Prospectus, Letters of Transmittal and related documents to the beneficial
owners of the Private Notes and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees and printing costs, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Private Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered holder of the
Private Notes tendered, or if tendered Private Notes are registered in the name
of any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Private Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
24
<PAGE> 31
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed by the Company directly to such tendering
holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Private Notes, as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company as a result of the consummation of the Exchange Offer.
The expenses of the Exchange Offer will be amortized by the Company pro rata as
to each series over the term of such series of Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions as to what action to take.
Holders of the Private Notes who do not tender their Private Notes in the
Exchange Offer will continue to hold such Private Notes and will be entitled to
all the rights, and subject to the limitations applicable thereto, under the
Indenture and the Registration Rights Agreement, except for any such rights
under the Registration Rights Agreement that by their terms terminate or cease
to have further effect as a result of the making of this Exchange Offer. All
untendered Private Notes will continue to be subject to the restrictions on
transfer set forth in the Indenture. Accordingly, the Private Notes may be
offered, resold, pledged or otherwise transferred only (i) to a person whom the
seller reasonably believes is a QIB in a transaction meeting the requirements of
Rule 144A; (ii) in a transaction meeting the requirements of Rule 144 under the
Securities Act; (iii) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 promulgated under the
Securities Act; (vi) in accordance with any other available exemption from the
registration requirements under the Securities Act; (v) to the Company; or (vi)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction. To the extent that Private Notes are
tendered and accepted in the Exchange Offer, the liquidity of the trading market
for untendered Private Notes could be adversely affected.
The Company may in the future seek to acquire untendered Private Notes in
the open market or through privately negotiated transactions, through subsequent
exchange offers or otherwise. The Company intends to make any such acquisitions
of Private Notes in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder, including Rule
14e-1, to the extent applicable. The Company has no present plan to acquire any
Private Notes that are not tendered in the Exchange Offer or to file a
registration statement to permit resales of any Private Notes that are not
tendered in the Exchange Offer.
25
<PAGE> 32
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
of a series as contemplated in this Prospectus, the Company will receive in
exchange Private Notes of the corresponding series in like principal amount. The
form and terms of the Exchange Notes of a series are identical in all material
respects to the form and terms of the Private Notes of the corresponding series,
except that (i) the offering of the Exchange Notes has been registered under the
Securities Act, (ii) the Exchange Notes will not be subject to transfer
restrictions and (iii) the holders of the Exchange Notes will not be entitled to
registration or other rights under the Registration Rights Agreement including
the payment of liquidated damages upon failure by the Company to consummate the
Exchange Offer or the occurrence of certain other events. The Private Notes
surrendered in exchange for Exchange Notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the Exchange Notes will not result
in a change in the indebtedness of the Company.
26
<PAGE> 33
CAPITALIZATION
The following table sets forth the capitalization, including short-term
borrowings, of the Company at March 31, 1998 and as adjusted to reflect the
issuance of the Notes offered hereby and the use of the net proceeds from the
issuance of the Private Notes to repay certain bank indebtedness and to retire a
portion of the existing public indebtedness of Falcon due 2001 (the "2001
Notes"), due 2003 (the "2003 Notes") and due 2005 (the "2005 Notes," and
together with the 2001 Notes and the 2003 Notes, the "Falcon Notes").
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN MILLIONS, UNAUDITED)
<S> <C> <C>
Current portion of long-term debt........................... $ 38.2 $ 38.2
Long-term debt, excluding current portion:
R&B Bank Credit Facility.................................. 385.0 --
Falcon Revolving Credit Facility.......................... 215.0 --
New Bank Facility......................................... -- --
2001 Notes(1)............................................. 110.0 5.2
2003 Notes(1)............................................. 120.0 0.4
2005 Notes(1)............................................. 50.0 --
5-Year Notes.............................................. -- 250.0
7-Year Notes.............................................. -- 350.0
10-Year Notes............................................. -- 250.0
20-Year Notes............................................. -- 250.0
Other debt.................................................. 35.8 35.8
-------- --------
Total long-term debt, including current portion... 954.0 1,179.6
Short-term obligations...................................... 84.5 84.5
Minority interest........................................... 53.8 53.8
Total stockholders' equity.................................. 822.2 800.2(2)
-------- --------
Total capitalization.............................. $1,914.5 $2,118.1
======== ========
</TABLE>
- ---------------
(1) On March 23, 1998, Falcon commenced a tender offer for all of the Falcon
Notes. On April 20, 1998, $274.4 million aggregate principal amount of the
Falcon Notes was repaid from proceeds of the Private Offering.
(2) Stockholders' equity has been adjusted to reflect the write-off of deferred
financing costs and the payment of premium with regard to the repurchase of
the Falcon Notes, less the effect of income taxes.
27
<PAGE> 34
DESCRIPTION OF THE NOTES
The Exchange Notes will be issued, and the Private Notes were issued,
pursuant to an Indenture dated April 14, 1998 between the Company and Chase Bank
of Texas, National Association, as trustee. The Private Notes were issued on
April 14, 1998 in a private transaction that was not subject to the registration
requirements of the Securities Act. The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes are
subject to all such terms, and prospective Holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement of such terms. The
following summary of certain provisions of the Notes and the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the Notes and the Indenture. Certain capitalized terms used
herein without definition are defined in the Indenture. As used in this section
only, references to the "Company" exclude the Subsidiaries.
The Exchange Notes of a series will be issued solely in exchange for an
equal principal amount of Private Notes of the corresponding series pursuant to
the Exchange Offer. The form and terms of the Exchange Notes of a series will be
identical in all material respects to the form and terms of the Private Notes of
the corresponding series, except that the offering of the Exchange Notes has
been registered under the Securities Act, and the Exchange Notes will therefore
not be subject to transfer restrictions, registration rights and certain
provisions relating to the payment of liquidated damages under certain
circumstances. See "The Exchange Offer -- Liquidated Damages."
The Private Notes of a series and the Exchange Notes of the corresponding
series will constitute a single series of debt securities under the Indenture.
If the Exchange Offer is consummated, holders of Private Notes of a series who
do not exchange their Private Notes for Exchange Notes will vote together with
holders of the Exchange Notes of the corresponding series for all relevant
purposes under the Indenture. In that regard, the Indenture requires that
certain actions by the holders thereunder (including following an Event of
Default) must be taken, and certain rights must be exercised, by specified
minimum percentages of the aggregate principal amount of the outstanding
securities issued under the Indenture. In determining whether holders of the
requisite percentage in principal amount have given any notice, consent or
waiver or taken any other action permitted under the Indenture, any Private
Notes of a series that remain outstanding after the Exchange Offer will be
aggregated with the Exchange Notes of the corresponding series, and the holders
of such Private Notes and the Exchange Notes will vote together as a single
series for all such purposes. Accordingly, all references herein to specified
percentages in aggregate principal amount of the outstanding Notes shall be
deemed to mean, at any time after the Exchange Offer is consummated, such
percentages in aggregate principal amount of the Private Notes of a series and
the Exchange Notes of the corresponding series then outstanding.
GENERAL
The Private Notes were issued pursuant to the Indenture in four series,
each limited in the following respective aggregate principal amounts: $250
million of 5-Year Notes, $350 million of 7-Year Notes, $250 million of 10-Year
Notes, and $250 million of 20-Year Notes. The Indenture does not limit the
aggregate principal amount of debt securities that may be issued thereunder and
provides that debt securities may be issued thereunder from time to time in one
or more additional series.
The 5-Year Notes will mature on April 15, 2003. The 7-Year Notes will
mature on April 15, 2005. The 10-Year Notes will mature on April 15, 2008. The
20-Year Notes will mature on April 15, 2018. Each series of Notes will bear
interest at the respective rate per annum from April 14, 1998, payable
semiannually on April 15 and October 15 of each year, commencing October 15,
1998, to the person in whose name the Note is registered at the close of
business on the April 1 or October 1 next preceding such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Principal and interest will be payable at the offices of the Trustee,
provided that, at the option of the Company, payment of interest will be made by
check mailed to the address of the person entitled thereto as it appears in the
register of the Notes (the "Register") maintained by the Registrar. The Notes
will be transferable and exchangeable at the office of the Registrar and any
co-registrar and will be issued in fully
28
<PAGE> 35
registered form, without coupons, in denominations of $1,000 and any integral
multiple thereof. The Company may require payment of a sum sufficient to cover
any transfer tax or other similar governmental charge payable in connection with
certain transfers and exchanges.
The 5-Year Notes are not redeemable. Each other series of Notes will be
redeemable at any time at the option of the Company, in whole or in part, at a
price equal to 100% of the principal amount, plus accrued and unpaid interest,
if any, to the applicable date of redemption plus the applicable Make-Whole
Premium (as defined) relating to the then prevailing applicable Treasury Yield
(as defined) and the remaining life of such series of the Notes. See
"-- Optional Redemption."
BOOK-ENTRY; DELIVERY AND FORM
The Private Notes were initially issued in fully registered form without
interest coupons, represented by several global Notes in definitive, fully
registered form without interest coupons (the "Private Global Notes") and were
deposited with the Trustee as custodian for DTC and registered in the name of a
nominee of DTC.
The Private Notes, to the extent validly tendered and accepted and directed
by their holders in their Letters of Transmittal, will be exchanged through
book-entry electronic transfer for global Notes (the "Exchange Global Notes") in
definitive, fully registered form deposited with the Trustee as custodian for
DTC and registered in the name of a nominee of DTC. The Private Global Notes and
the Exchange Global Notes are referred to collectively, whether one or more, as
the "Global Note."
Upon the issuance of the Global Note, DTC will credit, on its internal
system, the respective principal amount of the individual beneficial interests
represented by such Global Note to the accounts of persons who have accounts
with such depositary. Such accounts initially will be designated by or on behalf
of the Initial Purchasers. Ownership of beneficial interests in a Global Note
will be limited to persons who have accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Qualified Institutional Buyers may hold their interests in the Global Note
directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. In addition, no beneficial owner of
an interest in a Global Note will be able to transfer that interest except in
accordance with the applicable procedures of DTC and, if applicable, Morgan
Guaranty Trust Company of New York, as operator of the Euroclear system
("Euroclear").
Payments of the principal of, and interest on, the Global Note will be made
to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. Transfers
between participants in Euroclear will be effected in the ordinary way in
accordance with its rules and operating procedures.
29
<PAGE> 36
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Note is credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the Global Note for
Certificated Notes which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meanings of New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC and Euroclear are expected to follow the foregoing procedures
in order to facilitate transfers of interests in the Global Note among
participants of DTC and Euroclear, they are under no obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at
any time. None of the Company or the Trustee will have any responsibility for
the performance by DTC, Euroclear or the participants or indirect participants
of their respective obligations under the rules and procedures governing their
respective operations.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in a
Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Notes in the form of Certificated Notes. Upon any such
issuance, the Trustee is required to register such Notes in the name of, and
cause the same to be delivered to, such Person or Persons (or the nominee of any
thereof). In addition, if (i) DTC or any successor depositary (the "Depositary")
notifies the Company in writing that it is no longer willing or able to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Notes in the form of Certificated Notes under
the Indenture, then, upon surrender by the registered owner or holder of a
Global Note (a "Global Note Holder") of its Global Note, Notes in such form will
be issued to each Person that such Global Note Holder and the Depositary
identify as the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
related Global Note Holder or the Depositary in identifying the beneficial
owners of the related Notes, and each such Person may conclusively rely on, and
will be protected in relying on, instructions from such Global Note Holder or of
the Depositary for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the Notes to be issued).
SAME-DAY PAYMENT
The Indenture requires that payments in respect of Notes (including
principal, premium and interest) be made by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address.
RANKING AND GUARANTEES
The Notes are senior unsecured obligations of the Company and rank pari
passu in right of payment with all other existing and future senior unsecured
indebtedness of the Company, including obligations under the New Bank Facility,
and senior in right of payment to any existing and future indebtedness of the
Company
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that is, by its terms, expressly subordinated to the Notes. The Notes are
structurally subordinated to indebtedness and other liabilities of the Company's
subsidiaries, including existing indebtedness that remains outstanding after the
Private Offering and the application of the proceeds therefrom.
The Indenture provides that if any Subsidiary of the Company guarantees or
becomes a co-obligor on any Funded Indebtedness of the Company other than the
Notes at any time subsequent to the date on which the Notes are originally
issued (including, without limitation, following any release of such Subsidiary
from its Guarantee as described below), then the Company will cause the Notes to
be equally and ratably guaranteed by such Subsidiary, which shall thereupon
become a Guarantor. Each of the Guarantees will be an unsecured obligation of
the Guarantor providing such Guarantee and will rank pari passu with all
existing and future unsecured indebtedness of such Guarantor that is not, by its
terms, expressly subordinated in right of payment to such Guarantee. Under the
terms of the Indenture, a Guarantor may be released from its Guarantee if such
Guarantor is not a guarantor of (or co-obligor on) any Funded Indebtedness of
the Company other than the Notes and other than Funded Indebtedness of the
Company (i) subject to a release provision similar to the release provision
described in this paragraph and (ii) the related guarantee (or obligation) of
which will be released concurrently with the release of the Guarantee of such
Guarantor pursuant to such release provision, provided that no Default or Event
of Default under the Indenture has occurred and is continuing.
The obligations of each Guarantor will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under its Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal,
state or foreign law. Each Guarantor that makes a payment or distribution under
a Guarantee shall be entitled to a contribution from each other Guarantor in a
pro rata amount based on the Adjusted Net Assets of each Guarantor.
OPTIONAL REDEMPTION
The 5-Year Notes are not redeemable.
The Notes of each other series are redeemable, at the option of the
Company, at any time in whole or from time to time in part upon not less than 30
and not more than 60 days' notice mailed to each holder of Notes of such series
to be redeemed at the holder's address appearing in the Register, on any date
prior to maturity at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest to the Redemption Date (subject to the right of
holders of record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the Redemption Date) plus the
Make-Whole Premium applicable to such series of Notes (the "Redemption Price").
In no event will the Redemption Price ever be less than 100% of the principal
amount of the Notes plus accrued and unpaid interest to the Redemption Date.
The amount of the Make-Whole Premium with respect to any Note (or portion
thereof) of any series to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the Redemption
Date, of:
A. each interest payment that, but for such redemption, would have
been payable on the Note (or portion thereof) of such series being
redeemed on each Interest Payment Date occurring after the Redemption
Date (excluding any accrued and unpaid interest for the period prior to
the Redemption Date); and
B. the principal amount that, but for such redemption, would have
been payable at the final maturity of the Note (or portion thereof) of
such series being redeemed,
over
(ii) the principal amount of the Note (or portion thereof) of such
series being redeemed.
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The present values of interest and principal payments referred to in clause
(i) above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield (as defined below) plus (i) 20
basis points in the case of the 7-Year Notes, (ii) 20 basis points in the case
of the 10-Year Notes, and (iii) 25 basis points in the case of the 20-Year
Notes.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company fails to make such appointment at least 45 business days
prior to the Redemption Date, or if the institution so appointed is unwilling or
unable to make such calculation, such calculation will be made by Credit Suisse
First Boston Corporation or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent Investment
Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield" means
a rate of interest per annum equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant maturity that corresponds to
the remaining term to maturity of the Notes, calculated to the nearest 1/12th of
a year (the "Remaining Term"). The Treasury Yield will be determined as of the
third business day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200 of 1% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
If less than all of the Notes of any series are to be redeemed, the Trustee
will select the Notes of such series to be redeemed by such method as the
Trustee shall deem fair and appropriate. The Trustee may select for redemption
Notes and portions of Notes of such series in amounts of $1,000 or whole
multiples of $1,000.
The Notes are not entitled to the benefit of any sinking fund or other
mandatory redemption provisions.
CERTAIN COVENANTS
Limitation on Liens
Nothing in the Indenture or the Notes in any way limit the amount of
indebtedness or securities that the Company or its Subsidiaries may incur or
issue. The Indenture provides that the Company will not, and will not permit any
Subsidiary of the Company to, issue, assume or guarantee any Indebtedness for
borrowed money secured by any Lien on any property or asset now owned or
hereafter acquired by the Company or such Subsidiary without making effective
provision whereby any and all Notes then or thereafter outstanding will be
secured by a Lien equally and ratably with any and all other obligations thereby
secured for so long as any such obligations shall be so secured.
The foregoing restriction does not, however, apply to:
(a) Liens existing on the date on which the Notes are originally
issued or provided for under the terms of agreements existing on such date;
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(b) Liens on property securing (i) all or any portion of the cost of
acquiring, constructing, altering, improving or repairing any property or
assets, real or personal, or improvements used or to be used in connection
with such property or (ii) Indebtedness incurred by the Company or any
Subsidiary of the Company prior to or within one year after the later of
the acquisition, the completion of construction, alteration, improvement or
repair or the commencement of commercial operation thereof, which
Indebtedness is incurred for the purpose of financing all or any part of
the purchase price thereof or construction or improvements thereon;
(c) Liens securing Indebtedness owed by a Subsidiary of the Company to
the Company or to any other Subsidiary of the Company;
(d) Liens on property existing at the time of acquisition of such
property by the Company or any of its Subsidiaries or Liens on the property
of any Person existing at the time such Person becomes a Subsidiary of the
Company and, in any case, not incurred as a result of (or in connection
with or in anticipation of) the acquisition of such property or such Person
becoming a Subsidiary of the Company, provided that such Liens do not
extend to or cover any property or assets of the Company or any of its
Subsidiaries other than the property encumbered at the time such property
is acquired by the Company or any of its Subsidiaries or such Person
becomes a Subsidiary of the Company and, in any case, do not secure
Indebtedness with a principal amount in excess of the principal amount
outstanding at such time;
(e) Liens on any property securing (i) Indebtedness incurred in
connection with the construction, installation or financing of pollution
control or abatement facilities or other forms of industrial revenue bond
financing or (ii) Indebtedness issued or Guaranteed by the United States or
any State thereof or any department, agency or instrumentality of either;
(f) any Lien extending, renewing or replacing (or successive
extensions, renewals or replacements of) any Lien of any type permitted
under clause (a), (b), (d) or (e) above, provided that such Lien extends to
or covers only the property that is subject to the Lien being extended,
renewed or replaced and that the principal amount of the Indebtedness
secured thereby shall not exceed the principal amount of Indebtedness so
secured at the time of such extension, renewal or replacement: or
(g) Liens (exclusive of any Lien of any type otherwise permitted under
clauses (a) through (f) above) securing Indebtedness for borrowed money of
the Company or any Subsidiary of the Company in an aggregate principal
amount which, together with the aggregate amount of Attributable
Indebtedness deemed to be outstanding in respect of all Sale/Leaseback
Transactions entered into pursuant to clause (a) of the covenant described
under "Limitation on Sale/Leaseback Transactions" below (exclusive of any
such Sale/Leaseback Transactions otherwise permitted under clauses (a)
through (f) above), does not at the time such Indebtedness is incurred
exceed 15% of the Consolidated Net Worth of the Company (as shown in the
most recent audited consolidated balance sheet of the Company and its
Subsidiaries).
Limitation on Sale/Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
Subsidiary to, enter into any Sale/Leaseback Transaction with any person (other
than the Company or a Subsidiary) unless:
(a) the Company or such Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback Transaction, secured by a Lien on the
property subject to such Sale/Leaseback Transaction pursuant to the
covenant described under "Limitation on Liens" above without equally and
ratably securing the Notes pursuant to such covenant;
(b) after the date on which the Notes are originally issued and within
a period commencing six months prior to the consummation of such
Sale/Leaseback Transaction and ending six months after the consummation
thereof, the Company or such Subsidiary shall have expended for property
used or to be used in the ordinary course of business of the Company and
its Subsidiaries an amount equal to all or a portion of the net proceeds of
such Sale/Leaseback Transaction and the Company shall have elected to
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designate such amount as a credit against such Sale/Leaseback Transaction
(with any such amount not being so designated to be applied as set forth in
clause (c) below), or
(c) the Company, during the 12-month period after the effective date
of such Sale/Leaseback Transaction, shall have applied to the voluntary
defeasance or retirement of Notes or any Pari Passu Indebtedness an amount
equal to the greater of the net proceeds of the sale or transfer of the
property leased in such Sale/Leaseback Transaction and the fair value, as
determined by the Board of Directors of the Company, of such property at
the time of entering into such Sale/Leaseback Transaction (in either case
adjusted to reflect the remaining term of the lease and any amount expended
by the Company as set forth in clause (b) above), less an amount equal to
the principal amount of Notes and Pari Passu Indebtedness voluntarily
defeased or retired by the Company within such 12-month period and not
designated as a credit against any other Sale/Leaseback Transaction entered
into by the Company or any Subsidiary during such period.
Limitations on Mergers and Consolidations
The Indenture provides that neither the Company nor any Guarantor (other
than any Guarantor that shall have been released from its Guarantee pursuant to
the provisions of the Indenture) will consolidate with or merge into any Person,
or sell, lease, convey, transfer or otherwise dispose of all or substantially
all of its assets to any Person, unless: (i) the Person formed by or surviving
such consolidation or merger (if other than the Company or such Guarantor, as
the case may be), or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia (or, alternatively, in the case of a Guarantor
organized under the laws of a jurisdiction outside the United States, a
corporation organized and existing under the laws of such foreign jurisdiction),
and the Successor assumes by supplemental indenture in a form satisfactory to
the Trustee all of the obligations of the Company or such Guarantor, as the case
may be, under the Indenture and under the Notes; and (ii) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing.
CERTAIN DEFINITIONS
The following is a summary of certain defined terms used in the Indenture.
Reference is made to the Indenture for the full definition of all such terms and
for the definitions of other capitalized terms used herein and not defined
below.
"Adjusted Net Assets" of a Guarantor at any date means the lesser of (x)
the amount by which the fair value of the property of such Guarantor at such
date exceeds the total amount of liabilities, including, without limitation, the
probable amount of contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date) of such
Guarantor at such date, but excluding liabilities under the Guarantee of such
Guarantor, and (y) the amount by which the present fair saleable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of any obligations of such Subsidiary under the Guarantee
of such Guarantor), excluding debt in respect of the Guarantee of such
Guarantor, as they become absolute and matured.
"Attributable Indebtedness," when used with respect to any Sale/Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease included
in such transaction) of the total obligations of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Capitalized Lease Obligation" of any Person means any obligation of such
Person to pay rent or other amounts under a lease of property, real or personal,
that is required to be capitalized for financial reporting
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purposes in accordance with generally accepted accounting principles and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with generally accepted accounting principles.
"Consolidated Net Worth" of the Company means the consolidated
stockholders' equity of the Company and its Subsidiaries, as determined in
accordance with generally accepted accounting principles.
"Funded Indebtedness" means all Indebtedness (including Indebtedness
incurred under any revolving credit, letter of credit or working capital
facility) that matures by its terms, or that is renewable at the option of any
obligor thereon to a date, more than one year after the date on which such
Indebtedness is originally incurred.
"Hedging Obligations" of any Person means the net obligation (not the
notional amount) of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Indebtedness" of any Person at any date means, without duplication, (i)
all indebtedness of such Person for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit and
performance bonds issued by such Person in the ordinary course of business, to
the extent not drawn or, to the extent drawn, if such drawing is reimbursed not
later than the third Business Day following demand for reimbursement, (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, except trade payables and accrued expenses incurred in the
ordinary course of business, (v) all Capitalized Lease Obligations of such
Person, (vi) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, to the
extent of the fair market value of all the assets of such Person subject to such
Lien, (vii) all Indebtedness of others guaranteed by such Person to the extent
of such guarantee and (viii) all Hedging Obligations of such Person.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law. For
the purposes of the Indenture, the Company or any Subsidiary of the Company
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement
relating to such asset.
"Non-Recourse Indebtedness" means, at any date, the aggregate amount at
such date of Indebtedness of the Company or a Subsidiary of the Company in
respect of which the recourse of the holder of such Indebtedness, whether direct
or indirect and whether contingent or otherwise, is effectively limited to
specified assets, and with respect to which neither the Company nor any of its
Subsidiaries provides any credit support.
"Pari Passu Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date on which the Notes are originally issued or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall be
subordinated in right of payment to the Notes.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company, for a
period of more than three years, of any real or tangible personal property,
which property has been or is to be sold or transferred by the Company or such
Subsidiary to such Person in contemplation of such leasing.
"Significant Subsidiary" has the meaning set forth in Regulation S-X under
the Exchange Act.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which more than 50% of the total voting power of all classes of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors is owned by such Person directly or through one or
more other Subsidiaries of such Person, and (ii) any entity other than a
corporation of which at least a majority of the capital stock or
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other equity interest (however designated) entitled (without regard to the
occurrence of any contingency) to vote in the election of the governing body,
partners, managers or others that will control the management of such entity is
owned by such Person directly or through one or more other Subsidiaries of such
Person.
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture with respect to Notes of
any series as being: (i) default by the Company or any Guarantor for 30 days in
payment of any interest on Notes of such series; (ii) default by the Company or
any Guarantor in any payment of principal of or premium, if any, on Notes of
such series: (iii) default by the Company or any Guarantor in compliance with
any of its other covenants applicable to Notes of such series or agreements in,
or provisions of, the Notes of such series, the Guarantees, if any, or the
Indenture which shall not have been remedied within 60 days after written notice
by the Trustee or by the holders of at least 25% in principal amount of each
series of Notes then outstanding; (iv) the acceleration of the maturity of any
Indebtedness (other than of Notes of such series or any Non-Recourse
Indebtedness) of the Company or any Subsidiary of the Company having an
outstanding principal amount of $20 million or more individually or in the
aggregate, or a default in the payment of any principal or interest in respect
of any Indebtedness (other than the Notes of such series or any Non-Recourse
Indebtedness) of the Company or any Subsidiary of the Company having an
outstanding principal amount of $20 million or more individually or in the
aggregate and such default shall be continuing for a period of 30 days without
the Company or such Subsidiary, as the case may be, effecting a cure of such
default; (v) a final judgment or order for the payment of money in excess of $20
million (net of applicable insurance coverage) having been rendered against the
Company, a Guarantor or any Significant Subsidiary of the Company and such
judgment or order shall continue unsatisfied and unstayed for a period of 60
days; or (vi) certain events involving bankruptcy, insolvency or reorganization
of the Company, a Guarantor, or any Significant Subsidiary of the Company.
Pursuant to the Indenture, Guarantors may not be released from their Guarantees
if a Default or Event of Default has occurred and is continuing. The obligations
of any Subsidiary of the Company that becomes a Guarantor are not dependent upon
whether such Subsidiary becomes a Guarantor prior to or after an Event of
Default. The Indenture provides that the Trustee may withhold notice to the
holders of the Notes of any default (except in payment of principal of or
premium, if any, or interest on the Notes) if the Trustee considers it in the
interest of the holders of the Notes to do so.
The Indenture provides that if an Event of Default occurs and is continuing
with respect to the Indenture (other than certain events of bankruptcy,
insolvency or reorganization) with respect to any series of Notes, the Trustee
or the holders of not less than 25% in principal amount of such series of Notes
outstanding may declare the principal of and premium, if any, and accrued but
unpaid interest on all the Notes of such series to be due and payable. Upon such
a declaration, such principal, premium, if any, and interest will be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization occurs and is continuing, the principal
of and premium, if any, and interest on all the Notes will become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holders of the Notes. The amount due and payable on the
acceleration of any Note will be equal to 100% of the principal amount of such
Note, plus accrued interest to the date of payment. Under certain circumstances,
the holders of a majority in principal amount of the outstanding Notes of any
series may rescind any such acceleration with respect to the Notes of such
series and its consequences.
The Indenture provides that no holder of a Note of any series may pursue
any remedy under the Indenture unless (i) the Trustee shall have received
written notice of a continuing Event of Default, (ii) the Trustee shall have
received a request from holders of at least 25% in principal amount of such
series of Notes to pursue such remedy, (iii) the Trustee shall have been offered
indemnity reasonably satisfactory to it and (iv) the Trustee shall have failed
to act for a period of 60 days after receipt of such notice and offer of
indemnity; however, such provision does not affect the right of a holder of a
Note to sue for enforcement of any overdue payment thereon.
The holders of a majority in principal amount of any series of Notes then
outstanding have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee under the
Indenture, subject to certain limitations specified in the Indenture with
respect to such
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series. The Indenture requires the annual filing by the Company with the Trustee
of a written statement as to compliance with the covenants contained in the
Indenture.
MODIFICATION AND WAIVER
The Indenture provides that modifications and amendments to the Indenture
or the Notes may be made by the Company, the Guarantors, if any, and the Trustee
with the consent of the holders of a majority in principal amount of each series
of the Notes then outstanding; provided that no such modification or amendment
may, without the consent of the holder of each Note then outstanding affected
thereby of any series, (i) reduce the amount of Notes of such series whose
holders must consent to an amendment, supplement or waiver; (ii) reduce the rate
of or change the time for payment of interest, including default interest, on
any Note of such series; (iii) reduce the principal of or change the fixed
maturity of any Note of such series or alter the premium or other provisions
with respect to redemption; (iv) make any Note payable in money other than that
stated in the Note of such series; (v) impair the right to institute suit for
the enforcement of any payment of principal of, or premium, if any, or interest
on, any Note of such series; (vi) make any change in the percentage of principal
amount of Notes necessary to waive compliance with certain provisions of the
Indenture; or (vii) waive a continuing Default or Event of Default in the
payment of principal of, or premium, if any, or interest on the Notes of such
series. The Indenture provides that modifications and amendments of the
Indenture may be made by the Company, the Guarantors, if any, and the Trustee
without the consent of any holders of Notes in certain limited circumstances,
including (a) to cure any ambiguity, omission, defect or inconsistency, (b) to
provide for the assumption of the obligations of the Company or any Guarantor
under the Indenture upon the merger, consolidation or sale or other disposition
of all or substantially all of the assets of the Company or any such Guarantor,
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (d) to reflect the release of any Guarantor from its
Guarantee, or the addition of any Subsidiary of the Company as a Guarantor, in
the manner provided by the Indenture, (e) to comply with any requirement in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act of 1939 or (f) to make any change that does not adversely affect
the rights of any holder of Notes in any material respect.
The Indenture provides that the holders of a majority in aggregate
principal amount of the Notes of any series then outstanding may waive any past
default under the Indenture with respect to such series, except a default in the
payment of principal, or premium, if any, or interest.
DISCHARGE AND TERMINATION
Defeasance of Certain Obligations
The Indenture provides that the Company and the Guarantors, if any, may
terminate certain of their obligations under the Indenture with respect to Notes
of any series, including those described under the section "Certain Covenants,"
if (i) the Company irrevocably deposits in trust with the Trustee cash or
non-callable U.S. Government Obligations or a combination thereof sufficient to
pay principal of and interest on such series of Notes to maturity, and to pay
all other sums payable by it under the Indenture; (ii) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit: (iii)
the Company shall have delivered to the Trustee an Opinion of Counsel from
nationally recognized counsel acceptable to the Trustee or a tax ruling to the
effect that the holders of the Notes of such series will not recognize income,
gain or loss for Federal income tax purposes as a result of the Company's
exercise of its option under such section and will be subject to Federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such option had not been exercised; (iv) the Company
delivers to the Trustee certain other documents called for by the Indenture,
including an Officers' Certificate and Opinions of Counsel; and (v) certain
other conditions are satisfied. The Company's payment obligations and the
Guarantors' Guarantees, if any, shall survive until the Notes are no longer
outstanding.
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Discharge
The Indenture provides that the Indenture shall cease to be of further
effect with respect to Notes of any series (subject to certain exceptions
relating to compensation and indemnity of the Trustee and repayment to the
Company of excess money or securities) when (i) either (A) all outstanding Notes
of such series theretofore authenticated and issued (other than destroyed, lost
or stolen Notes that have been replaced or paid) have been delivered to the
Trustee for cancellation; or (B) all outstanding Notes of such series not
theretofore delivered to the Trustee for cancellation (x) have become due and
payable or (y) will become due and payable at their stated maturity within one
year and the Company has deposited or caused to be deposited with the Trustee as
funds (immediately available to the holders in the case of clause (x)) in trust
for such purpose an amount which, together with earnings thereon, will be
sufficient to pay and discharge the entire indebtedness on such Notes of such
series for principal and interest to the date of such deposit (in the case of
Notes of such series which have become due and payable) or to the stated
maturity, as the case may be; (ii) the Company has paid all other sums payable
by it under the Indenture; and (iii) the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to satisfaction and
discharge of the Indenture have been complied with, together with an Opinion of
Counsel to the same effect.
GOVERNING LAW
The Indenture provides that it will be governed by and will be construed in
accordance with the laws of the State of New York.
THE TRUSTEE
Chase Bank of Texas, National Association is the Trustee under the
Indenture. Its address is 600 Travis Street, Suite 1150, Houston, Texas 77002.
The Company has also appointed the Trustee as the initial Registrar and as
initial Paying Agent under the Indenture.
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; however, if it acquires any conflicting, interest (as defined in
the Trust Indenture Act of 1939, as amended), it must eliminate such conflict or
resign.
The Indenture provides that in case an Event of Default shall occur and be
continuing, the Trustee will be required to use the degree of care and skill of
a prudent man in the conduct of his own affairs. The Trustee will be under no
obligation to exercise any of its powers under the Indenture at the request of
any of the holders of the Notes, unless such holders shall have offered the
Trustee indemnity reasonably satisfactory to it.
ADDITIONAL INFORMATION
A copy of the Indenture and the Registration Rights Agreement was included
as an exhibit to the Registration Statement filed by the Company with the
Commission. Anyone who receives this Prospectus may obtain a copy of the
Indenture and Registration Rights Agreement without charge by writing to the
Company at 901 Threadneedle, Houston, Texas 77079, attention: Charles R. Ofner.
38
<PAGE> 45
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and disposition
of Notes by an initial beneficial owner of Notes that, for United States federal
tax purposes, is not a "United States person" (a "Non-United States Holder").
This discussion is based upon the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, all as in effect on the date hereof, which is
subject to change, possibly retroactively. For purposes of this discussion, a
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in the United
States or under the law of the United States or of any state or political
subdivision thereof, an estate whose income is includible in gross income for
United States federal income tax purposes regardless of its source, or a trust
if a U.S. court is able to exercise primary supervision over the administration
of the trust and one or more United States persons have the authority to control
all substantial decisions of the trust. This discussion applies only to those
Non-United States Holders who purchase Notes from the Initial Purchasers at the
price set forth on the cover page of this Prospectus and hold the Notes as a
capital asset. The tax treatment of the holders of the Notes may vary depending
upon their particular situations. United States persons acquiring the Notes are
subject to different rules than those discussed below. In addition, certain
other holders (including insurance companies, tax exempt organizations,
financial institutions and broker-dealers) may be subject to special rules not
discussed below. Prospective investors are urged to consult their tax advisors
regarding the United States federal tax consequences of acquiring, holding and
disposing of Notes, as well as any tax consequences that may arise under the
laws of any relevant foreign, state, local or other taxing jurisdiction.
INTEREST
Interest paid by the Company to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and such Non-United States Holder
(i) does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company; (ii) is not a controlled
foreign corporation with respect to which the Company is a related person and
(iii) certifies, under penalties of perjury, that such holder is not a United
States person and provides such holder's name and address (the "Certification
Requirement"). In the case of interest on a Note that is not "effectively
connected with the conduct of a trade or business within the United States" and
does not satisfy the three requirements of the preceding sentence, the
Non-United States Holder's interest on a Note would generally be subject to
United States withholding tax at a flat rate of 30% (or a lower applicable
treaty rate). If a Non-United States Holder's interest on a Note is "effectively
connected with the conduct of a trade or business within the United States,"
then the Non-United States Holder will be subject to United States federal
income tax on such interest income in essentially the same manner as a United
States person and, in the case of a Non-United States Holder that is a foreign
corporation, may also be subject to the branch profits tax.
GAIN ON DISPOSITION
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain recognized on a sale, redemption or
other disposition of a Note unless (i) the gain is effectively connected with
the conduct of a trade or business within the United States by the Non-United
States Holder or (ii) in the case of a Non-United States Holder who is a
nonresident alien individual and holds the Note as a capital asset, such holder
is present in the United States for 183 or more days in the taxable year and
certain other requirements are met.
39
<PAGE> 46
FEDERAL ESTATE TAXES
If interest on a Note is exempt from withholding of United States federal
income tax under the rules described above, the Note held by an individual who
at the time of death is a Non-United States Holder generally will not be subject
to United States federal estate tax as a result of such individual's death.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will, when required, report to the holders of the Notes and the
Internal Revenue Service ("IRS") the amount of any interest paid on the Notes in
each calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments of interest to Non-United States Holders, the
general 31% backup withholding tax and certain information reporting will not
apply to such payments with respect to which either the Certification
Requirement has been satisfied or an exemption has otherwise been established;
provided that neither the Company nor its payment agent has actual knowledge
that the holder is a United States person or that the conditions of any other
exemption are not in fact satisfied. Information reporting and backup
withholding requirements will apply to the gross proceeds paid to a Non-United
States Holder on the disposition of the Notes by or through a United States
office of a United States or foreign broker, unless the holder certifies to the
broker under penalties of perjury as to its name, address and status as a
foreign person or the holder otherwise establishes an exemption. Information
reporting requirements, but not backup withholding, will also apply to a payment
of the proceeds of a disposition of the Notes by or through a foreign office of
a United States broker or foreign brokers with certain types of relationships to
the United States unless such broker has documentary evidence in its file that
the holder of the Notes is not a United States person and such broker has no
actual knowledge to the contrary, or the holder establishes an exception.
Neither information reporting nor backup withholding generally will apply to a
payment of the proceeds of a disposition of the Notes by or through a foreign
office of a foreign broker not subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
The United States Treasury Department recently promulgated new regulations
regarding the withholding and information reporting rules discussed above. In
general, the new regulations do not significantly alter the substantive
withholding and information reporting requirements but rather unify current
certification procedures and forms and clarify reliance standards. The new
regulations require, however, that a foreign person furnish its taxpayer
identification number in certain circumstances to claim a reduction in United
States federal withholding tax and new rules are provided for foreign persons
that hold debt instruments thorough a foreign intermediary. The new regulations
are generally effective for payments made after December 31, 1999, subject to
certain transition rules. NON-UNITED STATES HOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF THE NEW REGULATIONS.
40
<PAGE> 47
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Private Notes where such Private Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such person may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer, other than commissions or concessions of any
broker-dealer, and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Exchange Notes offered hereby
will be passed upon for the Company by Gardere Wynne Sewell & Riggs, L.L.P.,
Houston, Texas.
EXPERTS
The consolidated balance sheets of R&B Falcon Corporation as of December
31, 1997 and 1996, and the related statements of operations, stockholders'
equity and cash flows for each of the years in the three year period ended
December 31, 1997, incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
With respect to the unaudited interim financial information for the
quarters ended March 31, 1998 and 1997, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of that
information. However, their separate report thereon states that they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, the accountants are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Act.
41
<PAGE> 48
======================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Forward-looking Statements............. iii
Available Information.................. iii
Incorporation of Certain Documents by
Reference............................ iv
Summary................................ 1
Risk Factors........................... 11
Recent Developments.................... 15
The Exchange Offer..................... 16
Use of Proceeds........................ 26
Capitalization......................... 27
Description of the Notes............... 28
Certain United States Federal Tax
Consequences for Non-united States
Holders.............................. 39
Plan of Distribution................... 41
Legal Matters.......................... 41
Experts................................ 41
</TABLE>
======================================================
======================================================
R&B FALCON CORPORATION
OFFER TO EXCHANGE
6 1/2% SENIOR NOTES DUE 2003, SERIES B
FOR ALL OUTSTANDING 6 1/2% SENIOR NOTES
DUE 2003, SERIES A,
6 3/4% SENIOR NOTES DUE 2005, SERIES B
FOR ALL OUTSTANDING 6 3/4% SENIOR NOTES
DUE 2005, SERIES A,
6.95% SENIOR NOTES DUE 2008, SERIES B
FOR ALL OUTSTANDING 6.95% SENIOR NOTES
DUE 2008, SERIES A,
AND
7 3/8% SENIOR NOTES DUE 2018, SERIES B
FOR ALL OUTSTANDING 7 3/8% SENIOR NOTES
DUE 2018, SERIES A
---------------------
PROSPECTUS
---------------------
JUNE , 1998
======================================================
<PAGE> 49
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Certificate of Incorporation of the Company
provides that no director of the Company shall be personally liable to the
Company or any of its stockholders for monetary damages for breach of fiduciary
duty by such director to the full extent authorized by law (as now or
hereinafter in effect), except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper personal
benefit. The Amended and Restated Certificate of Incorporation further provides
that the Company shall indemnify its officers to the full extent permitted by
the Delaware General Corporation Law, as amended from time to time.
Section 145 of the Delaware General Corporation Law authorizes and empowers
the Company to indemnify the directors, officers, employees and agents of the
Company against liabilities incurred in connection with, and related expenses
resulting from, any claim, action or suit brought against any such person as a
result of his relationship with R&B Falcon Corporation, provided that such
person acted in good faith and in a manner such person reasonably believed to be
in, and not opposed to, the best interests of R&B Falcon Corporation in
connection with the acts or events on which such claim, action or suit is based.
The finding of either civil or criminal liability on the part of such persons in
connection with such acts or events is not necessarily determinative of the
question of whether such persons have met the required standard of conduct and
are, accordingly, entitled to be indemnified. The foregoing statements are
subject to the detailed provisions of Section 145 of the General Corporation law
of the State of Delaware.
Article 6.1 of the Bylaws of the Company provides that the Company shall
indemnify to the fullest extent authorized or permitted by law, any person made,
or threatened to be made, a party to or otherwise involved in any action or
proceeding by reason of the fact that he or she is or was a director or officer
of the Company, at the request of the Company or by reason of the fact that such
director or officer at the request of the Company, is or was serving any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, in any capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
<C> <S>
4.1 -- Indenture dated as of April 14, 1998 between R&B Falcon
Corporation, as Issuer, and Chase Bank of Texas, National
Association, as Trustee, with respect to Series A and
Series B of each of $250,000,000 6 1/2% Senior Notes due
2003, $350,000,000 6 3/4% Senior Notes due 2005,
$250,000,00 6.95% Senior Notes due 2008, and $250,000,000
7 3/8% Senior Notes due 2018.
4.2 -- Registration Rights Agreement dated as of April 8, 1998
among R&B Falcon Corporation and Credit Suisse First
Boston, Chase Securities, Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Morgan Stanley Dean
Witter.
5.1 -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P., counsel
for R&B Falcon Corporation.
10.1 -- Purchase Agreement dated April 8, 1998 among R&B Falcon
Corporation, Credit Suisse First Boston Corporation,
Chase Securities Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, and Morgan Stanley & Co.,
Incorporated.
10.2 -- $500,000,000 Credit Agreement dated as of April 24, 1998
among R&B Falcon Corporation, the lender parties thereto,
and The Chase Manhattan Bank, as Administrative Agent.
12.1 -- Statement regarding computation of ratio of earnings to
fixed charges.
</TABLE>
II-1
<PAGE> 50
<TABLE>
<C> <S>
15.1 -- Letter regarding Unaudited Interim Financial Information
23.1 -- Consent of Arthur Andersen LLP.
24.1 -- Power of Attorney (set forth on the signature pages contained in Part II of this
Registration Statement).
25.1 -- Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 on
Form T-1 of Chase Bank of Texas, National Association.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) of 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(c) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on June 15, 1998.
R&B FALCON CORPORATION
By: /s/ STEVEN A. WEBSTER
----------------------------------
Steven A. Webster
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven A. Webster, Robert F. Fulton and Leighton
E. Moss, and each of them, each of whom may act without joinder of the other,
his or her true and lawful attorneys and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any or all pre- and post-effective amendments to
this Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, and each of them, or
the substitute or substitutes of any or all of them, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN A. WEBSTER Chief Executive Officer and June 15, 1998
- ----------------------------------------------------- President
Steven A. Webster (Principal Executive Officer)
/s/ PAUL B. LOYD, JR. Chairman of the Board and June 15, 1998
- ----------------------------------------------------- Director
Paul B. Loyd, Jr.
/s/ ROBERT F. FULTON Executive Vice President June 15, 1998
- ----------------------------------------------------- (Principal Financial Officer)
Robert F. Fulton
/s/ TIM W. NAGLE Executive Vice President June 15, 1998
- ----------------------------------------------------- (Principal Accounting
Tim W. Nagle Officer)
Director June , 1998
- -----------------------------------------------------
Purnendu Chatterjee
Director June , 1998
- -----------------------------------------------------
Arnold L. Chavkin
/s/ CHARLES A. DONABEDIAN Director June 15, 1998
- -----------------------------------------------------
Charles A. Donabedian
</TABLE>
II-3
<PAGE> 52
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS A.P. HAMILTON Director June 15, 1998
- -----------------------------------------------------
Douglas A.P. Hamilton
/s/ MACKO A.E. LAQUEUR Director June 15, 1998
- -----------------------------------------------------
Macko A.E. Laqueur
/s/ MICHAEL E. PORTER Director June 15, 1998
- -----------------------------------------------------
Michael E. Porter
/s/ ROBERT L. SANDMEYER Director June 15, 1998
- -----------------------------------------------------
Robert L. Sandmeyer
Director June , 1998
- -----------------------------------------------------
William R. Ziegler
</TABLE>
II-4
<PAGE> 53
INDEX TO EXHIBITS
[CAPTION]
<TABLE>
<CAPTION>
<C> <S>
EXHIBIT
NUMBER DESCRIPTION
-- ------------------------------------------------------------
<C> <S>
4.1 -- Indenture dated as of April 14, 1998 between R&B Falcon
Corporation, as Issuer, and Chase Bank of Texas, National
Association, as Trustee, with respect to Series A and
Series B of each of $250,000,000 6 1/2% Senior Notes due
2003, $350,000,000 6 3/4% Senior Notes due 2005,
$250,000,00 6.95% Senior Notes due 2008, and $250,000,000
7 3/8% Senior Notes due 2018.
4.2 -- Registration Rights Agreement dated as of April 8, 1998
among R&B Falcon Corporation and Credit Suisse First
Boston, Chase Securities, Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Morgan Stanley Dean
Witter.
5.1 -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P., counsel
for R&B Falcon Corporation.
10.1 -- Purchase Agreement dated April 8, 1998 among R&B Falcon
Corporation, Credit Suisse First Boston Corporation,
Chase Securities Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, and Morgan Stanley & Co.
Incorporated.
10.2 -- $500,000,000 Credit Agreement dated as of April 24, 1998
among R&B Falcon Corporation, the lender parties thereto,
and The Chase Manhattan Bank, as Administrative Agent.
12.1 -- Statement regarding computation of ratio of earnings to
fixed charges.
15.1 -- Letter regarding Unaudited Interim Financial Information
23.1 -- Consent of Arthur Andersen LLP.
24.1 -- Power of Attorney (set forth on the signature pages
contained in Part II of this Registration Statement).
25.1 -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 on Form T-1 of Chase Bank of
Texas, National Association.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
================================================================================
R&B FALCON CORPORATION
, AS ISSUER
AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
, AS TRUSTEE
------------------
INDENTURE
DATED AS OF APRIL 14, 1998
------------------
$1,100,000,000
SERIES A AND SERIES B
$250,000,000 6 1/2% SENIOR NOTES DUE 2003
$350,000,000 6 3/4% SENIOR NOTES DUE 2005
$250,000,000 6.95% SENIOR NOTES DUE 2008
$250,000,000 7 3/8% SENIOR NOTES DUE 2018
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TIA Section Indenture Section
- ----------- -----------------
<S> <C>
310 (a)(1) .................................................................... 6.10
(a)(2)..................................................................... 6.10
(a)(3)..................................................................... N.A.
(a)(4)..................................................................... N.A.
(a)(5)..................................................................... 6.10
(b)........................................................................ 6.10; 7.01(b)
(c)........................................................................ N.A.
311 (a)........................................................................ 6.11
(b)........................................................................ 6.11
(c)........................................................................ N.A.
312 (a)........................................................................ 2.05
(b)........................................................................ 11.03
(c)........................................................................ 11.03
313 (a)........................................................................ 6.06
(b)........................................................................ 6.06
(c)........................................................................ 6.06
(d)........................................................................ 6.06
314 (a)........................................................................ 3.03
(b)........................................................................ N.A.
(c)(1)..................................................................... 11.04
(c)(2)..................................................................... 11.04
(c)(3)..................................................................... N.A.
(d)........................................................................ N.A.
(e)........................................................................ 11.05
(f)........................................................................ N.A.
315 (a)........................................................................ 6.01(b)
(b)........................................................................ 6.05
(c)........................................................................ 6.01(a)
(d)........................................................................ 6.01(c)
(e)........................................................................ 5.11
316 (a)(last sentence)......................................................... 2.09
(a)(1)(A).................................................................. 5.05
(a)(1)(B).................................................................. 5.04
(a)(2)..................................................................... N.A.
(b)........................................................................ 5.07
(c)........................................................................ 8.04
317 (a)(1)..................................................................... 5.08
(a)(2)..................................................................... 5.09
(b)........................................................................ 2.04
318 (a)........................................................................ 10.01
318 (c)........................................................................ 10.01
</TABLE>
- ----------
N.A. means not applicable
* This Cross-Reference Table is not part of this Indenture
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions..................................................1
SECTION 1.02 Other Definitions............................................9
SECTION 1.03 Incorporation by Reference of Trust Indenture Act...........10
SECTION 1.04 Rules of Construction.......................................10
ARTICLE II
THE SECURITIES
SECTION 2.01 Form and Dating.............................................11
SECTION 2.02 Execution and Authentication................................12
SECTION 2.03 Registrar and Paying Agent..................................13
SECTION 2.04 Paying Agent to Hold Money in Trust.........................13
SECTION 2.05 Holder Lists................................................14
SECTION 2.06 Transfer and Exchange.......................................14
SECTION 2.07 Certificated Securities.....................................18
SECTION 2.08 Replacement Securities......................................19
SECTION 2.09 Outstanding Securities......................................20
SECTION 2.10 Treasury Securities.........................................20
SECTION 2.11 Temporary Securities........................................20
SECTION 2.12 Cancellation................................................21
SECTION 2.13 Defaulted Interest..........................................21
SECTION 2.14 Persons Deemed Owners.......................................21
ARTICLE III
COVENANTS
SECTION 3.01 Payment of Securities.......................................21
SECTION 3.02 Maintenance of Office or Agency.............................22
SECTION 3.03 SEC Reports; Financial Statements...........................22
SECTION 3.04 Compliance Certificate......................................23
SECTION 3.05 Corporate Existence.........................................24
SECTION 3.06 Maintenance of Properties...................................24
SECTION 3.07 Payment of Taxes and Other Claims...........................24
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 3.08 Waiver of Stay, Extension or Usury Laws.....................25
SECTION 3.09 Limitation on Sale/Leaseback Transactions...................25
SECTION 3.10 Limitation on Liens.........................................26
SECTION 3.11 Registration Rights Agreement...............................27
ARTICLE IV
SUCCESSORS
SECTION 4.01 Limitations on Mergers and Consolidations...................27
SECTION 4.02 Successor Corporation Substituted...........................28
ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01 Events of Default...........................................28
SECTION 5.02 Acceleration................................................30
SECTION 5.03 Other Remedies..............................................31
SECTION 5.04 Waiver of Existing Defaults.................................31
SECTION 5.05 Control by Majority.........................................32
SECTION 5.06 Limitations on Suits........................................32
SECTION 5.07 Rights of Holders to Receive Payment........................33
SECTION 5.08 Collection Suit by Trustee..................................33
SECTION 5.09 Trustee May File Proofs of Claim............................33
SECTION 5.10 Priorities..................................................34
SECTION 5.11 Undertaking for Costs.......................................34
ARTICLE VI
TRUSTEE
SECTION 6.01 Duties of Trustee...........................................34
SECTION 6.02 Rights of Trustee...........................................36
SECTION 6.03 Individual Rights of Trustee................................37
SECTION 6.04 Trustee's Disclaimer........................................37
SECTION 6.05 Notice of Defaults..........................................37
SECTION 6.06 Reports by Trustee to Holders...............................37
SECTION 6.07 Compensation and Indemnity..................................38
SECTION 6.08 Replacement of Trustee......................................39
SECTION 6.09 Successor Trustee by Merger, etc............................40
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.10 Eligibility; Disqualification...............................40
SECTION 6.11 Preferential Collection of Claims Against Company...........40
ARTICLE VII
DISCHARGE OF INDENTURE
SECTION 7.01 Termination of Company's Obligations........................41
SECTION 7.02 Application of Trust Money..................................43
SECTION 7.03 Repayment to Company........................................44
SECTION 7.04 Reinstatement...............................................44
ARTICLE VIII
AMENDMENTS
SECTION 8.01 Without Consent of Holders..................................44
SECTION 8.02 With Consent of Holders.....................................46
SECTION 8.03 Compliance with Trust Indenture Act.........................47
SECTION 8.04 Revocation and Effect of Consents...........................47
SECTION 8.05 Notation on or Exchange of Securities.......................48
SECTION 8.06 Trustee to Sign Amendments, etc.............................48
ARTICLE IX
GUARANTEES OF SECURITIES
SECTION 9.01 Unconditional Guarantees....................................48
SECTION 9.02 Limitation of Guarantor's Liability.........................51
SECTION 9.03 Contribution................................................51
SECTION 9.04 Execution and Delivery of Guarantees........................51
SECTION 9.05 Addition of Guarantors......................................52
SECTION 9.06 Release of Guarantee........................................52
SECTION 9.07 Consent to Jurisdiction and Service of Process..............53
SECTION 9.08 Waiver of Immunity..........................................53
SECTION 9.09 Judgment Currency...........................................54
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE X
REDEMPTION
SECTION 10.01 Notices to Trustee..........................................54
SECTION 10.02 Selection of Securities to be Redeemed......................54
SECTION 10.03 Notices to Holders..........................................55
SECTION 10.04 Effect of Notices of Redemption.............................56
SECTION 10.05 Deposit of Redemption Price.................................56
SECTION 10.06 Securities Redeemed in Part.................................56
SECTION 10.07 Optional Redemption.........................................56
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls................................57
SECTION 11.02 Notices.....................................................57
SECTION 11.03 Communication by Holders with Other Holders.................59
SECTION 11.04 Certificate and Opinion as to Conditions Precedent..........60
SECTION 11.05 Statements Required in Certificate or Opinion...............60
SECTION 11.06 Rules by Trustee and Agents.................................60
SECTION 11.07 Legal Holidays..............................................61
SECTION 11.08 No Recourse Against Others..................................61
SECTION 11.09 Governing Law...............................................61
SECTION 11.10 No Adverse Interpretation of Other Agreements...............61
SECTION 11.11 Successors..................................................61
SECTION 11.12 Severability................................................61
SECTION 11.13 Counterpart Originals.......................................62
SECTION 11.14 Table of Contents, Headings, etc............................62
EXHIBITS
EXHIBIT A Form of 5-Year Security.....................................A-1
EXHIBIT B Form of 7-Year Security.....................................B-1
EXHIBIT C Form of 10-Year Security....................................C-1
EXHIBIT D Form of 20-Year Security...................................D-1
EXHIBIT E Form of Supplemental Indenture..............................E-1
</TABLE>
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<PAGE> 7
INDENTURE dated as of April 14, 1998 between R&B FALCON CORPORATION, a
Delaware corporation (the "Company"), and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, a national banking association (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's (i) 6 1/2%
Series A Senior Notes due 2003 (the "Series A 5- Year Securities") and 6 1/2%
Series B Senior Notes due 2003 (the "Series B 5-Year Securities" and with the
Series A 5-Year Securities, the "5-Year Securities"), (ii) 6 3/4% Series A
Senior Notes due 2005 (the "Series A 7-Year Securities") and 6 3/4% Series B
Senior Notes due 2005 (the "Series B 7- Year Securities" and with the Series A
7-Year Securities, the "7-Year Securities"), (iii) 6.95% Series A Senior Notes
due 2008 (the "Series A 10-Year Securities") and 6.95% Series B Senior Notes due
2008 (the "Series B 10-Year Securities" and with the Series A 10-Year
Securities, the "10-Year Securities") and (iv) 73/8% Series A Senior Notes due
2018 (the "Series A 20-Year Securities") and 73/8% Series B Senior Notes due
2018 (the "Series B 20-Year Securities" and with the Series A 20- Year
Securities, the "20-Year Securities"). The Series A 5-Year Securities, the
Series A 7-Year Securities, the Series A 10-Year Securities and the Series A
20-Year Securities are collectively referred to herein as the "Series A
Securities", and the Series B 5-Year Securities, the Series B 7- Year
Securities, the Series B 10-Year Securities and Series B 20-Year Securities are
collectively referred to herein as the "Series B Securities." In addition, each
of the 5-Year Securities, the 7-Year Securities, the 10-Year Securities and the
20-Year Securities shall constitute a "series" of Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Adjusted Net Assets" of a Guarantor at any date means the lesser of
(x) the amount by which the fair value of the property of such Guarantor at such
date exceeds the total amount of liabilities, including, without limitation, the
probable amount of contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date) of such
Guarantor at such date, but excluding liabilities under the Guarantee of such
Guarantor, and (y) the amount by which the present fair saleable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of any obligations of such Subsidiary under the Guarantee
of such Guarantor), excluding debt in respect of the Guarantee of such
Guarantor, as they become absolute and matured.
"Affiliate" of any specified Person means any Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such specified Person. For purposes
<PAGE> 8
of this definition, "control" of a Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
The Trustee may request and may conclusively rely upon an Officers' Certificate
to determine whether any Person is an Affiliate of any specified Person.
"Agent" means any Registrar or Paying Agent.
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal,
state or foreign law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized, with respect to any particular matter, to act
by or on behalf of the Board of Directors of the Company.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" of any Person means and includes any and all shares,
interests, rights to purchase, warrants or options (whether or not currently
exercisable), participations or other equivalents of or interests in (however
designated) the equity (which includes, but is not limited to, common stock,
preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities that are convertible into, or exchangeable for,
such equity).
"Capitalized Lease Obligation" of any Person means any obligation of
such Person to pay rent or other amounts under a lease of property, real or
personal, that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Common Equity" of any Person means and includes all Capital Stock of
such Person that is generally entitled (without regard to the occurrence of any
contingency) to (i) vote in the election of directors of such Person, or (ii) if
such Person is not a corporation, vote or otherwise participate in the selection
of the governing body, partners, managers or others that will control the
management and policies of such Person.
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<PAGE> 9
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation; provided, however, that for
purposes of any provision contained herein which is required by the TIA,
"Company" shall also mean each Guarantor, if any.
"Consolidated Net Worth" of the Company means the consolidated
stockholders' equity of the Company and its Subsidiaries, as determined in
accordance with GAAP.
"Corporate Trust Office of the Trustee" means the office of the Trustee
at which the corporate trust business of the Trustee shall be principally
administered, which office shall initially be located at the address of the
Trustee specified in Section 11.02 hereof and may be located at such other
address as the Trustee may give notice to the Company.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
"Exchange Offer" means the offer that may be made by the Company
pursuant to a Registration Rights Agreement to exchange each series of the
Series B Securities for the corresponding series of Series A Securities.
"Exchange Offer Registration Statement" means a registration statement
under the Securities Act relating to an Exchange Offer, including the related
prospectus.
"Funded Indebtedness" means all Indebtedness (including Indebtedness
incurred under any revolving credit, letter of credit or working capital
facility) that matures by its terms, or that is renewable at the option of any
obligor thereon to a date, more than one year after the date on which such
Indebtedness is originally incurred.
"GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
-3-
<PAGE> 10
"Guarantor" means (i) each Subsidiary of the Company that becomes a
guarantor of the Securities pursuant to Section 9.05 hereof, (ii) each
Subsidiary of the Company that executes a supplemental indenture in which such
Subsidiary agrees to be bound by Article IX hereof and (iii) any Subsidiary of
the Company that is a successor corporation of any Subsidiary of the Company
referred to in clauses (i) or (ii). The term "Guarantor" shall not include any
Subsidiary of the Company referred to in clauses (i) through (iii) that shall
have been released from its obligations under Article IX pursuant to Section
9.06 hereof.
"Hedging Obligations" of any Person means the net obligations (not the
notional amount) of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person at any date means, without duplication,
(i) all indebtedness of such Person for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters of
credit and performance bonds issued by such Person in the ordinary course of
business, to the extent not drawn or, to the extent drawn, if such drawing is
reimbursed not later than the third Business Day following demand for
reimbursement, (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of others secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person, to the extent of the fair market value of all the assets of such Person
subject to such Lien, (vii) all Indebtedness of others guaranteed by such Person
to the extent of such guarantee and (viii) all Hedging Obligations of such
Person.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company for purposes of
calculating any Make-Whole Premium, provided, that if the Company fails to make
such appointment at least 45 Business Days prior to the Redemption Date for any
Security to be redeemed, or if the institution so appointed is unwilling or
unable to make such calculation, such calculation will be made by Credit Suisse
First Boston Corporation or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee.
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<PAGE> 11
"Initial Purchasers" means Credit Suisse First Boston Corporation,
Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
Morgan Stanley & Co. Incorporated, as initial purchasers in the Offering.
"Interest Payment Date" shall have the meaning assigned to such term in
the Securities.
"Issue Date" means the first date on which the Series A Securities are
issued under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in any of New York, New York, Houston, Texas or a place of payment
are authorized or obligated by law, regulation or executive order to remain
closed.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law. For
the purposes of this Indenture, the Company or any Subsidiary of the Company
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement
relating to such asset.
"Make-Whole Premium" means, with respect to any 7-Year Security,
10-Year Security or 20-Year Security (or portion thereof) to be redeemed, an
amount equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such
redemption, would have been payable on the Security (or
portion thereof) being redeemed on each Interest Payment Date
occurring after the Redemption Date (excluding any accrued and
unpaid interest for the period prior to the Redemption Date);
and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion thereof)
being redeemed.
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<PAGE> 12
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield plus (i) 20 basis points in the
case of the 7-Year Securities, (ii) 20 basis points in the case of the 10-Year
Securities and (iii) 25 basis points in the case of the 20-Year Securities. The
Make-Whole Premium will be calculated by an Independent Investment Banker. The
5-Year Securities will not be redeemable.
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Securities, calculated to the nearest
1/12 of a year (the "Remaining Term"). The Treasury Yield will be determined as
of the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100 of 1%, with any figure of
1/200% or above being rounded upward. If weekly average yields for United States
Treasury Notes are not available in the H.15 Statistical Release or otherwise,
then the Treasury Yield will be calculated by interpolation of comparable rates
selected by the Independent Investment Banker.
"Net Proceeds" means, with respect to any Sale/Leaseback Transaction
entered into by the Company or any Subsidiary of the Company, the aggregate net
proceeds received by the Company or such Subsidiary from such Sale/Leaseback
Transaction after payment of expenses, taxes, commissions and similar amounts
incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof at the time of receipt, as
determined by the Board of Directors).
"Non-Recourse Indebtedness" means, at any date, the aggregate amount at
such date of Indebtedness of the Company or a Subsidiary of the Company in
respect of which the recourse of the holder of such Indebtedness, whether direct
or indirect and whether contingent or otherwise, is
-6-
<PAGE> 13
effectively limited to specified assets, and with respect to which neither the
Company nor any of its Subsidiaries provides any credit support.
"Offering" means the offering of the Original Securities pursuant to
the Offering Circular.
"Offering Circular" means the Offering Circular of the Company, dated
April 9, 1998, relating to the Offering.
"Officer" means the Chairman of the Board, the President, any Vice
Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
"Officers' Certificate" means a certificate signed by two Officers of a
Person, one of whom must be the Person's Chief Executive Officer, Chief
Financial Officer or Chief Accounting Officer.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. Such counsel may be an employee of or counsel to the
Company, a Guarantor or the Trustee.
"Pari Passu Indebtedness" means any Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall be subordinated in right of
payment to the Securities.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Private Exchange" means the offer by the Company, pursuant to the
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each Initial Purchaser, in exchange for the Original Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means the Securities to be issued
pursuant to this Indenture to the Initial Purchasers in a Private Exchange.
"Purchase Agreement" means the Purchase Agreement, dated as of April 8,
1998, among the Company and the Initial Purchasers.
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<PAGE> 14
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date," when used with respect to any security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price" shall have the meaning assigned to such term in the
Securities.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of April 8, 1998, among the Company and the Initial
Purchasers relating to the Original Securities.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company, for a
period of more than three years, of any real or tangible personal property,
which property has been or is to be sold or transferred by the Company or such
Subsidiary to such Person in contemplation of such leasing.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and the Series B Securities.
For purposes of this Indenture, the term "Securities" shall, except where the
context otherwise requires, include any future Guarantees.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Security Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Series A Securities" means, collectively, the Company's (i) 6 1/2%
Series A Senior Notes due 2003, (ii) 6 3/4% Series A Senior Notes due 2005,
(iii) 6.95% Series A Senior Notes due 2008 and (iv) 7 3/8% Series A Senior Notes
due 2018 to be issued pursuant to this Indenture.
"Series B Securities" means, collectively, the Company's (i) 6 1/2%
Series B Senior Notes due 2003, (ii) 6 3/4% Series B Senior Notes due 2005,
(iii) 6.95% Series B Senior Notes due 2008 and (iv) 7 3/8% Series B Senior Notes
due 2018 to be issued pursuant to this Indenture in the Exchange Offer.
"Shelf Registration Statement" means the registration statement issued
by the Company, in connection with the offer and sale of Original Securities or
Private Exchange Securities, pursuant to the Registration Rights Agreement.
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<PAGE> 15
"Subsidiary" means, with respect to any Person (i) any corporation of
which more than 50% of the total voting power of all classes of the Common
Equity is owned by such Person directly or through one or more other
Subsidiaries of such Person, and (ii) any entity other than a corporation at
least a majority of the Common Equity of which is owned by such Person directly
or through one or more other Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb), as in effect on the Issue Date.
"Transfer Restricted Securities" shall have the meaning assigned to
such term in the Registration Rights Agreement.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer any of its corporate trust matters.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged.
SECTION 1.02 Other Definitions.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
--------------------------------------------- ------------------
<S> <C>
"Agent Members".............................. 2.01(c)
"Authorized Agent"........................... 9.07
"Custodian".................................. 5.01
"DTC"........................................ 2.03
"Event of Default"........................... 5.01
"Funding Guarantor".......................... 9.03
"Global Security"............................ 2.01(b)
"Guarantees"................................. 9.01(a)
"Judgement Currency"......................... 9.09
"Non-U.S. Guarantor"......................... 9.07
"Original Securities"........................ 2.02
"Paying Agent"............................... 2.03
"Registrar".................................. 2.03
"Regulation S"............................... 2.01(b)
"Rule 144A".................................. 2.01(b)
"Significant Subsidiary"..................... 5.01
"Successor".................................. 4.01
</TABLE>
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<PAGE> 16
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and each
Guarantor.
All terms used in this Indenture that are defined by the TIA, defined
by a TIA reference to another statute or defined by an SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
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<PAGE> 17
ARTICLE II
THE SECURITIES
SECTION 2.01 Form and Dating.
(a) General. The 5-Year Securities, the 7-Year Securities, the
10-Year Securities and the 20-Year Securities, any notations thereon relating to
the Guarantees and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A, B, C and D, respectively, to this
Indenture, the terms of which are hereby incorporated into this Indenture. The
Securities may have notations, legends or endorsements required by law,
securities exchange rule, the Company's certificate of incorporation or bylaws,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The Securities
shall be in registered form without coupons and only in denominations of $1,000
and any integral multiples thereof. The terms and provisions contained in the
Securities shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company, the Guarantors, if any, and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
(b) Global Securities. Original Securities of any Series
offered and sold to a QIB in reliance on Rule 144A under the Securities Act
("Rule 144A") or in reliance on Regulation S under the Securities Act
("Regulation S"), in each case as provided in the Purchase Agreement, shall be
issued initially in the form of one or more permanent global Securities in
definitive, fully registered form without interest coupons with the global
securities legend and restricted securities legend set forth in Exhibit 1 hereto
(each, a "Global Security"), which shall be deposited on behalf of the
purchasers of the Original Securities represented thereby with the Trustee, at
its New York office, as custodian for the Depositary (or with such other
custodian as the Depositary may direct), and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depositary or its
nominee as hereinafter provided.
(c) Book-entry Provisions. This Section 2.01(c) shall apply
only to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(c), authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (ii)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
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Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in this
Section 2.01 or Section 2.06 or 2.07, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.
SECTION 2.02 Execution and Authentication.
One Officer of the Company shall sign the Securities on behalf of the
Company by manual or facsimile signature. The Company's seal may be impressed,
affixed, imprinted or reproduced on the Securities and may be in facsimile form.
If an Officer of the Company whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
be valid nevertheless.
A Security shall not be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose until authenticated by the manual
signature of an authorized signatory of the Trustee, which signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate (i) for original issue on the Issue Date
each of (A) the 5-Year Series A Securities in the aggregate principal amount of
$250,000,000, (B) the 7-Year Series A Securities in the aggregate principal
amount of $350,000,000, (C) the 10-Year Series A Securities in the aggregate
principal amount of $250,000,000 and (D) the 20-Year Series A Securities in the
aggregate principal amount of $250,000,000 (collectively, the "Original
Securities"), and (ii) the Series B Securities for original issue, pursuant to
an Exchange Offer or Private Exchange, for a like principal amount of Series A
Securities, in each case, upon a written order of the Company signed by one
Officer of the Company. Such order shall specify (a) the amount of the
Securities of each series to be authenticated and the date of original issue
thereof, and (b) whether the Securities are Series A Securities or Series B
Securities. The aggregate principal amount of Securities outstanding at any time
may not exceed (i) $250,000,000 in the case of the 5-Year Securities, (ii)
$350,000,000
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in the case of the 7-Year Securities, (iii) $250,000,000 in the case of the
10-Year Securities and (iv) $250,000,000 in the case of the 20-Year Securities,
except as provided in Section 2.08 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, or an Affiliate of any of
them.
The Series A Securities of any series and the corresponding Series B
Securities of such series shall be considered collectively to be a single class
for all purposes of this Indenture, including, without limitations waivers,
amendments, redemptions and offers to purchase.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or exchange ("Registrar") and an office
or agency where Securities may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. The Company may change any Paying Agent or Registrar
without notice to any Holder. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints the Trustee as Registrar and Paying
Agent.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect each Global Security.
SECTION 2.04 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium, if any, or interest on the Securities, whether such
money shall have been paid to it by the Company or any Guarantor, and will
notify
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the Trustee of any default by the Company or any Guarantor in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon payment
over to the Trustee and upon accounting for any funds disbursed, the Paying
Agent (if other than the Company or a Subsidiary of the Company) shall have no
further liability for the money. If the Company or a Subsidiary of the Company
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent.
SECTION 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, and the
Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in accordance with
the Depositary's procedures containing information regarding the participant
account of the Depositary to be credited with a beneficial interest in the
Global Security. The Registrar shall, in accordance with such instructions,
instruct the Depositary to credit to the account of the Person specified in such
instructions a beneficial interest in the Global Security and to debit the
account of the Person making the transfer the beneficial interest in the Global
Security being transferred.
(ii) Notwithstanding any other provisions of this
Indenture (other than the provisions set forth in Section 2.07), a
Global Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(iii) In the event that a Global Security is
exchanged for Securities in definitive registered form pursuant to this
Section 2.06 or Section 2.07 of this Indenture, prior to the
consummation of an Exchange Offer or prior to or in a transfer made
pursuant
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to an effective Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with
such procedures as are substantially consistent with the provisions of
this Section 2.06 (including the certification and other requirements
set forth on the reverse of the Original Securities intended to ensure
that such transfers comply with Rule 144A or Regulation S, as the case
may be, or are otherwise in compliance with the requirements of the
Securities Act) and such other procedures as may from time to time be
adopted by the Company.
(b) Legend.
(i) Except as permitted by the following paragraphs
(ii), (iii) and (iv), each Security certificate evidencing the Global
Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY (OR ITS PREDECESSOR) AND ANY GUARANTEE THEREOF
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES
FOR THE BENEFIT OF THE ISSUER THAT (A) THIS SECURITY MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144
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THEREUNDER (IF AVAILABLE), OR (iv) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144 under the
Securities Act, in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
certificated Security that does not bear the legend set forth above and
rescind any restriction on the transfer of such Transfer Restricted
Security, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the
Security).
(iii) After a transfer of any Original Securities or
Private Exchange Securities during the period of the effectiveness of
and pursuant to a Shelf Registration Statement with respect to such
Original Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends on such Initial Security or such
Private Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private Exchange Security
issued to certain Holders be issued in global form will cease to apply,
and a certificated Original Security or Private Exchange Security
without legends will be available to the transferee of the Holder of
such Original Securities or Private Exchange Securities upon exchange
of such transferring Holder's certificated Original Security or Private
Exchange Security or directions to transfer such Holder's interest in
the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange
Offer with respect to the Original Securities pursuant to which Holders
of such Original Securities are offered Exchange Securities in exchange
for their Original Securities, all requirements pertaining to such
Original Securities that Original Securities issued to certain Holders
be issued in global form will cease to apply and certificated Original
Securities with the restricted securities legend set forth in Section
2.06(b) will be available to Holders of such Original Securities that
do not exchange their Original Securities, and Exchange Securities in
certificated or global form will be available to Holders that exchange
such Original Securities in such Exchange Offer.
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(v) Upon the consummation of a Private Exchange with
respect to the Original Securities pursuant to which Holders of such
Original Securities are offered Private Exchange Securities in exchange
for their Original Securities, all requirements pertaining to such
Original Securities that Original Securities issued to certain Holders
be issued in global form will still apply, and Private Exchange
Securities in global form with the Restricted Securities Legend set
forth in Section 2.06(b) will be available to Holders that exchange
such Original Securities in such Private Exchange.
(c) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for certificated Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depositary for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for certificated
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
certificated Securities and Global Securities at the Registrar's or
co-registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments or similar governmental charge
payable upon exchange or transfer pursuant to Sections 5.11, 8.05 and
10.06 of the Indenture).
(ii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of (a) any
certificated Security selected for redemption in whole or in part
pursuant to Article X of this Indenture, except the unredeemed portion
of any certificated Security being redeemed in part, or (b) any
Security for a period beginning 15 Business Days before the mailing of
a notice of an offer to repurchase or redeem Securities or 15 Business
Days before an interest payment date.
(iii) Prior to the due presentation for registration
of transfer of any Security, the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the person
in whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and
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none of the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(iv) All Securities issued upon any transfer or
exchange pursuant to the terms of this Indenture shall evidence the
same debt and shall be entitled to the same benefits under this
Indenture as the Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Security, a member of,
or a participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depositary) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depositary or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depositary with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
SECTION 2.07 Certificated Securities.
(a) A Global Security deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.06 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a
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"clearing agency" registered under the Exchange Act and a successor depositary
is not appointed by the Company within 90 days of such notice, or (ii) the
Company, in its sole discretion, notifies the Trustee in writing that it elects
to cause the issuance of certificated Securities under this Indenture.
(b) Any Global Security that is transferred to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depositary
to the Trustee at its office located in the Borough of Manhattan, The City of
New York, to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate principal amount of
certificated Original Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.06(d), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.06(b), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.07(a), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
(e) In the event that a certificated Security issued pursuant
to this Section 2.07 is exchanged for another certificated Security prior to the
consummation of an Exchange Offer or prior to or in a transfer made pursuant to
an effective Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of (i) Section 2.06(a)(iii)
(including the certification and other requirements set forth on the reverse of
the Original Securities intended to ensure that such transfers comply with Rule
144A or Regulation S, as the case may be, or are otherwise in compliance with
the requirements of the Securities Act) and such other procedures as may from
time to time be adopted by the Company and (ii) Section 2.06(b).
SECTION 2.08 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee, the Company or any Guarantor, such Holder must furnish
an indemnity bond that is sufficient in the judgment of the Trustee, the Company
and the Guarantors
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to protect the Company, the Guarantors, the Trustee, any Agent or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Company, the Trustee and the Guarantors may charge for their
expenses in replacing a Security. If, after the delivery of such replacement
Security, a bona fide purchaser of the original Security in lieu of which such
replacement Security was issued presents for payment or registration such
original Security, the Trustee shall be entitled to recover such replacement
Security from the person to whom it was delivered or any person taking
therefrom, except a bona fide purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Trustee, the Company or any Guarantor in
connection therewith.
Every replacement Security is an additional obligation of the Company
and the Guarantors.
SECTION 2.09 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.09 as
not outstanding.
If a Security is replaced pursuant to Section 2.08 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 3.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the Company, a
Guarantor or an Affiliate of any of them holds the Security.
SECTION 2.10 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities of any series have concurred in any direction, waiver or consent,
Securities owned by the Company, any Guarantor or an Affiliate of any of them
shall be disregarded, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.
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SECTION 2.11 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities, but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities. Until
so exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 2.12 Cancellation.
The Company or any Guarantor at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation. Unless
the Company shall direct that canceled Securities be returned to it, after
written notice to the Company all canceled Securities held by the Trustee shall
be disposed of in accordance with the usual disposal procedures of the Trustee,
and the Trustee shall maintain a record of their disposal. The Company may not
issue new Securities to replace Securities that have been paid or that have been
delivered to the Trustee for cancellation.
SECTION 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest on the defaulted interest, in each case at the rate provided in
the Securities and in Section 3.01 hereof. The Company may pay the defaulted
interest to the Persons who are Holders on a subsequent special record date. At
least 15 days before any special record date, the Company (or the Trustee, in
the name of and at the expense of the Company) shall mail to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
SECTION 2.14 Persons Deemed Owners.
The Company, the Trustee, any Agent and any authenticating agent may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payments of principal of or premium, if
any, or interest on such Security and for all other purposes. None of the
Company, the Trustee, any Agent or any authenticating agent shall be affected by
any notice to the contrary.
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ARTICLE III
COVENANTS
SECTION 3.01 Payment of Securities.
The Company shall pay the principal of and premium, if any, and
interest (including additional interest, if any, required by the Registration
Rights Agreement referred to in Section 3.11 hereof) on the Securities on the
dates and in the manner provided in the Securities and in this Indenture.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds by 11:00 a.m., Eastern time, on that date money deposited by the Company
designated for and sufficient to pay all principal, premium and interest then
due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal, and premium, if any,
at a rate equal to the then applicable interest rate on the Securities to the
extent lawful; and it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 3.02 Maintenance of Office or Agency.
The Company will maintain, in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee, the Registrar
or the Paying Agent) where Securities may be presented for registration of
transfer or exchange, where Securities may be presented for payment and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. Unless otherwise designated by the Company by written
notice to the Trustee, such office or agency shall be the principal office of
the agent of the Trustee, in The City of New York which, on the date hereof, is
located at the address set forth in Section 11.02 hereof. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location
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of any such other office or agency. The Company hereby designates the Corporate
Trust Office of the Trustee as one such office or agency of the Company in
accordance with Section 2.03 hereof.
SECTION 3.03 SEC Reports; Financial Statements.
(a) The Company shall file with the Trustee, within 15 days
after it files the same with the SEC, copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. If the Company is not subject to the requirements of such Section
13 or 15(d), the Company shall file with the Trustee, within 15 days after it
would have been required to file the same with the SEC, financial statements,
including any notes thereto (and with respect to annual reports, an auditors'
report by a firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Company would have been required to include in such
annual reports, information, documents or other reports if the Company had been
subject to the requirements of such Section 13 or 15(d). The Company shall also
comply with the provisions of TIA Section 314(a).
(b) If the Company is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause any annual report furnished to its stockholders generally and any
quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
If the Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements referred to in Section 3.03(a) hereof, including any notes thereto
(and with respect to annual reports, an auditors' report by a firm of
established national reputation), and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" to be so mailed to the Holders
within 105 days after the end of each of the Company's fiscal years and within
60 days after the end of each of the Company's first three fiscal quarters.
(c) The Company shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information that the
Trustee may be required to deliver to Holders under this Section 3.03.
SECTION 3.04 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, a statement signed by two
Officers of the Company, which need not constitute an Officers' Certificate,
complying with TIA Section 314(a)(4) and stating that in the course of
performance by the signing Officers of the Company of their duties as such
Officers of the Company they would normally obtain knowledge of the keeping,
observing, performing and
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fulfilling by the Company of its obligations under this Indenture, and further
stating, as to each such Officer signing such statement, that to the best of his
knowledge the Company and each Guarantor, if any, has kept, observed, performed
and fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officer may have
knowledge and what action the Company or such Guarantor, as the case may be, is
taking or proposes to take with respect thereto).
(b) The Company and the Guarantors, if any, shall, so long as
any of the Securities are outstanding, deliver to the Trustee, forthwith upon
any Officer of the Company or any Guarantor becoming aware of any Default or
Event of Default under this Indenture, an Officers' Certificate specifying such
Default or Event of Default and what action the Company or such Guarantor is
taking or proposes to take with respect thereto.
SECTION 3.05 Corporate Existence.
Subject to Article IV hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership and other existence of each of its
Subsidiaries and all rights (charter and statutory) and franchises of the
Company and its Subsidiaries, provided that the Company shall not be required to
preserve the corporate existence of any Subsidiary of the Company or any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole and that the loss thereof
would not have a material adverse effect on the business, prospects, assets or
financial condition of the Company and its Subsidiaries taken as a whole and
would not have any material adverse effect on the payment and performance of the
obligations of the Company and the Guarantors under the Securities and this
Indenture.
SECTION 3.06 Maintenance of Properties.
The Company shall cause all material properties owned by or leased to
the Company or any Subsidiary of the Company or used or held for use in the
conduct of its business or the business of any such Subsidiary to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
and casualty losses excepted) and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly conducted at all times; provided that
nothing in this Section 3.06 shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any such Subsidiary and not disadvantageous in any material respect
to the Holders.
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SECTION 3.07 Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (ii) all material lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon the property of the
Company or any of its Subsidiaries; provided that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith, and by appropriate proceedings.
SECTION 3.08 Waiver of Stay, Extension or Usury Laws.
The Company and each Guarantor, if any, covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or any usury law or other law, which would prohibit or forgive
the Company or any Guarantor from paying all or any portion of the principal of,
or premium, if any, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that they may
lawfully do so) the Company and each Guarantor hereby expressly waive all
benefit or advantage of any such law, and covenant that they will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 3.09 Limitation on Sale/Leaseback Transactions.
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into any Sale/Leaseback Transaction with any Person (other
than the Company or a Subsidiary of the Company) unless:
(a) the Company or such Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable Indebtedness with
respect to such Sale/Leaseback Transaction, secured by a Lien on the property
subject to such Sale/Leaseback Transaction pursuant to Section 3.10 hereof
without equally and ratably securing the Securities pursuant to such Section;
(b) after the Issue Date and within a period commencing six
months prior to the consummation of such Sale/Leaseback Transaction and ending
six months after the consummation thereof, the Company or such Subsidiary shall
have expended for property used or to be used in the ordinary course of business
of the Company and its Subsidiaries an amount equal to all or a portion of the
Net Proceeds of such Sale/Leaseback Transaction and the Company shall have
elected to
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designate such amount as a credit against such Sale/Leaseback Transaction (with
any such amount not being so designated to be applied as set forth in clause (c)
below); or
(c) the Company, during the 12-month period after the
effective date of such Sale/Leaseback Transaction, shall have applied to the
voluntary defeasance or retirement of Securities or any Pari Passu Indebtedness
an amount equal to the greater of the Net Proceeds of the sale or transfer of
the property leased in such Sale/Leaseback Transaction and the fair value, as
determined by the Board of Directors, of such property at the time of entering
into such Sale/Leaseback Transaction (in either case adjusted to reflect the
remaining term of the lease and any amount expended by the Company as set forth
in clause (b) above), less an amount equal to the principal amount of Securities
and Pari Passu Indebtedness voluntarily defeased or retired by the Company
within such 12-month period and not designated as a credit against any other
Sale/Leaseback Transaction entered into by the Company or any Subsidiary of the
Company during such period.
SECTION 3.10 Limitation on Liens.
The Company shall not, and shall not permit any Subsidiary of the
Company to, issue, assume or guarantee any Indebtedness for borrowed money
secured by any Lien on any property or asset now owned or hereafter acquired by
the Company or such Subsidiary without making effective provision whereby any
and all Securities then or thereafter outstanding will be secured by a Lien
equally and ratably with any and all other obligations thereby secured for so
long as any such obligations shall be so secured. Notwithstanding the foregoing,
the Company or any Subsidiary of the Company may, without so securing the
Securities, issue, assume or guarantee Indebtedness for borrowed money secured
by the following Liens:
(a) Liens existing on the Issue Date or provided for under the
terms of agreements existing on the Issue Date;
(b) Liens on property securing (i) all or any portion of the
cost of acquiring, constructing, altering, improving or repairing any property
or assets, real or personal, or improvements used or to be used in connection
with such property or (ii) Indebtedness incurred by the Company or any
Subsidiary of the Company prior to or within one year after the later of the
acquisition, the completion of construction, alteration, improvement or repair
or the commencement of commercial operation thereof, which Indebtedness is
incurred for the purpose of financing all or any part of the purchase price
thereof or construction or improvements thereon;
(c) Liens securing Indebtedness owed by a Subsidiary of the
Company to the Company or to any other Subsidiary of the Company;
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(d) Liens on property existing at the time of acquisition of
such property by the Company or any of its Subsidiaries or Liens on the property
of any Person existing at the time such Person becomes a Subsidiary of the
Company and, in any case, not incurred as a result of (or in connection with or
in anticipation of) the acquisition of such Property or such Person becoming a
Subsidiary of the Company, provided that such Liens do not extend to or cover
any property or assets of the Company or any of its Subsidiaries other than the
property encumbered at the time such property is acquired by the Company or any
of its Subsidiaries or such Person becomes a Subsidiary of the Company and, in
any case, do not secure Indebtedness with a principal amount in excess of the
principal amount outstanding at such time;
(e) Liens on any property securing (i) Indebtedness incurred
in connection with the construction, installation or financing of pollution
control or abatement facilities or other forms of industrial revenue bond
financing or (ii) Indebtedness issued or guaranteed by the United States or any
State thereof or any department, agency or instrumentality of either;
(f) any Lien extending, renewing or replacing (or successive
extensions, renewals or replacements of) any Lien of any type permitted under
clause (a), (b), (d) or (e) above, provided that such Lien extends to or covers
only the property that is subject to the Lien being extended, renewed or
replaced and that the principal amount of the Indebtedness secured thereby shall
not exceed the principal amount of Indebtedness so secured at the time of such
extension, renewal or replacement; or
(g) Liens (exclusive of any Lien of any type otherwise
permitted under clauses (a) through (f) above) securing Indebtedness for
borrowed money of the Company or any Subsidiary of the Company in an aggregate
principal amount which, together with the aggregate amount of Attributable
Indebtedness deemed to be outstanding in respect of all Sale/Leaseback
Transactions entered into pursuant to clause (a) of Section 3.09 hereof
(exclusive of any such Sale/Leaseback Transactions otherwise permitted under
clauses (a) through (f) above), does not at the time such Indebtedness is
incurred exceed 15% of the Consolidated Net Worth of the Company (as shown in
the most recent audited consolidated balance sheet of the Company and its
Subsidiaries).
SECTION 3.11 Registration Rights Agreement.
The Company shall perform its obligations under the Registration Rights
Agreement and shall comply in all material respects with the terms and
conditions contained therein including, without limitation, the payment of any
additional interest required by Section 6 of the Registration Rights Agreement.
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ARTICLE IV
SUCCESSORS
SECTION 4.01 Limitations on Mergers and Consolidations.
Neither the Company nor any Guarantor (other than any Guarantor that
has been released from its Guarantee pursuant to the provisions of Section 9.06
hereof) shall consolidate with or merge into any Person, or sell, lease, convey,
transfer or otherwise dispose of all or substantially all of its assets to any
Person, unless:
(i) the Person formed by or surviving such
consolidation or merger (if other than the Company or such Guarantor,
as the case may be), or to which such sale, lease, conveyance, transfer
or other disposition shall be made (collectively, the "Successor"), is
a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia (or,
alternatively, in the case of a Guarantor organized under the laws of a
jurisdiction outside the United States, a corporation organized and
existing under the laws of such foreign jurisdiction), and the
Successor assumes by supplemental indenture in a form satisfactory to
the Trustee all of the obligations of the Company or such Guarantor, as
the case may be, under this Indenture and the Securities;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
(iii) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
the transaction and such supplemental indenture comply with this
Indenture.
SECTION 4.02 Successor Corporation Substituted.
Upon any consolidation or merger of the Company or any Guarantor, or
any sale, lease, conveyance, transfer or other disposition of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 4.01 hereof, the Successor formed by such consolidation or into or
with which the Company or such Guarantor is merged or to which such sale, lease,
conveyance, transfer or other disposition or assignment is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company or such Guarantor, as the case may be, under this Indenture and the
Securities with the same effect as if such Successor had been named as the
Company or such Guarantor herein and the predecessor Company or Guarantor, in
the case of a sale, conveyance, transfer or other disposition, shall be released
from all obligations under this Indenture and the Securities.
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ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01 Events of Default.
An "Event of Default" with respect to any series of Securities occurs
if:
(1) the Company or any Guarantor defaults in the payment of
interest on any Security of such series when the same becomes due and
payable and such default continues for a period of 30 days;
(2) the Company or any Guarantor defaults in the payment of
the principal of or premium, if any, on any Security of such series
when the same becomes due and payable at maturity, upon acceleration,
upon redemption or otherwise;
(3) the Company or any Guarantor fails to comply with any of
its other agreements or covenants in, or provisions of, the Securities
of such series, any Guarantees or this Indenture and such failure
continues for the period and after the notice specified in the last
paragraph of this Section 5.01;
(4) any default shall occur which results in the acceleration
of the maturity of any Indebtedness of the Company or any Subsidiary of
the Company (other than the Securities of such series or any
Non-Recourse Indebtedness) having an outstanding principal amount of
$20 million or more individually or, taken together with all other such
Indebtedness that has been so accelerated, in the aggregate; or any
default shall occur in the payment of any principal or interest in
respect of any Indebtedness of the Company or any Subsidiary of the
Company (other than the Securities of such series or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or
more individually or, taken together with all other such Indebtedness
with respect to which any such payment has not been made, in the
aggregate and such default shall be continuing for a period of 30 days
without the Company or such Subsidiary, as the case may be, effecting a
cure of such default;
(5) a final judgment or order for the payment of money in
excess of $20 million (net of applicable insurance coverage) shall be
rendered against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the
Exchange Act, a "Significant Subsidiary") of the Company and such
judgment or order shall continue unsatisfied and unstayed for a period
of 60 days;
(6) the Company, any Guarantor or any other Significant
Subsidiary of the Company pursuant to or within the meaning of any
Bankruptcy Law:
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(A) commences a voluntary case,
(B) consents to the entry of an order for
relief against it in an involuntary case,
(C) consents to the appointment of a
Custodian of it or for all or for a substantial part of its
property, or
(D) makes a general assignment for the
benefit of its creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that remains unstayed and in effect for
60 days and that:
(A) is for relief against the Company, any
Guarantor or any other Significant Subsidiary of the Company
as debtor in an involuntary case,
(B) appoints a Custodian of the Company, any
Guarantor or any other Significant Subsidiary of the Company
or a Custodian for all or for a substantial part of the
property of the Company, any Guarantor or any other
Significant Subsidiary of the Company, or
(C) orders the liquidation of the Company,
any Guarantor or any other Significant Subsidiary of the
Company.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know of a Default or Event of
Default unless a Trust Officer at the Corporate Trust Office of the Trustee has
actual knowledge of such Default or the Trustee receives written notice at the
Corporate Trust Office of the Trustee of such Default or Event of Default with
specific reference to such Default.
When a Default is cured, it ceases.
A Default under clause (3) of this Section is not an Event of Default
until the Trustee notifies the Company and, in the case of a Default by a
Guarantor, such Guarantor, or the Holders of at least 25% in principal amount of
the Securities of any series then outstanding notify the Company, such Guarantor
(where applicable) and the Trustee, of the Default, and neither the Company nor
such Guarantor cures the Default within 60 days after receipt of the notice. The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default."
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SECTION 5.02 Acceleration.
If an Event of Default (other than an Event of Default specified in
clause (6) or (7) of Section 5.01 hereof with respect to the Company or any
Guarantor) with respect to any series of Securities occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
principal amount of the then outstanding Securities of such series by notice to
the Company and the Trustee, may declare the principal of and premium, if any,
and accrued and unpaid interest on all then outstanding Securities of such
series to be due and payable immediately. Upon any such declaration the amounts
due and payable on the Securities of such series, as determined in accordance
with the next succeeding paragraph, shall be due and payable immediately. If an
Event of Default specified in clause (6) or (7) of Section 5.01 hereof with
respect to the Company or any Guarantor occurs, the principal of and premium, if
any, and accrued and unpaid interest on all Securities then outstanding shall
ipso facto become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee or any Holder. The Holders of a
majority in principal amount of the Securities of any series then outstanding by
written notice to the Trustee may rescind an acceleration and its consequences
with respect to such series (other than nonpayment of principal of, or premium,
if any, or interest on the Securities of such series) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived, except nonpayment of principal, or premium, if any,
or interest that has become due solely because of the acceleration.
In the event that the maturity of the Securities of any series is
accelerated pursuant to this Section 5.02, 100% of the principal amount thereof
shall become due and payable plus, premium, if any, and accrued interest to the
date of payment.
SECTION 5.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, or premium, if any,
or interest on the Securities or to enforce the performance of any provision of
the Securities, this Indenture or the Registration Rights Agreement.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
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SECTION 5.04 Waiver of Existing Defaults.
Subject to Sections 5.07 and 8.02 hereof, the Holders of a majority in
principal amount of the Securities of any series then outstanding by notice to
the Trustee may waive an existing Default or Event of Default and its
consequences (including waivers obtained in connection with a tender offer or
exchange offer for the Securities of such series or a solicitation of consents
in respect of the Securities of such series, provided that in each case such
offer or solicitation is made to all Holders of the Securities of such series
then outstanding on equal terms), except (1) a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on
the Securities of any series or (2) a continuing Default in respect of a
provision that under Section 8.02 hereof cannot be amended without the consent
of each Holder affected. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 5.05 Control by Majority.
The Holders of a majority in principal amount of the Securities of any
series then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it hereunder with respect to such series. However, the
Trustee may refuse to follow any direction that conflicts with applicable law or
this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of other Holders, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification satisfactory
to it in its sole discretion against all losses and expenses caused by taking or
not taking such action.
SECTION 5.06 Limitations on Suits.
Subject to Section 5.07 hereof, a Holder may pursue a remedy with
respect to this Indenture (including the Guarantees) or the Securities of any
series only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the
Securities of such series then outstanding make a written request to
the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
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(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the Securities of such series do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 5.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of, and premium, if any,
and interest on the Security, on or after the respective due dates expressed in
the Security, or to bring suit for the enforcement of any such payment on or
after such respective dates, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
SECTION 5.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of Section 5.01
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company and any
Guarantor for the amount of principal and premium, if any, and interest
remaining unpaid on any series of Securities, and interest on overdue principal
and premium, if any, and, to the extent lawful, interest on overdue interest,
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 5.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents and to take such actions, including participating as a member,
voting or otherwise, of any committee of creditors, as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company and any Guarantor or their respective
creditors or properties and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims and any Custodian in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 6.07 hereof. To the extent that
the payment of any such
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compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 6.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders of the Securities of any series may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities of any series or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 5.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 6.07
hereof;
Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and
interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Article.
SECTION 5.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 5.07 hereof, or a suit by a Holder or Holders of more than
10% in principal amount of the Securities of any series then outstanding.
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ARTICLE VI
TRUSTEE
SECTION 6.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine such certificates
and opinions to determine whether or not, on their face, they appear to
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.
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(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
reasonably satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law. All money received by the Trustee shall,
until applied as herein provided, be held in trust for the payment of the
principal of, and premium if any, and interest on the Securities.
SECTION 6.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company or any Guarantor shall
be sufficient if signed by an Officer of the Company or such Guarantor.
(f) The Trustee is not required to give any bond or surety
with respect to the performance of its duties or the exercise of its powers
under this Indenture.
(g) In the event the Trustee receives inconsistent or
conflicting requests and indemnity from two or more groups of holders of
Securities of a series, each representing less than a majority in aggregate
principal amount of the Securities outstanding of such series, pursuant to the
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provisions of this Indenture, the Trustee, in its sole discretion, may determine
what action, if any, shall be taken.
(h) The Trustee's immunities and protections from liability
and its right to indemnification in connection with the performance of its
duties under this Indenture shall extend to the Trustee's officers, directors,
agents, attorneys and employees. Such immunities and protections and right to
indemnity, together with the Trustee's right to compensation, shall survive the
Trustee's resignation or removal, the discharge of this Indenture and final
payment of the Securities.
(i) The permissive right of the Trustee to take the actions
permitted by the Indenture shall not be construed as an obligation or duty to do
so.
(j) Except for information provided by the Trustee concerning
the Trustee, the Trustee shall have no responsibility for any information in any
offering memorandum or other disclosure material distributed with respect to the
Securities, and the Trustee shall have no responsibility for compliance with any
state or federal securities laws in connection with the Securities.
SECTION 6.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, the
Guarantors or any of their Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 6.10 and 6.11 hereof.
SECTION 6.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities or any money paid to the Company or upon
the Company's direction under any provision hereof, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee and it shall not be responsible for any statement or recital herein
or any statement in the Securities other than its certificate of authentication.
SECTION 6.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, or premium,
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if any, or interest on any Security, the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Holders.
SECTION 6.06 Reports by Trustee to Holders.
As promptly as practicable after each May 15, beginning with May 15,
1999, the Trustee shall mail to Holders a brief report dated as of such
reporting date that complies with TIA Section 313(a); provided, however, that if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted. The Trustee also
shall comply with TIA Section 313(b). The Trustee shall also transmit by mail
all reports as required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange, if any, on which the Securities
are listed. The Company shall notify the Trustee if and when the Securities are
listed on any stock exchange.
SECTION 6.07 Compensation and Indemnity.
The Company and the Guarantors jointly and severally agree to pay to
the Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
and the Guarantors jointly and severally agree to reimburse the Trustee upon
request for all reasonable disbursements, advances and expenses incurred by it.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company and the Guarantors jointly and severally agree to indemnify
the Trustee against any loss, liability or expense incurred by it arising out of
or in connection with the acceptance or administration of its duties under this
Indenture, except as set forth in the next paragraph. The Trustee shall notify
the Company and the Guarantors promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company and the
Guarantors shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent.
Neither the Company nor the Guarantors shall be obligated to reimburse
any expense or indemnify against any loss or liability incurred by the Trustee
through negligence or bad faith.
To secure the payment obligations of the Company and the Guarantors in
this Section 6.07, the Trustee shall have a Lien prior to the Securities on all
money or property held or collected by the
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Trustee, except that held in trust to pay principal of, and premium, if any, and
interest on the Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 6.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 6.08.
The Trustee may resign and be discharged from the trust hereby created
by so notifying the Company and the Guarantors. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and the Guarantors shall promptly
appoint a successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the Securities then
outstanding may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Securities then outstanding
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 6.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company and the Guarantors.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the Lien provided for in Section 6.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 6.08 hereof, the obligations of the Company and
the Guarantors under Section 6.07 hereof shall continue for the benefit of the
retiring Trustee.
SECTION 6.09 Successor Trustee by Merger, etc.
Subject to Section 6.10 hereof, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia and authorized under such
laws to exercise corporate trust power, shall be subject to supervision or
examination by Federal or State (or the District of Columbia) authority and
shall have, or be a Subsidiary of a bank or bank holding company having, a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
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SECTION 6.11 Preferential Collection of Claims Against Company.
The Trustee is subject to and shall comply with the provisions of TIA
Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
ARTICLE VII
DISCHARGE OF INDENTURE
SECTION 7.01 Termination of Company's Obligations.
(a) This Indenture shall cease to be of further effect with
respect to Securities of a series (except that the Company's and any Guarantors'
obligations under Section 6.07 hereof and the Trustee's and Paying Agent's
obligations under Section 7.03 hereof shall survive), and the Trustee, on demand
of the Company, shall execute proper instruments acknowledging the satisfaction
and discharge of this Indenture with respect to such series, when:
(1) either
(A) all outstanding Securities of such
series theretofore authenticated and issued (other than
destroyed, lost or stolen Securities that have been replaced
or paid) have been delivered to the Trustee for cancellation;
or
(B) all outstanding Securities of such
series not theretofore delivered to the Trustee for
cancellation:
(i) have become due and payable, or
(ii) will become due and payable at their stated
maturity within one year,
and the Company, in the case of clause (i) or (ii) above, has deposited
or caused to be deposited with the Trustee as funds (immediately
available to the Holders in the case of clause (i)) in trust for such
purpose an amount which, together with earnings thereon, will be
sufficient to pay and discharge the entire indebtedness on such
Securities of such series for principal, premium, if any, and interest
to the date of such deposit (in the case of Securities which have
become due and payable) or to the stated maturity, as the case may be;
(1) the Company has paid all other sums payable by it
hereunder with respect to such series; and
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(2) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture with respect to such series have been
complied with, together with an Opinion of Counsel to the same effect.
(b) The Company and the Guarantors may, subject as provided
herein, terminate all of their obligations under this Indenture with respect to
Securities of a series if:
(1) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in trust for the
purpose of making the following payments dedicated solely to the
benefit of the Holders (i) cash in an amount, or (ii) U.S. Government
Obligations or (iii) a combination thereof, sufficient, in the opinion
of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay, without consideration of the reinvestment of any such amounts
and after payment of all taxes or other charges or assessments in
respect thereof payable by the Trustee, the principal of, and premium,
if any, and interest on all Securities of such series on each date that
such principal, premium, if any, or interest is due and payable and to
pay all other sums payable by it hereunder; provided that the Trustee
shall have been irrevocably instructed to apply such money and/or the
proceeds of such U.S. Government Obligations to the payment of said
principal, premium, if any, and interest with respect to the Securities
of such series as the same shall become due;
(2) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture with respect to Securities of such series
have been complied with, and an Opinion of Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as clauses (6) and
(7) of Section 5.01 hereof are concerned, at any time during the period
ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);
(4) the Company shall have delivered to the Trustee an Opinion
of Counsel from a nationally recognized counsel acceptable to the
Trustee or a tax ruling to the effect that the Holders of Securities of
such series will not recognize income, gain or loss for Federal income
tax purposes as a result of the Company's exercise of its option under
this Section 7.01(b) and will be subject to Federal income tax on the
same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised;
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(5) such deposit and discharge will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound;
(6) such deposit and discharge shall not cause the Trustee to
have a conflicting interest as defined in TIA Section 310(b); and
(7) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the passage of 91 days following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally.
In such event, this Indenture shall cease to be of further effect with
respect to Securities of such series (except as provided in the next succeeding
paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging satisfaction and discharge under this Indenture.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 3.01, 4.01, 6.07, 6.08 and 7.04 hereof, the Company's and any
Guarantors' obligations in Sections 4.01, 6.07, 7.04 and 9.01 hereof and the
Trustee's and Paying Agent's obligations in Section 7.03 hereof shall survive
until the Securities of such series are no longer outstanding. Thereafter, only
the Company's and any Guarantors' obligations in Section 6.07 hereof and the
Trustee's and Paying Agent's obligations in Section 7.03 hereof shall survive.
After such irrevocable deposit made pursuant to this Section 7.01(b)
and satisfaction of the other conditions set forth herein, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal of,
or premium, if any, or interest on the Securities of such series, the U.S.
Government Obligations shall be payable as to principal or interest on or before
such payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
SECTION 7.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 7.01 hereof. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of, and premium, if
any, and interest on Securities of the series with respect to which the deposit
was made.
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SECTION 7.03 Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
Subject to the requirements of any applicable abandoned property laws,
the Trustee and the Paying Agent shall pay to the Company upon written request
any money held by them for the payment of principal, or premium, if any, or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due; provided, however, that the Company shall have
either caused notice of such payment to be mailed to each Holder entitled
thereto no less than 30 days prior to such repayment or within such period shall
have published such notice in a financial newspaper of widespread circulation
published in The City of New York. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and the Paying Agent with respect to such money shall
cease.
SECTION 7.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money or U.
S. Government Obligations in accordance with Section 7.01 hereof by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the obligations of the Company and any Guarantors under this
Indenture and the Securities of the applicable series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 7.01 hereof
until such time as the Trustee or the Paying Agent is permitted to apply all
such money or U. S. Government Obligations in accordance with Section 7.01
hereof; provided, however, that if the Company or any Guarantor has made any
payment of principal of or interest on any Securities of such series because of
the reinstatement of its obligations, the Company or such Guarantor shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or the
Paying Agent.
ARTICLE VIII
AMENDMENTS
SECTION 8.01 Without Consent of Holders.
The Company, the Guarantors, if any, and the Trustee may amend or
supplement this Indenture or any of the Securities or waive any provision hereof
or thereof without the consent of any Holder:
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(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Sections 4.01 and 4.02 hereof;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(4) to reflect the release of any Guarantor from its
Guarantee, or the addition of any Subsidiary of the Company as a
Guarantor, in the manner provided by Section 9.06 hereof;
(5) to comply with any requirement in order to effect or
maintain the qualification of this Indenture under the TIA;
(6) to add guarantees of the Securities;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to add to the covenants of the Company or any Guarantor
for the benefit of the Holders or to surrender any right or power
herein conferred upon the Company or any Guarantor; or
(9) to make any change that does not adversely affect the
rights hereunder of any Holder in any material respect.
Upon the request of the Company and the Guarantors, if any, accompanied
by a resolution of the Board of Directors and of the board of directors, board
of trustees or managing partners of each Guarantor authorizing the execution of
any such supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 8.06 hereof, the Trustee shall join with the
Company and any Guarantors in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and make any further
appropriate agreements and stipulations that may be therein contained. After an
amendment, supplement or waiver under this Section 8.01 becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
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SECTION 8.02 With Consent of Holders.
Except as provided below in this Section 8.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture with respect
to the Securities of a series or the Securities of any series with the written
consent (including consents obtained in connection with a tender offer or
exchange offer for the Securities of such series or a solicitation of consents
in respect of the Securities of such series, provided that in each case such
offer or solicitation is made to all Holders of the Securities of such series
then outstanding on equal terms) of the Holders of at least a majority in
principal amount of the Securities of such series then outstanding.
Upon the request of the Company and the Guarantors, if any, accompanied
by a resolution of the Board of Directors and of the board of directors, board
of trustees or managing partners of each Guarantor, if any, authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt
by the Trustee of the documents described in Section 8.06 hereof, the Trustee
shall join with the Company and the Guarantors, if any, in the execution of such
supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 8.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
The Holders of a majority in principal amount of the Securities of any
series then outstanding may waive compliance in a particular instance by the
Company or the Guarantors with any provision of this Indenture or the Securities
of such series (including waivers obtained in connection with a tender offer or
exchange offer for the Securities of such series or a solicitation of consents
in respect of the Securities of such series, provided that in each case such
offer or solicitation is made to all Holders of the Securities of such series
then outstanding on equal terms).
However, without the consent of each Holder affected, an amendment,
supplement or waiver under this Section may not:
(1) reduce the amount of the Securities of any series whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security or alter the premium or other provisions with respect to
redemption under Section 10.07 or specified in the Securities;
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(4) make any Security payable in money other than that stated
in the Security;
(5) impair the right to institute suit for the enforcement of
any payment of principal of, or premium, if any, or interest on any
Security pursuant to Sections 5.07 and 5.08 hereof, except as limited
by Section 5.06 hereof;
(6) make any change in the percentage of principal amount of
the Securities of any series necessary to waive compliance with certain
provisions of this Indenture pursuant to Section 5.04 or 5.07 hereof or
this clause of this Section 8.02; or
(7) waive a continuing Default or Event of Default in the
payment of principal of, or premium, if any, or interest on the
Securities of any series.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of the Securities with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of this Indenture.
SECTION 8.03 Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities of any series shall
comply in form and substance with the TIA as then in effect.
SECTION 8.04 Revocation and Effect of Consents.
A consent to an amendment (which includes a supplement) or waiver by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Security of any series or portion of a Security of such series that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his or her Security or portion of a Security
if the Trustee receives written notice of revocation at any time pror to (but
not after) the date the Trustee receives an Officers' Certificate certifying
that the Holders of the requisite principal amount of Securities have consented
(and not theretofore revoked such consent) to the amendment, supplement or
waiver. An amendment, supplement or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver or to take any other action with respect to the Securities of any series
under this Indenture. If a record date is fixed, then
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notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date. No consent shall be
valid or effective for more than 90 days after such record date unless consents
from Holders of the principal amount of the Securities of such series required
hereunder for such amendment or waiver to be effective shall have also been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it is of the type described in any of clauses (1)
through (7) of Section 8.02 hereof. In such case, the amendment or waiver shall
bind each Holder who has consented to it and every subsequent Holder that
evidences the same debt as the consenting Holder's Security.
SECTION 8.05 Notation on or Exchange of Securities.
If an amendment changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. The Trustee may
place an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, waiver or supplemental indenture
authorized pursuant to this Article if the amendment, waiver or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such amendment, waiver or supplemental indenture,
the Trustee shall be entitled to receive and subject to Section 6.01 hereof,
shall be fully protected in relying upon, an Opinion of Counsel as conclusive
evidence that such amendment, waiver or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that it
will be valid and binding upon the Company and the Guarantors, if any, in
accordance with its terms.
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ARTICLE IX
GUARANTEES OF SECURITIES
SECTION 9.01 Unconditional Guarantees.
(a) For value received, the Guarantors, jointly and severally,
hereby fully, unconditionally and absolutely guarantee (the "Guarantees") to the
Holders and to the Trustee the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities and all other amounts due and
payable under this Indenture and the Securities by the Company, when and as such
principal, premium, if any, and interest shall become due and payable, whether
at the stated maturity, upon redemption or by declaration of acceleration or
otherwise, according to the terms of the Securities and this Indenture.
(b) Failing payment when due of any amount guaranteed pursuant
to the Guarantees, for whatever reason, each Guarantor will be obligated to pay
the same immediately. Each Guarantee hereunder is intended to be a general,
unsecured, senior obligation of each Guarantor and will rank pari passu in right
of payment with all Indebtedness of each such Guarantor that is not, by its
terms, expressly subordinated in right of payment to the Guarantee of such
Guarantor. Each of the Guarantors hereby agrees that its obligations hereunder
shall be full, unconditional and absolute, irrespective of the validity,
regularity or enforceability of the Securities, the Guarantees or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, any release of
any other Guarantor, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each of the
Guarantors hereby agrees that in the event of a default in payment of the
principal of, or premium, if any, or interest on the Securities of any series,
whether at the stated maturity, upon redemption or by declaration of
acceleration or otherwise, legal proceedings may be instituted by the Trustee on
behalf of the Holders or, subject to Section 5.06 hereof, by the Holders, on the
terms and conditions set forth in this Indenture, directly against each of the
Guarantors to enforce the Guarantees without first proceeding against the
Company.
(c) The obligations of each Guarantor under this Article IX
shall be as aforesaid full, unconditional and absolute and shall not be
impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (i) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Company or any
Guarantor contained in any of the Securities or this Indenture, (ii) any
impairment, modification, release or limitation of the liability of the Company,
any Guarantor or any of their estates in bankruptcy, or any remedy for the
enforcement thereof, resulting from the operation of any present or future
provision of any applicable Bankruptcy Law, as amended, or other statute or from
the decision of any court, (iii) the assertion or exercise by the Company, any
Guarantor or the Trustee of any rights or remedies under any of the Securities
or this Indenture or their delay in or failure to assert or exercise any such
rights or remedies, (iv) the assignment or the purported assignment of any
property as security for any of the Securities, including all or any part of the
rights of the Company or any Guarantor under this Indenture, (v) the
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extension of the time for payment by the Company or any Guarantor of any
payments or other sums or any part thereof owing or payable under any of the
terms and provisions of any of the Securities or this Indenture or of the time
for performance by the Company or any Guarantor of any other obligations under
or arising out of any such terms and provisions or the extension or the renewal
of any thereof, (vi) the modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Company or any Guarantor
set forth in this Indenture, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, the Company or any of the Guarantors or any of their respective
assets, or the disaffirmance of any of the Securities, the Guarantees or this
Indenture in any such proceeding, (viii) the release or discharge of the Company
or any Guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of such instruments by operation of law, (ix)
the unenforceability of any of the Securities, the Guarantees or this Indenture
or (x) any other circumstance which might otherwise constitute a legal or
equitable discharge of a surety or guarantor.
(d) Each of the Guarantors hereby (i) waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Company or a Guarantor, and all
demands whatsoever, (ii) acknowledges that any agreement, instrument or document
evidencing the Guarantees may be transferred and that the benefit of its
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing the Guarantees without notice to them and (iii) covenants
that its Guarantee will not be discharged except by complete performance of the
Guarantees. Each Guarantor further agrees that if at any time all or any part of
any payment theretofore applied by any Person to any Guarantee is, or must be,
rescinded or returned for any reason whatsoever, including without limitation,
the insolvency, bankruptcy or reorganization of any Guarantor, such Guarantee
shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence notwithstanding such application, and the
Guarantees shall continue to be effective or be reinstated, as the case may be,
as though such application had not been made.
(e) Each Guarantor shall be subrogated to all rights of the
Holders and the Trustee against the Company in respect of any amounts paid by
such Guarantor pursuant to the provisions of this Indenture; provided, however,
that no Guarantor shall be entitled to enforce or to receive any payments
arising out of, or based upon, such right of subrogation with respect to any of
the Securities until all of the Securities and the Guarantees thereof shall have
been paid in full or discharged.
(f) A director, officer, employee or stockholder, as such, of
any Guarantor shall not have any liability for any obligations of such Guarantor
under this Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation.
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SECTION 9.02 Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any federal, state or foreign law. To effectuate the
foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that each Guarantor's liability shall be limited to the lesser of (i) the
aggregate amount of the obligations of the Company under the Securities and this
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Guarantor "insolvent" (as such term is defined in the Bankruptcy Law and in the
Debtor and Creditor Law of the State of New York) or (B) left such Guarantor
with unreasonably small capital at the time its Guarantee of the Notes was
entered into; provided that it will be a presumption in any lawsuit or other
proceedings in which a Guarantor is a party that the amount guaranteed pursuant
to the Guarantee is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Guarantor, or debtor in
possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a
lawsuit that the aggregate liability of the Guarantor is the amount set forth in
clause (ii) above. In making any determination as to solvency or sufficiency of
capital of a Guarantor in accordance with the previous sentence, the right of
such Guarantor to contribution from other Guarantors, and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into account.
SECTION 9.03 Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from each
other Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by the Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to its Guarantee thereof.
SECTION 9.04 Execution and Delivery of Guarantees.
To further evidence the Guarantees, each Guarantor hereby agrees that a
notation relating to such Guarantees shall be endorsed on each Security
authenticated and delivered by the Trustee and executed by either manual or
facsimile signature of an Officer of each Guarantor.
Each of the Guarantors hereby agrees that its Guarantee shall remain in
full force and effect notwithstanding any failure to endorse on each Security a
notation relating to such Guarantee.
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If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 9.05 Addition of Guarantors.
(a) If any Subsidiary of the Company guarantees (or becomes a
co-obligor on) any Funded Indebtedness of the Company other than the Securities
at any time subsequent to the Issue Date (including, without limitation,
following any release of such Subsidiary pursuant to Section 9.06 hereof from
any Guarantee previously provided by it under this Article IX), then the Company
shall (i) cause the Securities then outstanding to be equally and ratably
guaranteed by such Subsidiary, but only to the extent that such Securities are
not already guaranteed by such Subsidiary on reasonably comparable terms and
(ii) cause such Subsidiary to execute and deliver a supplemental indenture, in
substantially the form of Exhibit E hereto, evidencing its provision of a
Guarantee in accordance with clause (b) below.
(b) Any Person may become a Guarantor by executing and
delivering to the Trustee (i) a supplemental indenture in form and substance
satisfactory to the Trustee, which subjects such Person to the provisions
(including the representations and warranties) of this Indenture as a Guarantor
and (ii) an Opinion of Counsel and Officers' Certificate to the effect that such
supplemental indenture has been duly authorized and executed by such Person and
constitutes the legal, valid, binding and enforceable obligation of such Person
(subject to such customary exceptions concerning creditors' rights and equitable
principles as may be acceptable to the Trustee in its discretion and provided
that no opinion need be rendered concerning the enforceability of the
Guarantee).
SECTION 9.06 Release of Guarantee.
Notwithstanding anything to the contrary in this Article IX, in the
event that any Guarantor shall no longer be a guarantor of (or co-obligor on)
any Funded Indebtedness of the Company other than the Securities and other than
Funded Indebtedness of the Company (i) subject to a release provision
substantially similar to this Section 9.06 and (ii) the related guarantee (or
obligation) of which will be released substantially concurrently with the
release of the Guarantee of such Guarantor pursuant to this Section 9.06, and so
long as no Default or Event of Default shall have occurred or be continuing,
such Guarantor, upon giving notice to the Trustee to the foregoing effect, shall
be deemed to be released from all of its obligations under this Indenture and
the Guarantee of such Guarantor shall be of no further force or effect.
Following the receipt by the Trustee of any such notice, the Company shall cause
this Indenture to be amended as provided in Section 8.01 hereof;
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provided, however, that the failure to so amend this Indenture shall not affect
the validity of the termination of the Guarantee of such Guarantor.
SECTION 9.07 Consent to Jurisdiction and Service of Process.
Each Guarantor that is not organized under the laws of the United
States (including the States and the District of Columbia) (each a "Non-U.S.
Guarantor") hereby appoints the principal office of CT Corporation System in The
City of New York which, on the date hereof, is located at 1633 Broadway, New
York, New York 10019, as the authorized agent thereof (the "Authorized Agent")
upon whom process may be served in any action, suit or proceeding arising out of
or based on this Indenture or the Securities which may be instituted in the
Supreme Court of the State of New York or the United States District Court for
the Southern District of New York, in either case in The Borough of Manhattan,
The City of New York, by the Holder of any Security, and each Non-U.S. Guarantor
hereby waives any objection which it may now or hereafter have to the laying of
venue of any such proceeding and expressly and irrevocably accepts and submits,
for the benefit of the Holders from time to time of the Securities, to the
nonexclusive jurisdiction of any such court in respect of any such action, suit
or proceeding, for itself and with respect to its properties, revenues and
assets. Such appointment shall be irrevocable unless and until the appointment
of a successor authorized agent for such purpose, and such successor's
acceptance of such appointment, shall have occurred. Each Non-U.S. Guarantor
agrees to take any and all actions, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized Agent
with respect to any such action shall be deemed, in every respect, effective
service of process upon any such Non-U.S. Guarantor. Notwithstanding the
foregoing, any action against any Non-U.S. Guarantor arising out of or based on
any Security may also be instituted by the Holder of such Security in any court
in the jurisdiction of organization of such Non-U.S. Guarantor, and such
Non-U.S. Guarantor expressly accepts the jurisdiction of any such court in any
such action. The Company shall require the Authorized Agent to agree in writing
to accept the foregoing appointment as agent for service of process.
SECTION 9.08 Waiver of Immunity.
To the extent that any Non-U.S. Guarantor or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any legal action, suit or proceeding, from the giving of any
relief in any thereof, from set-off or counterclaim, from the jurisdiction of
any court, from service of process, from attachment upon or prior to judgment,
from attachment in aid of execution of judgment, or from execution of judgment,
or other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any jurisdiction in which proceedings may at any
time be commenced, with respect to its obligations, liabilities or any other
matter under or arising out of or in connection with this Indenture or the
Securities, such Non-U.S. Guarantor, to the
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maximum extent permitted by law, hereby irrevocably and unconditionally waives,
and agrees not to plead or claim, any such immunity and consents to such relief
and enforcement.
SECTION 9.09 Judgment Currency.
Each Non-U.S. Guarantor agrees to indemnify the Trustee and each Holder
against any loss incurred by it as a result of any judgment or order being given
or made and expressed and paid in a currency (the "Judgment Currency") other
than United States dollars and as a result of any variation as between (i) the
rate of exchange at which the United States dollar amount is converted into the
Judgment Currency for the purpose of such judgment or order and (ii) the spot
rate of exchange in The City of New York at which the Trustee or such Holder on
the date of payment of such judgment or order is able to purchase United States
dollars with the amount of the Judgment Currency actually received by the
Trustee or such Holder. The foregoing indemnity shall constitute a separate and
independent obligation of each Non-U.S. Guarantor and shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "spot rate of exchange" shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, United States
dollars.
ARTICLE X
REDEMPTION
SECTION 10.01 Notices to Trustee.
If the Company elects to redeem the Securities of any series pursuant
to the redemption provisions of Section 10.07, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a Redemption Date (unless the
Trustee consents in writing to a shorter period of at least 30 days prior to the
Redemption Date), an Officers' Certificate setting forth the Redemption Date,
the principal amount of such Securities to be redeemed and the Redemption Price.
SECTION 10.02 Selection of Securities to be Redeemed.
If less than all of the Securities of a series are to be redeemed, the
Trustee shall select the Securities of such series to be redeemed by such method
as the Trustee in its sole discretion shall deem fair and appropriate. The
particular Securities of such series to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 days nor more than 60 days prior to
the Redemption Date by the Trustee from the outstanding Securities of such
series not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities of such series selected for redemption and, in the case of any
Security selected for partial redemption, the principal
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amount thereof to be redeemed. Securities and portions of them selected shall be
in amounts of $1,000 or whole multiples of $1,000. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption.
SECTION 10.03 Notices to Holders.
(a) At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail in conformity with Section 11.02 a
notice of redemption to each Holder whose Securities are to be redeemed.
The Notice shall identify the Securities to be redeemed and shall
state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the Redemption Date, upon surrender of such Security, a new
Security or Securities in principal amount equal to the unredeemed
portion will be issued;
(iv) the name and address of the Paying Agent;
(v) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice
to collect the Redemption Price;
(vi) that unless the Company defaults in making the
redemption payment, interest on Securities called for redemption ceases
to accrue on and after the Redemption Date and the only remaining right
of the Holders is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities; and
(vii) the aggregate principal amount of Securities of
each series being redeemed.
If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions.
(b) At the Company's request, the Trustee shall give the
notice required in Section 10.03(a) in the Company's name; provided, however,
that the Company shall deliver to the
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Trustee, at least 45 days prior to the Redemption Date (unless the Trustee
consents in writing to a shorter period at least 30 days prior to the Redemption
Date), an Officer's Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in Section
10.03(a).
SECTION 10.04 Effect of Notices of Redemption.
Once notice of redemption is mailed pursuant to Section 10.03,
Securities called for redemption become due and payable on the Redemption Date
at the Redemption Price. Upon surrender to the Paying Agent, such Securities
shall be paid out at the Redemption Price.
SECTION 10.05 Deposit of Redemption Price.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the Redemption Price of all Securities to be redeemed on that date. The Trustee
or the Paying Agent shall return to the Company any money not required for that
purpose less the expenses of the Trustee as provided herein.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed (whether or not such Securities
are presented for payment) will cease to accrue on the applicable Redemption
Date. If any Security called for redemption shall not be so paid upon surrender
because of the failure of the Company to comply with the preceding paragraph,
then interest will be paid on the unpaid principal and premium, if any, from the
Redemption Date until such principal and premium are paid and, to the extent
lawful, on any interest not paid on such unpaid principal, in each case at the
rate provided in the Securities and in Section 3.01.
SECTION 10.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder, at the expense of
the Company, a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
SECTION 10.07 Optional Redemption.
The Securities of any series (other than the 5-year Securities) may be
redeemed at any time, at the option of the Company, in whole or from time to
time in part, at the Redemption Price specified in such Securities.
Any redemption pursuant to this Section 10.07 shall be made, to the
extent applicable, pursuant to the provisions of Sections 10.01 through 10.06.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control. If this Indenture excludes any provision
of the TIA that is required to be included, such provision shall be deemed
included herein.
SECTION 11.02 Notices.
Any notice or communication by the Company, the Guarantors, if any, or
the Trustee to the others is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company or the Guarantors:
R&B Falcon Corporation
901 Threadneedle Street
Houston, Texas 77079
Attention: Leighton E. Moss
Telecopier No. (281) 496-0285
If to the Trustee:
For payment registration, transfer or exchange of the Securities:
By Hand:
Chase Bank of Texas, National Association
One Main Place
1201 Main Street, 18th Floor
Dallas, Texas 75202
Attention: Registered Bond Events
Telecopier No. (214) 672-5932
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By Mail:
Chase Bank of Texas, National Association
P. O. Box 2320
Dallas, Texas 75221-2320
Attention: Registered Bond Events
For all other communications relating to the Securities:
Chase Bank of Texas, National Association
Global Trust Services
600 Travis Street, Suite 1150
Houston, Texas 77002
Telephone: (713) 216-6686
Telecopy: (713) 216-5476
Address of the Trustee in New York:
For Physical Securities:
The Chase Manhattan Bank
55 Water Street, North Building
Room 234, Windows 20 and 21
New York, New York 10041
Telephone: (212) 638-0454
Telecopy: (212) 638-7380 or 7381
For Book Entry Securities:
The Chase Manhattan Bank
DTC Participant #2423
Telephone: (212) 638-0454
Telecopy: (212) 638-7380 or 7381
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The Company, the Guarantors or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Notwithstanding the foregoing, notices to the Trustee shall be effective only
upon receipt.
Any notice or communication to a Holder shall be mailed by first-class
mail, postage prepaid, to the Holder's address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company or any Guarantor mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications, including without limitation notices to
the Trustee or the Company or any Guarantor by Holders, shall be in writing,
except as set forth below, and in the English language.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice required by
this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 11.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
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SECTION 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor
shall, if requested by the Trustee, furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been complied
with.
SECTION 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or the Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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SECTION 11.07 Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
SECTION 11.08 No Recourse Against Others.
A director, officer, employee or stockholder of the Company or any
Guarantor, as such, shall not have any liability for any obligations of the
Company or such Guarantor under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 11.09 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUCTED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
SECTION 11.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company, any Guarantor or any other Subsidiary of the
Company. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 11.11 Successors.
All agreements of the Company and the Guarantors in this Indenture and
the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.12 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 11.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.14 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
R&B FALCON CORPORATION
By: /s/ LEIGHTON MOSS
---------------------------
Name: Leighton Moss
Title: Sr. Vice President
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: /s/ MAURI J. COWEN
---------------------------
Name: Mauri J. Cowen
Title: Vice President and Trust Officer
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EXHIBIT A
[FACE OF 5-YEAR SECURITY]
R&B FALCON CORPORATION
6 1/2% SERIES [A/B] SENIOR NOTE DUE 2003
CUSIP 74912E AA 9
No. ___ $___________
R&B Falcon Corporation, a Delaware corporation (the "Company"), for
value received promises to pay to ___________________________ or registered
assigns, the principal sum of $_________ Dollars on April 15, 2003 [or such
greater or lesser amount as is indicated on the Schedule of Exchanges of
Securities on the other side of this Security].*
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
R&B FALCON CORPORATION
By:
-----------------------------
By:
-----------------------------
Certificate of Authentication:
- ----------
as Trustee, certifies that this is one of the Securities referred to in the
within-mentioned Indenture.
* This phrase should be included only if the Security is a
Global Security.
A-1
<PAGE> 71
By:
----------------------------
Authorized Signature
[GLOBAL SECURITIES LEGEND]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. THE DEPOSITARY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A
SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]*
[TRANSFER RESTRICTED SECURITIES LEGEND]
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) INSIDE THE UNITED
- --------------
* This paragraph should be included only if the Security is a Global
Security.
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STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
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[REVERSE OF 5-YEAR SECURITY]
R&B FALCON CORPORATION
6 1/2% SERIES [A/B] SENIOR NOTE DUE 2003
This Security is one of a duly authorized issue of 6 1/2% Series [A/B]
Senior Notes due 2003 (the "Securities") of R&B Falcon Corporation, a Delaware
corporation (the "Company").
1. Interest. The Company promises to pay interest on the principal
amount of this Security at 6 1/2% per annum from April 14, 1998 until maturity.
The Company will pay interest semiannually on April 15 and October 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Securities will accrue
from the most recent Interest Payment Date on which interest has been paid or,
if no interest has been paid, from April 14, 1998; provided that if there is no
existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 15, 1998. The Company also promises to pay any
additional interest required by Section 6 of the Registration Rights Agreement
(as defined in paragraph 17 below), upon the conditions, at the rates and for
the periods specified therein. Further, the Company shall pay interest on
overdue principal and premium, if any, from time to time on demand at a rate
equal to the interest rate then in effect; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder must surrender this
Security to a Paying Agent to collect principal and premium, if any, payments.
The Company will pay the principal of, and premium, if any, and interest on the
Securities in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
the Securities represented by a Global Security (including principal, premium,
if any, and interest) will be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company. The Company
will make all payments in respect of a certificated Security (including
principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Security will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank
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<PAGE> 74
in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Ranking and Guarantees. The Securities are senior unsecured
obligations of the Company. The Indenture provides that any Subsidiary that
guarantees Funded Indebtedness of the Company after the Issue Date will be
required to equally and ratably guarantee the Securities. The Guarantee of the
Securities by any subsidiary may be released if, but only so long as, no other
Funded Indebtedness of the Company is guaranteed by such Subsidiary. Each of the
Guarantees is an unsecured obligation of the Guarantor providing such Guarantee.
Certain limitations to the obligations of the Guarantors are set forth in
further detail in the Indenture. References herein to the Indenture or the
Securities shall be deemed also to refer to the Guarantees set forth in the
Indenture except where the context otherwise requires.
4. No Optional Redemption. The Securities are not redeemable prior to
their maturity.
5. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association (the "Trustee"), the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar,
co-registrar or additional paying agent without notice to any Holder. The
Company may act in any such capacity.
6. Indenture. The Company issued the Securities under an Indenture
dated as of April 14, 1998 (the "Indenture") among the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date of
execution of the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Securities are unsecured general obligations of the Company.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities during the period between a record date and the corresponding
Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
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9. Amendments and Waivers. Subject to certain exceptions and
limitations, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Securities, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of the principal of, or premium, if any, or
interest on the Securities) by the Holders of at least a majority in principal
amount of the Securities then outstanding in accordance with the terms of the
Indenture. Without the consent of any Holder, the Company, any Guarantors and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency; to provide for uncertificated
Securities in addition to or in place of certificated Securities; to provide for
the assumption of the obligations of the Company and any Guarantor under the
Indenture to Holders in the case of the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or any
Guarantor; to reflect the release of any Guarantor from its Guarantee to the
extent permitted by the Indenture; to add guarantees to the Securities; to add
to the covenants of the Company or any Guarantors or to surrender any right of
the Company or any Guarantor; to make any change that does not materially
adversely affect the rights of any Holder; or to comply with the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security, (iii) reduce the
principal of or change the fixed maturity of any Security or alter the premium
or other provisions with respect to redemption, (iv) make any Security payable
in money other than that stated in the Security, (v) impair the right to
institute suit for the enforcement of any payment of principal of, or premium,
if any, or interest on any Security, (vi) make any change in the percentage of
principal amount of Securities necessary to waive compliance with certain
provisions of the Indenture or (vii) waive a continuing Default or Event of
Default in the payment of principal of, or premium, if any, or interest on the
Securities.
10. Defaults and Remedies. Events of Default include: default in
payment of interest on the Securities for 30 days; default in payment of
principal of, or premium, if any, on the Securities; failure by the Company or
any Guarantor for 60 days after written notice by the Trustee or by the Holders
of at least 25% of the aggregate principal amount of the Securities then
outstanding to it to comply with any of its other covenants or agreements in the
Indenture, the Guarantees or the
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<PAGE> 76
Securities; the acceleration of the maturity of any Indebtedness of the Company
or any Subsidiary of the Company (other than the Securities or any Non-Recourse
Indebtedness) that has an outstanding principal amount of $20 million or more
individually or in the aggregate; a default in the payment of principal or
interest in respect of any Indebtedness of the Company or any Subsidiary of the
Company (other than the Securities or any Non-Recourse Indebtedness) having an
outstanding principal amount of $20 million or more individually or in the
aggregate, and such default shall be continuing for a period of 30 days without
the Company or such Subsidiary, as the case may be, effecting a cure of such
default; a final judgment or order for the payment of money in excess of $20
million (net of applicable insurance coverage) having been rendered against the
Company, any Guarantor or any other "significant subsidiary" (as such term is
defined in Regulation S-X under the Securities Exchange Act of 1934, as amended;
a "Significant Subsidiary") of the Company and such judgment or order shall
continue unsatisfied and unstayed for a period of 60 days; or certain events
involving bankruptcy, insolvency or reorganization of the Company, any Guarantor
or any other Significant Subsidiary of the Company. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Securities may declare the principal
of, and premium, if any, and interest on all the Securities to be immediately
due and payable, except that in the case of an Event of Default arising from
certain events of bankruptcy, insolvency or reorganization of the Company or any
Guarantor, all outstanding Securities become due and payable immediately without
further action or notice. The amount due and payable upon the acceleration of
any Security is equal to 100% of the principal amount thereof plus premium, if
any, and accrued interest to the date of payment. Holders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity reasonably satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders notice
of any continuing default (except a default in payment of principal or premium,
if any, or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
11. Discharge Prior to Maturity. The Indenture shall be discharged and
canceled upon the payment of all of the Securities and shall be discharged
except for certain obligations upon the irrevocable deposit with the Trustee of
funds or U.S. Government Obligations sufficient for such payment.
12. Trustee Dealings with Company and Guarantors. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, any Guarantors or their respective Affiliates,
and may otherwise deal with the Company, any Guarantors or their respective
Affiliates, as if it were not Trustee.
13. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company
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<PAGE> 77
or any Guarantor under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
14. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed thereon.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Securities under the Indenture,
Holders of Transfer Restricted Securities shall have all the rights set forth in
the Registration Rights Agreement, dated as of the Issue Date (the "Registration
Rights Agreement"), among the Company and the Initial Purchasers.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Attention: Leighton E. Moss
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FORM OF NOTATION ON SECURITY
RELATING TO FUTURE GUARANTEES
Each Guarantor (which term includes any successor Person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of, and premium, if any, and interest
on the Securities and all other amounts due and payable under the Indenture and
the Securities by the Company.
The obligations of the Guarantors to the Holders of Securities and to
the Trustee pursuant to the Guarantees and the Indenture are expressly set forth
in Article IX of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantees.
[NAMES OF GUARANTORS]
By:
------------------------
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ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to _________________________________________
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
--------------------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
-----------------------------------------------------------
(Participant in a Recognized Signature Guaranty
Medallion Program)
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred as specified below:
CHECK ONE
(1) |_| to the Company or a Subsidiary thereof; or
(2) |_| to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933, as amended) that purchases for its own
account or for the account of a qualified
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<PAGE> 80
institutional buyer to whom notice is given that such transfer is being
made in reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of 1933, as amended;
or
(3) |_| outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(4) |_| pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(5) |_| pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Rule 144 thereunder.
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
|_| The transferee is an Affiliate of the Company.
Unless one of items (1) through (5) above is checked, the Trustee will
refuse to register any of the Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided, however,
that if item (3), or (5) is checked, the Company or the Trustee may require,
prior to registering any such transfer of the Securities, in their sole
discretion, such written legal opinions, certifications (including an investment
letter) and other information as the Trustee or the Company have reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Security in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Signed:
------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
------------------------------------------------------------
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<PAGE> 81
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------------------- ---------------------------------------
Notice: to be executed by an executive
officer*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
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SCHEDULE OF EXCHANGES OF SECURITIES*
The following exchanges, redemptions or repurchases of a part of this
Global Security have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
GLOBAL SECURITY SIGNATURE OF
AMOUNT OF DECREASE AMOUNT OF INCREASE FOLLOWING SUCH AUTHORIZED OFFICER,
IN PRINCIPAL AMOUNT IN PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR SECURITIES
DATE OF TRANSACTION OF GLOBAL SECURITY OF GLOBAL SECURITY INCREASE) CUSTODIAN
- ------------------- ------------------ ------------------ --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
- --------
* This Schedule should be included only if the Security is a Global Security.
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<PAGE> 83
EXHIBIT B
[FACE OF 7-YEAR SECURITY]
R&B FALCON CORPORATION
6 3/4% SERIES [A/B] SENIOR NOTE DUE 2005
CUSIP 74912E AB 7
No. ___ $___________
R&B Falcon Corporation, a Delaware corporation (the "Company"), for
value received promises to pay to ___________________________ or registered
assigns, the principal sum of $_________ Dollars on April 15, 2005 [or such
greater or lesser amount as is indicated on the Schedule of Exchanges of
Securities on the other side of this Security.*]
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
R&B FALCON CORPORATION
By:
------------------------
By:
------------------------
Certificate of Authentication:
- --------------------------------------------------------
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.
- --------
* This phrase should be included only if the Security is a Global Security.
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<PAGE> 84
By:
------------------------------------
Authorized Signature
[GLOBAL SECURITIES LEGEND]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. THE DEPOSITORY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A
SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]*
[TRANSFER RESTRICTED SECURITIES LEGEND]
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) INSIDE THE UNITED
- --------
* This paragraph should be included only if the Security is a Global Security.
B-2
<PAGE> 85
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
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<PAGE> 86
[REVERSE OF 7-YEAR SECURITY]
R&B FALCON CORPORATION
6 3/4% SERIES [A/B] SENIOR NOTE DUE 2005
This Security is one of a duly authorized issue of 6 3/4% Series [A/B]
Senior Notes due 2005 (the "Securities") of R&B Falcon Corporation, a Delaware
corporation (the "Company").
1. Interest. The Company promises to pay interest on the principal
amount of this Security at 6 3/4% per annum from April 14, 1998 until maturity.
The Company will pay interest semiannually on April 15 and October 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Securities will accrue
from the most recent Interest Payment Date on which interest has been paid or,
if no interest has been paid, from April 14, 1998; provided that if there is no
existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 15, 1998. The Company also promises to pay any
additional interest required by Section 6 of the Registration Rights Agreement
(as defined in paragraph 17 below), upon the conditions, at the rates and for
the periods specified therein. Further, the Company shall pay interest on
overdue principal and premium, if any, from time to time on demand at a rate
equal to the interest rate then in effect; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder must surrender this
Security to a Paying Agent to collect principal and premium, if any, payments.
The Company will pay the principal of, and premium, if any, and interest on the
Securities in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
the Securities represented by a Global Security (including principal, premium,
if any, and interest) will be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company. The Company
will make all payments in respect of a certificated Security (including
principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Security will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank
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<PAGE> 87
in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Ranking and Guarantees. The Securities are senior unsecured
obligations of the Company. The Indenture provides that any Subsidiary that
guarantees Funded Indebtedness of the Company after the Issue Date will be
required to equally and ratably guarantee the Securities. The Guarantee of the
Securities by any subsidiary may be released if, but only so long as, no other
Funded Indebtedness of the Company is guaranteed by such Subsidiary. Each of the
Guarantees is an unsecured obligation of the Guarantor providing such Guarantee.
Certain limitations to the obligations of the Guarantors are set forth in
further detail in the Indenture. References herein to the Indenture or the
Securities shall be deemed also to refer to the Guarantees set forth in the
Indenture except where the context otherwise requires.
4. Optional Redemption. The Securities may be redeemed at any time, at
the option of the Company, in whole or from time to time in part, at a price
equal to 100% of their principal amount plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment date that is
on or prior to the Redemption Date) plus the Make-Whole Premium, if any (the
"Redemption Price").
The amount of the Make-Whole Premium with respect to any Security (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of
the Redemption Date, of:
(A) each interest payment that, but for such
redemption would have been payable on the Security (or portion
thereof) being redeemed on each Interest Payment Date
occurring after the Redemption Date (excluding any accrued and
unpaid interest for the period prior to the Redemption Date);
and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion
thereof) being redeemed.
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<PAGE> 88
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield plus 20 basis points. The
Make-Whole Premium will be calculated by an Independent Investment Banker (as
defined in the Indenture).
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Securities, calculated to the nearest
1/12 of a year (the "Remaining Term"). The Treasury Yield will be determined as
of the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be determined by
reference to the most recent statistical release published by the Federal
Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or
any successor release (the "H.15 Statistical Release"). If the H.15 Statistical
Release sets forth a weekly average yield for United States Treasury Notes
having a constant maturity that is the same as the Remaining Term, then Treasury
Yield will be equal to such weekly average yield. In all other cases, the
Treasury Yield will be calculated by interpolation, on a straight-line basis,
between the weekly average yields on the United States Treasury Notes that have
a constant maturity closest to and greater than the Remaining Term and the
United States Treasury Notes that have a constant maturity closest to and less
than the Remaining Term (in each case as set forth in the H.15 Statistical
Release). Any weekly average yields so calculated by interpolation will be
rounded to the nearest 1/100 of 1%, with any figure of 1/200% or above being
rounded upward. If weekly average yields for United States Treasury Notes are
not available in the H.15 Statistical Release or otherwise, then the Treasury
Yield will be calculated by interpolation of comparable rates selected by the
Independent Investment Banker.
Periodic interest installments with respect to which the Interest
Payment Date is on or prior to any Redemption Date will be payable to Holders of
record at the close of business on the relevant record dates referred to herein,
all as provided in the Indenture.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. On or after the
Redemption Date interest will cease to accrue on Securities or on the portions
thereof called for redemption, as the case may be.
5. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association (the "Trustee"), the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar,
co-registrar or additional paying agent without notice to any Holder. The
Company may act in any such capacity.
B-6
<PAGE> 89
6. Indenture. The Company issued the Securities under an Indenture
dated as of April 14, 1998 (the "Indenture") among the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date of
execution of the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Securities are unsecured general obligations of the Company.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities during the period between a record date and the corresponding
Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions and
limitations, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Securities, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of the principal of, or premium, if any, or
interest on the Securities) by the Holders of at least a majority in principal
amount of the Securities then outstanding in accordance with the terms of the
Indenture. Without the consent of any Holder, the Company, any Guarantors and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency; to provide for uncertificated
Securities in addition to or in place of certificated Securities; to provide for
the assumption of the obligations of the Company and any Guarantor under the
Indenture to Holders in the case of the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or any
Guarantor; to reflect the release of any Guarantor from its Guarantee to the
extent permitted by the Indenture; to add guarantees to the Securities; to add
to the covenants of the Company or any Guarantors or to surrender any right of
the Company or any Guarantor; to make any change that does not materially
adversely affect the rights of any Holder; or to comply with the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a
B-7
<PAGE> 90
date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security, (iii) reduce the
principal of or change the fixed maturity of any Security or alter the premium
or other provisions with respect to redemption, (iv) make any Security payable
in money other than that stated in the Security, (v) impair the right to
institute suit for the enforcement of any payment of principal of, or premium,
if any, or interest on any Security, (vi) make any change in the percentage of
principal amount of Securities necessary to waive compliance with certain
provisions of the Indenture or (vii) waive a continuing Default or Event of
Default in the payment of principal of, or premium, if any, or interest on the
Securities.
10. Defaults and Remedies. Events of Default include: default in
payment of interest on the Securities for 30 days; default in payment of
principal of, or premium, if any, on the Securities; failure by the Company or
any Guarantor for 60 days after written notice by the Trustee or by the Holders
of at least 25% of the aggregate principal amount of the Securities then
outstanding to it to comply with any of its other covenants or agreements in the
Indenture, the Guarantees or the Securities; the acceleration of the maturity of
any Indebtedness of the Company or any Subsidiary of the Company (other than the
Securities or any Non-Recourse Indebtedness) that has an outstanding principal
amount of $20 million or more individually or in the aggregate; a default in the
payment of principal or interest in respect of any Indebtedness of the Company
or any Subsidiary of the Company (other than the Securities or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or more
individually or in the aggregate, and such default shall be continuing for a
period of 30 days without the Company or such Subsidiary, as the case may be,
effecting a cure of such default; a final judgment or order for the payment of
money in excess of $20 million (net of applicable insurance coverage) having
been rendered against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the Securities
Exchange Act of 1934, as amended; a "Significant Subsidiary") of the Company and
such judgment or order shall continue unsatisfied and unstayed for a period of
60 days; or certain events involving bankruptcy, insolvency or reorganization of
the Company, any Guarantor or any other Significant Subsidiary of the Company.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Securities may declare
the principal of, and premium, if any, and interest on all the Securities to be
immediately due and payable, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency or reorganization of the
Company or any Guarantor, all outstanding Securities become due and payable
immediately without further action or notice. The amount due and payable upon
the acceleration of any Security is equal to 100% of the principal amount
thereof plus premium, if any, and accrued interest to the date of payment.
Holders may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity reasonably
B-8
<PAGE> 91
satisfactory to it before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or premium, if any, or interest) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
11. Discharge Prior to Maturity. The Indenture shall be discharged and
canceled upon the payment of all of the Securities and shall be discharged
except for certain obligations upon the irrevocable deposit with the Trustee of
funds or U.S. Government Obligations sufficient for such payment.
12. Trustee Dealings with Company and Guarantors. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, any Guarantors or their respective Affiliates,
and may otherwise deal with the Company, any Guarantors or their respective
Affiliates, as if it were not Trustee.
13. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities.
14. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed thereon.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Securities under the Indenture,
Holders of Transfer Restricted
B-9
<PAGE> 92
Securities shall have all the rights set forth in the Registration Rights
Agreement, dated as of the Issue Date (the "Registration Rights Agreement"),
among the Company and the Initial Purchasers.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Attention: Leighton E. Moss
B-10
<PAGE> 93
FORM OF NOTATION ON SECURITY
RELATING TO FUTURE GUARANTEES
Each Guarantor (which term includes any successor Person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of, and premium, if any, and interest
on the Securities and all other amounts due and payable under the Indenture and
the Securities by the Company.
The obligations of the Guarantors to the Holders of Securities and to
the Trustee pursuant to the Guarantees and the Indenture are expressly set forth
in Article IX of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantees.
[NAMES OF GUARANTORS]
By:
---------------------------
B-11
<PAGE> 94
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to _________________________________________
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------------------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
-----------------------------------------------------------
(Participant in a Recognized Signature
Guaranty Medallion Program)
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred as specified below:
CHECK ONE
(1) [ ] to the Company or a Subsidiary thereof; or
(2) [ ] to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933, as amended) that purchases for its own
account or for the account of a qualified
B-12
<PAGE> 95
institutional buyer to whom notice is given that such transfer is being
made in reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of 1933, as amended;
or
(3) [ ] outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(4) [ ] pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(5) [ ] pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Rule 144 thereunder.
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Unless one of items (1) through (5) above is checked, the Trustee will
refuse to register any of the Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided, however,
that if item (3), or (5) is checked, the Company or the Trustee may require,
prior to registering any such transfer of the Securities, in their sole
discretion, such written legal opinions, certifications (including an investment
letter) and other information as the Trustee or the Company have reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Security in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Signed:
----------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
--------------------------------------------------------
B-13
<PAGE> 96
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
--------------------------- ---------------------------------
Notice: to be executed by an
executive officer]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
B-14
<PAGE> 97
SCHEDULE OF EXCHANGES OF SECURITIES*
The following exchanges, redemptions or repurchases of a part of this
Global Security have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
GLOBAL SECURITY SIGNATURE OF
AMOUNT OF DECREASE AMOUNT OF INCREASE FOLLOWING SUCH AUTHORIZED OFFICER,
IN PRINCIPAL AMOUNT IN PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR SECURITIES
DATE OF TRANSACTION OF GLOBAL SECURITY OF GLOBAL SECURITY INCREASE) CUSTODIAN
- ------------------- ------------------ ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
* This Schedule should be included only if the Security is a Global
Security.
B-15
<PAGE> 98
EXHIBIT C
[FACE OF 10-YEAR SECURITY]
R&B FALCON CORPORATION
6.95% SERIES [A/B] SENIOR NOTE DUE 2008
CUSIP 74912E AC 5
No. ___ $________
R&B Falcon Corporation, a Delaware corporation (the "Company"), for
value received promises to pay to ___________________________ or registered
assigns, the principal sum of $_________ Dollars on April 15, 2008 or such
greater or lesser amount as is indicated on the Schedule of Exchanges of
Securities on the other side of this Security.*
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
R&B FALCON CORPORATION
By:
------------------------------
By:
------------------------------
Certificate of Authentication:
- --------------------------------------------------------
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.
- --------
* This phrase should be included only if the Security is a Global
Security.
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<PAGE> 99
By:
----------------------------------
Authorized Signature
[GLOBAL SECURITIES LEGEND]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. THE DEPOSITORY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A
SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]*
[TRANSFER RESTRICTED SECURITIES LEGEND]
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) INSIDE THE UNITED
- --------
* This paragraph should be included only if the Security is a Global
Security.
C-2
<PAGE> 100
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
C-3
<PAGE> 101
[REVERSE OF 10-YEAR SECURITY]
R&B FALCON CORPORATION
6.95% SERIES [A/B] SENIOR NOTE DUE 2008
This Security is one of a duly authorized issue of 6.95% Series [A/B]
Senior Notes due 2008 (the "Securities") of R&B Falcon Corporation, a Delaware
corporation (the "Company").
1. Interest. The Company promises to pay interest on the principal
amount of this Security at 6.95% per annum from April 14, 1998 until maturity.
The Company will pay interest semiannually on April 15 and October 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Securities will accrue
from the most recent Interest Payment Date on which interest has been paid or,
if no interest has been paid, from April 14, 1998; provided that if there is no
existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 15, 1998. The Company also promises to pay any
additional interest required by Section 6 of the Registration Rights Agreement
(as defined in paragraph 17 below), upon the conditions, at the rates and for
the periods specified therein. Further, the Company shall pay interest on
overdue principal and premium, if any, from time to time on demand at a rate
equal to the interest rate then in effect; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder must surrender this
Security to a Paying Agent to collect principal and premium, if any, payments.
The Company will pay the principal of, and premium, if any, and interest on the
Securities in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
the Securities represented by a Global Security (including principal, premium,
if any, and interest) will be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company. The Company
will make all payments in respect of a certificated Security (including
principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Security will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank
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<PAGE> 102
in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Ranking and Guarantees. The Securities are senior unsecured
obligations of the Company. The Indenture provides that any Subsidiary that
guarantees Funded Indebtedness of the Company after the Issue Date will be
required to equally and ratably guarantee the Securities. The Guarantee of the
Securities by any subsidiary may be released if, but only so long as, no other
Funded Indebtedness of the Company is guaranteed by such Subsidiary. Each of the
Guarantees is an unsecured obligation of the Guarantor providing such Guarantee.
Certain limitations to the obligations of the Guarantors are set forth in
further detail in the Indenture. References herein to the Indenture or the
Securities shall be deemed also to refer to the Guarantees set forth in the
Indenture except where the context otherwise requires.
4. Optional Redemption. The Securities may be redeemed at any time, at
the option of the Company, in whole or from time to time in part, at a price
equal to 100% of their principal amount plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment date that is
on or prior to the Redemption Date) plus the Make-Whole Premium, if any (the
"Redemption Price").
The amount of the Make-Whole Premium with respect to any Security (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such
redemption would have been payable on the Security (or portion
thereof) being redeemed on each Interest Payment Date
occurring after the Redemption Date (excluding any accrued and
unpaid interest for the period prior to the Redemption Date);
and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion thereof)
being redeemed.
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<PAGE> 103
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield plus 20 basis points. The
Make-Whole Premium will be calculated by an Independent Investment Banker (as
defined in the Indenture).
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Securities, calculated to the nearest
1/12 of a year (the "Remaining Term"). The Treasury Yield will be determined as
of the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be determined by
reference to the most recent statistical release published by the Federal
Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or
any successor release (the "H.15 Statistical Release"). If the H.15 Statistical
Release sets forth a weekly average yield for United States Treasury Notes
having a constant maturity that is the same as the Remaining Term, then Treasury
Yield will be equal to such weekly average yield. In all other cases, the
Treasury Yield will be calculated by interpolation, on a straight-line basis,
between the weekly average yields on the United States Treasury Notes that have
a constant maturity closest to and greater than the Remaining Term and the
United States Treasury Notes that have a constant maturity closest to and less
than the Remaining Term (in each case as set forth in the H.15 Statistical
Release). Any weekly average yields so calculated by interpolation will be
rounded to the nearest 1/100 of 1%, with any figure of 1/200% or above being
rounded upward. If weekly average yields for United States Treasury Notes are
not available in the H.15 Statistical Release or otherwise, then the Treasury
Yield will be calculated by interpolation of comparable rates selected by the
Independent Investment Banker.
Periodic interest installments with respect to which the Interest
Payment Date is on or prior to any Redemption Date will be payable to Holders of
record at the close of business on the relevant record dates referred to herein,
all as provided in the Indenture.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. On or after the
Redemption Date interest will cease to accrue on Securities or on the portions
thereof called for redemption, as the case may be.
5. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association (the "Trustee"), the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar,
co-registrar or additional paying agent without notice to any Holder. The
Company may act in any such capacity.
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<PAGE> 104
6. Indenture. The Company issued the Securities under an Indenture
dated as of April 14, 1998 (the "Indenture") among the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date of
execution of the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Securities are unsecured general obligations of the Company.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities during the period between a record date and the corresponding
Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions and
limitations, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Securities, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of the principal of, or premium, if any, or
interest on the Securities) by the Holders of at least a majority in principal
amount of the Securities then outstanding in accordance with the terms of the
Indenture. Without the consent of any Holder, the Company, any Guarantors and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency; to provide for uncertificated
Securities in addition to or in place of certificated Securities; to provide for
the assumption of the obligations of the Company and any Guarantor under the
Indenture to Holders in the case of the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or any
Guarantor; to reflect the release of any Guarantor from its Guarantee to the
extent permitted by the Indenture; to add guarantees to the Securities; to add
to the covenants of the Company or any Guarantors or to surrender any right of
the Company or any Guarantor; to make any change that does not materially
adversely affect the rights of any Holder; or to comply with the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a
C-7
<PAGE> 105
date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security, (iii) reduce the
principal of or change the fixed maturity of any Security or alter the premium
or other provisions with respect to redemption, (iv) make any Security payable
in money other than that stated in the Security, (v) impair the right to
institute suit for the enforcement of any payment of principal of, or premium,
if any, or interest on any Security, (vi) make any change in the percentage of
principal amount of Securities necessary to waive compliance with certain
provisions of the Indenture or (vii) waive a continuing Default or Event of
Default in the payment of principal of, or premium, if any, or interest on the
Securities.
10. Defaults and Remedies. Events of Default include: default in
payment of interest on the Securities for 30 days; default in payment of
principal of, or premium, if any, on the Securities; failure by the Company or
any Guarantor for 60 days after written notice by the Trustee or by the Holders
of at least 25% of the aggregate principal amount of the Securities then
outstanding to it to comply with any of its other covenants or agreements in the
Indenture, the Guarantees or the Securities; the acceleration of the maturity of
any Indebtedness of the Company or any Subsidiary of the Company (other than the
Securities or any Non-Recourse Indebtedness) that has an outstanding principal
amount of $20 million or more individually or in the aggregate; a default in the
payment of principal or interest in respect of any Indebtedness of the Company
or any Subsidiary of the Company (other than the Securities or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or more
individually or in the aggregate, and such default shall be continuing for a
period of 30 days without the Company or such Subsidiary, as the case may be,
effecting a cure of such default; a final judgment or order for the payment of
money in excess of $20 million (net of applicable insurance coverage) having
been rendered against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the Securities
Exchange Act of 1934, as amended; a "Significant Subsidiary") of the Company and
such judgment or order shall continue unsatisfied and unstayed for a period of
60 days; or certain events involving bankruptcy, insolvency or reorganization of
the Company, any Guarantor or any other Significant Subsidiary of the Company.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Securities may declare
the principal of, and premium, if any, and interest on all the Securities to be
immediately due and payable, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency or reorganization of the
Company or any Guarantor, all outstanding Securities become due and payable
immediately without further action or notice. The amount due and payable upon
the acceleration of any Security is equal to 100% of the principal amount
thereof plus premium, if any, and accrued interest to the date of payment.
Holders may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity reasonably
C-8
<PAGE> 106
satisfactory to it before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or premium, if any, or interest) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
11. Discharge Prior to Maturity. The Indenture shall be discharged and
canceled upon the payment of all of the Securities and shall be discharged
except for certain obligations upon the irrevocable deposit with the Trustee of
funds or U.S. Government Obligations sufficient for such payment.
12. Trustee Dealings with Company and Guarantors. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, any Guarantors or their respective Affiliates,
and may otherwise deal with the Company, any Guarantors or their respective
Affiliates, as if it were not Trustee.
13. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities.
14. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed thereon.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Securities under the Indenture,
Holders of Transfer Restricted
C-9
<PAGE> 107
Securities shall have all the rights set forth in the Registration Rights
Agreement, dated as of the Issue Date (the "Registration Rights Agreement"),
among the Company and the Initial Purchasers.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Attention: Leighton E. Moss
C-10
<PAGE> 108
FORM OF NOTATION ON SECURITY
RELATING TO FUTURE GUARANTEES
Each Guarantor (which term includes any successor Person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of, and premium, if any, and interest
on the Securities and all other amounts due and payable under the Indenture and
the Securities by the Company.
The obligations of the Guarantors to the Holders of Securities and to
the Trustee pursuant to the Guarantees and the Indenture are expressly set forth
in Article IX of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantees.
[NAMES OF GUARANTORS]
By:
--------------------------------
C-11
<PAGE> 109
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to _________________________________________
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date:
--------------------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
----------------------------------------------------------
(Participant in a Recognized Signature
Guaranty Medallion Program)
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred as specified below:
CHECK ONE
(1) [ ] to the Company or a Subsidiary thereof; or
(2) [ ] to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933, as amended) that purchases for its own
account or for the account of a qualified
C-12
<PAGE> 110
institutional buyer to whom notice is given that such transfer is being
made in reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of 1933, as amended;
or
(3) [ ] outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(4) [ ] pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(5) [ ] pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Rule 144 thereunder.
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Unless one of items (1) through (5) above is checked, the Trustee will
refuse to register any of the Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided, however,
that if item (3), or (5) is checked, the Company or the Trustee may require,
prior to registering any such transfer of the Securities, in their sole
discretion, such written legal opinions, certifications (including an investment
letter) and other information as the Trustee or the Company have reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Security in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Signed:
-----------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
----------------------------------------------------------
C-13
<PAGE> 111
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------------------- ---------------------------------------
Notice: to be executed by an executive
officer]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
C-14
<PAGE> 112
SCHEDULE OF EXCHANGES OF SECURITIES*
The following exchanges, redemptions or repurchases of a part of this
Global Security have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
GLOBAL SECURITY SIGNATURE OF
AMOUNT OF DECREASE AMOUNT OF INCREASE FOLLOWING SUCH AUTHORIZED OFFICER,
IN PRINCIPAL AMOUNT IN PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR SECURITIES
DATE OF TRANSACTION OF GLOBAL SECURITY OF GLOBAL SECURITY INCREASE) CUSTODIAN
- ------------------- ------------------ ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
* This Schedule should be included only if the Security is a Global
Security.
C-15
<PAGE> 113
EXHIBIT D
[FACE OF 20-YEAR SECURITY]
R&B FALCON CORPORATION
73/8% SERIES [A/B] SENIOR NOTE DUE 2018
CUSIP 74912E AD 3
No. ___ $_________
R&B Falcon Corporation, a Delaware corporation (the "Company"), for
value received promises to pay to ___________________________ or registered
assigns, the principal sum of $_________ Dollars on April 15, 2018 [or such
greater or lesser amount as is indicated on the Schedule of Exchanges of
Securities on the other side of this Security].*
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
R&B FALCON CORPORATION
By:
--------------------------------
By:
--------------------------------
Certificate of Authentication:
- --------------------------------------------------------
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.
- --------
* This phrase should be included only if the Security is a Global
Security.
D-1
<PAGE> 114
By:
-------------------------------------
Authorized Signature
[GLOBAL SECURITIES LEGEND]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. THE DEPOSITORY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A
SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]*
[TRANSFER RESTRICTED SECURITIES LEGEND]
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) INSIDE THE UNITED
- --------
* This paragraph should be included only if the Security is a Global
Security.
D-2
<PAGE> 115
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
D-3
<PAGE> 116
[REVERSE OF 20-YEAR SECURITY]
R&B FALCON CORPORATION
73/8% SERIES [A/B] SENIOR NOTE DUE 2018
This Security is one of a duly authorized issue of 73/8 % Series [A/B]
Senior Notes due 2018 (the "Securities") of R&B Falcon Corporation, a Delaware
corporation (the "Company").
1. Interest. The Company promises to pay interest on the principal
amount of this Security at 73/8% per annum from April 14, 1998 until maturity.
The Company will pay interest semiannually on April 15 and October 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Securities will accrue
from the most recent Interest Payment Date on which interest has been paid or,
if no interest has been paid, from April 14, 1998; provided that if there is no
existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 15, 1998. The Company also promises to pay any
additional interest required by Section 6 of the Registration Rights Agreement
(as defined in paragraph 17 below), upon the conditions, at the rates and for
the periods specified therein. Further, the Company shall pay interest on
overdue principal and premium, if any, from time to time on demand at a rate
equal to the interest rate then in effect; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder must surrender this
Security to a Paying Agent to collect principal and premium, if any, payments.
The Company will pay the principal of, and premium, if any, and interest on the
Securities in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
the Securities represented by a Global Security (including principal, premium,
if any, and interest) will be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company. The Company
will make all payments in respect of a certificated Security (including
principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Security will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank
D-4
<PAGE> 117
in the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Ranking and Guarantees. The Securities are senior unsecured
obligations of the Company. The Indenture provides that any Subsidiary that
guarantees Funded Indebtedness of the Company after the Issue Date (including
indebtedness under the New Bank Facility) will be required to equally and
ratably guarantee the Securities. The Guarantee of the Securities by any
subsidiary may be released if, but only so long as, no other Funded Indebtedness
of the Company is guaranteed by such Subsidiary. Each of the Guarantees is an
unsecured obligation of the Guarantor providing such Guarantee. Certain
limitations to the obligations of the Guarantors are set forth in further detail
in the Indenture. References herein to the Indenture or the Securities shall be
deemed also to refer to the Guarantees set forth in the Indenture except where
the context otherwise requires.
4. Optional Redemption. The Securities may be redeemed at any time, at
the option of the Company, in whole or from time to time in part, at a price
equal to 100% of their principal amount plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment date that is
on or prior to the Redemption Date) plus the Make-Whole Premium, if any (the
"Redemption Price").
The amount of the Make-Whole Premium with respect to any Security (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated
as of the Redemption Date, of:
(A) each interest payment that, but for such
redemption would have been payable on the Security (or portion
thereof) being redeemed on each Interest Payment Date
occurring after the Redemption Date (excluding any accrued and
unpaid interest for the period prior to the Redemption Date);
and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or
portion thereof) being redeemed.
D-5
<PAGE> 118
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield plus 25 basis points. The
Make-Whole Premium will be calculated by an Independent Investment Banker (as
defined in the Indenture).
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Securities, calculated to the nearest
1/12 of a year (the "Remaining Term"). The Treasury Yield will be determined as
of the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be determined by
reference to the most recent statistical release published by the Federal
Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or
any successor release (the "H.15 Statistical Release"). If the H.15 Statistical
Release sets forth a weekly average yield for United States Treasury Notes
having a constant maturity that is the same as the Remaining Term, then Treasury
Yield will be equal to such weekly average yield. In all other cases, the
Treasury Yield will be calculated by interpolation, on a straight-line basis,
between the weekly average yields on the United States Treasury Notes that have
a constant maturity closest to and greater than the Remaining Term and the
United States Treasury Notes that have a constant maturity closest to and less
than the Remaining Term (in each case as set forth in the H.15 Statistical
Release). Any weekly average yields so calculated by interpolation will be
rounded to the nearest 1/100 of 1%, with any figure of 1/200% or above being
rounded upward. If weekly average yields for United States Treasury Notes are
not available in the H.15 Statistical Release or otherwise, then the Treasury
Yield will be calculated by interpolation of comparable rates selected by the
Independent Investment Banker.
Periodic interest installments with respect to which the Interest
Payment Date is on or prior to any Redemption Date will be payable to Holders of
record at the close of business on the relevant record dates referred to herein,
all as provided in the Indenture.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. On or after the
Redemption Date interest will cease to accrue on Securities or on the portions
thereof called for redemption, as the case may be.
5. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association (the "Trustee"), the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar,
co-registrar or additional paying agent without notice to any Holder. The
Company may act in any such capacity.
D-6
<PAGE> 119
6. Indenture. The Company issued the Securities under an Indenture
dated as of April 14, 1998 (the "Indenture") among the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date of
execution of the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Securities are unsecured general obligations of the Company.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities during the period between a record date and the corresponding
Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions and
limitations, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Securities, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of the principal of, or premium, if any, or
interest on the Securities) by the Holders of at least a majority in principal
amount of the Securities then outstanding in accordance with the terms of the
Indenture. Without the consent of any Holder, the Company, any Guarantors and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency; to provide for uncertificated
Securities in addition to or in place of certificated Securities; to provide for
the assumption of the obligations of the Company and any Guarantor under the
Indenture to Holders in the case of the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or any
Guarantor; to reflect the release of any Guarantor from its Guarantee to the
extent permitted by the Indenture; to add guarantees to the Securities; to add
to the covenants of the Company or any Guarantors or to surrender any right of
the Company or any Guarantor; to make any change that does not materially
adversely affect the rights of any Holder; or to comply with the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a
D-7
<PAGE> 120
date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security, (iii) reduce the
principal of or change the fixed maturity of any Security or alter the premium
or other provisions with respect to redemption, (iv) make any Security payable
in money other than that stated in the Security, (v) impair the right to
institute suit for the enforcement of any payment of principal of, or premium,
if any, or interest on any Security, (vi) make any change in the percentage of
principal amount of Securities necessary to waive compliance with certain
provisions of the Indenture or (vii) waive a continuing Default or Event of
Default in the payment of principal of, or premium, if any, or interest on the
Securities.
10. Defaults and Remedies. Events of Default include: default in
payment of interest on the Securities for 30 days; default in payment of
principal of, or premium, if any, on the Securities; failure by the Company or
any Guarantor for 60 days after written notice by the Trustee or by the Holders
of at least 25% of the aggregate principal amount of the Securities then
outstanding to it to comply with any of its other covenants or agreements in the
Indenture, the Guarantees or the Securities; the acceleration of the maturity of
any Indebtedness of the Company or any Subsidiary of the Company (other than the
Securities or any Non-Recourse Indebtedness) that has an outstanding principal
amount of $20 million or more individually or in the aggregate; a default in the
payment of principal or interest in respect of any Indebtedness of the Company
or any Subsidiary of the Company (other than the Securities or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or more
individually or in the aggregate, and such default shall be continuing for a
period of 30 days without the Company or such Subsidiary, as the case may be,
effecting a cure of such default; a final judgment or order for the payment of
money in excess of $20 million (net of applicable insurance coverage) having
been rendered against the Company, any Guarantor or any other "significant
subsidiary" (as such term is defined in Regulation S-X under the Securities
Exchange Act of 1934, as amended; a "Significant Subsidiary") of the Company and
such judgment or order shall continue unsatisfied and unstayed for a period of
60 days; or certain events involving bankruptcy, insolvency or reorganization of
the Company, any Guarantor or any other Significant Subsidiary of the Company.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Securities may declare
the principal of, and premium, if any, and interest on all the Securities to be
immediately due and payable, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency or reorganization of the
Company or any Guarantor, all outstanding Securities become due and payable
immediately without further action or notice. The amount due and payable upon
the acceleration of any Security is equal to 100% of the principal amount
thereof plus premium, if any, and accrued interest to the date of payment.
Holders may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity reasonably
D-8
<PAGE> 121
satisfactory to it before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or premium, if any, or interest) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
11. Discharge Prior to Maturity. The Indenture shall be discharged and
canceled upon the payment of all of the Securities and shall be discharged
except for certain obligations upon the irrevocable deposit with the Trustee of
funds or U.S. Government Obligations sufficient for such payment.
12. Trustee Dealings with Company and Guarantors. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, any Guarantors or their respective Affiliates,
and may otherwise deal with the Company, any Guarantors or their respective
Affiliates, as if it were not Trustee.
13. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities.
14. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed thereon.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Securities under the Indenture,
Holders of Transfer Restricted
D-9
<PAGE> 122
Securities shall have all the rights set forth in the Registration Rights
Agreement, dated as of the Issue Date (the "Registration Rights Agreement"),
among the Company and the Initial Purchasers.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Attention: Leighton E. Moss
D-10
<PAGE> 123
FORM OF NOTATION ON SECURITY
RELATING TO FUTURE GUARANTEES
Each Guarantor (which term includes any successor Person under the
Indenture), has fully, unconditionally and absolutely guaranteed, to the extent
set forth in the Indenture and subject to the provisions in the Indenture, the
due and punctual payment of the principal of, and premium, if any, and interest
on the Securities and all other amounts due and payable under the Indenture and
the Securities by the Company.
The obligations of the Guarantors to the Holders of Securities and to
the Trustee pursuant to the Guarantees and the Indenture are expressly set forth
in Article IX of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantees.
[NAMES OF GUARANTORS]
By:
--------------------------------
D-11
<PAGE> 124
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to _________________________________________
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
-------------------------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
----------------------------------------------------------
(Participant in a Recognized Signature
Guaranty Medallion Program)
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred as specified below:
CHECK ONE
(1) [ ] to the Company or a Subsidiary thereof; or
(2) [ ] to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933, as amended) that purchases for its own
account or for the account of a qualified
D-12
<PAGE> 125
institutional buyer to whom notice is given that such transfer is being
made in reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of 1933, as amended;
or
(3) [ ] outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(4) [ ] pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(5) [ ] pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Rule 144 thereunder.
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Unless one of items (1) through (5) above is checked, the Trustee will
refuse to register any of the Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided, however,
that if item (3), or (5) is checked, the Company or the Trustee may require,
prior to registering any such transfer of the Securities, in their sole
discretion, such written legal opinions, certifications (including an investment
letter) and other information as the Trustee or the Company have reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Security in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.06 of the Indenture shall have
been satisfied.
Signed:
----------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
----------------------------------------------------------
D-13
<PAGE> 126
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-------------------------- -------------------------------------
Notice: to be executed by an
executive officer]*
- --------
* These paragraphs should be included only if the Security is a Transfer
Restricted Security.
D-14
<PAGE> 127
SCHEDULE OF EXCHANGES OF SECURITIES*
The following exchanges, redemptions or repurchases of a part of this
Global Security have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
GLOBAL SECURITY SIGNATURE OF
AMOUNT OF DECREASE AMOUNT OF INCREASE FOLLOWING SUCH AUTHORIZED OFFICER,
IN PRINCIPAL AMOUNT IN PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR SECURITIES
DATE OF TRANSACTION OF GLOBAL SECURITY OF GLOBAL SECURITY INCREASE) CUSTODIAN
- ------------------- ------------------ ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
* This Schedule should be included only if the Security is a Global
Security.
D-15
<PAGE> 128
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
____________ between ____________________, a __________ corporation (the "New
Guarantor"), a subsidiary of R&B Falcon Corporation, a Delaware corporation (the
"Company"), and [____________________], as trustee under the indenture referred
to below (the "Trustee"). Capitalized terms used herein and not defined herein
shall have the meaning ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (as amended or supplemented from time to time, the
"Indenture"), dated as of April 14, 1998;
WHEREAS, Section 9.05 of the Indenture provides that under certain
circumstances the Company must cause certain of its subsidiaries to execute and
deliver to the Trustee a supplemental indenture pursuant to which such
subsidiaries shall unconditionally guarantee all of the Company's obligations
under the Securities (as defined in the Indenture) pursuant to a Guarantee on
the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.05 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which are hereby acknowledged, the
New Guarantor and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Securities as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings ascribed to them in the Indenture.
2. Agreement to Guarantee. The New Guarantor hereby fully,
unconditionally and absolutely guarantees, jointly and severally with all other
Guarantors, the Company's obligations under the Securities and the Indenture on
the terms and subject to the conditions set forth in Article IX of the Indenture
and agrees to be bound by all other applicable provisions of the Indenture.
3. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Guarantor, as such,
shall have any liability for any
E-1
<PAGE> 129
obligations of the Company or any Guarantor under the Securities, any
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Securities.
4. New York Law to Govern. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: [NAME OF NEW SUBSIDIARY GUARANTOR]
----------------------
By:
---------------------------------
Name:
Title:
Dated: [ ]
--------------------- -----------------------------------
as Trustee
By:
---------------------------------
Name:
Title:
E-2
<PAGE> 1
EXHIBIT 4.2
$1,100,000,000
R&B FALCON CORPORATION
6 1/2% SENIOR NOTES DUE 2003
6 3/4% SENIOR NOTES DUE 2005
6.95% SENIOR NOTES DUE 2008
7 3/8% SENIOR NOTES DUE 2018
REGISTRATION RIGHTS AGREEMENT
April 8, 1998
Credit Suisse First Boston Corporation
Chase Securities, Inc.
Donaldson, Lufkin & Jenrette
Securities Corporation
Morgan Stanley & Co. Incorporated
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
R&B Falcon Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Credit Suisse First Boston Corporation, Chase
Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Morgan
Stanley & Co. Incorporated (collectively, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), $250,000,000 aggregate principal amount of its 6 1/2% Senior Notes
due 2003, $350,000,000 aggregate principal amount of its 6 3/4% Senior Notes due
2005, $250,000,000 aggregate principal amount of its 6.95% Senior Notes due 2008
and $250,000,000 aggregate principal amount of its 7 3/8% Senior Notes due 2018
(collectively, the "Initial Securities"). The Initial Securities will be issued
pursuant to an Indenture, dated as of April 14, 1998, (the "Indenture") among
the Company and Chase Bank of Texas, National Association (the "Trustee"). As an
inducement to the Initial Purchasers, the Company agrees with the Initial
Purchasers, for the benefit of the holders of the Initial Securities (including,
without limitation, the Initial Purchasers), the Exchange Securities (as defined
below) and the Private Exchange Securities (as defined below) (collectively the
"Holders"), as follows:
1. Registered Exchange Offer. The Company shall, at its own cost,
prepare and, not later than 60 days after (or if the 60th day is not a business
day, the first business day thereafter) the date of original issue of the
Initial Securities (the "Issue Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to a proposed offer (the
"Registered Exchange Offer") to the Holders of Transfer Restricted Securities
(as defined in Section 6 hereof), who are not prohibited by any law or policy of
the Commission from participating in the Registered Exchange Offer, to issue and
deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount of debt securities (the "Exchange Securities") of the
Company issued under the Indenture and identical in all material respects to the
Initial Securities (except for the transfer restrictions relating to the Initial
Securities and the provisions relating to the matters described in Section 6
hereof) that would be registered under the Securities Act. The Company shall use
its best efforts to cause such Exchange Offer Registration Statement to become
effective under the Securities Act within 180 days (or if the 180th day is not a
business day, the first business day thereafter) after the Issue Date of the
Initial Securities and shall keep the Exchange Offer Registration Statement
effective for not less than 30 days (or longer, if required by applicable law)
after the date
<PAGE> 2
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer 30 days after the
commencement thereof provided that the Company has accepted all the Initial
Securities theretofore validly tendered in accordance with the terms of the
Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities (as defined in Section 6
hereof) electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Securities in the ordinary course
of such Holder's business and has no arrangements with any person to participate
in the distribution of the Exchange Securities and is not prohibited by any law
or policy of the Commission from participating in the Registered Exchange Offer)
to trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States.
The Company acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing the
information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and (c) Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an
Initial Purchaser that elects to sell Exchange Securities acquired in exchange
for Securities constituting any portion of an unsold allotment is required to
deliver a prospectus containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such
sale.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall
make such prospectus and any amendment or supplement thereto, available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 90 days after the consummation of the Registered
Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States, but excluding
provisions relating to the matters described in Section 6 hereof) to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
2
<PAGE> 3
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date notice thereof
is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered
and not withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(y) deliver to the Trustee for cancellation all the Initial
Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to
each Holder of the Initial Securities, Exchange Securities or Private Exchange
Securities, as the case may be, equal in principal amount to the Initial
Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that all the
Securities of each series will vote and consent together on all matters as a
class separate from each other series on any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
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<PAGE> 4
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
180 days of the Issue Date, (iii) any Initial Purchaser so requests with respect
to the Initial Securities (or the Private Exchange Securities) not eligible to
be exchanged for Exchange Securities in the Registered Exchange Offer and held
by it following consummation of the Registered Exchange Offer or (iv) any Holder
(other than an Exchanging Dealer) is not eligible to participate in the
Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable
(but in no event more than 30 days after so required or requested pursuant to
this Section 2) file with the Commission and thereafter shall use its best
efforts to cause to be declared effective a registration statement (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, a "Registration Statement") on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined in Section 6 hereof) by the Holders thereof from time to
time in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act (hereinafter, the
"Shelf Registration"); provided, however, that no Holder (other than an Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein to be lawfully delivered by the Holders of the relevant
Securities, for a period of two years (or for such longer period if extended
pursuant to Section 3(j) below) from the date of the issuance of the Initial
Securities or such shorter period that will terminate when all the Securities
covered by the Shelf Registration Statement (i) have been sold pursuant thereto
or (ii) can be sold pursuant to Rule 144 under the Securities Act without any
limitations under clauses (c), (e), (f) and (h) of Rule 144, or any successor
rule thereof. The Company shall be deemed not to have used its best efforts to
keep the Shelf Registration Statement effective during the requisite period if
it voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such Securities during that
period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (i) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and, in the event that an Initial Purchaser (with
respect to any portion of an unsold allotment from the original offering) is
participating in the Registered Exchange Offer or the Shelf Registration
Statement, the Company shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments as such Initial
Purchaser reasonably may propose; (ii) include the information set forth in
Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of the prospectus forming a part
of the Exchange Offer Registration Statement and include the information set
forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include
the information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in the prospectus forming a part of the Exchange
Offer Registration Statement; (iv) include within the prospectus contained in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain
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<PAGE> 5
a summary statement of the positions taken or policies made by the staff of the
Commission with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
Securities received by such broker-dealer in the Registered Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the Commission or such positions or
policies, in the reasonable judgment of the Initial Purchasers based upon advice
of counsel (which may be in-house counsel), represent the prevailing views of
the staff of the Commission; and (v) in the case of a Shelf Registration
Statement, include the names of the Holders, who propose to sell Securities
pursuant to the Shelf Registration Statement, as selling securityholders.
(b) The Company shall give written notice to the Initial
Purchasers, the Holders of the Securities and any Participating Broker-Dealer
from whom the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which notice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel
of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the
Company to make changes in the Registration Statement or the prospectus
in order that the Registration Statement or the prospectus do not
contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain
the withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(e) The Company shall deliver to each Exchanging Dealer and
each Initial Purchaser, and to any other Holder who so requests, without charge,
at least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if any Initial Purchaser or any such Holder requests, all exhibits thereto
(including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
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<PAGE> 6
(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the Exchange
Offer Registration Statement and any amendment or supplement thereto as such
persons may reasonably request. The Company consents, subject to the provisions
of this Agreement, to the use of the prospectus or any amendment or supplement
thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer
and such other persons required to deliver a prospectus following the Registered
Exchange Offer in connection with the offering and sale of the Exchange
Securities covered by the prospectus, or any amendment or supplement thereto,
included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities, pursuant
to any Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky" laws of such
states of the United States as any Holder of the Securities reasonably requests
in writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the Securities covered by
such Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(i) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to any Registration Statement
free of any restrictive legends and in such denominations and registered in such
names as the Holders may request a reasonable period of time prior to sales of
the Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the period for which
the Company is required to maintain an effective Registration Statement, the
Company shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any other
required document so that, as thereafter delivered to Holders of the Securities
or purchasers of Securities, the prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of
Section 3(b) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Initial Purchasers, the
Holders of the Securities and any such Participating Broker-Dealers shall
suspend use of such prospectus, and the period of effectiveness of the Shelf
Registration Statement provided for in Section 2(b) above and the Exchange Offer
Registration Statement provided for in Section 1 above shall each be extended by
the number of days from and including the date of the giving of such notice to
and including the date when the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer shall have received such
amended or supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the Initial
Securities, the Exchange Securities or the Private Exchange Securities, as the
case may be, and provide the applicable trustee with printed certificates for
the Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, in a form eligible for deposit with The
Depository Trust Company.
(l) The Company will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make generally
available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after
the end of a 12- month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement shall
cover such 12-month period.
(m) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act of 1939, as amended, in a timely manner and
containing such changes, if any, as shall be necessary for such qualification.
In
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<PAGE> 7
the event that such qualification would require the appointment of a new trustee
under the Indenture, the Company shall appoint a new trustee thereunder pursuant
to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all such other action, if any, as any Holder of the Securities shall reasonably
request in order to facilitate the disposition of the Securities pursuant to any
Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the Securities,
any underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained by
the Holders of the Securities or any such underwriter all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
of the Securities or any such underwriter, attorney, accountant or agent in
connection with the Shelf Registration Statement, in each case, as shall be
reasonably necessary to enable such persons, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
however, that the foregoing inspection and information gathering shall be
coordinated on behalf of the Initial Purchasers by you and on behalf of the
other parties, by one counsel designated by and on behalf of such other parties
as described in Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if
requested by any Holder of Securities covered thereby, shall cause (i) its
counsel to deliver an opinion and updates thereof relating to the Securities in
customary form addressed to such Holders and the managing underwriters, if any,
thereof and dated, in the case of the initial opinion, the effective date of
such Shelf Registration Statement (it being agreed that such opinion shall be in
the form and substance reasonably satisfactory to the managing underwriters, if
any, and the Holders of a majority in aggregate principal amount of the
securities being registered by such Shelf Registration Statement); (ii) its
officers to execute and deliver all customary documents and certificates and
updates thereof requested by any underwriters of the applicable Securities and
(iii) its independent public accountants and the independent public accountants
with respect to any other entity for which financial information is provided in
the Shelf Registration Statement to provide to the selling Holders of the
applicable Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested
by any Initial Purchaser or any known Participating Broker-Dealer, the Company
shall cause (i) its counsel to deliver to such Initial Purchaser or such
Participating Broker-Dealer a signed opinion in the form set forth in Section
6(c) of the Purchase Agreement with such changes as are customary in connection
with the preparation of a Registration Statement and (ii) its independent public
accountants and the independent public accountants with respect to any other
entity for which financial information is provided in the Registration Statement
to deliver to such Initial Purchaser or such Participating Broker-Dealer a
comfort letter, in customary form, meeting the requirements as to the substance
thereof as set forth in Section 6(a) of the Purchase Agreement, with appropriate
date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Initial Securities by Holders to the
Company (or to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be, the
Company shall mark, or caused to be marked, on the Initial Securities so
exchanged that such Initial Securities are being canceled in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be; in
no event shall the Initial Securities be marked as paid or otherwise satisfied.
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(t) The Company will use its best efforts to (a) if the
Initial Securities have been rated prior to the initial sale of such Initial
Securities, confirm such ratings will apply to the Securities covered by a
Registration Statement, or (b) if the Initial Securities were not previously
rated, cause the Securities covered by a Registration Statement to be rated with
the appropriate rating agencies, if so requested by Holders of a majority in
aggregate principal amount of Securities covered by such Registration Statement,
or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules (the "Rules") of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company will assist such
broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall so require,
engaging a "qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating to such
Securities, to exercise usual standards of due diligence in respect thereto and,
if any portion of the offering contemplated by such Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Securities, (ii) indemnifying any such qualified
independent underwriter to the extent of the indemnification of underwriters
provided in Section 5 hereof and (iii) providing such information to such
broker-dealer as may be required in order for such broker-dealer to comply with
the requirements of the Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1 through 3 hereof (including the reasonable fees and expenses, if any,
of Andrews & Kurth L.L.P., counsel for the Initial Purchasers, incurred in
connection with the Registered Exchange Offer), whether or not the Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Initial Securities covered thereby to act as counsel for the Holders of the
Initial Securities in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
the Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein; provided further, however, that this indemnity agreement will
be in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters participating
in the distribution, their officers and directors and each person who controls
such underwriters within the meaning of the Securities Act or the Exchange Act
to the same extent as provided above with respect to the indemnification of the
Holders of the Securities if requested by such Holders.
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(b) Each Holder of the Securities, severally and not jointly,
will indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent will not be unreasonably
withheld), effect any settlement of any pending or threatened action in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the Securities,
pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by
the foregoing clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties 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 on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 5(d), the Holders of the Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
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No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls such indemnified party within
the meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as such indemnified party and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive
the sale of the Securities pursuant to a Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a)
Additional interest (the "Additional Interest") with respect to the Initial
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below a "Registration Default" and
each period during which a Registration Default has occurred and is continuing,
a "Registration Default Period"):
(i) If by June 15, 1998, neither the Exchange Offer
Registration Statement nor a Shelf Registration Statement has been
filed with the Commission;
(ii) If by October 12, 1998, neither the Registered
Exchange Offer is consummated nor, if required in lieu thereof, the
Shelf Registration Statement is declared effective by the Commission;
or
(iii) If after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective (A)
such Registration Statement thereafter ceases to be effective; or (B)
such Registration Statement or the related prospectus ceases to be
usable (except as permitted in paragraph (b)) in connection with
resales of Transfer Restricted Securities during the periods specified
herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on the Initial Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at the rate of 0.25% per
annum for the first 90 days of each Registration Default Period and at the rate
of 0.50% per annum thereafter for the remaining portion of such Registration
Default Period.
(b) A Registration Default referred to in Section 6(a)(iii)(B)
hereof shall be deemed not to have occurred and be continuing in relation to a
Shelf Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause
(i), (ii) or (iii) of Section 6(a) above will be payable in cash on the regular
interest payment dates with respect to the Initial Securities. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Initial Securities, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
10
<PAGE> 11
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until
(i) the date on which such Transfer Restricted Security has been exchanged by a
person other than a broker-dealer for a freely transferable Exchange Security in
the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in
the Registered Exchange Offer of a Initial Security for an Exchange Security,
the date on which such Exchange Security is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Initial Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Initial Securities is distributed to
the public pursuant to Rule 144 under the Securities Act or is saleable pursuant
to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Initial
Securities, make publicly available other information so long as necessary to
permit sales of their securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Initial
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Initial Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Company will provide a
copy of this Agreement to prospective purchasers of Initial Securities
identified to the Company by the Initial Purchasers upon request. Upon the
request of any Holder of Initial Securities, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority in principal amount of the
Securities affected by such amendment, modification, supplement, waiver or
consents.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.
11
<PAGE> 12
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Andrews & Kurth L.L.P.
425 Lexington Avenue
New York, New York 10017-3903
Attention: Allan D. Reiss
(3) if to the Company, at its address as follows:
R&B Falcon Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Leighton E. Moss
with a copy to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201-4761
Attention: C. Robert Butterfield
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(d) Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
12
<PAGE> 13
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
is required hereunder, Securities held by the Company or its affiliates (other
than subsequent Holders of Securities if such subsequent Holders are deemed to
be affiliates solely by reason of their holdings of such Securities) shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(j) Submission to Jurisdiction. The Company hereby submits to
the non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
R&B FALCON CORPORATION
By: /s/ LEIGHTON MOSS
-------------------------------------
Name: Leighton Moss
Title: Vice President
The foregoing Registration
Rights Agreement is hereby confirmed and accepted as of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES, INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
by: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ ROBERT A. HANSEN
----------------------------------
Name: Robert A. Hansen
Title: Director
13
<PAGE> 14
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
14
<PAGE> 15
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for [Initial] Securities, where such Initial Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities.
See "Plan of Distribution."
15
<PAGE> 16
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
16
<PAGE> 17
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------------------
Address:
--------------------------------------------
--------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
17
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF GARDERE WYNNE SEWELL & RIGGS, L.L.P.]
June 15, 1998
Board of Directors
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Gentlemen:
We have acted as counsel to R&B Falcon Corporation, a Delaware
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-4 (the "Registration Statement") being filed with the
Securities and Exchange Commission on this date relating to the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of the
offer by the Company (the "Exchange Offer") of certain notes to be exchanged
(the "Exchange Notes") for up to $250 million aggregate principal amount of its
6 1/2 % Senior Notes Due 2003, Series A, up to $350 million aggregate principal
amount of its 6 3/4% Senior Notes Due 2005, Series A, up to $250 million
aggregate principal amount of its 6.95% Senior Notes Due 2008, Series A, and up
to $250 million of its 7 3/8% Senior Notes Due 2018, Series A (collectively, the
"Private Notes"). The Exchange Notes are to have terms substantially identical
in all material respects to the Private Notes, except that such Exchange Notes
will not contain terms with respect to transfer restrictions. The Exchange Notes
are proposed to be issued in accordance with the provisions of the Indenture,
dated as of April 14, 1998, between the Company and Chase Bank of Texas,
National Association, as Trustee (the "Indenture").
As the basis for the opinions expressed below, we have examined the
Registration Statement, the Prospectus contained therein, the Indenture, which
is filed as an exhibit to the Prospectus, and such statutes, regulations,
corporate records and documents, certificates of corporate and public officials
and other instruments as we have deemed necessary or advisable for the purposes
of this opinion. In such examination, we have assumed (i) that the signatures on
all documents that we have examined are genuine, (ii) the authenticity of all
documents submitted to us as originals, and (iii) the conformity with the
original documents of all documents submitted to us as copies.
<PAGE> 2
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective, (ii) the Indenture will have been
qualified under the Trust Indenture Act of 1939, as amended, and (iii) the
Exchange Notes will be issued and exchanged in compliance with applicable
federal and state securities laws and in the manner stated in the Registration
Statement.
Based upon the foregoing, subject to the qualifications hereinafter set
forth, and having regard for such legal considerations as we have deemed
relevant, we are of the opinion that the Exchange Notes proposed to be issued
pursuant to the Exchange Offer have been duly authorized for issuance and,
subject to the Registration Statement becoming effective under the 1933 Act and
in compliance with any applicable state securities laws, when executed,
authenticated, issued, delivered and exchanged in accordance with the Exchange
Offer and the Indenture, will be legally issued and will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms.
The opinion expressed above with respect to the Exchange Notes is
subject to the qualifications (x) that the enforcement of the Exchange Notes may
be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and (y) that a waiver of rights under any usury
laws may be unenforceable. Furthermore, we express no opinion as to the
enforceability of any provisions of the Exchange Notes that would require the
performance thereof in the presence of fraud or illegality on the part of the
holders of the Exchange Notes or the Trustee.
The opinions expressed herein are limited exclusively to the federal
laws of the United States of America, the laws of the State of Texas and the
General Corporation Law of the State of Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of the Company and is
not to be used, circulated, copied, quoted or referred to without our prior
written consent. We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the statements made with respect to us
under the caption "Legal Matters" in the Prospectus included as part of the
Registration Statement.
Very truly yours,
/S/ WILLIAM MARK YOUNG
William Mark Young, Partner
<PAGE> 1
EXHIBIT 10.1
$1,100,000,000
R&B FALCON CORPORATION
6 1/2% SENIOR NOTES DUE 2003
6 3/4% SENIOR NOTES DUE 2005
6.95% SENIOR NOTES DUE 2008
7 3/8% SENIOR NOTES DUE 2018
PURCHASE AGREEMENT
April 8, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
c/o Credit Suisse First Boston
Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. R&B Falcon Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto (the
"Purchasers") $250,000,000 aggregate principal amount of its 6 "% Senior Notes
due 2003 (the "5-Year Notes"), $350,000,000 aggregate principal amount of its 6
"% Senior Notes due 2005 (the "7-Year Notes"), $250,000,000 aggregate principal
amount of its 6.95% Senior Notes due 2008 (the "10-Year Notes") and $250,000,000
aggregate principal amount of its 7 "% Senior Notes due 2018 (the "20-Year
Notes" and, collectively with the 5-Year Notes, the 7-Year Notes and the 10-Year
Notes, the "Offered Securities") to be issued under an indenture dated as of
April 14, 1998 (the "Indenture") between the Company and Chase Bank of Texas,
National Association, as Trustee. The United States Securities Act of 1933 is
herein referred to as the "Securities Act."
The Company hereby agrees with the several Purchasers as follows:
<PAGE> 2
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with the several Purchasers that:
(1) A preliminary offering circular and an offering circular relating to
the Offered Securities to be offered by the Purchasers have been prepared by the
Company. Such preliminary offering circular and offering circular, as
supplemented as of the date of this Agreement, together with any other document
approved by the Company for use in connection with the contemplated resale of
the Offered Securities are hereinafter collectively referred to as the "Offering
Document." On the date of this Agreement, the Offering Document does not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the Offering Document based
upon written information furnished to the Company by any Purchaser through
Credit Suisse First Boston Corporation ("CSFBC") specifically for use therein,
it being understood and agreed that the only such information is that described
as such in Section 7(b) hereto. On the date of this Agreement, the Company"s
Annual Report on Form 10-K most recently filed with the Securities and Exchange
Commission (the "Commission") and all subsequent reports (collectively, the
"Exchange Act Reports") which have been filed by the Company with the Commission
or sent to shareholders pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act") do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Such
documents, when they were filed with the Commission, conformed in all material
respects to the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder.
(2) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Document; and the Company is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition (financial
or other), business, properties or results of operation of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). (1)
(3) Each of the subsidiaries of the Company listed on Schedule C hereto
(the "Subsidiaries") has been duly incorporated or formed and is an existing
corporation or limited liability entity in good standing under the laws of the
jurisdiction of its incorporation or formation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Document; and each of the Subsidiaries is duly
qualified to do business as a foreign corporation or limited liability entity in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect;
all of the issued and outstanding capital stock or member interests of each
Subsidiary has been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock or member
2
<PAGE> 3
interests of each Subsidiary is owned directly or indirectly by the Company free
from liens, encumbrances and defects.
(4) The Indenture has been duly authorized; the Offered Securities have
been duly authorized; and when the Offered Securities are executed and
authenticated in accordance with the terms thereof and delivered and paid for
pursuant to this Agreement on the Closing Date (as defined below), the Indenture
will have been duly executed and delivered, such Offered Securities will have
been duly executed, issued and delivered and will conform to the description
thereof contained in the Offering Document and the Indenture and such Offered
Securities will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors" rights
and to general equity principles.
(5) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the consummation of
the transactions contemplated by this Agreement in connection with the issuance
and sale of the Offered Securities by the Company, except such as may be
required under state securities laws and except for such filings with the
Securities and Exchange Commission as are required in connection with the
Registration Rights Agreement.
(6) The execution, delivery and performance of the Indenture, the
Registration Rights Agreement and this Agreement, and the issuance and sale of
the Offered Securities and compliance with the terms and provisions thereof will
not result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of its properties, or any
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of the properties
of the Company or any Subsidiary is subject, or the Certificate of Incorporation
or other organizational documents and Bylaws of the Company and each of the
Subsidiaries, and the Company has full power and authority to authorize, issue
and sell the Offered Securities as contemplated by this Agreement.
(7) Each of this Agreement and Registration Rights Agreement has been
duly authorized, executed and delivered by the Company. (1)
(8) Except as disclosed in the Offering Document or as would not have a
Material Adverse Effect, the Company and the Subsidiaries have good and
marketable title to all real properties and all other properties and assets
owned by them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use made or
to be made thereof; and except as disclosed in the Offering Document or as would
not have a Material Adverse Effect, the Company and the Subsidiaries hold any
leased real or personal property under valid and enforceable leases.
3
<PAGE> 4
(9) The Company and the Subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
any Subsidiary, would individually or in the aggregate have a Material Adverse
Effect.
(10) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent that should
reasonably be expected to have a Material Adverse Effect.
(11) None of the Company or any Subsidiary is in violation of any
statute, any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws, is
liable for any off-site disposal or contamination pursuant to any environmental
laws, or is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and none of the Company and any
Subsidiary is aware of any pending investigation which might lead to such a
claim.
(12) There are no pending actions, suits or proceedings against or
affecting the Company, the Subsidiaries or any of their respective properties
that, if determined adversely to the Company and the Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, the Indenture or the Registration Rights
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are threatened.
(13) The financial statements included in the Offering Document present
fairly, in all material respects, the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their results of operations
and cash flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles in the
United States applied on a consistent basis.
(14) Since the date of the latest audited financial statements included
in the Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Company and the Subsidiaries taken as a whole, and there has been no
dividend or distribution of any kind declared, paid or made by the Company. (1)
(15) The Company is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the
4
<PAGE> 5
United States Investment Company Act of 1940 (the "Investment Company Act"); and
the Company is not and, after giving effect to the offering and sale of the
Offered Securities and the application of the proceeds thereof as described in
the Offering Document, will not be an "investment company" as defined in the
Investment Company Act.
(16) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed on any
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934 (the "Exchange Act") or quoted in a U.S. automated
inter-dealer quotation system.
(17) Assuming the accuracy of the representation of the Purchasers
contained in Section 4 hereof, the offer and sale of the Offered Securities in
the manner contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof, Regulation
D thereunder and Regulation S thereunder; and prior to the effectiveness of a
registration statement as contemplated in the Registration Rights Agreement, it
is not necessary to qualify an indenture in respect of the Offered Securities
under the United States Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(18) None of the Company or any of its affiliates, or any person acting
on its or their behalf (other than the Purchasers, with respect to which the
Company makes no representation) (i) has, within the six-month period prior to
the date hereof, offered or sold in the United States or to any U.S. person (as
such terms are defined in Regulation S under the Securities Act) the Offered
Securities or any security of the same class or series as the Offered Securities
or (ii) has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or (B)
with respect to any such securities sold in reliance on Rule 903 of Regulation S
("Regulation S") under the Securities Act, by means of any directed selling
efforts within the meaning of Rule 902(b) of Regulation S. The Company, its
affiliates and any person acting on their behalf (other than the Purchasers,
with respect to which the Company makes no representation) have complied and
will comply with the offering restrictions requirement of Regulation S. The
Company has not entered and will not enter into any contractual arrangement with
respect to the distribution of the Offered Securities except for this Agreement
and the Registration Rights Agreement.
(19) The proceeds to the Company from the offering of the Offered
Securities will not be used to purchase or carry any security other than the
Falcon Notes (as defined in the Offering Document).
(20) The proceeds to the Company from the offering of the Offered
Securities will be used as described in the Offering Document. (1)
(21) None of the Company, the Subsidiaries, any of their respective
affiliates, or any director, officer, agent, employee or other person associated
with or acting on behalf of the Company, the Subsidiaries or any of their
respective affiliates has (i) used any corporate funds
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<PAGE> 6
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(22) The Company is subject to Section 13 or 15(d) of the Exchange Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at respective purchase prices of (a) 99.617% of the principal
amount of the 5-Year Notes, (b) 99.396% of the principal amount of the 7-Year
Notes, (c) 99.658% of the principal amount of the 10-Year Notes and (d) 99.174%
of the principal amount of the 20-Year Notes, in each case plus accrued interest
from April 14, 1998 to the Closing Date (as hereinafter defined) the respective
principal amounts of Securities set forth opposite the names of the several
Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global Securities in registered
form without interest coupons (the "Global Securities") which will be deposited
with the Trustee as custodian for The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee for DTC. Interests in any
permanent global Securities will be held only in book-entry form through DTC,
except in the limited circumstances described in the Offering Document. Payment
for the Offered Securities shall be made by the Purchasers in Federal (same day)
funds by wire transfer to an account at a bank acceptable to CSFBC at 10:00 a.m.
(New York time) on April 14, 1998, or at such other time not later than seven
full business days thereafter as CSFBC and the Company determine, such time
being herein referred to as the "Closing Date", against delivery to the Trustee
as custodian for DTC of the Global Securities representing all of the Offered
Securities. The Global Securities will be made available for checking at the
offices of Andrews & Kurth L.L.P., 600 Travis Street, Suite 4200, Houston, Texas
77002, at least 24 hours prior to the Closing Date.
4. Representations by Purchasers; Resale by Purchasers. (a) Each Purchaser
severally represents and warrants to the Company that it is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
(1) Each Purchaser severally acknowledges that the Offered Securities
have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities as part of its distribution at any
time, only in accordance with Rule 903 or Rule 144A under the Securities Act
("Rule 144A"). Accordingly, neither such Purchaser nor its affiliates, nor any
persons acting on its or their behalf, have engaged or will engage in any
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<PAGE> 7
directed selling efforts with respect to the Offered Securities, and such
Purchaser, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. Each Purchaser severally agrees that, at or prior to confirmation
of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such
Purchaser will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Offered
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons as part of their distribution at any time or except in
accordance with Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meanings given to them by
Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulation S.
(2) Each Purchaser severally agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with respect
to the distribution of the Offered Securities except for any such arrangements
with the other Purchasers or affiliates of the other Purchasers with the prior
written consent of the Company.
(3) Each Purchaser severally agrees that it and each of its affiliates
will not offer or sell the Offered Securities in the United States by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Each Purchaser severally agrees, with
respect to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that the resale of
such Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A. (1)
(4) Each of the Purchasers severally represents and agrees that (i) it
has not offered or sold and prior to the date six months after the date of issue
of the Offered Securities will not offer or sell any Offered Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Offered Securities in, from or otherwise
involving the United Kingdom; and (iii) it
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<PAGE> 8
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the Offered
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
5. Certain Agreements of the Company. The Company agrees with the several
Purchasers that:
(1) The Company will advise CSFBC promptly of any proposal to amend or
supplement the Offering Document and will not effect such amendment or
supplementation without CSFBC"s consent, which CSFBC agrees it will not
unreasonably withhold. If, at any time prior to the completion of the resale of
the Offered Securities by the Purchasers, any event occurs as a result of which
the Offering Document as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Company promptly will notify CSFBC of
such event and promptly will prepare, at its own expense, an amendment or
supplement which will correct such statement or omission. Neither CSFBC"s
consent to, nor the Purchasers" delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(2) The Company will furnish to CSFBC copies of any preliminary
offering circular, the Offering Document and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as
CSFBC requests, and the Company will furnish to CSFBC on the date hereof five
copies of the Offering Document signed by a duly authorized officer of the
Company, one of which will include the independent accountants" reports therein
manually signed by such independent accountants. At any time when the Company is
not subject to Section 13 or 15(d) of the Exchange Act, the Company will
promptly furnish or cause to be furnished to CSFBC (and, upon request, to each
of the other Purchasers) and, upon request of holders and prospective purchasers
of the Offered Securities, to such holders and purchasers, copies of the
information required to be delivered to holders and prospective purchasers of
the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or
any successor provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Offered Securities. The Company
will pay the expenses of printing and distributing to the Purchasers all such
documents.
(3) The Company will arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for investment
under the laws of such jurisdictions in the United States and Canada as CSFBC
designates and will continue such qualifications in effect so long as required
for the resale of the Offered Securities by the Purchasers, provided that the
Company will not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such state.
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<PAGE> 9
(4) During the period of five years hereafter, the Company will furnish
to CSFBC and, upon request, to each of the other Purchasers, as soon as
practicable after the end of each fiscal year, a copy of its annual report to
stockholders for such year; and the Company will furnish to CSFBC and, upon
request, to each of the other Purchasers (i) as soon as available, a copy of
each report or financial statement furnished to or filed with the Commission or
any securities exchange on which any class of securities of either of the
Company is listed, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(5) During the period of two years after the Closing Date, the Company
will, upon request, furnish to CSFBC, each of the other Purchasers and any
holder of Offered Securities a copy of the restrictions on transfer applicable
to the Offered Securities.
(6) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Offered Securities that have
been reacquired by any of them.
(7) During the period of two years after the Closing Date, the Company
will not be or become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act.
(8) The Company will pay all expenses incidental to the performance of
its obligations under this Agreement, the Indenture and the Registration Rights
Agreement, including (i) the reasonable fees and expenses of the Trustee and its
professional advisers; (ii) all expenses in connection with the execution,
issue, authentication, packaging and initial delivery of the Offered Securities,
the preparation and printing of this Agreement, the Offered Securities, the
Registration Rights Agreement and the Indenture, the Offering Document and
amendments and supplements thereto, and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities; (iii) the cost of
listing the Offered Securities and qualifying the Offered Securities for trading
in The PortalSM Market ("PORTAL") of The Nasdaq Stock Market, Inc. and any
expenses incidental thereto; (iv) the cost of any advertising approved by the
Company in connection with the issue of the Offered Securities; (v) any
reasonable expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the laws
of such jurisdictions in the United States and Canada as CSFBC designates and
the printing of memoranda relating thereto; (vi) any fees charged by investment
rating agencies for the rating of the Securities; and (vii) any expenses
incurred in distributing preliminary offering circulars and the Offering
Document (including any amendments and supplements thereto) to the Purchasers.
The Company will also pay or reimburse the Purchasers (to the extent incurred by
them) for all reasonable travel expenses of the Purchasers and the Company"s
officers and employees and any other reasonable expenses of the Purchasers and
the Company in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities from the Purchasers.
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<PAGE> 10
(9) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchasers of the completion of the resale of the
Offered Securities, neither the Company nor any of its affiliates has or will,
either alone or with one or more other persons, bid for or purchase for any
account in which it or any of its affiliates has a beneficial interest any
Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither the Company nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading in, or
of raising the price of, the Offered Securities.
6. Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company and
the Subsidiary of their obligations hereunder and to the following additional
conditions precedent:
(1) The Purchasers shall have received a letter, dated the date of this
Agreement, of Arthur Andersen LLP confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and to the
effect that:
(i) in their opinion the financial statements examined by them and
included in the Offering Document and in the Exchange Act Reports comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act and the related published Rules and
Regulations; and
(ii) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Offering Document and the Exchange Act Reports (in each
case to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting records of
the Company and its subsidiaries subject to the internal controls of the
Company"s accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts, percentages
and other financial information to be in agreement with such results,
except as otherwise specified in such letter.
(2) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) a change in U.S. or international financial,
political or economic conditions or currency exchange rates or exchange controls
as would, in the judgment of CSFBC, be likely to prejudice materially the
success of the proposed issue, sale or distribution of the Offered Securities,
whether in the primary market or in respect of dealings in the secondary market,
or (ii) (A) any change, or any development or event involving a prospective
change, in the condition (financial or other), business, properties or results
of operations of the Company which, in the
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<PAGE> 11
judgment of a majority in interest of the Purchasers including CSFBC, is
material and adverse and makes it impractical or inadvisable to proceed with
completion of the offering or the sale of and payment for the Offered
Securities; (B) any downgrading in the rating of any debt securities of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act), or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (C) any suspension or limitation of trading in
securities generally on the New York Stock Exchange of the Company; (D) any
banking moratorium declared by U.S. Federal or New York authorities; or (E) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity or emergency if, in the judgment of a majority in
interest of the Purchasers including CSFBC, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and payment
for the Offered Securities.
(3) The Purchasers shall have received an opinion, dated the Closing
Date, of Gardere Wynne Sewell & Riggs L.L.P., counsel for the Company, and
Leighton E. Moss, Esq., General Counsel of the Company to the collective effect
that:
(1) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Offering Document; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification;
(2) Each of the Subsidiaries has been duly incorporated or formed
and is an existing corporation or limited liability entity in good standing
under the laws of the jurisdiction of its incorporation or formation, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Offering Document; and each of the
Subsidiaries is duly qualified to do business as a foreign corporation or
entity in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock or member
interests of each Subsidiary has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock or member
interests of each Subsidiary is owned directly or indirectly by the Company
free from any liens, encumbrances and defects.
(3) The Indenture has been duly authorized; the Offered Securities
have been duly authorized; and when the Offered Securities have been
executed and authenticated in accordance with the terms of the Indenture
and have been delivered and paid for pursuant to this Agreement on the
Closing Date, the Indenture will have been duly executed and delivered,
such Offered Securities will have been duly executed, issued and
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<PAGE> 12
delivered and will conform to the description thereof contained in the
Offering Document and the Indenture and such Offered Securities will
constitute valid and legally binding obligations of the Company, as the
case may be, enforceable against the Company in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors" rights and to general equity
principles.
(4) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus will not be, an "investment company" as
defined in the Investment Company Act.
(5) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement in connection with the issuance or sale of
the Offered Securities by the Company, or for the execution, delivery and
performance of the Indenture, except such as may be required under state
securities laws and except for such filings with the Commission as are
required in connection with the Registration Rights Agreement;
(6) The execution, delivery and performance of the Indenture, this
Agreement and the Registration Rights Agreement and the issuance and sale
of the Offered Securities and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over the Company or any of its properties, or any agreement or
instrument to which the Company is a party or by which the Company is bound
or to which any of the properties of the Company is subject, or the
charter, other organizational documents or by-laws of the Company; and the
Company has full corporate power and authority to authorize, issue and sell
the Offered Securities as contemplated by this Agreement;
(7) Such counsel have no reason to believe that the Offering
Document, or any amendment or supplement thereto, or any Exchange Act
Report, as of the date hereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading; the descriptions
in the Offering Document of statutes, legal and governmental proceedings
and contracts and other documents are accurate and fairly present the
information; it being understood that such counsel need express no opinion
as to the financial statements or other financial data contained in the
Offering Document and the Exchange Act Reports;
(8) Each of this Agreement and the Registration Rights Agreement has
been duly authorized, executed and delivered by the Company; and
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(9) It is not necessary in connection with (A) the offer, sale
and delivery of the Offered Securities by the Company to the several
Purchasers pursuant to this Agreement or (B) the resales of the Offered
Securities by the several Purchasers in the manner contemplated by this
Agreement, to register the Offered Securities under the Securities Act or
to qualify an indenture in respect thereof under the Trust Indenture Act.
(4) The Purchasers shall have received from Andrews & Kurth
L.L.P., counsel for the Purchasers, such opinion, dated the Closing Date,
with respect to the formation of the Company, the validity of the Offered
Securities, the Offering Document, the exemption from registration for the
offer and sale of the Offered Securities by the Company to the several
Purchasers and the resales by the several Purchasers as contemplated hereby
and other related matters as CSFBC may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(5) The Purchasers shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and that, subsequent to the date of the
most recent financial statements in the Offering Document there has been no
material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, except as set forth in or contemplated by
the Offering Document or as described in such certificate.
(6) The Purchasers shall have received a letter, dated the
Closing Date, of Arthur Andersen LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to the Closing Date for the purposes of this subsection.
(7) The Offered Securities shall have been made eligible for
trading in PORTAL.
The Company will furnish the Purchasers with such conformed copies
of such opinions, certificates, letters and documents as the Purchasers
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Purchasers compliance with any conditions to the obligations of the
Purchasers hereunder, whether in respect of the Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Purchaser against any losses, claims,
damages or liabilities, joint
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or several, to which such Purchaser may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any breach of any of the representations and warranties
of the Company contained herein or any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering
circular, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse each Purchaser for any legal or
other expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through CSFBC
specifically for use therein, it being understood and agreed that the only
such information consists of the information described as such in
subsection (b) below.
(1) Each Purchaser will severally and not jointly indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Securities
Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser through CSFBC specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Purchaser consists of the following information in the Offering Document
furnished on behalf of each Purchaser: the last paragraph at the bottom of
the cover page concerning the terms of the offering by the Purchasers, the
legend concerning over-allotments and stabilizing on the inside front cover
page, and, under the caption "Plan of Distribution," the third sentence of
paragraph two, the third sentence of paragraph six, and paragraphs seven
and eight.
(2) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in
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respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent will not be
unreasonably withheld), effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.
(3) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Purchasers on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and the Purchasers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Purchasers 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
Purchasers from the Company under this Agreement. 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 or the Purchasers and the parties" relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other
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<PAGE> 16
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Offered Securities purchased
by it were resold exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers"
obligations in this subsection (d) to contribute are several in proportion
to their respective purchase obligations and not joint. (1)
(4) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Purchasers under this Section
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act.
8. Default of Purchasers. If any Purchaser or Purchasers default
in their obligations to purchase Offered Securities hereunder and the
aggregate amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, CSFBC may make arrangements
satisfactory to the Company for the purchase of such Offered Securities by
other persons, including any of the Purchasers, but if no such arrangements
are made by such Closing Date, the non-defaulting Purchasers shall be
obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting
Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so
default and the aggregate principal amount of Offered Securities with
respect to which such default or defaults occur exceeds 10% of the total
principal amount of Offered Securities and arrangements satisfactory to
CSFBC and the Company for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting
Purchaser or the Company, except as provided in Section 9. As used in this
Agreement, the term "Purchaser" includes any person substituted for a
Purchaser under this Section. Nothing herein will relieve a defaulting
Purchaser from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Purchasers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Purchaser and the Company or any of
their respective officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Section 8
16
<PAGE> 17
or if for any reason the purchase of the Offered Securities by the
Purchasers is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the
respective obligations of the Company and the Purchasers pursuant to
Section 7 shall remain in effect. If the purchase of the Offered Securities
by the Purchasers is not consummated for any reason other than solely
because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (C), (D) or (E) of Section
6(b)(ii), the Company will reimburse the Purchasers for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred
by them in connection with the offering of the Offered Securities. If this
Agreement is terminated as provided in the second and third sentences of
this Section 9 or the purchase of the Offered Securities is not
consummated, the Company"s sole liability shall be as provided for in this
Section 9. 1.
10. Notices. All communications hereunder will be in writing and,
if sent to the Purchasers will be mailed, delivered or telegraphed and
confirmed to the Purchasers c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment
Banking Department"Transactions Advisory Group, or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at R&B Falcon
Corporation, 901 Threadneedle, Suite 200, Houston, Texas 77079, Attention:
Leighton E. Moss, Co-Counsel; provided, however, that any notice to a
Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed
and confirmed to such Purchaser.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7 and no other person will have
any right or obligation hereunder, except that holders of Offered
Securities shall be entitled to enforce the agreements for their benefit
contained in the second and third sentences of Section 5(b) hereof against
the Company as if such holders were parties thereto.
12. Representation of Purchasers. You will act for the several
Purchasers in connection with this purchase, and any action under this
Agreement taken by you jointly or by CSFBC will be binding upon all the
Purchasers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New
York in any suit or
17
<PAGE> 18
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Purchasers" understanding
of our agreement, kindly sign and return to us one of the counterparts
hereof, whereupon it will become a binding agreement among the Company and
the several Purchasers in accordance with its terms.
Very truly yours,
R&B FALCON CORPORATION
By /s/ LEIGHTON MOSS
---------------------------
Name: Leighton Moss
Title: Vice President
The foregoing Purchase Agreement is hereby
confirmed and accepted as of the date first
above written.
Acting on behalf of itself and as the
Representative of the several Purchasers
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
By CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ ROBERT A. HANSEN
--------------------------------------
Name: Robert A. Hansen
Title: Director
18
<PAGE> 19
SCHEDULE A
<TABLE>
<CAPTION>
PURCHASER PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
- --------------------------------------------- AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
5-YEAR NOTES 7-YEAR NOTES 10-YEAR NOTES 20-YEAR NOTES
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston Corporation ...... $125,000,000 $175,000,000 $125,000,000 $125,000,000
Chase Securities ............................ 41,700,000 58,380,000 41,700,000 41,700,000
Donaldson, Lufkin & Jenrette
Securities Corporation .................. 41,650,000 58,310,000 41,650,000 41,650,000
Morgan Stanley & Co., Incorporated .......... 41,650,000 58,310,000 41,650,000 41,650,000
------------ ------------ ------------ ------------
Total ................................ $250,000,000 $350,000,000 $250,000,000 $250,000,000
============ ============ ============ ============
</TABLE>
19
<PAGE> 20
SCHEDULE B
R&B Falcon (International Deepwater) Inc.
R&B Falcon (Drilling U.S.), Inc.
Reading & Bates Drilling Co.
Arcade Drilling A.S.
R&B Falcon Inland, Inc.
Falrig Offshore, Inc.
20
<PAGE> 1
EXHIBIT 10.2
[CHASE LOGO]
$500,000,000
CREDIT AGREEMENT
dated as of
April 24, 1998
among
R&B FALCON CORPORATION
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
CHASE SECURITIES INC.,
CREDIT SUISSE FIRST BOSTON,
BANQUE PARIBAS and
CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH
as Co-Arrangers
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Classification of Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.03. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.04. Accounting Terms; GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.03. Requests for Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.04. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.05. Funding of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.06. Interest Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.07. Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.08. Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.09. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.10. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.11. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.12. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.13. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.14. Break Funding Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . . . . . . . . . . . . . . . . . 24
SECTION 2.17. Mitigation Obligations; Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.02. Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.04. Financial Condition; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.07. Compliance with Laws and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.08. Investment and Holding Company Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.02. Each Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.01. Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.03. Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.04. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.05. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.06. Books and Records; Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.08. Use of Proceeds and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.09 Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10 L/C Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.03. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions . . . . . . . . . . . . . . . . . . 34
SECTION 6.05. Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.07. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.08. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.09 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.10 EBITDA Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.11 Sale of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.12 Amendments to Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII The Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.02. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.03. Expenses; Indemnity; Damage Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.05. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.06. Counterparts; Integration; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.07. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.08. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process . . . . . . . . . . . . . . . . . 45
SECTION 9.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.08 -- Existing Restrictions
-ii-
<PAGE> 4
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Note
-iii-
<PAGE> 5
CREDIT AGREEMENT dated as of April 24, 1998, among R&B FALCON
CORPORATION, the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Agreement" means this Credit Agreement as the same may from
time to time be amended or supplemented.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day or (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective from and including the effective date
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment.
If the Commitments have terminated or expired, the Applicable Percentages shall
be determined based upon the Commitments most recently in effect, giving effect
to any assignments.
"Applicable Rate" means, for any day, with respect to any ABR
Loan, Eurodollar Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "ABR Spread", "Eurodollar Spread" or "Facility Fee Rate", as
the case may be, based upon the ratings by Moody's and S&P, respectively,
applicable on such date to the Index Debt:
<PAGE> 6
<TABLE>
<CAPTION>
===========================================================================================
ABR Eurodollar Facility Fee
--- ---------- ------------
Index Debt Ratings: Spread Spread Rate
- ------------------ ------ ------ ----
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1 0.0 0.200 0.175
----------
- -------------------------------------------------------------------------------------------
Category 2 0.0 0.300 0.200
----------
- -------------------------------------------------------------------------------------------
Category 3 0.0 0.400 0.225
----------
- -------------------------------------------------------------------------------------------
Category 4 0.0 0.500 0.250
----------
- -------------------------------------------------------------------------------------------
Category 5 0.0 0.750 0.250
----------
===========================================================================================
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P
shall not have in effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a rating in Category 5;
(ii) if the ratings established or deemed to have been established by Moody's
and S&P for the Index Debt shall fall within different Categories, the
Applicable Rate shall be based on the lower of the two ratings; and (iii) if
the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
"Category 1" means BBB+ or higher by S&P and Baa1 or higher by
Moody's.
"Category 2" means BBB by S&P and Baa2 by Moody's.
"Category 3" means BBB- by S&P and Baa3 by Moody's.
"Category 4" means BB+ by S&P and Ba1 by Moody's.
"Category 5" means BB or lower by S&P and Ba2 or lower by
Moody's.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative
Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
-2-
<PAGE> 7
"Bonds" means the Senior Unsecured Notes issued pursuant to
the Indenture.
"Borrower" means R&B Falcon Corporation, a Delaware
corporation.
"Borrowing" means Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
of shares representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the
board of directors of the Borrower nor (ii) appointed by directors so
nominated; or (c) the acquisition of direct or indirect Control of the Borrower
by any Person or group.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.13(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Co-Arranger" means any of Chase Securities Inc., Credit
Suisse First Boston Corporation, Banque Paribas, and Christiania Bank.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount that such Lender's Revolving Credit Exposure could be
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment
and Acceptance pursuant to which such Lender shall have assumed its Commitment,
as applicable. The initial aggregate amount of the Lenders' Commitments is
$500,000,000.
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<PAGE> 8
"Consolidated Net Income" shall mean with respect to the
Borrower and its Consolidated Subsidiaries, for any period, the aggregate of
the net income (or loss) of the Borrower and its Consolidated Subsidiaries
after allowances for taxes for such period, determined on a consolidated basis
in accordance with GAAP; provided that there shall be excluded from such net
income (to the extent otherwise included therein) the following: (i) the net
income of any Person in which the Borrower or any Consolidated Subsidiary has
an interest (which interest does not cause the net income of such other Person
to be consolidated with the net income of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any
extraordinary gains, including gains attributable to property sales not in the
ordinary course of business; and (v) the cumulative effect of a change in
accounting principles and any gains or losses attributable to writeups or
writedowns of assets; and further provided that there shall be added to such
net income (to the extent otherwise deducted therefrom) any extraordinary
losses.
"Consolidated Subsidiaries" shall mean each Subsidiary of the
Borrower (whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Borrower in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Deepwater Pathfinder" means the drillship being constructed
for a joint venture on the date of this Agreement in which the Borrower
indirectly owns a 50% interest.
"Deepwater Frontier" means the drillship being constructed for
a joint venture on the date of this Agreement in which the Borrower indirectly
owns a 60% interest.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States
of America.
"Drillship III" means the drillship being constructed for a
wholly-owned subsidiary on the date of this Agreement.
"EBITDA" shall mean, for any period, the sum of Consolidated
Net Income for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
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"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any
Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.17(b) unless such assignee so agrees in writing),
any
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<PAGE> 10
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender's failure to
comply with Section 2.15(e), except to the extent that such Foreign Lender (or
its assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 2.15(a).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
"Financing Documents" shall mean this Agreement, together with
any other note, document, instrument or agreement (other than participation,
agency or similar agreements among the Lenders or between any Lender and any
other bank or creditor with respect to any indebtedness or obligations of the
Borrower hereunder) now or hereafter entered into in connection with the Loans
or the Indebtedness incurred hereunder, as such documents, instruments or
agreements may be amended, modified or supplemented from time to time.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Funded Debt" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
Capital Lease Obligations of such Person, (d) all Hedging Obligations of such
Person, (e) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (f) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances and (g) all obligations, contingent or otherwise, of such Person
guaranteeing, indemnifying or having the economic effect of guaranteeing any of
the above described Funded Debt of another Person. The Funded Debt of any
Person shall include the Funded Debt of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person's ownership interest in or
other relationship with such entity, except to the extent the terms of such
Funded Debt provide that such Person is not liable therefor. Funded Debt shall
expressly exclude Permitted Project Debt.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including,
without
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<PAGE> 11
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement.
"Hedging Obligations" of any person means the net obligation
(not the notional amount) of such Person pursuant to any Hedging Agreement.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all Synthetic Lease Obligations of such Person, (j) all Hedging Obligations of
such Persons, (k) all obligations, contingent or otherwise, of such Person as
an account party in respect of letters of credit and letters of guaranty and
(j) all obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indenture" shall mean the Indenture dated April __, 1998,
between the Borrower, as Issuer, and Chase Bank of Texas, National Association,
as Trustee, providing for the issuance of
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<PAGE> 12
$1,100,000,000 of Senior Unsecured Notes and all renewals, extensions and
modifications permitted by the terms of this Agreement.
"Index Debt" means senior, unsecured, long-term indebtedness
for borrowed money of the Borrower that is not guaranteed by any other Person
or subject to any other credit enhancement.
"Information Memorandum" means the Confidential Information
Memorandum dated March, 1998, relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the last day of each March, June, September and December, and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two, three
or, as available, six months thereafter, as the Borrower may elect; provided,
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity
as the issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.04(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank
pursuant to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. The LC Exposure of any Lender at
any time shall be its Applicable Percentage of the total LC Exposure at such
time.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment
and Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant
to this Agreement.
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"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole or (b) the
ability of the Borrower to perform any of its obligations under this Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $10,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the
Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Maturity Date" means April 24, 2002 or such later date as
such date may be extended pursuant to Section 2.07(d).
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
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"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, maritime and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary; and
(g) any interest or title of a lessor or charterer under any
lease or charter between the Borrower and any Subsidiary or between any of its
Subsidiaries or as otherwise permitted hereunder;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in clause
(c) above.
"Permitted Project Debt" means Indebtedness (including,
without limitation or duplication, the Guarantee of any such Indebtedness by
the Borrower) incurred in connection with the construction of Deepwater
Pathfinder, Deepwater Frontier and Drillship III by the respective joint
venture or Subsidiary
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<PAGE> 15
owning such vessel not to exceed $375,000,000 in the aggregate and all
extensions, renewals and replacements of any such Indebtedness by the primary
obligor thereof that do not increase the outstanding principal amount thereof.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.
"Prior Indebtedness" means the Funded Debt of the Borrower on
the date of this Agreement, excluding the Indebtedness created under this
Agreement and the Indebtedness evidenced by the Bonds.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having
Revolving Credit Exposures and unused Commitments representing at least 51% of
the sum of the total Revolving Credit Exposures and unused Commitments at such
time.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Borrower or any option, warrant or other right to acquire any such shares
of capital stock of the Borrower.
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the sum of the outstanding principal amount of such Lender's
Revolving Loans and its LC Exposure at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject with respect to the Adjusted LIBO Rate, for Eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time
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<PAGE> 16
to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Synthetic Lease Obligations" of any Person means the
aggregate obligations of such Person under each lease or a guaranty of such
lease which requires such Person to make payments of rent or other amounts over
the term of such lease, including payments at termination, which are more than
seventy percent (70%) but less than ninety percent (90%) of the purchase price
of the Property subject to such lease but excluding interest at an imputed rate
of interest.
"Tangible Net Worth" means without duplication in accordance
with GAAP the sum of (i) the total amount of capital stock of the Borrower,
(ii) preferred stock, (iii) paid-in capital, and (iv) retained earnings minus
the sum of (i) patents, patent applications, trademarks, service marks,
copyrights, and trade names and (ii) goodwill and all other intangibles.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Transactions" means the execution, delivery and performance
by the Borrower of this Agreement and the other Financing Documents, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g., a "Eurodollar Loan"). Borrowings also may be classified and referred to
by Type (e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed
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as referring to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any restrictions
on such amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e)
the words "asset" and "property" shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Revolving Loans to the
Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment or (b) the sum of the total
Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Commitments. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan in accordance with this Agreement; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000 At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000; provided
that an ABR Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.04(e).
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Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of nine (9) Eurodollar
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a
Borrowing, the Borrower shall notify the Administrative Agent of such request
by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00
a.m., New York City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00 a.m.,
New York City time, on the Business Day of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Letters of Credit. (a) General. Subject to
the terms and conditions set forth herein, the Borrower may request the
issuance of Letters of Credit for its own account, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension
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(which shall be a Business Day), the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) of this Section), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on the Issuing Bank's standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall
be issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii)
the total Revolving Credit Exposures shall not exceed the total Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at
or prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit
(or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or
reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt; provided that, if such LC Disbursement is not less than $5,000,000 the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with an ABR
Borrowing in an equivalent amount and, to the extent so financed, the
Borrower's obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of
such notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such
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payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans as contemplated
above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of
any Letter of Credit or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Bank
shall promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.11(c) shall apply.
Interest
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accrued pursuant to this paragraph shall be for the account of the Issuing
Bank, except that interest accrued on and after the date of payment by any
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.
The Administrative Agent shall notify the Lenders of any such replacement of
the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.10(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the
term "Issuing Bank" shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit issued by it prior to such replacement, but
shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrower receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Lenders with LC Exposure representing at least
51% of the total LC Exposure) demanding the deposit of cash collateral pursuant
to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default with respect to
the Borrower described in clause (h) or (i) of Article VII. Such deposit shall
be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the
Borrower's risk and expense, such deposits shall not bear interest. Interest
or profits, if any, on such investments shall accumulate in such account.
Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of Lenders with LC Exposure representing at least
51% of the total LC Exposure), be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request; provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
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(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
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(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Borrowing is repaid
as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid,
each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a)
Unless previously terminated, the Commitments shall terminate on the Maturity
Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $10,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.09, the sum of the Revolving Credit Exposures would exceed the total
Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
(d) The Borrower may request up to three (3) one-year
extensions of the Maturity Date by requesting such extension in writing and
delivering such request to the Administrative Agent and the Lenders not sooner
than 120 days nor later than 60 days before each yearly anniversary of the date
of this Agreement, commencing with the first such anniversary date occurring in
the year 2001. To be effective, all of the Lenders must consent to such
extension by not later than 30 days after receipt of such extension request,
which consent may be withheld in each Lender's sole discretion. If any Lender
has not responded to such request in writing within 30 days after receipt of
the written request of the Borrower, such failure shall be deemed a denial of
said request.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving
Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
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(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns)
and in a form substantially in accordance with Exhibit C. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to prior notice in accordance with paragraph (b) of
this Section.
(b) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Borrowing, not later than 10:00 a.m., New York
City time, on the date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.07. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type
as provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11.
Prepayments of Eurodollar Borrowings are subject to Section 2.14 for break
funding payments.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Rate on the daily amount of the Commitment of such
Lender (whether used or unused) during the period from and including the date
of this Agreement to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Revolving
Credit Exposure after its Commitment terminates, then such facility fee shall
continue to accrue on the daily amount of such Lender's Revolving Credit
Exposure from and including the date on which its Commitment terminates to but
excluding the date on which such Lender ceases to have any Revolving Credit
Exposure. Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the
date hereof; provided that any facility fees accruing after the date on which
the Commitments terminate shall be payable on demand. All facility fees shall
be
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computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative
Agent for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure; provided that the participation fee with respect to all Lenders for
any Letter of Credit shall not be less than $500, and (ii) to the Issuing Bank
a fronting fee, which shall accrue at the rate of 1/8 of 1% per annum on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through
and including the last day of March, June, September and December of each year
shall be payable on the third Business Day following such last day, commencing
on the first such date to occur after the Effective Date; provided that all
such fees shall be payable on the date on which the Commitments terminate and
any such fees accruing after the date on which the Commitments terminate shall
be payable on demand. Any other fees payable to the Issuing Bank pursuant to
this paragraph shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of facility fees and participation fees, to the Lenders. Fees paid shall not
be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in
the preceding paragraphs of this Section or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a)
of this Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, upon termination of the
Commitments; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior
to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment
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<PAGE> 26
or prepayment and (iii) in the event of any conversion of any Eurodollar
Revolving Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate
or the LIBO Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing; provided that if the circumstances
giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted.
SECTION 2.13. Increased Costs. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing
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Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or
the Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender
or the Issuing Bank or such Lender's or the Issuing Bank's holding company for
any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
the Issuing Bank's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a)
the payment of any principal of any Eurodollar Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.09(b) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.17, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all
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<PAGE> 28
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs. (a) The Borrower shall make each payment required to be made by
it hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue,
New York, New York, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due
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hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal and unreimbursed LC Disbursements then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off
or counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and participations in LC Disbursements
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Revolving Loans and participations in LC Disbursements; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than
to the Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(d) or (e), 2.05(b) or 2.16(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.13, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts
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payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, the Issuing Bank), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The
Transactions are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action.
This Agreement has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Borrower or any of its Subsidiaries or
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<PAGE> 31
its assets, or give rise to a right thereunder to require any payment to be
made by the Borrower or any of its Subsidiaries, and (d) will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal year ended December 31, 1997, reported on
by Arthur Andersen LLP, independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP.
(b) Since December 31, 1997, there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.06. Litigation and Environmental Matters. (a)
There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of
the Borrower and its Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property and
all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.
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<PAGE> 32
SECTION 3.08. Investment and Holding Company Status. Neither
the Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $5,000,000 the fair market value
of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts,
exceed by more than $10,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject, and all other matters known to
it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. Neither the Information Memorandum nor
any of the other reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make Loans and of the Issuing Bank to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and
dated the Effective Date) of Leighton E. Moss or
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Wayne K. Hillin, counsel for the Borrower, substantially in the form of Exhibit
B, and covering such other matters relating to the Borrower, this Agreement or
the Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
the Borrower, the authorization of the Transactions and any other legal matters
relating to the Borrower, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a Vice
President or a Financial Officer of the Borrower, confirming compliance with
the conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
(f) The Bonds shall have been or shall be concurrently issued
in an amount of one billion one hundred million dollars ($1,100,000,000). All
Prior Indebtedness, except for the Prior Indebtedness set forth on Schedule
6.01, shall be concurrently refinanced with the proceeds of the initial Loans
and the Bonds and releases of the Liens securing the Prior Indebtedness shall
have been executed by the appropriate Persons and delivered to the
Administrative Agent.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on May
31, 1998 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each
Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set
forth in this Agreement shall be true and correct on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter
of Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
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<PAGE> 34
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by independent public accountants of
recognized national standing (without a "going concern" or like qualification
or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.09, 6.10 and 6.11 and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed
by the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be;
(f) as soon as available and in any event within 60 days
after the end of the first three fiscal quarters of the Borrower and within 90
days after the end of the fourth fiscal quarter, a report (in form
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<PAGE> 35
satisfactory to the Administrative Agent) detailing (i)(A) the then current
location of each of the offshore drilling rigs owned or leased by the Borrower
and its Subsidiaries, (B) the then current term of and parties to any contract
of any such offshore drilling rig, and (C) the then current day rate with
respect to any such contract and (ii) for the previous fiscal quarter, the
average day rates and utilization for each such offshore drilling rig;
(g) not more than 60 days after the commencement of each
fiscal year of the Borrower, a forecast which includes an income statement,
balance sheet and cash flow statement of the Borrower and its Subsidiaries for
each of the four fiscal quarters of such fiscal year, including, a breakdown of
revenues, operating expenses, utilizations and consolidated capital expenditure
assumptions for each offshore drilling rig owned or leased by the Borrower and
its Subsidiaries; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of
the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Borrower or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $10,000,000;
(d) any notices sent to the holders of the Bonds or to the
trustee under the Indenture, including without limitation, any notice of a
default under the Indenture; and
(e) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and
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<PAGE> 36
(c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The
Borrower will, and will cause each of its Subsidiaries to, (a) keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in
the same or similar businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. The
proceeds of the Loans will be used only for working capital and general
corporate requirements of the Borrower and its Subsidiaries. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any law, rule or regulation of any
Governmental Authority, including the Regulations of the Board, including
Regulations G, U and X. Letters of Credit will be issued only to support the
general corporate requirements of the Borrower and its Subsidiaries.
SECTION 5.09 Subsidiary Guarantee. If any Subsidiary is
required to Guarantee any Indebtedness other than the existing Guarantees
described in Schedule 6.01, the Borrower shall promptly cause such Subsidiary
to execute a guaranty agreement guaranteeing the Indebtedness under this
Agreement for the benefit of the Lenders in form and substance satisfactory to
the Administrative Agent; provided that the Borrower shall cause the Guarantees
described as items 17, 18, 19 and 20 on Schedule 6.01 to be released or
Guarantees of the Borrower to be substituted for such Guarantees on or before
June 30, 1998.
SECTION 5.10 L/C Facility. The Borrower shall cause the
letter of credit facility described as item 11 on Schedule 6.01 to be
transferred to the Borrower and all Subsidiaries released from any obligation
thereunder on or before June 30, 1998.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that:
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<PAGE> 37
SECTION 6.01. Indebtedness. The Borrower will not, and will
not permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(d) Permitted Project Debt: and
(e) other Indebtedness in an aggregate principal amount not
exceeding $30,000,000 at any time outstanding; provided that the aggregate
principal amount of Indebtedness of the Borrower's Subsidiaries permitted by
this clause (d) shall not exceed $5,000,000 at any time outstanding.
SECTION 6.02. Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(c) any Lien on the Deepwater Pathfinder, Deepwater Frontier,
and Drillship III and on the equity of the entity that owns such vessel to
secure the respective Permitted Project Debt incurred to construct such vessel;
and
(d) Liens on fixed or capital assets acquired, leased,
constructed or improved by the Borrower or any Subsidiary; provided that (i)
such security interests secure Indebtedness permitted by clause (e) of Section
6.01 but the aggregate principal amount of such Indebtedness secured shall not
exceed $20,000,000 at any time outstanding, (ii) such security interests and
the Indebtedness secured thereby are incurred prior to or within 90 days after
such acquisition or lease or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary.
SECTION 6.03. Fundamental Changes. (a) The Borrower will
not, and will not permit any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) all or substantially all of its assets, or any of the
stock of or voting rights with respect to any of its Subsidiaries (in each
case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing (i) any Subsidiary may merge
into the Borrower in a transaction in which the Borrower is the
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<PAGE> 38
surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a
transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary
may sell, transfer, lease or otherwise dispose of its assets to the Borrower or
to another Subsidiary, (iv) any Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in
the best interests of the Borrower and is not materially disadvantageous to the
Lenders; provided that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger shall not be permitted and
(v) the Borrower may merge with another Person if (A) the Borrower is the
successor or survivor of such merger transaction and (B) Moody's and S&P shall
have affirmed in writing that such transaction will not impair the Borrower's
implied senior debt rating as such debt rating is in effect immediately prior
to the announcement of such merger transaction.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Borrower or by any Subsidiary in the
capital stock of its Subsidiaries;
(c) loans or advances made by the Borrower to any Subsidiary
and made by any Subsidiary to the Borrower or any other Subsidiary; and
(d) investments by the Borrower and/or any Subsidiary, in the
aggregate not to exceed 10% of the Borrower's consolidated Tangible Net Worth.
SECTION 6.05. Hedging Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business
to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed
in the conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not,
and will not permit any of its Subsidiaries to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except (a) the
Borrower may declare and pay dividends with respect to its capital stock
payable solely in additional shares of its common stock, (b) Subsidiaries may
declare and pay dividends ratably with respect to their capital stock and (c)
the Borrower may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of the
Borrower and its Subsidiaries.
SECTION 6.07. Transactions with Affiliates. The Borrower
will not, and will not permit any of its Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less
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<PAGE> 39
favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and its wholly-owned Subsidiaries not involving any other
Affiliate and (c) any Restricted Payment permitted by Section 6.06.
SECTION 6.08. Restrictive Agreements. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof and contained
in the Indenture or identified on Schedule 6.08 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and
other contracts restricting the assignment thereof.
SECTION 6.09 Tangible Net Worth. The Borrower will not
permit at any time its Tangible Net Worth to be less than $600,000,000 plus (i)
50% of its cumulative Consolidated Net Income, if positive, for the period from
April 1, 1998 through the date of calculation, plus (ii) 100% of any equity
issued by the Borrower after the date of this Agreement.
SECTION 6.10 EBITDA Leverage Ratio. The Borrower will not
permit its EBITDA Leverage Ratio as of the end of any fiscal quarter of the
Borrower (calculated quarterly at the end of each fiscal quarter) to be greater
than the amount set forth in the table below on the applicable date. For the
purposes of this Section 6.10, "EBITDA Leverage Ratio" shall mean the ratio of
(i) difference of Funded Debt minus cash and cash equivalents of the Borrower
on a consolidated basis to (i) EBITDA for the four fiscal quarters ending on
such date; provided that (A) EBITDA for the period ending on June 30, 1998
shall equal the product of EBITDA for the six-month period ending on such date
times 2 and (B) EBITDA for the period ending on September 30, 1998 shall equal
the product of EBITDA for the nine-month period ending on such date times 1.33.
<TABLE>
<CAPTION>
------------------------------------------------------
Period EBITDA Leverage Ratio
------------------------------------------------------
<S> <C>
6/30/98 thru 6/30/99 3.00x
------------------------------------------------------
7/1/99 thru 12/31/99 2.50x
------------------------------------------------------
1/1/00 and thereafter 2.00x
------------------------------------------------------
</TABLE>
SECTION 6.11 Sale of Properties. The Borrower will not, and
will not permit any Subsidiary to, sell, assign, convey or otherwise transfer
any properties or assets except for (i) the sale of inventory in the ordinary
course of business; (ii) the sale or transfer of equipment or other property or
assets that is no longer necessary for the business of the Borrower or such
Subsidiary or is replaced by equipment
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<PAGE> 40
or other property or assets of at least comparable value and use and (iii)
sales of properties and assets which shall not exceed $50,000,000 in the
aggregate in any fiscal year.
SECTION 6.12 Amendments to Material Agreements. The Borrower
will not modify or amend the terms of the Indenture as in existence on the date
of this Agreement or any documents described on Schedule 6.12 without the
consent of the Required Lenders, if the effect of such modification or
amendment would be to the material detriment of the Lenders.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in clause (a)
of this Article) payable under this Agreement, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of three (3) Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any amendment or modification hereof or waiver hereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect in
any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the Borrower's existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(taking into account any applicable grace period);
(g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
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conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed; or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to
enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding (i) $10,000,000
in any year or (ii) $20,000,000 for all periods;
(m) a Change in Control shall occur;
(n) the Company or any Subsidiary, individually or in the
aggregate, incurs any uninsured loss or destruction of its property or assets
in one or more occurrence during any 12-month period for which the aggregate
value of the properties and assets lost or destroyed exceeds $50,000,000; or
(o) the material terms of the Financing Documents shall for
any reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable (except as
enforceability may be limited as stated in Section 3.02) in accordance with
their terms;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of
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the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
All proceeds received after maturity of the Indebtedness hereunder,
whether by acceleration or otherwise, shall be applied first to reimbursement
of expenses and indemnities provided for in this Agreement; second to accrued
interest on the Loans; third to fees; fourth pro rata to principal outstanding
on the Loans and other Indebtedness hereunder; fifth to serve as cash
collateral to be held by the Administrative Agent to secure the LC Exposure;
and any excess shall be paid to the Borrower or as otherwise required by any
applicable law, rule, order or regulation of a Governmental Authority.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Subsidiaries that is communicated to or obtained by
the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness
or genuineness of this Agreement or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
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believed by it to be genuine and to have been signed or sent by the proper
Person. The Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. The Administrative Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub- agent may perform any and all its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. Upon the acceptance of its appointment
as Administrative Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or
thereunder. Each Lender acknowledges that Vinson & Elkins L.L.P. is acting in
the Transactions as special counsel to the Administrative Agent only. Each
Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Transactions.
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ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Attention of Chief Financial Officer
Telecopy No.: (281) 496-0285;
(b) if to the Administrative Agent, to:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
Agency Services
New York, New York 10081
Attention: Daniel Fischer or LuAnn DeStefano
Phone No.: (212) 552-7906/(212) 552-7903
Telecopy No.: (212) 552-5777
with copy to:
Chase Bank of Texas, National Association
600 Travis, 20th Floor
Houston, TX 77002-8086
Attention: Mona Foch
Phone No.: (713) 216-5911
Telecopy: (713) 216-4227
(c) if to the Issuing Bank, to:
The Chase Manhattan Bank
55 Water Street, Room 1710
New York, New York 10041
Attention: Tony Bridglal
Phone No.: (212) 638-1834
Telecopy No.: (212) 638-8200 or 8201; and
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(d) if to any other Lender, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay
by the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the
Lenders hereunder are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the
Borrower and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount
of any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) change Section 2.16(b) or
(c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, or (v) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or
waivers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket
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expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent,
the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or the Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to
the Administrative Agent or the Issuing Bank, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of the Issuing Bank that issues any Letter of Credit), except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
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(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a
Lender, each of the Borrower and the Administrative Agent (and, in the case of
an assignment of all or a portion of a Commitment or any Lender's obligations
in respect of its LC Exposure, the Issuing Bank) must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000 (or $2,500,000 when any Co-Arranger
is the assigning Lender, but only until July 31, 1998) unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, (iv) the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire; and provided
further that any consent of the Borrower otherwise required under this
paragraph shall not be required if an Event of Default has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain
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unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects such
Participant. Subject to paragraph (f) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 2.13, 2.14
and 2.15 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.16(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.13 or 2.15 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.15 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. The provisions of Sections
2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
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together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in
the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
-45-
<PAGE> 50
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section, "Information" means all
information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower; provided that, in the case of information
received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
[SIGNATURES BEGIN NEXT PAGE]
-46-
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWER: R&B FALCON CORPORATION
By: /s/ Robert Fulton
---------------------------------------
Name: Robert Fulton
Title: Executive Vice President
ADMINISTRATIVE AGENT THE CHASE MANHATTAN BANK, individually and
AND LENDER: as Administrative Agent,
By: /s/ Peter M. Ling
---------------------------------------
Name: Peter M. Ling
Title: Vice President
SYNDICATION AGENT CREDIT SUISSE FIRST BOSTON
AND LENDER
By: /s/ J. Scott Karro
---------------------------------------
Name: J. Scott Karro
Title: Associate
By: /s/ James P. Moran
---------------------------------------
Name: James P. Moran
Title:
DOCUMENT AGENT BANQUE PARIBAS
AND LENDER:
By: /s/ Brian Malone
---------------------------------------
Name: Brian Malone
Title: Director
By: /s/ Betsy R. Jocher
---------------------------------------
Name: Betsy R. Jocher
Title: Assistant Vice President
S-1
<PAGE> 52
CO-SYNDICATION AGENT CHRISTIANA BANK OG KREDITKASSE ASA,
AND LENDER: NEW YORK BRANCH
By: /s/ William S. Phillips
---------------------------------------
Name: William S. Phillips
Title: Vice President
By: /s/ Petter Svendsen
---------------------------------------
Name: Petter Svendsen
Title: First Vice President
MANAGING AGENT THE BANK OF NOVA SCOTIA
AND LENDER:
By: /s/ F.C.H. Ashby
---------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
MANAGING AGENT BANK OF TOKYO-MITSUBISHI, LTD.
AND LENDER:
By: /s/ Michael G. Meiss
---------------------------------------
Name: Michael G. Meiss
Title: Vice President & Manager
MANAGING AGENT WELLS FARGO BANK (TEXAS), N.A.
AND LENDER:
By: /s/ Frank W. Shageman
---------------------------------------
Name: Frank W. Shageman
Title: Vice President -
Senior Relationship Manager
OTHER LENDERS: BANK AUSTRIA AKTIENGESELLSCHAFT
By: /s/ J. Anthony Seay
---------------------------------------
Name: J. Anthony Seay
Title: First Vice President
By: /s/ Karen L. Jill
---------------------------------------
Name: Karen L. Jill
Title: Assistant Vice President
S-2
<PAGE> 53
CREDIT AGRICOLE INDOSUEZ
By: /s/ Bjorn Hundevendt Gulbrandsen
---------------------------------------
Name: Bjorn Hundevendt Gulbrandsen
Title: Man. Dir.
By:
---------------------------------------
Name:
Title:
FIRST NATIONAL BANK OF COMMERCE
By: /s/ Joseph P. Maxwell
---------------------------------------
Name: Joseph P. Maxwell
Title: Assistant Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ William R. McKnown, III
---------------------------------------
Name: William R. McKnown, III
Title: Vice President and Manager
SKANDINA VISKA ENSKILDA BANKERN (AB (PUBL)
By: /s/ Bjorn Boe
---------------------------------------
Name: Bjorn Boe
Title: Managing Director
By: /s/ Per J. Frolich
---------------------------------------
Name: Per J. Frolich
Title: Head of Administration
S-3
<PAGE> 54
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ Kenneth R. Crespo
---------------------------------------
Name: Kenneth R. Crespo
Title: Vice President
By: /s/ Cynthia M. Niesen
---------------------------------------
Name: Cynthia M. Niesen
Title: Managing Director
ABN AMRO BANK N.V.
By: /s/ W. Bryan Chapman
---------------------------------------
Name: W. Bryan Chapman
Title: Group Vice President
By: /s/ Stuart Murray
---------------------------------------
Name: Stuart Murray
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Claire Lice
---------------------------------------
Name: Claire Lice
Title: Managing Director
S-4
<PAGE> 55
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By: /s/ Mark Connelly
---------------------------------------
Name: Mark Connelly
Title: Vice President
By: /s/ Lynne McCarthy
---------------------------------------
Name: Lynne McCarthy
Title: Asst. Vice President
THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ Masaaki Ishikura
---------------------------------------
Name: Masaaki Ishikura
Title: Vice President
THE FUJI BANK, LIMITED
By: /s/ Nate Ellis
---------------------------------------
Name: Nate Ellis
Title: Vice President and Manager
KREDIETBANK N.V.
By: /s/ Robert Snauffer
---------------------------------------
Name: Robert Snauffer
Title: Vice President
By: /s/ Tod R. Angus
---------------------------------------
Name: Tod R. Angus
Title: Vice President
S-5
<PAGE> 56
NATEXIS BANQUE
By: /s/ John H. Thieroff
---------------------------------------
Name: John H. Thieroff
Title: Vice President
By: /s/ Timothy L. Polvado
---------------------------------------
Name: Timothy L. Polvado
Title: Vice President
S-6
<PAGE> 57
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of April
24, 1998 (as amended and in effect on the date hereof, the "Credit Agreement"),
among R&B Falcon Corporation, the Lenders named therein and The Chase Manhattan
Bank, as Administrative Agent for the Lenders. Terms defined in the Credit
Agreement are used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and
assigns, without recourse, to the Assignee named on the reverse hereof, and the
Assignee hereby purchases and assumes, without recourse, from the Assignor,
effective as of the Assignment Date set forth on the reverse hereof, the
interests set forth on the reverse hereof (the "Assigned Interest") in the
Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Assignment Date and Revolving Loans owing to
the Assignor which are outstanding on the Assignment Date, together with the
participations in Letters of Credit and LC Disbursements held by the Assignor
on the Assignment Date, but excluding accrued interest and fees to and
excluding the Assignment Date. The Assignee hereby acknowledges receipt of a
copy of the Credit Agreement. From and after the Assignment Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
of the Assigned Interest, relinquish its rights and be released from its
obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.15(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The Assignee/Assignor shall pay the fee
payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit
Agreement.
This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
A-1
<PAGE> 58
<TABLE>
<CAPTION>
============================================================================================================
Percentage Assigned of
Facility/Commitment (set
forth, to at least 8 decimals,
Principal Amount Assigned as a percentage of the
Facility and the aggregate
Commitments of all Lenders
thereunder)
-----------
Facility
--------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitment Assigned: $ %
- ------------------------------------------------------------------------------------------------------------
Revolving Loans:
============================================================================================================
</TABLE>
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
---------------------
By:
Name:
Title:
[Name of Assignee] , as Assignee
---------------------
By:
Name:
Title:
A-1
<PAGE> 59
The undersigned hereby consent to the within assignment:(1/)
[Name of Borrower], The Chase Manhattan Bank,
as Administrative Agent,
By: By:
Name: Name:
Title: Title:
The Chase Manhattan Bank,
as Issuing Bank
By:
Name:
Title:
- ----------------
(1/) Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
A-1
<PAGE> 60
EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
[Effective Date]
To the Lenders and the Administrative
Agent Referred to Below
c/o The Chase Manhattan Bank, as
Administrative Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
I have acted as counsel for R&B Falcon Corporation, a Delaware
corporation (the "Borrower"), in connection with the Credit Agreement dated as
of April 24, 1998 (the "Credit Agreement"), among the Borrower, the banks and
other financial institutions identified therein as Lenders, and The Chase
Manhattan Bank, as Administrative Agent. Terms defined in the Credit Agreement
are used herein with the same meanings.
I, or individuals under my direction, have examined originals
or copies, certified or otherwise identified to my satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower (a) is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and (b) has all
requisite power and authority to carry on its business as now conducted.
2. The Transactions are within the Borrower's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. The Credit Agreement has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
3. The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or its assets,
or give rise to a right thereunder to require
B-1
<PAGE> 61
any payment to be made by the Borrower or any of its Subsidiaries, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
4. There are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to [my/our]
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries (a) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect (other than
the Disclosed Matters) or (b) that involve the Credit Agreement or the
Transactions.
5. Neither the Borrower nor any of its Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
I am a member of the bar of the State of Texas and the
foregoing opinion is limited to the laws of the State of Texas, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. I note that the Credit Agreement is governed by the laws of
the State of New York and, for purposes of the opinion expressed in paragraph 2
above, I have assumed that the laws of the State of New York do not differ from
the laws of Texas in any manner that would render such opinion incorrect.](2/)
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by any other Person (other than your successors and assigns as Lenders and
Persons that acquire participations in your Loans) without our prior written
consent.
Very truly yours,
- -------------------------------------
(2/) To be included only when Borrower's counsel cannot give an opinion
regarding New York law.
B-2
<PAGE> 62
EXHIBIT C
FORM OF NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, R&B FALCON CORPORATION, a Delaware corporation
(the "Borrower") hereby promises to pay to the order of
______________________________ (the "Lender"), at the Principal Office of THE
CHASE MANHATTAN BANK (the "Administrative Agent"), at 270 Park Avenue, New
York, New York 10017, the principal sum of _____________ Dollars
($____________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement, as hereinafter defined), in lawful money of the United States
of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on the scheduleS
attached hereto or any continuation thereof or on any separate record
maintained by the Lender.
This Note is one of the notes referred to in Section 2.08(e) of the
Credit Agreement dated as of April 24, 1998 among the Borrower, the Lenders
which are or become parties thereto (including the Lender) and the
Administrative Agent, and evidences Loans made by the Lender thereunder (such
Credit Agreement as the same may be amended or supplemented from time to time,
the "Credit Agreement"). Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled
to the benefits provided for in the Credit Agreement. The Credit Agreement
provides for the acceleration of the maturity of this Note upon the occurrence
of certain events, for prepayments of Loans upon the terms and conditions
specified therein and other provisions relevant to this Note.
This Note (including, but not limited to, the validity and
enforceability hereof) shall be governed by, and construed in accordance with,
the laws of the State of New York.
R&B FALCON CORPORATION
By:
Name:
Title:
C-1
<PAGE> 1
EXHIBIT 12.1
R&B FALCON CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ IN MILLIONS)
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
------------------ -------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- ------- -------- ------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations
before income tax expense, minority
interest and extraordinary gain $113.5 $ 61.0 $250.1 $140.1 $ 32.6 $ (2.8) $ 10.9
Add
Portion of rents representative of the
interest factor 3.4 2.9 12.1 6.8 3.2 5.9 4.9
Interest on indebtedness inclusive of
amortization of deferred financing
charges 13.9 10.1 46.3 43.0 34.6 26.4 17.1
------ ------ ------ ------ ------ ------ ------
Income as adjusted $130.8 $ 74.0 $308.5 $189.9 $ 70.4 $ 29.5 $ 32.9
====== ====== ====== ====== ====== ====== ======
Fixed charges
Interest on indebtedness inclusive of
amortization of deferred financing
charges $ 13.9 $ 10.1 $ 46.3 $ 43.0 $ 34.6 $ 26.4 $ 17.1
Interest capitalized 6.3 3.0 10.8 4.9 0.4 0.6 --
Portion of rents representative of the
interest factor 3.4 2.9 12.1 6.8 3.2 5.9 4.9
------ ------ ------ ------ ------ ------ ------
Fixed charges $ 23.6(a) $ 16.0(a) $ 69.2(a) $ 54.7 $ 38.2 $ 32.9 $ 22.0
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges 5.5 4.6 4.5 3.5 1.8 -(b) 1.5
====== ====== ====== ====== ====== ====== ======
</TABLE>
(a) Fixed charges for the year ended December 31, 1997 and the three months
ended March 31, 1998 and 1997 exclude interest cost of $7.3 million, $4.5
million and $1.2 million, respectively, related to the debt of joint
venture companies guaranteed by R&B.
(b) As a result of the loss incurred in 1994 earnings did not cover fixed
charges by $3.4 million.
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
($ IN MILLIONS)
The following computation reflects on a pro-forma basis, earnings available for
fixed charges and resultant ratio. The computation gives effect to the sale of
the senior notes.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1997 December 31, 1997
------------------ -----------------
<S> <C> <C>
Income as adjusted $ 130.8 $ 308.5
========== ==========
Fixed charges $ 23.6 $ 69.2
Pro forma adjustments
Interest on portion of senior notes that will be used to retire existing debt 15.6 54.4
Amortization of deferred financing charges on portion of senior notes that
will be used to retire existing debt 0.4 1.4
Interest requirements reduction attributable to substitution of proceeds from
the sale of the senior notes offered hereby for the debt that is to be retired (18.4) (64.9)
---------- ----------
Pro-forma fixed charges $ 21.2 $ 60.1
========== ==========
Pro-forma ratio of earnings to fixed charges 6.2 5.1
========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 15.1
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
R&B Falcon Corporation:
We are aware that R&B Falcon Corporation has incorporated by reference in this
registration statement on Form S-4, its Form 10-Q for the quarter ended March
31, 1998, which includes our report dated April 28, 1998 covering the unaudited
interim financial information contained therein. Pursuant to Regulation C of
the Securities Act of 1933, that report is not considered a part of the
registration statement prepared or certified by our firm or a report prepared
or certified by our firm within the meaning of Sections 7 and 11 of the Act.
ARTHUR ANDERSEN LLP
Houston, Texas
June 15, 1998
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated
March 24, 1998 included in R&B Falcon Corporation's Form 10-K for the year
ended December 31, 1997 and to all references to our Firm in this registration
statement.
ARTHUR ANDERSEN LLP
Houston, Texas
June 15, 1998
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
----------------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
74-0800980
(I.R.S. Employer Identification Number)
712 MAIN STREET, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR
HOUSTON, TEXAS 77002 (713) 216-2448
(Name, address and telephone number of agent for service)
R & B FALCON CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 76-0544217
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
901 THREADNEEDLE
HOUSTON, TEXAS 77079
(Address of principal executive offices) (Zip code)
6 1/2% SENIOR NOTES DUE 2003
6 3/4% SENIOR NOTES DUE 2005
6.95% SENIOR NOTES DUE 2008
7-3/8% Senior Notes due 2018
(Title of indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C. Federal Deposit
Insurance Corporation, Washington, D.C. Board of Governors of
the Federal Reserve System, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
The obligor is not an affiliate of the trustee. (See Note on
Page 7.)
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE.
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
-------------- ------------------
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER
WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY
OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING
INFORMATION:
(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER
INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
2
<PAGE> 3
ITEM 4. (CONTINUED)
(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR
THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF
SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE
TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A
STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS
COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER
INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
OBLIGOR OR UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF
THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR
REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY
EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH
CONNECTION.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND
EXECUTIVE OFFICER OF THE OBLIGOR.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
- ------------- -------------- ------------ ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR
THEIR OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
3
<PAGE> 4
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
- ------------- -------------- ------------ ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE
OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN
DEFAULT BY THE TRUSTEE.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
WHETHER THE BENEFICIALLY OR PERCENT OF
SECURITIES HELD AS COLLATERAL CLASS
ARE VOTING SECURITY FOR REPRESENTED BY
OR NONVOTING OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS SECURITIES DEFAULT IN COL. C
- -------------- ---------- ------- ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF
SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
4
<PAGE> 5
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
NAME OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- -------------- ----------- ------------------ ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES
OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH
THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
NAME OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- -------------- ----------- ------------------ ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF
A PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR
SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
5
<PAGE> 6
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
NAME OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- -------------- ----------- ------------------ ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS
INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
<TABLE>
<CAPTION>
COL. A COL. B COL. C
NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
- ------------ ----------- ---------
<S> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO
THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There is not, nor has there been, a default with respect to the
securities under this indenture. (See Note on Page 7.)
6
<PAGE> 7
ITEM 13. (CONTINUED)
(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There has not been a default under any such indenture or series. (See
Note on Page 7.)
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN
TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE
QUALIFIED UNDER THE ACT.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
o 1. A copy of the articles of association of the trustee now
in effect.
# 2. A copy of the certificate of authority of the trustee to
commence business.
* 3. A copy of the certificate of authorization of the trustee
to exercise corporate trust powers issued by the Board of
Governors of the Federal Reserve System under date of January
21, 1948.
+ 4. A copy of the existing bylaws of the trustee.
5. Not applicable.
6. The consent of the United States institutional trustees
required by Section 321(b) of the Act.
n 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not applicable.
9. Not applicable.
NOTE REGARDING INCORPORATED EXHIBITS
Effective January 20, 1998, the name of the Trustee was changed from
Texas Commerce Bank National Association to Chase Bank of Texas, National
Association. The exhibits incorporated herein by reference, except for Exhibit
7, were filed under the former name of the Trustee.
7
<PAGE> 8
o Incorporated by reference to exhibit bearing the same designation and
previously filed with the Securities and Exchange Commission as exhibits to the
Form S-3 File No. 33-56195.
# Incorporated by reference to exhibit bearing the same designation and
previously filed with the Securities and Exchange Commission as exhibits to the
Form S-3 File No. 33-42814.
* Incorporated by reference to exhibit bearing the same designation and
previously filed with the Securities and Exchange Commission as exhibits to the
Form S-11 File No. 33-25132.
+ Incorporated by reference to exhibit bearing the same designation and
previously filed with the Securities and Exchange Commission as exhibits to the
Form S-3 File No. 33-65055.
n Incorporated by reference to exhibit bearing the same designation and
previously filed with the Securities and Exchange Commission as exhibits to the
Form S-3 File No. 333-52197.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Items 2 and 13, the
answers to said Items are based on incomplete information. Such Items may,
however, be considered as correct unless amended by an amendment to this Form
T-1.
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE
TRUSTEE, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, FORMERLY KNOWN AS TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS
STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO AUTHORIZED, ALL IN THE CITY OF HOUSTON, AND STATE OF TEXAS, ON THE
15TH DAY OF JUNE, 1998.
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, AS TRUSTEE
By: /s/ MAURI J. COWEN
--------------------------------
Mauri J. Cowen
Vice President and Trust Officer
<PAGE> 9
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is trustee under an Indenture between R & B Falcon
Corporation, a Delaware corporation (the "Company"), and Chase Bank of Texas,
National Association, as Trustee, entered into in connection with the issuance
of the Company's Senior Notes.
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /s/ MAURI J. COWEN
--------------------------------
Mauri J. Cowen
Vice President and Trust Officer
1
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
R&B FALCON CORPORATION
OFFER TO EXCHANGE
6 1/2% SENIOR NOTES DUE 2003, SERIES B
FOR ALL OUTSTANDING 6 1/2% SENIOR NOTES DUE 2003, SERIES A,
6 3/4% SENIOR NOTES DUE 2005, SERIES B
FOR ALL OUTSTANDING 6 3/4% SENIOR NOTES DUE 2005, SERIES A,
6.95% SENIOR NOTES DUE 2008, SERIES B
FOR ALL OUTSTANDING 6.95% SENIOR NOTES DUE 2008, SERIES A
AND
7 3/8% SENIOR NOTES DUE 2018, SERIES B
FOR ALL OUTSTANDING 7 3/8% SENIOR NOTES DUE 2018, SERIES A
PURSUANT TO THE PROSPECTUS DATED JUNE , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer Is:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Mail, Hand or Overnight Delivery: By Facsimile Transmission:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (For Eligible Institutions Only)
C/O THE CHASE MANHATTAN BANK (212) 638-0454
55 WATER STREET, NORTH BUILDING
ROOM 234, WINDOWS 20 AND 21 Confirm by Telephone:
NEW YORK, NEW YORK 10041 (212) 638-7380
ATTENTION: CARLOS ESTEVES
For Other Inquiries:
MAURI COWEN
(713) 216-6686
</TABLE>
---------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE NUMBER
OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
For purposes of this Letter of Transmittal, the outstanding 6 1/2% Senior
Notes due 2003, Series A, shall be defined as the "5-Private Notes," the
outstanding 6 3/4% Senior Notes due 2005, Series A, shall be defined as the
"7-Year Private Notes," the outstanding 6.95% Senior Notes due 2008, Series A,
shall be defined as the "10-Year Private Notes," the outstanding 7 3/8% Senior
Notes due 2018, Series A, shall be defined as the "20-Year Private Notes," and
the 5-Year Private Notes, 7-Year Private Notes, 10-Year Private Notes and
20-Year Private Notes shall be defined collectively as the "Private Notes." All
other capitalized terms used but not defined herein shall have the same meanings
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders (which term, for
purposes of this Letter of Transmittal, shall include any participant in The
Depository Trust Company ("DTC")) either if (a) certificates are to be forwarded
herewith or (b) tenders are to be made pursuant to the procedures for tender by
book-entry transfer set forth under "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and an Agent's Message (as defined below) is not
delivered. Certificates, or book-entry
1
<PAGE> 2
confirmation of a book-entry transfer of such Private Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or a facsimile
thereof or delivery of an Agent's Message in lieu thereof), properly completed
and duly executed, with any required signature guarantees, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Tenders by book-entry transfer may also be made by delivering an Agent's
Message in lieu of this Letter of Transmittal. The term "book-entry
confirmation" means a timely confirmation of a book-entry transfer of Private
Notes into the Exchange Agent's account at DTC. The term "Agent's Message" means
a message, transmitted by DTC to and received by the Exchange Agent and forming
part of a book-entry confirmation, that states that DTC has received an express
acknowledgment from the tendering participant, which acknowledgment states that
such participant has received and agrees to be bound by this Letter of
Transmittal and that R&B Falcon Corporation may enforce this Letter of
Transmittal against such participant.
Holders of Private Notes whose certificates (the "Certificates") for such
Private Notes are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date or who cannot complete the procedures for book-entry
transfer on or prior to the Expiration Date must tender their Private Notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Procedures for Tendering" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
2
<PAGE> 3
THE UNDERSIGNED HAS COMPLETED THE APPROPRIATE BOXES BELOW AND SIGNED THIS
LETTER OF TRANSMITTAL TO INDICATE THE ACTION THE UNDERSIGNED DESIRES TO TAKE
WITH RESPECT TO THE EXCHANGE OFFER.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 5-YEAR PRIVATE NOTES (CUSIP NO. 74912E AA 9)
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT TENDERED
CERTIFICATE AGGREGATE FOR EXCHANGE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S) PRINCIPAL AMOUNT (MUST BE IN
OF 5-YEAR PRIVATE NOTE(S), EXACTLY AS NAME(S) APPEAR(S) (ATTACH SIGNED LIST REPRESENTED BY INTEGRAL MULTIPLES
ON CERTIFICATE(S) (PLEASE FILL IN, IF BLANK) IF NECESSARY)(1) CERTIFICATE(S) OF $1,000)(2)
- ----------------------------------------------------------------------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
- ----------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 5-YEAR PRIVATE NOTES TENDERED: $ $
- ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the
requested information.
(2) Need not be completed if tendering for exchange all 5-Year Private Notes held. 5-Year Private Notes may be
tendered in whole or in part in integral multiples of $1,000 in aggregate principal amount. All 5-Year Private
Notes held shall be deemed tendered unless a lesser number is specified in this column.
======================================================================================================================
DESCRIPTION OF 7-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 7)
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT TENDERED
CERTIFICATE AGGREGATE FOR EXCHANGE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S) PRINCIPAL AMOUNT (MUST BE IN
OF 7-YEAR PRIVATE NOTE(S), EXACTLY AS NAME(S) APPEAR(S) (ATTACH SIGNED LIST REPRESENTED BY INTEGRAL MULTIPLES
ON CERTIFICATE(S) (PLEASE FILL IN, IF BLANK) IF NECESSARY)(1) CERTIFICATE(S) OF $1,000)(2)
- ----------------------------------------------------------------------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
- ----------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 7-YEAR PRIVATE NOTES TENDERED: $ $
- ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the
requested information.
(2) Need not be completed if tendering for exchange all 7-Year Private Notes held. 7-Year Private Notes may be
tendered in whole or in part in integral multiples of $1,000 in aggregate principal amount. All 7-Year Private
Notes held shall be deemed tendered unless a lesser number is specified in this column.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 10-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 5)
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT TENDERED
CERTIFICATE AGGREGATE FOR EXCHANGE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S) PRINCIPAL AMOUNT (MUST BE IN
OF 10-YEAR PRIVATE NOTE(S), EXACTLY AS NAME(S) APPEAR(S) (ATTACH SIGNED LIST REPRESENTED BY INTEGRAL MULTIPLES
ON CERTIFICATE(S) (PLEASE FILL IN, IF BLANK) IF NECESSARY)(1) CERTIFICATE(S) OF $1,000)(2)
- ----------------------------------------------------------------------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
- ----------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 10-YEAR PRIVATE NOTES TENDERED: $ $
- ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the
requested information.
(2) Need not be completed if tendering for exchange all 10-Year Private Notes held. 10-Year Private Notes may be
tendered in whole or in part in integral multiples of $1,000 in aggregate principal amount. All 10-Year Private
Notes held shall be deemed tendered unless a lesser number is specified in this column.
======================================================================================================================
DESCRIPTION OF 20-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 3)
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT TENDERED
CERTIFICATE AGGREGATE FOR EXCHANGE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S) PRINCIPAL AMOUNT (MUST BE IN
OF 20-YEAR PRIVATE NOTE(S), EXACTLY AS NAME(S) APPEAR(S) (ATTACH SIGNED LIST REPRESENTED BY INTEGRAL MULTIPLES
ON CERTIFICATE(S) (PLEASE FILL IN, IF BLANK) IF NECESSARY)(1) CERTIFICATE(S) OF $1,000)(2)
- ----------------------------------------------------------------------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
------------------------------------------------------
$ $
- ----------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 20-YEAR PRIVATE NOTES TENDERED: $ $
- ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by book-entry holders. Such holders should check the appropriate box below and provide the
requested information.
(2) Need not be completed if tendering for exchange all 20-Year Private Notes held. 20-Year Private Notes may be
tendered in whole or in part in integral multiples of $1,000 in aggregate principal amount. All 20-Year Private
Notes held shall be deemed tendered unless a lesser number is specified in this column.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS
(DEFINED IN INSTRUCTION 1) ONLY)
[ ] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------
DTC Account Number
--------------------------------------------------------
Transaction Code Number
---------------------------------------------------
By crediting the Private Notes to the Exchange Agent's account at DTC in
accordance with DTC's Automated Tender Offer Program ("ATOP") and by complying
with applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the holder of the
Private Notes acknowledges and agrees to be bound by the terms of this Letter of
Transmittal, the participant in ATOP confirms on behalf of itself and the
beneficial owners of such Private Notes all provisions of this Letter of
Transmittal applicable to it and such beneficial owners as fully as if it had
completed the information required herein and executed and transmitted this
Letter of Transmittal to the Exchange Agent.
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder
-------------------------------------------------
Window Ticket Number (if any)
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------
Name of Institution Which Guaranteed Delivery
-----------------------------
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution
---------------------------------------------
DTC Account Number
--------------------------------------------------------
Transaction Code Number
---------------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED PRIVATE
NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE PRIVATE NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name
----------------------------------------------------------------------
Address
-------------------------------------------------------------------
Area Code and Telephone Number
--------------------------------------------
Contact Person
------------------------------------------------------------
<PAGE> 6
Ladies and Gentlemen:
The undersigned hereby tenders to R&B Falcon Corporation, a Delaware
corporation (the "Company"), the above-described aggregate principal amount of
its 5-Year Private Notes in exchange for a like aggregate principal amount of
its 6 1/2% Senior Notes due 2003, Series B (the "5-Year Exchange Notes"), its
7-Year Private Notes in exchange for a like aggregate principal amount of its
6 3/4% Senior Notes due 2005, Series B (the "7-Year Exchange Notes"), its
10-Year Private Notes in exchange for a like aggregate principal amount of its
6.95% Senior Notes due 2008, Series B (the "10-Year Exchange Notes"), and its
20-Year Private Notes in exchange for a like aggregate principal amount of its
7 3/8% Senior Notes due 2018, Series B (the "20-Year Exchange Notes," and
together with the 5-Year Exchange Notes, the 7-Year Exchange Notes and the
10-Year Exchange Notes, the "Exchange Notes"), which Exchange Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
upon the terms and subject to the conditions set forth in the Prospectus dated
June , 1998 (as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitutes the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Private Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Private Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Private Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus to (i) deliver Certificates for Private Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Notes to be issued in exchange for such
Private Notes, (ii) present Certificates for such Private Notes for registration
of transfer, and transfer the Private Notes on the books of the Company, and
(iii) receive for the account of the Company all benefits and otherwise exercise
all rights of beneficial ownership of such Private Notes, all in accordance with
the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
PRIVATE NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE,
THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE
AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE
PRIVATE NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES.
THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE PRIVATE NOTES TENDERED
HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE
REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE
TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) (which term, for
the purposes of this Letter of Transmittal, shall include any participant in
DTC) of the Private Notes tendered hereby should be printed above, if they are
not already set forth above, as they appear on the Certificates representing
such Private Notes. The Certificate number(s) of the Private Notes that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Private Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Private Notes
than are tendered or accepted for exchange, Certificates for
<PAGE> 7
such nonexchanged or nontendered Private Notes will be returned (or, in the case
of Private Notes tendered by book-entry transfer, such Private Notes will be
credited to an account maintained at DTC), without expense to the tendering
holder, promptly following the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Private Notes pursuant to any
one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions herein will, upon the
Company's acceptance for exchange of such tendered Private Notes, constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Company may
not be required to accept for exchange any of the Private Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name of the undersigned or, in the case of a book-entry transfer
of Private Notes, that such Exchange Notes be credited to the account indicated
above maintained at DTC. If applicable, substitute Certificates representing
Private Notes not exchanged or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Private Notes, will be
credited to the account indicated above maintained at DTC. Similarly, unless
otherwise indicated under "Special Delivery Instructions" below, please deliver
Exchange Notes to the undersigned at the address shown below the undersigned's
signature.
BY TENDERING PRIVATE NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, OR
EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, THE UNDERSIGNED HEREBY
REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE
COMPANY WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT, (II) ANY
EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE
ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE
OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS
NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. BY TENDERING PRIVATE
NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL,
OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, A HOLDER OF PRIVATE
NOTES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN
INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE
OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH
PRIVATE NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE OR (B) SUCH
PRIVATE NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE
PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH
EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME
TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER IN CONNECTION WITH RESALES
OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR PRIVATE NOTES, WHERE SUCH PRIVATE
NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180
DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED
CIRCUMSTANCES
<PAGE> 8
DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH EXCHANGE NOTES HAVE
BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH
PARTICIPATING BROKER-DEALER, BY TENDERING SUCH PRIVATE NOTES AND EXECUTING THIS
LETTER OF TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU
THEREOF, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE
OF ANY EVENT OR THE DISCOVERY OF ANY FACT THAT MAKES ANY STATEMENT CONTAINED OR
INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR
THAT CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER
TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT
OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR OF THE
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS
AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE
NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED
THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER, OR
THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED,
AS THE CASE MAY BE. IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE USE OF THE
PROSPECTUS, IT SHALL EXTEND THE 180-DAY PERIOD REFERRED TO ABOVE DURING WHICH
PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION
WITH THE RESALE OF EXCHANGE NOTES BY THE NUMBER OF DAYS DURING THE PERIOD FROM
AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE
WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE EXCHANGE NOTES OR TO
AND INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE USE OF THE
PROSPECTUS MAY BE RESUMED, AS THE CASE MAY BE.
AS A RESULT, A PARTICIPATING BROKER-DEALER WHO INTENDS TO USE THE
PROSPECTUS IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR
PRIVATE NOTES PURSUANT TO THE EXCHANGE OFFER MUST NOTIFY THE COMPANY, OR CAUSE
THE COMPANY TO BE NOTIFIED, ON OR PRIOR TO THE EXPIRATION DATE, THAT IT IS A
PARTICIPATING BROKER-DEALER. SUCH NOTICE MAY BE GIVEN IN THE SPACE PROVIDED
ABOVE OR MAY BE DELIVERED TO THE EXCHANGE AGENT AT THE ADDRESS SET FORTH IN THE
PROSPECTUS UNDER "THE EXCHANGE OFFER -- EXCHANGE AGENT."
Holders of Private Notes which are accepted for exchange will not receive
interest payments on such Private Notes, and the undersigned waives the right to
receive any interest payments on such Private Notes accumulated from and after
April 14, 1998. Accordingly, holders of Exchange Notes as of the record date for
the payment of interest on October 15, 1998 will be entitled to receive interest
accumulated from and after April 14, 1998.
The undersigned agrees that acceptance of any tendered Private Notes and
transfer of tendered Private Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Private Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
<PAGE> 9
THE UNDERSIGNED, BY COMPLETING THE BOXES ENTITLED "DESCRIPTION OF PRIVATE
NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE
TENDERED THE PRIVATE NOTES AS SET FORTH IN EACH SUCH BOX.
<PAGE> 10
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) (which term, for purposes of this
Letter of Transmittal, shall include any participant in DTC) exactly as name(s)
appear(s) on Certificate(s) for the Private Notes hereby tendered or on the
register of holders maintained by the Company, or by any person authorized to
become the registered holder by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Company for the Private Notes to comply with the restrictions
on transfer applicable to the Private Notes). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary or representative capacity, please
set forth the signer's full title. See Instruction 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE OF HOLDER(S) OR AUTHORIZED SIGNATORY)
Date:
------------------------------ , 1998
Name(s):
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or Social Security Number(s):
--------------------------------
SIGNATURE(S) GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date:
------------------------------ , 1998
Name of Eligible Institution Guaranteeing Signatures:
---------------------------
Capacity (full title):
----------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
<PAGE> 11
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or any Private Notes that are
not tendered are to be issued in the name of someone other than the registered
holder of the Private Notes whose name appears above.
Issue
[ ] Exchange Notes and/or
[ ] Private Notes not tendered
Designate Series
----------------------------------------------------------------
to:
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Phone Number)
- --------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or any Private Notes that are
not tendered are to be sent to someone other than the registered holder of the
Private Notes whose name appears above, or to such registered holder at an
address other than that shown above.
Mail
[ ] Exchange Notes and/or
[ ] Private Notes not tendered
Designate Series
----------------------------------------------------------------
to:
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Phone Number)
- --------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
<PAGE> 12
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth under "The
Exchange Offer -- Procedures for Tendering" in the Prospectus and an Agent's
Message is not delivered. Certificates, or book-entry confirmation of a
book-entry transfer of such Private Notes into the Exchange Agent's account at
DTC, as well as this Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in lieu thereof, and any other documents required by this Letter
of Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Private Notes may be tendered in
whole or in part in integral multiples of $1,000 in aggregate principal amount.
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
this Letter of Transmittal and all other required documents to the Exchange
Agent on or prior to the Expiration Date or (iii) who cannot complete the
procedures for delivery by book-entry transfer on or prior to the Expiration
Date, may tender their Private Notes by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth under "The Exchange Offer -- Procedures for Tendering" in the Prospectus.
Pursuant to such procedures: (a) such tender must be made by or through an
Eligible Institution (as defined below); (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Company, must be received by the Exchange Agent on or prior to the
Expiration Date; and (c) the Certificates (or a book-entry confirmation (as
defined in the Prospectus)) representing all tendered Private Notes, in proper
form for transfer, together with a Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer -- Procedures for
Tendering" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Private Notes to
be properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution' means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association recognized program.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY ON OR PRIOR TO THE
EXPIRATION DATE. NO DOCUMENTS SHOULD BE SENT TO THE COMPANY. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by executing a Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), waives any right to
receive any notice of the acceptance of such tender.
<PAGE> 13
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Letter of Transmittal, shall include any
participant in DTC whose name appears on a security position listing as the
owner of the Private Notes) of Private Notes tendered herewith, unless such
holder has completed either the box entitled "Special Issuance
Instructions' or the box entitled "Special Delivery Instructions" above, or
(ii) such Private Notes are tendered for the account of a firm that is
an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature on
this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the boxes captioned
"Description of Private Notes" is inadequate, the Certificate numbers and/or the
principal amount of Private Notes and any other required information should be
listed on a separate signed schedule that is attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Private Notes will be
accepted only in integral multiples of $1,000 in aggregate principal amount. If
less than all the Private Notes evidenced by any Certificate submitted are to be
tendered, fill in the principal amount of Private Notes that are to be tendered
in the box entitled "Principal Amount of Private Notes Tendered (If Less than
All)." In such case, a new Certificate for the remainder of the Private Notes
that were evidenced by the old Certificate will be sent to the holder of the
Private Notes promptly after the Expiration Date, unless the appropriate boxes
on this Letter of Transmittal are completed. All Private Notes represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth above or in the Prospectus on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Private Notes to be withdrawn, the aggregate
principal amount of Private Notes to be withdrawn, and (if Certificates for
Private Notes have been tendered) the name of the registered holder of the
Private Notes as set forth on the Certificate for the Private Notes, if
different from that of the person who tendered such Private Notes. If
Certificates for the Private Notes have been delivered or otherwise identified
to the Exchange Agent, then prior to the physical release of such Certificates
for the Private Notes, the tendering holder must submit the serial numbers shown
on the particular Certificates for the Private Notes to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Private Notes tendered for the account of an
Eligible Institution. If Private Notes have been tendered pursuant to the
procedures for book-entry transfer set forth under "The Exchange
Offer -- Procedures for Tendering," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of
Private Notes, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written or facsimile transmission on or prior
to the Expiration Date. Withdrawals of tenders of Private Notes may not be
rescinded. Private Notes properly withdrawn will not be deemed validly tendered
for purposes of the Exchange Offer, but may be retendered at any subsequent time
on or prior to the Expiration Date by following any of the procedures described
in the Prospectus under "The Exchange Offer -- Procedures for Tendering."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Private Notes that have been tendered
but are withdrawn on or prior to the Expiration Date will be returned to the
holder thereof without cost to such holder promptly after withdrawal.
<PAGE> 14
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Private
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) or on a security position listing
without alteration, enlargement or any change whatsoever.
If any of the Private Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Private Notes are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof or Agent's Messages in lieu
thereof) as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of such persons' authority
to so act.
When this Letter of Transmittal is signed by the registered owner of the
Private Notes listed and transmitted hereby, no endorsement of Certificates or
separate bond powers are required unless Exchange Notes are to be issued in the
name of a person other than the registered holder. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Private Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name of the
registered owner appears on the Certificates, and also must be accompanied by
such opinions of counsel, certifications and other information as the Company or
the Exchange Agent may require in accordance with the restrictions on transfer
applicable to the Private Notes. Signatures on such Certificates or bond powers
must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Private Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal are
completed. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Private Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer -- Conditions to
Exchange Offer," or any conditions or irregularities in any tender of Private
Notes of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Private Notes will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. The
Company, any affiliates or assigns of the Company, the Exchange Agent, or any
other person shall not be under a duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. The holder should promptly
notify the Exchange Agent if any Certificates representing Private Notes have
been lost, destroyed or stolen. The holder will then be instructed as to the
steps that must be taken in order to replace the Certificates. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Certificates have been followed.
<PAGE> 15
9. SECURITY TRANSFER TAXES. Holders who tender their Private Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Private Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Private Notes in connection with the Exchange Offer, then
the amount of any such transfer tax (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. The amount of such
transfer taxes will be billed directly to such tendering holder if satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal.
10. INCORPORATION OF LETTER OF TRANSMITTAL. This Letter of Transmittal
shall be deemed to be incorporated in and acknowledged and accepted by any
tender through the DTC's ATOP procedures by any participant in DTC on behalf of
itself and the beneficial owners of any Private Notes so tendered.
11. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
12. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering holders of Private Notes, by executing
this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of Private Notes for exchange.
Questions and requests for assistance may be directed to the Exchange Agent
at its address and telephone number set forth on the front of this Letter of
Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed
Delivery and this Letter of Transmittal may be obtained from the Exchange Agent
or from the holder's broker, dealer, commercial bank, trust company or other
nominee.
None of the Company, the Exchange Agent or any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Private
Notes nor shall any of them incur any liability for failure to give any such
notice.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF OR AN AGENT'S MESSAGE
IN LIEU HEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT AT OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
<PAGE> 16
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Private Notes are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on the Substitute Form
W-9 included herein or otherwise establish a basis for exemption from backup
withholding. If such holder is an individual, the TIN is his or her social
security number. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the holder or transferee to a $50 penalty.
In addition, delivery of such holder's Exchange Notes may be subject to backup
withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that holder's foreign status. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the holder or other transferee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Private
Notes exchanged in the Exchange Offer, the holder is required to provide the
Exchange Agent with either: (i) the holder's correct TIN by completing the form
included herein, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder is awaiting a TIN) and that (a) the holder has not
been notified by the Internal Revenue Service that the holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(b) the Internal Revenue Service has notified the holder that the holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60-day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60-day period,
amounts withheld will be remitted to the Internal Revenue Service as backup
withholding. In addition, 31% of all payments made thereafter will be withheld
and remitted to the Internal Revenue Service until a correct TIN is provided.
NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Private Notes or of the last transferee appearing on the transfers attached
to, or endorsed on, the Private Notes. If the Private Notes are held in more
than one name or are held not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which number to report.
<PAGE> 17
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: The Chase Manhattan Bank
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE ------------------------------------
BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number
FORM W-9 DATING BELOW OR
Department of the Treasury ------------------------------------
Internal Revenue Service Employer Identification Number
----------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART II -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
TAXPAYER IDENTIFICATION (1) The number shown on this form is my correct Taxpayer Identification Number (or I am
NUMBER ("TIN") waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you are subject to backup withholding, you received another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out such item (2).
- ---------------------------------------------------------------------------------------------------------------------------
SIGNATURE ______________ DATE __________
NAME (please print) ____________________ PART III --
ADDRESS (please print) ____________________ Awaiting TIN [ ]
______________________________
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 20
percent of all reportable payments made to me thereafter will be withheld until
I provide a number. In addition, I understand that if, after seven business days
after this certification is received, the Company is required to make a payment
to me which, in its judgment, will close my account, or cause the cessation of
my relationship, with the Company, then such payment may be subject to backup
withholding.
<TABLE>
<S> <C>
- -------------------------------------- ------------------------------------------------------------
Date Signature
</TABLE>
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
6 1/2% SENIOR NOTES DUE 2003, SERIES A,
6 3/4% SENIOR NOTES DUE 2005, SERIES A,
6.95% SENIOR NOTES DUE 2008, SERIES A,
AND
7 3/8% SENIOR NOTES DUE 2018, SERIES A
OF
R&B FALCON CORPORATION
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 6 1/2% Senior Notes due 2003,
Series A (the "5-Private Notes"), 6 3/4% Senior Notes due 2005, Series A (the
"7-Year Private Notes"), 6.95% Senior Notes due 2008, Series A (the "10-Year
Private Notes"), and 7 3/8% Senior Notes due 2018, Series A (the "20-Year
Private Notes," and together with the 5-Year Private Notes, 7-Year Private
Notes, 10-Year Private Notes, the "Private Notes"), are not immediately
available, (ii) Private Notes, the Letter of Transmittal and all other required
documents cannot be delivered to Chase Bank of Texas, National Association (the
"Exchange Agent") on or prior to the Expiration Date (as defined in the
Prospectus defined below), or (iii) the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand, overnight courier or mail, or transmitted by
facsimile transmission, to the Exchange Agent. See "The Exchange
Offer -- Procedures for Tendering" and "-- Guaranteed Delivery Procedures" in
the Prospectus. In addition, in order to utilize the guaranteed delivery
procedure to tender Private Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal relating to the Private Notes (or
facsimile thereof) must also be received by the Exchange Agent on or prior to
the Expiration Date. Capitalized terms used but not defined herein have the
meanings assigned to them in the Prospectus.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer Is:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Mail, Hand or Overnight Delivery: By Facsimile Transmission:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (For Eligible Institutions Only)
C/O THE CHASE MANHATTAN BANK (212) 638-0454
55 WATER STREET, NORTH BUILDING
ROOM 234, WINDOWS 20 AND 21 Confirm by Telephone:
NEW YORK, NEW YORK 10041 (212) 638-7380
ATTENTION: CARLOS ESTEVES
For Other Inquiries:
MAURI COWEN
(713) 216-6686
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A
FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
1
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to R&B Falcon Corporation, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated June , 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Private Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering"
and "-- Guaranteed Delivery Procedures."
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
5-YEAR PRIVATE NOTES (CUSIP NO. 74912E AA 9)
- -----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED FOR EXCHANGE
CERTIFICATE NUMBER(S) AMOUNT REPRESENTED BY (MUST BE IN INTEGRAL
(IF AVAILABLE) CERTIFICATE(S) MULTIPLES OF $1,000)*
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 5-YEAR
PRIVATE NOTES TENDERED: $ $
- -----------------------------------------------------------------------------------------------
* Need not be completed if tendering for exchange all 5-Year Private Notes held. 5-Year
Private Notes may be tendered in whole or in part in integral multiples of $1,000 in
aggregate principal amount. All 5-Year Private Notes held shall be deemed tendered unless a
lesser number is specified in this column.
===============================================================================================
7-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 7)
- -----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED FOR EXCHANGE
CERTIFICATE NUMBER(S) AMOUNT REPRESENTED BY (MUST BE IN INTEGRAL
(IF AVAILABLE) CERTIFICATE(S) MULTIPLES OF $1,000)*
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 7-YEAR
PRIVATE NOTES TENDERED: $ $
- -----------------------------------------------------------------------------------------------
* Need not be completed if tendering for exchange all 7-Year Private Notes held. 7-Year
Private Notes may be tendered in whole or in part in integral multiples of $1,000 in
aggregate principal amount. All 7-Year Private Notes held shall be deemed tendered unless a
lesser number is specified in this column.
- -----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
10-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 5)
- -----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED FOR EXCHANGE
CERTIFICATE NUMBER(S) AMOUNT REPRESENTED BY (MUST BE IN INTEGRAL
(IF AVAILABLE) CERTIFICATE(S) MULTIPLES OF $1,000)*
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 10-YEAR
PRIVATE NOTES TENDERED: $ $
- -----------------------------------------------------------------------------------------------
* Need not be completed if tendering for exchange all 10-Year Private Notes held. 10-Year
Private Notes may be tendered in whole or in part in integral multiples of $1,000 in
aggregate principal amount. All 10-Year Private Notes held shall be deemed tendered unless
a lesser number is specified in this column.
===============================================================================================
20-YEAR PRIVATE NOTES (CUSIP NO. 74912E AB 3)
- -----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED FOR EXCHANGE
CERTIFICATE NUMBER(S) AMOUNT REPRESENTED BY (MUST BE IN INTEGRAL
(IF AVAILABLE) CERTIFICATE(S) MULTIPLES OF $1,000)*
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------
TOTAL AMOUNT OF 20-YEAR
PRIVATE NOTES TENDERED: $ $
- -----------------------------------------------------------------------------------------------
* Need not be completed if tendering for exchange all 20-Year Private Notes held. 20-Year
Private Notes may be tendered in whole or in part in integral multiples of $1,000 in
aggregate principal amount. All 20-Year Private Notes held shall be deemed tendered unless
a lesser number is specified in this column.
- -----------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH, INCAPACITY, OR DISSOLUTION OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
If Private Notes will be tendered by book-entry transfer, please provide the
following information:
Name of Tendering Institution
- ------------------------------------------------
The Depository Trust Company
Account No.
- ------------------------------------------------
PLEASE SIGN HERE
- --------------------------------------------------------------------------------
Signature(s)
- --------------------------------------------------------------------------------
Name(s) (Please Print)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address (Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Phone Number)
- --------------------------------------------------------------------------------
Date
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Private Notes exactly as its (their) name(s) appear on certificates
for Private Notes, or by person(s) authorized to become registered holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es):
Name(s)
-------------------------------------------------------------------------
Capacity
------------------------------------------------------------------------
Address(es)
---------------------------------------------------------------------
4
<PAGE> 5
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in a Recognized Signature Guarantee
Medallion Program, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Private Notes tendered
hereby in proper form for transfer, or confirmation of the book-entry transfer
of such Private Notes into the Exchange Agent's account at the Depository Trust
Company, pursuant to the procedure for book-entry transfer set forth in the
prospectus, and any other required documents, all by 5:00 p.m., New York City
time, on the third New York Stock Exchange trading day following the Expiration
Date (as defined in the Prospectus).
<TABLE>
<S> <C>
- ------------------------------------------------------- -------------------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------------------- -------------------------------------------------------
Name (please print)
- ------------------------------------------------------- -------------------------------------------------------
Address Title
- ------------------------------------------------------- -------------------------------------------------------
Area Code and Telephone No. Date
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR PRIVATE NOTES WITH THIS FORM. CERTIFICATES
FOR PRIVATE NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
5
