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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 21, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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R&B FALCON CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 76-0544217
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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901 THREADNEEDLE
HOUSTON, TEXAS 77079
(281) 496-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
WAYNE K. HILLIN
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)
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Copies to:
W. MARK YOUNG
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
1000 LOUISIANA, SUITE 3400
HOUSTON, TEXAS 77002-5007
(713) 308-5864
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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, as determined by market conditions.
If the securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to registered additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
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. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, $0.01 par value..... 10,500,000(1) $9.56(2) $100,406,250(2) $27,915
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Common Stock Purchase Warrants.... 300,000 -- -- --(3)
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(1) In accordance with Rule 416 under the Securities Act of 1933, this
Registration Statement also covers an indeterminate number of shares of
Common Stock, $0.01 par value, as may become issuable upon the exercise of
Common Stock Purchase Warrants to prevent dilution resulting from stock
splits, stock dividends and similar transactions in accordance with the
terms of the Common Stock Purchase Warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low sales price
for the Common Stock as quoted on the New York Stock Exchange for June 15,
1999.
(3) Pursuant to Rule 457(g), no filing fee is required for the Common Stock
Purchase Warrants since the shares of Common Stock underlying such warrants
are being registered hereby.
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.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
R&B FALCON CORPORATION
10,500,000 SHARES OF COMMON STOCK
300,000 COMMON STOCK PURCHASE WARRANTS
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The shares of common stock and the common stock purchase warrants are being
offered by selling securityholders. We will not receive any of the proceeds from
the sale of the shares or the warrants by the selling securityholders. We will
receive proceeds from any exercise of the warrants.
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Our common stock is traded on the New York Stock Exchange (NYSE Symbol:
FLC). On , 1999, the closing price of the common stock was
$ per share.
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You should carefully consider the risk factors commencing on page 3 before
purchasing any of the common stock or warrants offered by the selling
securityholders.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is , 1999.
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TABLE OF CONTENTS
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PAGE
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The Company................................................. 3
Risk Factors................................................ 3
Forward-Looking Statements.................................. 6
Recent Developments......................................... 7
Use of Proceeds............................................. 7
Selling Securityholders..................................... 7
Plan of Distribution........................................ 8
Where You Can Find More Information......................... 10
Incorporation by Reference.................................. 10
Legal Matters............................................... 11
Independent Public Accountants.............................. 11
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THE COMPANY
We own and operate the world's largest fleet of marine drilling rigs. Our
fleet is one of the most diverse in the industry, capable of drilling in shallow
to ultra-deepwater depths. We currently operate in most of the world's major
offshore hydrocarbon producing regions. We believe that our fleet diversity and
worldwide operations allow us to mitigate revenue and cash flow impacts
associated with a major downturn in any single segment of the drilling industry
or geographic region. The mailing address of our principal executive officers is
901 Threadneedle, Houston, Texas 77079, and our telephone number is (281)
496-5000.
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing our
company. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations. The risk factors set forth
below are generally applicable to our common stock as well as the warrants.
This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including the risks faced by us described below and elsewhere in this
prospectus.
DEPRESSED INDUSTRY CONDITIONS, COMBINED WITH OUR SUBSTANTIAL CAPITAL
REQUIREMENTS, HAVE ADVERSELY AFFECTED OUR LIQUIDITY.
We are currently constructing or significantly upgrading six wholly-owned
deepwater drilling rigs and have recently completed the construction of one
deepwater drilling rig. We estimate the gross capital expenditures on these
projects will be approximately $1.9 billion, of which approximately $0.8 billion
remains to be expended. Since May 1998, however, there has been a downturn in
demand for marine drilling rigs resulting in a decline in rig utilization and
dayrates. The decline has been particularly dramatic in the domestic barge and
jack-up rig markets where we are one of the largest contractors. Although our
operating revenues increased by $99.6 million from 1997 to 1998, on a quarterly
basis we have experienced a decline in operating revenues from $279.3 million
for the first quarter of 1998 to $243.8 million for the first quarter of 1999.
As a result of our declining operating results, our cash flow from operations
and cash on hand, including the net proceeds from our debt offering in March
1999, our borrowings from RBF Finance Co. and our preferred stock and warrant
offering in April 1999, may not be sufficient to satisfy our short-term and
long-term working capital needs, planned investments, capital expenditures,
debt, lease and other payment obligations. Accordingly, it may be necessary for
us to obtain additional capital through debt and/or equity financings to meet
our currently projected obligations. We are currently evaluating two project
financings to meet a portion of our additional capital requirements. There can
be no assurance, however, that we can obtain these or any other additional
financings or, if obtained, that they will be on favorable terms or for the
amount we need. As a result of our debt offering in March 1999 and our
borrowings from RBF Finance Co., we have a limited ability under our indenture
covenants to incur additional recourse indebtedness and to secure that debt. In
the event that we are unable to obtain the requisite financing, we would have to
sell assets or terminate or suspend one or more construction projects.
Termination or suspension of a project may subject us to claims for penalties or
damages under the construction contracts or drilling contracts for rigs that are
being constructed. Accordingly, our inability to complete such financings would
have a material adverse effect on our financial condition and results of
operations.
WE ARE DEPENDENT ON THE OIL AND GAS INDUSTRY AND MARKET PRICES. DECLINES IN OIL
AND GAS PRICES HAVE ADVERSELY AFFECTED OUR DAYRATES AND RIG UTILIZATION.
Our results of operations depend on the level of activity in offshore oil
and gas exploration and development. Oil and gas prices significantly affect the
level of activity in oil and gas exploration and development. These prices are
volatile, and have only recently begun to show signs of recovery from
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declines that started in 1997. These declines have adversely affected our rig
utilization and dayrates. If conditions in the oil and gas industry do not
improve in the future, our results of operations may continue to be adversely
affected.
WE HAVE A SIGNIFICANT AMOUNT OF DEBT.
We have a significant amount of debt. At March 31, 1999, our total
indebtedness was approximately $2.7 billion, which would have been 63% of our
total book value capitalization, as adjusted to give effect to our preferred
stock and warrant offering in April 1999. This substantial indebtedness will
have important consequences to you. For example, it will:
- make it more difficult for us to make our required debt payments;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future capital expenditures and working capital
and other general corporate requirements;
- potentially require us to sell assets or to terminate or suspend some of
our deepwater drilling construction projects;
- limit our flexibility in planning for, or reacting to, changes in our
business and our industry;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds because of financial and
other restrictive covenants governing our debt.
WE HAVE COMMITTED SIGNIFICANT RESOURCES TO THE DEEPWATER DRILLING MARKET.
We have committed significant financial resources to the deepwater drilling
market through our deepwater rig construction projects. The cost of these
projects will exceed the cash flow from the contractual commitments that we have
for these projects. If the deepwater market continues to weaken, we may not be
able to obtain contracts for the use of the contracted rigs once the initial
contracts expire, and any renewals may be at lower dayrates and for shorter
terms than those in the initial contracts. For the periods during which we are
obligated to use the Deepwater Frontier, we will be obligated to pay the full
dayrate of $165,000 to the limited liability company that owns this rig, without
regard to whether we have a customer for this rig. These developments would
result in reduced cash flows and profitability, and adversely affect our results
of operations.
OUR CUSTOMERS MAY SEEK TO CANCEL OR RENEGOTIATE CONTRACTS DURING DEPRESSED
MARKET CONDITIONS.
During depressed market conditions like those we are currently
experiencing, a customer may no longer need a rig, or may be able to obtain a
comparable rig at a lower dayrate. As a result, customers may pressure us to
renegotiate the terms of existing contracts. In addition, customers may seek to
avoid their obligations under existing drilling contracts. Since December 1998,
customers have cancelled a number of contracts within the drilling industry,
including the contract for our Jack Bates semisubmersible rig, primarily based
on alleged performance breaches by the drilling contractors. Our customers for
our drillship Peregrine VII and our semisubmersible Falcon 100 recently
cancelled their contracts with us because of our late delivery of these rigs. If
our customers cancel some of our significant contracts, it could have a material
adverse effect on our financial condition and results of operations.
OUR CUSTOMERS MAY CANCEL THEIR DEEPWATER CONTRACTS IF WE EXPERIENCE OPERATIONAL
PROBLEMS.
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 our fleet. We and other drilling
contractors have experienced problems with the new generation of subsea and
related systems
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designed for drilling in deeper waters. If this equipment fails to function
properly, the rig cannot engage in drilling operations. If we encounter these or
other operational problems on our deepwater rigs, we will lose revenues, and our
customers may have the right to terminate the drilling contracts. The likelihood
that a customer may seek to terminate a contract for operational problems is
increased during market downturns like the one we are currently experiencing. If
our customers cancel some of our significant contracts, it could have a material
adverse effect on our financial condition and results of operations.
OUR CONSTRUCTION AND UPGRADE PROJECTS ARE SUBJECT TO DELAYS AND COST OVERRUNS.
Our deepwater rig construction and upgrade projects are subject to delays
and cost overruns from (1) delays in equipment deliveries, (2) unforeseen
engineering problems, (3) work stoppages, (4) weather interference, (5)
unanticipated cost increases and (6) shortages of materials or skilled labor.
Our conversion projects are particularly susceptible to cost overruns and delays
due to the engineering and construction uncertainties inherent in conversion
projects. The customers for our drillship Peregrine VII and semisubmersible
Falcon 100 have cancelled their drilling contracts due to late delivery of these
rigs. We will be subject to late delivery penalties to our customer for our
drillship Peregrine IV, and our drilling contract for this rig gives the
customer cancellation rights if delivery is delayed significantly. We may also
be subject to late delivery penalties under the recently cancelled contract for
our semisubmersible Falcon 100. We have recently extended the delivery dates
for, and increased our estimated costs of, several of our deepwater rig
projects. Any additional cost overruns or delays will adversely affect our
financial condition and results of operations.
REDUCED DAYRATES RESULTING FROM COMPETITION ADVERSELY EFFECT OUR RESULTS OF
OPERATIONS BECAUSE WE CANNOT SIGNIFICANTLY REDUCE OUR OPERATING COSTS.
The marine drilling market is highly competitive and no one competitor is
dominant. During periods when the supply of rigs exceeds demand, as it currently
does, this competition results in significant downward pressure on the dayrates
at which we can contract our rigs. Because our rig operating costs cannot be
materially reduced, any reduction in dayrates adversely affects our results of
operations.
WE ARE SUBJECT TO OPERATIONAL RISKS.
Our operations are subject to the hazards inherent in the marine drilling
business. These include (1) blowouts, (2) craterings, (3) fires, (4) collisions,
(5) capsizings and (6) adverse weather. These hazards could result in
substantial damage to the environment, personal injury and loss of life,
suspension of drilling operations or damage to property and producing
formations. We may incur substantial liabilities or losses as a result of these
hazards. While we maintain insurance protection against some of these risks, and
seek to obtain indemnity agreements from our customers requiring the customers
to hold us harmless in the event of loss of production, reservoir damage or
liability for pollution that originates below the water surface, our insurance
or contractual indemnity protection may not be sufficient to protect us under
all circumstances or against all hazards.
WE CONDUCT TURNKEY DRILLING OPERATIONS.
We conduct most of our drilling services under daywork drilling contracts
where the customer pays for the period of time required to drill or workover a
well. We expect to provide an increasing portion of our services under turnkey
drilling contracts. Under turnkey drilling contracts, we contract to drill a
well to a contract depth under specified conditions for a fixed price. Our risks
under a turnkey drilling contract are substantially greater than on a well
drilled on a daywork basis because we assume most of the risks associated with
drilling operations generally assumed by the operator in a daywork contract,
including (1) risk of blowout, (2) loss of hole, (3) stuck drill stem, (4) lost
production or damage to the reservoir, (5) machinery breakdowns, (6) abnormal
drilling conditions and (7) risks associated with subcontractors' services,
supplies and personnel.
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WE CONDUCT FOREIGN OPERATIONS.
We currently operate our rigs worldwide. Operations outside the United
States involve additional risks, including (1) war and civil disturbances, (2)
general strikes, (3) regional economic downturns and (4) foreign governmental
activities that may limit or disrupt markets, restrict payments or the movement
of funds, impose exchange controls or cause currency devaluations, or result in
the loss of contract rights or expropriation of property.
OFFSHORE DRILLING OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATION.
A number of federal, state, local and foreign laws and regulations govern
our operations. These include laws and regulations that restrict the discharge
of materials into the environment or otherwise relate to the protection of the
environment, the safety of our personnel and vessels and other matters.
Environmental laws and regulations could impose significant liability on us for
damages, clean-up costs and penalties if we spill oil or other pollutants in the
course of our operations. Some of these laws impose liability without regard to
negligence or fault. Environmental and other laws and regulations may increase
our costs of doing business, discourage our customers from exploring for oil and
gas and reduce demand for our services.
THE WARRANTS ARE NOT LISTED ON ANY EXCHANGE, AND TRADING IN THE WARRANTS MAY BE
LIMITED.
The warrants are not listed on any stock exchange, and the Company is not
required to list the warrants on any stock exchange. Although the warrants are
eligible for trading in The PORTAL Market, trading in this market may be
limited. There can be no assurance as to the liquidity of the warrants.
FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to analyses and other information which are based
on forecasts of future results and estimates of amounts not yet determinable.
These statements also relate to our future prospects, developments and business
strategies.
These forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "will," and similar terms and
phrases, including references to assumptions. These statements are contained in
sections entitled "Summary" and "Risk Factors," and other sections of this
prospectus and in the documents incorporated by reference in this prospectus.
These forward-looking statements involve risks and uncertainties that may
cause our actual future activities and results of operations to be materially
different from those suggested or described in this prospectus. These risks
include: our dependence on the oil and gas industry; the effects of recent
declines in oil and gas prices; our commitment to the deepwater drilling market;
the cancellation of contracts by our customers; our ability to secure adequate
financing, including financing to fund our deepwater drilling program; the risks
involved in our construction and upgrade projects; competition; operational
risks; risks involved in turnkey operations and foreign operations; the age of
our rigs; government regulation and environmental matters; our ability to
integrate and realize anticipated synergies relating to the merger with Cliffs
Drilling Company; our ability to achieve and execute internal business plans;
and the impact of any economic downturns and inflation.
If one or more of these risks or uncertainties materialize, or if
underlying assumptions prove incorrect, our actual results may vary materially
from those expected, estimated or projected.
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RECENT DEVELOPMENTS
On April 7, 1999, we announced that Steven Webster, our president and chief
executive officer, would resign from these officer positions at the end of May
1999. On May 19, 1999, Mr. Paul Loyd, our chairman of the board, was elected as
our chief executive officer, and Mr. Andrew Bakonyi was elected as president and
chief operating officer. Mr. Webster remains a director of our company.
On April 15, 1999, BP Amoco cancelled its drilling contract with us for our
drillship Peregrine VII in accordance with the terms of the contract because we
had not delivered this rig on time. We are currently marketing this rig.
On April 22, 1999, we issued 300,000 units, each consisting of one share of
preferred stock and a warrant to purchase 35 shares of our common stock, in a
private placement for net proceeds of approximately $289 million. The preferred
stock provides for a liquidation preference of $1,000 per share and cumulative
dividends, payable quarterly, at a rate of 13 7/8% per year. We may pay these
dividends in additional shares of preferred stock for up to five years. We will
have the right to exchange the preferred stock for subordinated debentures when
we could do so without violating the covenants in our existing debt documents.
We must redeem the preferred stock at a price equal to its liquidation
preference on May 1, 2009. Each warrant entitles the holder to purchase 35
shares of our common stock, for an aggregate of 10,500,000 shares, at a purchase
price of $9.50 per share. The warrants are exercisable at any time after they
separate from the preferred stock, which will occur no later than October 22,
1999. The warrants expire on May 1, 2009. We are using the net proceeds from
this offering for general corporate purposes, including funding our deepwater
rig construction program.
On May 19, 1999, we announced that we had received notice from Petrobras of
cancellation of the drilling contract on our semisubmersible Falcon 100, based
upon alleged late delivery of the rig. We do not believe that Petrobras has the
right to cancel the contract. We have engaged Brazilian counsel to pursue our
rights under the contract and intend to take legal action to enforce our rights
under the contract. Petrobras has also advised us that the contract for which we
had been the low bidder with our Peregrine VII drillship had been awarded by
Petrobras to another drilling contractor, for the reason that Petrobras desired
to commence such contract prior to the expected delivery date of the Peregrine
VII.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock or
warrants by the selling securityholders.
We may receive up to $99.75 million from the exercise of the warrants. We
will use any net proceeds received from the exercise of the warrants for general
corporate purposes.
SELLING SECURITYHOLDERS
This prospectus may be used by the selling securityholders to offer and
sell up to 10,500,000 shares of our common stock. All of these shares of common
stock are issuable upon exercise of the warrants held by the selling
securityholders. Each warrant entitles the holder to purchase 35 shares of our
common stock for $9.50 per share. This prospectus also relates to the resale of
the warrants by the selling securityholders. All shares and warrants, to the
extent they are being offered, are being offered for the account of the
following securityholders and their donees or pledgees, who we refer to in this
prospectus as the selling securityholders.
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The following table sets forth information regarding the selling
securityholders for whom we are registering the common stock and warrants for
resale to the public, including the number of shares and warrants offered by
each selling securityholder. We have no knowledge of the intentions of any
selling securityholder to actually sell any of the securities listed in the
table. There are no material relationships between any of the selling
securityholders and our company other than as disclosed below.
BENEFICIAL OWNERSHIP BEFORE OFFERING(1)
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SHARES OF COMMON STOCK WARRANTS
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ISSUABLE UPON
EXERCISE OF OFFERED IN THIS OWNED PRIOR TO OFFERED IN THIS
SELLING SECURITYHOLDER WARRANTS OFFERING(2) THIS OFFERING OFFERING
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(We will amend the registration statement of which this prospectus is a part to
list the selling securityholders as soon as practicable after we receive this
information from the selling securityholders, and in any event prior to the
effectiveness of the registration statement. We may file supplements to this
prospectus in the future to update the list of selling securityholders.)
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(1) We have not provided any information regarding the beneficial ownership of
the selling securityholders after the offering because the number of shares
of common stock and warrants would be zero.
(2) Assumes the exercise of all of the warrants.
The information concerning the selling securityholders may change from time
to time and will be set forth in supplements to this prospectus.
PLAN OF DISTRIBUTION
The purpose of this prospectus is to permit the selling securityholders, or
their pledgees on behalf of the selling securityholders, to offer and sell up to
300,000 warrants to purchase our common stock and up to 10,500,000 shares of our
common stock upon exercise of the warrants at such times and at such places as
the selling securityholders choose. Donees and other transferees of the selling
securityholders may also use this prospectus to offer and sell any warrants or
shares of common stock that they may acquire from the selling securityholders.
However, we may be required to supplement this prospectus to name these donees
or other transferees as selling securityholders if they acquire more than 500
shares of common stock or warrants to purchase more than 500 shares of common
stock.
We will not receive any proceeds from the sale of the warrants or the
common stock underlying the warrants through this prospectus. However, we will
receive up to $99.75 million upon the exercise of the warrants. We have agreed
to pay the expenses of registration of the securities offered hereby, including
legal and accounting fees, but excluding underwriter's discounts and
commissions, if any.
The warrants and the common stock underlying the warrants may be sold from
time to time at
- negotiated prices,
- fixed prices which may be changed,
- market prices prevailing at the time of sale or
- prices related to prevailing market prices.
The selling securityholders may effect such transactions directly or
indirectly through broker-dealers or agents
- in privately negotiated sales in the over-the-counter market or any
exchange on which the securities are listed (which, with respect to the
common stock, includes the New York Stock Exchange),
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- by selling the shares to or through broker-dealers, including block
trades in which brokers or dealers will attempt to sell the shares as
agent but may position and resell the block as principal, and
- in one or more underwritten offerings on a firm commitment or best effort
basis.
Sales of these securities may also be made pursuant to Rule 144 under the
Securities Act, where applicable.
To the extent required under the Securities Act, the following information
will be set forth in an accompanying prospectus supplement:
- the names of donees or other transferees of selling securityholders,
- the aggregate amount of selling stockholders' shares being offered and
the terms of the offering,
- the names of any such agents, brokers, dealers, transferees or
underwriters, and
- any applicable fee or commission with respect to a particular offer.
Each selling securityholder will be responsible for paying compensation
owed by it to any underwriters, dealers, brokers or agents participating in the
distribution of its warrants or shares of common stock underlying its warrants,
regardless of whether such compensation is in the form of underwriting
discounts, concessions, commission or fees. This compensation might be in excess
of customary commissions. The aggregate proceeds to a selling securityholder
from the sale of its shares offered by this prospectus will be the purchase
price of such shares less any discounts or commissions.
If selling securityholders pledge, hypothecate or grant a security interest
in some or all of the warrants or the shares of common stock underlying the
warrants, then the pledgees, secured parties or persons to whom such securities
have been hypothecated shall, upon foreclosure in the event of default, be
deemed to be selling securityholders under this prospectus.
A selling securityholder may also use this prospectus in the following
ways:
- to sell short, from time to time, shares of our common stock and, in such
instances, this prospectus may be delivered in connection with such short
sales and the shares offered hereby may be used to cover such short
sales,
- to enter into hedging transactions with broker-dealers, and the
broker-dealers may engage in short sales of shares of our common stock in
the course of holding the positions they assume with such selling
securityholder, including, without limitation, in connection with
distribution of these shares by such broker-dealers,
- to enter into option or other transactions with broker-dealers that
involve the delivery of shares of our common stock to the broker-dealers,
who may then resell or otherwise transfer these shares, and
- to loan or pledge the warrants and the shares of common stock underlying
the warrants to a broker-dealer and the broker-dealer may sell the shares
as loaned or upon a default may sell or otherwise transfer the pledge
shares.
The selling securityholders, any underwriter, any broker-dealer or any
agent that participates with the selling securityholders in the distribution of
the warrants or the shares of common stock may be deemed to be "underwriter"
within the meaning of the Securities Act. As a result thereof, any discounts,
commissions or concessions received by them and any profit on the resales of
these securities purchased by them may be deemed to be underwriting commissions
under the Securities Act.
To comply with securities laws of certain states, if applicable, the
warrants and the shares of common stock underlying the warrants will be sold in
such jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states these securities may not be sold unless they have
been registered
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or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available.
Rules and regulations under the Securities Exchange Act of 1934 limit the
ability of anyone engaged in a distribution of our common stock or warrants to
simultaneously engage in market transactions in our common stock, warrants, and
other derivative securities. For example, selling stockholders must comply with
Rule 10b-5 and Regulation M under the Securities Exchange Act, which may limit
the timing of purchases and sales of common stock and warrants by the selling
securityholders.
Pursuant to a registration rights agreement entered into in connection with
the preferred stock financing and the issuance of the warrants, we have agreed
to keep the registration statement of which this prospectus is a part
continuously effective until the earlier of (1) two years after the first date
as of which no warrants remain outstanding or (2) if the warrants expire
unexercised, the expiration date of the warrants. In this regard, we are
required to supplement and/or amend the registration statement of which this
prospectus is a part to supplement or change the selling securityholders and
provide other information to maintain the accuracy of the disclosures in the
prospectus.
The registration rights agreement requires us to indemnify the selling
securityholders, any underwriter and the respective directors, officers and
controlling persons of each selling securityholder against certain liabilities
in connection with the offer and sale of the warrants and the shares of common
stock underlying the warrants hereunder, including under the Securities Act.
Similarly, each selling securityholder is required to indemnify us and our
directors, officers and controlling persons against certain liabilities in
connection with the offer and sale of the warrants and the shares of common
stock underlying the warrants hereunder, including the Securities Act, to the
extent that liability occurs as a result of reliance with written information
furnished to us by such selling securityholder expressly for use in connection
with the registration statement of which this prospectus is a part. To the
extent such indemnification is prohibited, the selling securityholders and we
are required to contribute to payments the parties may be required to make in
respect of otherwise indemnifiable claims.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information filed by us at the SEC's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our filings with the SEC are also
available to the public from commercial document retrieval services and at the
SEC's web site at "http://www.sec.gov."
This prospectus constitutes a part of a registration statement we have
filed with the SEC under the Securities Act. As permitted by the rules and
regulations of the SEC, this prospectus does not contain all of the information
contained in the registration statement and the exhibits and schedules to the
registration statement. Accordingly, in this prospectus, we make reference to
the registration statement and to its exhibits and schedules. For further
information about us and about the securities we are offering in this
prospectus, you should consult the registration statement and its exhibits and
schedules. You should be aware that statements contained in this prospectus
concerning the provisions of any documents filed as an exhibit to the
registration statement or otherwise filed with the SEC are not necessarily
complete, and in each instance reference is made to the copy of the document so
filed as an exhibit to the registration statement. These statements are
qualified in their entirety by these references.
INCORPORATION BY REFERENCE
All documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act after the date hereof are incorporated by reference into
and to be a part of this prospectus from the date of filing of those documents.
10
<PAGE> 12
We are incorporating by reference the following documents we have filed
with the SEC:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999;
- Current Report on Form 8-K/A filed January 20, 1999, amending Current
Report on Form 8-K filed December 15, 1998; and
- Current Reports on Form 8-K filed March 16, 1999, April 19, 1999, April
21, 1999, May 20, 1999 and May 21, 1999.
You may request a copy of any of these filings, at no cost, by writing or
telephoning us at the following address or phone number:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
(281) 496-5000
Attention: Investor Relations
LEGAL MATTERS
Legal matters with respect to the warrants and the common stock underlying
the warrants offered hereby will be passed upon for us by Gardere Wynne Sewell &
Riggs, L.L.P., Houston, Texas.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets of R&B Falcon Corporation as of December
31, 1998 and 1997, and the related statements of operations, stockholders'
equity and cash flows for each of the years in the three year period ended
December 31, 1998, 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 report.
With respect to the unaudited interim financial information for the
quarters ended March 31, 1999 and 1998, 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 that Act.
The consolidated financial statements of Cliffs Drilling Company as of
December 31, 1997 and for each of the three years in the period ended December
31, 1997, incorporated by reference in this prospectus, have been audited by
Ernst & Young LLP, independent accountants, as stated in their report, which is
incorporated by reference herein.
11
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Registrant in connection with the issuance and distribution of the Capital
Securities being registered. All amounts shown are estimates except for the
Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $27,915
Legal fees and expenses..................................... 10,000
Accountants' services....................................... 10,000
Printing, EDGAR formatting and mailing expenses............. 20,000
Miscellaneous............................................... 5,000
-------
Total............................................. $72,915
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Certificate of Incorporation and Bylaws of R&B
Falcon Corporation require the indemnification of directors and officers to the
fullest extent permitted by law.
Section 145 of the Delaware General Corporation Law authorizes and empowers
R&B Falcon Corporation to indemnify the directors, officers, employees and
agents of R&B Falcon Corporation 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 R&B Falcon Corporation provides that R&B
Falcon Corporation 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 R&B Falcon Corporation, at the request of R&B
Falcon Corporation or by reason of the fact that such director or officer at the
request of R&B Falcon Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, in
any capacity.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 -- Warrant Agreement, including form of Warrant
4.2 -- Registration Rights Agreement dated April 22, 1999
between R&B Falcon Corporation and Donaldson Lufkin &
Jenrette Securities Corporation
5 -- Legal Opinion of Gardere Wynne Sewell & Riggs, L.L.P.
15.1 -- Letter regarding unaudited interim financial information
23.1 -- Consent of Arthur Andersen, LLP, independent public
accountants
</TABLE>
II-1
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
23.2 -- Consent of Ernst & Young, LLP, independent public
accountants
23.3 -- Consent of Gardere Wynne Sewell & Riggs, L.L.P. (included
in Exhibit 5)
24 -- Power of Attorney (contained on signature page to the
Registration Statement)
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
and (2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus 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 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.
(c) 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.
II-2
<PAGE> 15
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 21, 1999.
R&B FALCON CORPORATION
By: /s/ PAUL B. LOYD
----------------------------------
Paul B. Loyd
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul B. Loyd, Tim W. Nagle and Wayne K. Hillin,
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/ PAUL B. LOYD Chairman of the Board, Chief June 21, 1999
- ----------------------------------------------------- Executive Officer and Director
Paul B. Loyd (Principal Executive Officer)
/s/ TIM W. NAGLE Executive Vice President and June 21, 1999
- ----------------------------------------------------- Chief Financial Officer
Tim W. Nagle (Principal Accounting and
Financial Officer)
Director June , 1999
- -----------------------------------------------------
Purnendu Chatterjee
/s/ STEVEN A. WEBSTER Director June 21, 1999
- -----------------------------------------------------
Steven A. Webster
Director June , 1999
- -----------------------------------------------------
Arnold L. Chavkin
/s/ CHARLES A. DONABEDIAN Director June 21, 1999
- -----------------------------------------------------
Charles A. Donabedian
</TABLE>
II-3
<PAGE> 16
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS A.P. HAMILTON Director June 21, 1999
- -----------------------------------------------------
Douglas A.P. Hamilton
Director June , 1999
- -----------------------------------------------------
Macko A.E. Laqueur
Director June , 1999
- -----------------------------------------------------
Michael E. Porter
/s/ ROBERT L. SANDMEYER Director June 21, 1999
- -----------------------------------------------------
Robert L. Sandmeyer
/s/ DOUGLAS E. SWANSON Director June 21, 1999
- -----------------------------------------------------
Douglas E. Swanson
/s/ WILLIAM R. ZIEGLER Director June 21, 1999
- -----------------------------------------------------
William R. Ziegler
</TABLE>
II-4
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 -- Warrant Agreement, including form of Warrant
4.2 -- Registration Rights Agreement dated April 22, 1999
between R&B Falcon Corporation and Donaldson Lufkin &
Jenrette Securities Corporation
5 -- Legal Opinion of Gardere Wynne Sewell & Riggs, L.L.P.
15.1 -- Letter regarding unaudited interim financial information
23.1 -- Consent of Arthur Andersen, LLP, independent public
accountants
23.2 -- Consent of Ernst & Young, LLP, independent public
accountants
23.3 -- Consent of Gardere Wynne Sewell & Riggs, L.L.P. (included
in Exhibit 5)
24 -- Power of Attorney (contained on signature page to the
Registration Statement)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
===============================================================================
R&B FALCON CORPORATION
WARRANT AGREEMENT
Dated as of April 22, 1999
AMERICAN STOCK TRANSFER & TRUST COMPANY
Warrant Agent
===============================================================================
<PAGE> 2
EXHIBIT 4.1
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated as of April 22, 1999
between R&B Falcon Corporation, a Delaware corporation ("the Company"), and
American Stock Transfer & Trust Company, a bank and trust company organized and
existing under the laws of the State of New York, as warrant agent (the
"Warrant Agent").
WHEREAS, the Company entered into a purchase agreement dated April 15,
1999 (the "Purchase Agreement") with Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser") pursuant to which the Company has agreed
to sell to the Initial Purchaser 300,000 units (the "Units") consisting of
$1,000 liquidation preference of its 137/8% Senior Cumulative Preferred Stock
(the "Preferred Stock") and one warrant (the "Warrant") to purchase 35 shares
of common stock, par value $0.01 per share, of the Company (the "Common
Stock"); and
WHEREAS, prior to the separation of the Preferred Stock from the
Warrants issued as part of the Units as described herein, the Units shall be
issued pursuant to the Unit Agreement dated as of April 22, 1999 (the "Unit
Agreement") between the Company and American Stock Transfer & Trust Company, as
unit agent (the "Unit Agent"); and
WHEREAS, the Warrants and the Preferred Stock shall not be separately
transferable until on or after the Separation Date (as defined below); and
WHEREAS, the Company desires the Warrant Agent to assist the Company
in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among
other things, the terms and conditions on which the Warrants may be issued,
exchanged, cancelled, replaced and exercised; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined) and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Issuance of Warrants. Warrants comprising part of the Units
shall be originally issued in connection with the issuance of the Units and
such Warrants shall not be separately transferable from the notes until on or
after the Separation Date as provided in Section 9 hereof.
Each certificate evidencing the Warrants (the "Warrant Certificate")
shall evidence the number of Warrants specified therein, and each Warrant
evidenced thereby shall represent the right, subject to the provisions
contained herein and therein, to purchase from the Company (and the Company
shall issue and sell to such holder of the Warrant) 35 shares of Common Stock
of
<PAGE> 3
the Company (the shares purchasable upon exercise of a Warrant being
hereinafter referred to as the "Warrant Shares," subject to adjustment as
provided in Section 17 hereof).
SECTION 3. Warrant Certificates. (a) The Warrant Certificates to be
delivered pursuant to this Agreement shall be in registered form only and shall
be substantially in the form set forth in Exhibit A attached hereto with such
changes as are necessary to reflect the number of shares of Common Stock for
which the Warrants are then exercisable.
(b) The Warrants will be offered and sold in reliance on Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), ("Rule 144A") and shall be evidenced initially in the form of one or
more permanent global Warrants (each, a "Global Warrant") evidenced by a
Warrant Certificate in definitive, fully registered form, substantially in the
form set forth in Exhibit A (each, a Global Warrant Certificate"), deposited
with the Warrant Agent, as custodian for The Depository Trust Company ("DTC"),
or such other depositary institution as the Company may approve to act as
depositary for the Warrants and the Warrant Shares (the "Depositary") and
registered in the name of a nominee of the Depositary, duly executed by the
Company and countersigned by the Warrant Agent as hereinafter provided;
provided that until such time as the Warrants separate from the Preferred
Stock, the Global Warrants shall be registered in the name of the Unit Agent
and shall be represented by a Global Unit deposited with the Unit Agent as
custodian for and registered in the name of DTC or its nominee. The aggregate
amount of a Global Warrant may from time to time be increased or decreased by
adjustments made on the records of the Warrant Agent, as custodian for the
Depositary or its nominee, as hereinafter provided.
SECTION 4. Execution of Warrant Certificates. (a) The Warrant
Certificates shall be signed on behalf of the Company by an Officer of the
Company (as defined below). Such signature upon the Warrant Certificates may be
in the form of a facsimile signature and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been an
Officer, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to
hold such office. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates. For purposes hereof, an "Officer" shall mean the Chairman
of the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President.
(b) In case any Officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such Officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such Officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be an Officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such Officer.
2
<PAGE> 4
(c) Warrant Certificates shall be dated the date of countersignature
by the Warrant Agent.
SECTION 5. Registration and Countersignature. (a) The Warrant Agent,
on behalf of the Company, shall number and register the Warrant Certificates in
a register as they are issued by the Company.
(b) Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the
Board, the Chief Executive Officer, the President, a Vice President, the
Treasurer or the Controller of the Company, initially countersign, issue and
deliver Warrant Certificates entitling the holders thereof to purchase not more
than 10,500,000 shares of Common Stock of the Company and shall countersign and
deliver Warrant Certificates as otherwise provided in this Agreement.
(c) The Company and the Warrant Agent may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.
SECTION 6. Restrictive Legends.
(a) Except as permitted by the following clause (c) or this Section 6,
each Warrant Certificate issued hereunder and each certificate representing a
Warrant Share issued upon exercise of a Warrant (and all securities issued in
exchange therefor, in substitution thereof or upon conversion thereof) shall
bear a legend (a "Restrictive Legend") substantially in the following form:
"THESE WARRANTS (OR THEIR PREDECESSORS) AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
(AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THESE WARRANTS OR WARRANT SHARES EXCEPT (A) TO THE ISSUER OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE ISSUER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE
3
<PAGE> 5
REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE
WARRANT AGENT) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (E) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE ISSUER) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE
WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THESE WARRANTS IN
VIOLATION OF THE FOREGOING."
(b) The Global Warrant Certificate shall also bear the following
legend:
"UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY WARRANT ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS 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 SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH RESTRICTIONS SET FORTH IN SECTION 10 OF THE WARRANT
AGREEMENT."
(c) Upon any sale or transfer of any Warrant Certificate or Warrant
Shares pursuant to an effective registration statement under the Securities Act
or satisfying the condition set forth
4
<PAGE> 6
in subclause (1)(C) of the Restrictive Legend, the Warrant Agent shall permit
the holder thereof to exchange such Warrant Certificate or such Warrant Shares
for another Warrant Certificate or certificate evidencing Warrant Shares, as
applicable, that does not bear the Restrictive Legend.
SECTION 7. Registration of Transfers and Exchanges. (a) The Warrant
Certificates shall be issued in registered form only. The Company shall cause
to be kept at the office of the Warrant Agent a register in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Warrant Certificates and transfers or exchanges of Warrant
Certificates as provided in this Agreement. All Warrant Certificates issued
upon any registration of transfer or exchange of Warrant Certificates shall be
the valid obligations of the Company, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.
A holder may transfer its Warrants only by written application to the
Warrant Agent stating the name of the proposed transferee and otherwise
complying with the terms of this Agreement. The Warrant Agent shall not be
required to register the transfer of any Warrant bearing the Restrictive Legend
that does not comply with the provisions of the Restrictive Legend. No such
transfer shall be effected until, and such transferee shall succeed to the
rights of a holder only upon, final acceptance and registration of the transfer
by the Warrant Agent in the register. Prior to the registration of any transfer
of Warrants by a holder as provided herein, the Company, the Warrant Agent, and
any agent of the Company may treat the person in whose name the Warrants are
registered as the owner thereof for all purposes and as the person entitled to
exercise the rights represented thereby, any notice to the contrary
notwithstanding. When Warrant Certificates are presented to the Warrant Agent
with a request to register the transfer or to exchange them for an equal amount
of Warrants of other authorized denominations, the Warrant Agent shall register
such transfer or make such exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute Warrant Certificates at the Warrant Agent's request.
(b) The Warrant Agent shall retain copies of all letters, notices and
other written communications received pursuant to this Section 7. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Warrant Agent.
(c) Any Warrant Certificate surrendered for registration of transfer,
exchange or exercise of the Warrants represented thereby shall, if surrendered
to the Company, be delivered to the Warrant Agent, and all Warrant Certificates
surrendered or so delivered to the Warrant Agent shall be promptly cancelled by
the Warrant Agent and shall not be reissued by the Company and, except as
provided in this Section 7 in case of an exchange, Section 12 hereof in case of
the exercise of less than all the Warrants represented thereby or Section 14
hereof in case of a mutilated Warrant Certificate, no Warrant Certificate shall
be issued hereunder in lieu thereof. The Warrant Agent shall deliver to the
Company from time to time or otherwise dispose of such cancelled Warrant
Certificates as the Company may direct.
(d) The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of this Section 7 and of Section 5 hereof, the
new Warrant Certificates required pursuant to the provisions of this Section 7.
5
<PAGE> 7
(e) No service charge shall be made for registration of transfer or
exchange upon surrender of any Warrant Certificate at the office of the Warrant
Agent maintained for that purpose. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration, transfer or exchange of Warrant Certificates.
SECTION 8. Temporary Warrant Certificates. Pending the preparation of
definitive Warrant Certificates, the Company may execute, and the Warrant Agent
shall countersign and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates may determine,
as evidenced by their execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 12(b) hereof.
Subject to the provisions of Section 7(e) hereof, such exchange shall be
without charge to the holder. Upon surrender for cancellation of any one or
more temporary Warrant Certificates, the Company shall execute, and the Warrant
Agent shall countersign and deliver in exchange therefor, one or more
definitive Warrant Certificates representing in the aggregate a like number of
Warrants. Until so exchanged, the holder of a temporary Warrant Certificate
shall in all respects be entitled to the same benefits under this Agreement as
a holder of a definitive Warrant Certificate.
SECTION 9. Separation of Warrants and Preferred Stock. (a) The
Preferred Stock and Warrants will not be separately transferable until the
earliest to occur of (i) 180 days after the date of the original issue of the
Warrants, (ii) the date on which a registration statement with respect to a
registered exchange offer or a shelf registration statement for the Preferred
Stock is declared effective under the Securities Act, (iii) the date on which a
shelf registration statement with respect to the Warrants is declared effective
under the Securities Act, (iv) such date as the Initial Purchaser in its sole
discretion shall determine and (v) the occurrence of a Change of Control (as
defined in that certain Offering Memorandum dated April 15, 1999 with respect
to the Offering of the Units, Preferred Stock and Warrants) (such date, the
"Separation Date"). The surrender of a Unit Certificate for separate Warrant
Certificates and Preferred Stock certificates is herein referred to as a
"separation" and the related Warrants being referred to as "separated." Upon
separation of the Warrants and the Preferred Stock, the Global Warrants shall
be transferred to and deposited with the Warrant Agent, as custodian for, and
registered in the name of DTC or its nominee, duly executed by the Company and
countersigned by the Warrant Agent as provided herein.
6
<PAGE> 8
SECTION 10. Book-Entry Provisions for Global Warrants.
(a) Registered Owner of Global Warrants. Each Global Warrant initially
shall (i) be registered in the name of DTC or its nominee, (ii) be delivered to
the Warrant Agent as custodian for the Depositary and (iii) bear legends as set
forth in Section 6.
Members of, or participants in, DTC ("Agent Members") shall have no
rights under this Agreement with respect to any Global Warrant held on their
behalf by DTC, or the Warrant Agent as its custodian, or under the Global
Warrant, and DTC may be treated by the Company, the Warrant Agent and any agent
of the Company or the Warrant Agent as the absolute owner of such Global
Warrant for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Warrant Agent or any agent of the Company
or the Warrant Agent from giving effect to any written certification, proxy or
other authorization furnished by DTC or shall impair, as between DTC and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a Holder of any Warrant.
(b) Transfers of a Global Warrant shall be limited to transfers of
such Global Warrant in whole, but not in part, to DTC, its successors or their
respective nominees. Interests of beneficial owners in a Global Warrant may be
transferred in accordance with the rules and procedures of DTC and the
provisions of this Section 10. If required to do so pursuant to any applicable
law or regulation, beneficial owners may obtain Warrants in definitive form, in
exchange for their beneficial interests in a Global Warrant upon written
request in accordance with DTC's and the Warrant Agent's procedures. In
addition, definitive Warrants in the form of Exhibit A without the provisions
relating solely to Global Warrants and designated by footnotes (the "Definitive
Warrants") shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Warrant if (i) DTC (A) notifies the Company
that it is unwilling or unable to continue as a Depositary for the Global
Warrant and the Company thereupon fails to appoint a successor depositary upon
90 days notice or (B) has ceased to be a clearing agency registered under the
Securities Exchange Act of 1934 and the Company thereupon fails to appoint a
successor depositary upon 90 days notice, or (ii) the Company, at its option,
notifies the Warrant Agent in writing that it elects to cause issuance of
Definitive Warrants. In addition, beneficial interests in a Global Warrant may
be exchanged for Definitive Warrants upon request but only upon at least 20
days' prior written notice given to the Warrant Agent by or on behalf of DTC in
accordance with customary procedures. In all cases, Definitive Warrants
delivered in exchange for any Global Warrants or beneficial interests therein
will be registered in names, and issued in any approved denominations,
requested by or on behalf of DTC (in accordance with its customary procedures)
and will bear the Restrictive Legend set forth in Section 6, if applicable,
unless the Company determines otherwise in compliance with applicable law.
(c) In connection with any transfer of a portion of the beneficial
interest in a Global Warrant pursuant to Section 10(b) to beneficial owners who
are required to hold Definitive Warrants, the Warrant Agent shall reflect on
its books and records the date and a decrease in the amount of such Global
Warrant in an amount equal to the amount of the beneficial interest in the
Global Warrant to be transferred, and the Company shall execute, and the
Warrant Agent shall countersign and deliver, one or more Definitive Warrants of
like tenor and amount.
7
<PAGE> 9
(d) In connection with the transfer of an entire Global Warrant to
beneficial owners pursuant to Section 10(b), such Global Warrant shall be
deemed to be surrendered to the Warrant Agent for cancellation, and the Company
shall execute, and the Warrant Agent shall countersign and deliver to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Global Warrant, an equal aggregate amount of Definitive Warrants of
authorized denominations.
(e) Any Definitive Warrant delivered in exchange for an interest in a
Global Warrant pursuant to Section 10(c) or (d) shall, except as otherwise
provided herein, bear the Restrictive Legend set forth in Section 6, if
applicable.
(f) The holder of a Global Warrant 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 Agreement or the Warrants.
SECTION 11. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Warrant to any institutional "Accredited Investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) that is not a QIB:
(i) The Warrant Agent shall register the transfer of any
Warrant, whether or not such Warrant bears the
Restrictive Legend, if (A) the requested transfer is
at least two years after the later of the Issue Date
and the last date on which such Warrant was held by
an Affiliate of the Company or (B) the proposed
transferee has delivered to the Warrant Agent (1) a
certificate substantially in the form of Exhibit C
hereto and (2) an opinion of counsel, if so
requested by the Company, acceptable to the Company
and the Warrant Agent that such transfer is in
compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the Global Warrant,
upon receipt by the Warrant Agent of (A) the
documents, if any, required by Section 11(a)(i) and
(B) instructions given in accordance with the
Depository's and the Warrant Agent's procedures, the
Warrant Agent shall reflect on its books and records
the date and a decrease in the aggregate amount of
the beneficial interest in the Global Warrant to be
transferred, and the Company shall execute, and the
Warrant Agent shall countersign and deliver, one or
more definitive Warrant Certificates of like tenor
and amount.
(b) Transfers to QIBs. If the Warrant to be transferred consists of
Definitive Warrants, the Warrant Agent shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Warrant stating, or has otherwise advised the
Company and the Warrant Agent in writing, that the sale has been made in
8
<PAGE> 10
compliance with the provisions of Rule 144A to a transferee who has signed the
certification provided for in the form of Exhibit B hereto, or has otherwise
advised the Company and the Warrant Agent in writing, that it is purchasing the
Warrant 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 QIB within the
meaning of Rule 144A, 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 it 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 its foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
(c) Restrictive Legend. Upon the transfer, exchange or replacement of
Warrant Certificates not bearing the Restrictive Legend, the Warrant Agent
shall deliver Warrant Certificates that do not bear the Restrictive Legend.
Upon the transfer, exchange or replacement of Warrant Certificates bearing the
Restrictive Legend, unless there is delivered to the Warrant Agent an opinion
of counsel reasonably satisfactory to the Company and the Warrant Agent to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act, the Warrant Agent shall deliver Warrant Certificates that do bear the
Restrictive Legend.
(d) General. The provisions hereof shall be qualified in their
entirety by any applicable securities laws of the United States and any other
applicable jurisdiction and by the procedures of any applicable clearing
agency, in each case as in effect from time to time, and all such laws and
clearing procedures shall be deemed to be incorporated herein by reference. By
its acceptance of any Warrant Certificate bearing the Restrictive Legend, each
holder of such a Warrant Certificate shall be deemed to acknowledge the
restrictions on transfer of such Warrant Certificate set forth in this
Agreement and in the Restrictive Legend and agrees that it will transfer such
Warrant Certificate only as provided in this Agreement. The Warrant Agent shall
not register a transfer of any Warrant Certificate unless such transfer
complies with the restrictions on transfer of such Warrant Certificate set
forth in this Agreement. In connection with any transfer of Warrant
Certificates, each Warrant holder agrees by its acceptance of the Warrant
Certificates to furnish the Warrant Agent or the Company such certifications,
legal opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities
Act; provided that the Warrant Agent shall not be required to determine (but
may rely on a determination made by the Company with respect to) the
sufficiency of any such certifications, legal opinions or other information.
SECTION 12. Terms of Warrants; Exercise of Warrants. (a) Subject to
the terms of this Agreement, each Warrant holder shall have the right, which
may be exercised any time on or after the Separation Date until 5:00 p.m., New
York City time, on May 1, 2009 (the "Exercise Period"), to receive from the
Company the number of fully paid and non-assessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the exercise price of $9.50 per Warrant Share (the "Exercise
Price"); provided that holders shall be able to exercise their Warrants for
cash only if a registration statement relating to the Warrant Shares is then in
effect in the case of Warrants resold pursuant to a shelf registration
statement, or the exercise of such Warrants is exempt from the registration
requirements of the Securities Act, and such securities are qualified for sale
or exempt from qualification under the
9
<PAGE> 11
applicable securities laws of the states in which the various holders of the
Warrants or other persons to whom it is proposed that the Warrant Shares be
issued on exercise of the Warrants reside. Each holder may exercise its right,
during the Exercise Period, to receive Warrant Shares on a net basis, such
that, without the exchange of any funds, the holder will receive such number of
Warrant Shares equal to the product of (A) the number of Warrant Shares for
which such Warrant is exercisable as of the date of exercise (if the Exercise
Price were being paid in cash) and (B) the Cashless Exercise Ratio. The
Cashless Exercise Ratio shall equal a fraction the numerator of which is the
Market Value (as defined below) per share of Common Stock on the date of
exercise minus the Exercise Price per share as of the date of exercise and the
denominator of which is the Market Value per share on the date of exercise.
Each Warrant not exercised prior to 5:00 p.m., New York City time, on May 1,
2009 (the "Expiration Date") shall become void and all rights thereunder and
all rights in respect thereof under this agreement shall cease as of such time.
No adjustments as to dividends will be made upon exercise of the Warrants.
The "Market Value" per share of Common Stock as of any date shall
equal (i) if the Common Stock is primarily traded on a securities exchange, the
last sale price on such securities exchange on the trading day immediately
prior to the date of determination, or if no sales occurred on such day, the
mean between the closing "bid" and "asked" prices on such day, (ii) if the
principal market for the Common Stock is in the over-the-counter market, the
closing sale price on the trading day immediately prior to the date of the
determination, as published by the National Association of Securities Dealers
Automated Quotation System or similar organization, or if such price is not so
published on such day, the mean between the closing "bid" and "asked" prices,
if available, on such day, which prices may be obtained from any reputable
pricing service, broker or dealer, and (iii) if neither clause (i) nor clause
(ii) is applicable, the fair market value on the date of determination of the
Common Stock as determined in good faith by the Board of Directors of the
Company.
(b) In order to exercise all or any of the Warrants represented by a
Warrant Certificate, the holder thereof must deliver to the Warrant Agent at
its corporate trust office set forth in Section 25 hereof the Warrant
Certificate and the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, which is set forth in Section
12(a) hereof and in the form of Warrant Certificate attached hereto as Exhibit
A, as adjusted as herein provided, for the number of Warrant Shares in respect
of which such Warrants are then exercised. Payment of the aggregate Exercise
Price shall be made (i) in cash, by wire transfer or by certified or official
bank check payable to the order of the Company (a "Cash Exercise") or (ii) on a
net basis in the manner provided in Section 12(a) hereof. An exercise of a
Warrant in accordance with clause (ii) of the immediately preceding sentence is
herein called a "Cashless Exercise."
Upon surrender of a Warrant Certificate representing more than one
Warrant in connection with the Holder's option to elect a Cashless Exercise,
the number of shares of Common Stock deliverable upon a Cashless Exercise shall
be equal to the number of shares of Common Stock issuable upon the exercise of
Warrants that the Holder specifies are to be exercised pursuant to a Cashless
Exercise multiplied by the Cashless Exercise Ratio. All provisions of this
Agreement shall be applicable with respect to a surrender of a Warrant
10
<PAGE> 12
Certificate pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby. Upon surrender of the Warrant Certificate and
payment of the Exercise Price in accordance with this Agreement, the Company
will issue shares of Common Stock of the Company for each Warrant evidenced by
such Warrant Certificate, subject to adjustment as described herein. Whenever
there occurs a Cashless Exercise, the Company shall deliver to the Warrant
Agent a certificate setting forth the Cashless Exercise Ratio. The Warrant
Agent shall be entitled to rely on such certificate and shall be under no duty
or responsibility with respect to any such certificate, except to exhibit the
same from time to time, to any holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any holder to determine whether the Cashless Exercise
Ratio is correct or with respect to the method employed in determining the
Cashless Exercise Ratio or the validity or value of any shares of Common Stock.
(c) Subject to the provisions of Section 13 hereof, upon compliance
with Section 12(b) above, the Warrant Agent shall deliver or cause to be
delivered with all reasonable dispatch, to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of whole Warrant Shares issuable
upon the exercise of such Warrants or other securities or property to which
such holder is entitled hereunder, together with cash as provided in Section 18
hereof; provided that if any consolidation, merger or lease or sale of assets
is proposed to be effected by the Company as described in Section 17(l) hereof,
or a tender offer or an exchange offer for shares of Common Stock shall be
made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Warrant Agent shall, as soon as possible, but in any event not
later than two business days thereafter, deliver or cause to be delivered the
full number of Warrant Shares issuable upon the exercise of such Warrants in
the manner described in this sentence or other securities or property to which
such holder is entitled hereunder, together with cash as provided in Section 18
hereof. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part. If less than all the
Warrants represented by a Warrant Certificate are exercised, such Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same
tenor and for the number of Warrants which were not exercised shall be executed
by the Company and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Warrant Certificate, registered in such name or names as
may be directed in writing by the holder, and shall deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same.
(e) All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner satisfactory to the
Company. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all monies received
by the Warrant Agent for the purchase of the Warrant Shares through the
exercise of such Warrants.
11
<PAGE> 13
(f) The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement
as the Warrant Agent may request.
SECTION 13. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in
the issue of any Warrant Certificates or any certificates for Warrant Shares in
a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
SECTION 14. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 15. Reservation of Warrant Shares. (a) The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from such Transfer Agent the stock
certificates required to honor outstanding Warrants upon exercise thereof in
accordance with the terms of this Agreement. The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will
provide or otherwise make available any cash which may be payable as provided
in Section 18 hereof. The Company will furnish such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each holder pursuant to Section 19 hereof.
12
<PAGE> 14
(c) Before taking any action which would cause an adjustment pursuant
to Section 17 hereof to reduce the Exercise Price below the then par value (if
any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
(d) The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof.
SECTION 16. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed
on the principal securities exchanges, automated quotation systems or other
markets within the United States of America on which other shares of Common
Stock are then listed, if any.
SECTION 17. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 17. For purposes of this
Section 17, "Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any
class or series of preferred stock) to participate in any distribution of the
assets or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock. If the Company (i) pays a
dividend or makes a distribution on its Common Stock in shares of its Common
Stock, (ii) subdivides its outstanding shares of Common Stock into a greater
number of shares, (iii) combines its outstanding shares of Common Stock into a
smaller number of shares, (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock or (v) issues by
reclassification of its Common Stock any shares of its capital stock, then the
Exercise Price in effect immediately prior to such action shall be
proportionately adjusted (including by adjusting the definition of "Warrant
Shares") so that after giving effect to such adjustment, the holder of any
Warrant thereafter exercised may receive the aggregate number and kind of
shares of capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior to
such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Company
shall determine, in good faith, the allocation of the adjusted Exercise Price
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 17. Such adjustment shall be made successively
whenever any event listed above shall occur.
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<PAGE> 15
(b) Adjustment for Rights Issue. If the Company distributes any
rights, options or warrants to all holders of its Common Stock entitling them
for a period expiring within 45 days after the record date mentioned below to
purchase shares of Common Stock or securities convertible into, or exchangeable
for, Common Stock at a price per share less than the Fair Value (as defined
herein) per share on that record date, the Exercise Price shall be adjusted in
accordance with the formula:
<TABLE>
<S> <C> <C>
O + N x P
-------------------
E' = E x M
---------------------------------------
O + N
</TABLE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Fair Value per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Exercise Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued.
(c) Adjustment for Other Distributions. If the Company distributes to
all holders of its Common Stock any of its assets or debt securities or any
rights or warrants to purchase debt securities, assets or other securities of
the Company, the Exercise Price shall be adjusted in accordance with the
formula:
<TABLE>
<S> <C>
M - F
E' = E x ----------
M
</TABLE>
where:
E' = the adjusted Exercise Price.
14
<PAGE> 16
E = the current Exercise Price.
M = the Fair Value per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants to be distributed in respect
of one share of Common Stock as determined in good faith by
the Board of Directors of the Company (the "Board of
Directors").
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the
distribution.
This Section 17(c) does not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in accordance with generally accepted
accounting principles. Also, this Section 17(c) does not apply to rights,
options or warrants referred to in Section 17(b) hereof.
(d) Adjustment for Common Stock Issue. If the Company issues shares of
Common Stock for a consideration per share less than the Fair Value per share
on the date the Company fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:
<TABLE>
<S> <C>
E' = E x P + (O x M)
-----------
A x M
</TABLE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares
of Common Stock.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Fair Value per share of Common Stock on the date of
issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This Section 17(d) does not apply to:
15
<PAGE> 17
(1) any of the transactions described in subsections
(b) and (c) of this Section 17,
(2) the exercise of Warrants, or the conversion or
exchange of other securities convertible or exchangeable for
Common Stock the issuance of which caused an adjustment to be
made under Section 17(e),
(3) Common Stock issued to the Company's employees
under bona fide employee benefit plans adopted by the Board
of Directors and approved by the holders of Common Stock when
required by law, if such Common Stock would otherwise be
covered by this Section 17(d) (but only to the extent that
the aggregate number of shares excluded hereby and issued
after the date of this Warrant Agreement shall not exceed 5%
of the Common Stock outstanding at the time of the adoption
of each such plan, exclusive of anti-dilution adjustments
thereunder), or
(4) Common Stock issued to stockholders of any
person which merges into the Company, or with a subsidiary of
the Company, in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger,
provided that if such person is an Affiliate of the Company,
the Board of Directors shall have obtained a fairness opinion
from a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of the Company,
stating that the consideration received in such merger is
fair to the Company from a financial point of view.
(e) Adjustment for Convertible Securities Issue. If the Company issues
any securities convertible into or exchangeable for Common Stock (other than
securities issued in transactions described in Section 17(b) and (c)) for a
consideration per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the Fair Value per share on the date
of issuance of such securities, the Exercise Price shall be adjusted in
accordance with the formula:
<TABLE>
<S> <C>
E' = E x P + (O x M)
-----------
(O + D) x M
</TABLE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
16
<PAGE> 18
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Fair Value per share of Common Stock on the date of
issuance of such securities.
D = the maximum number of shares of Common Stock deliverable
upon conversion or in exchange for such securities at the
initial conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This Section 17(e) does not apply to convertible securities issued to
stockholders of any person which merges into the Company, or with a subsidiary
of the Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger, provided that if such
person is an Affiliate of the Company, the Board of Directors shall have
obtained a fairness opinion from a nationally recognized investment banking,
appraisal or valuation firm, which is not an Affiliate of the Company, stating
that the consideration received in such merger is fair to the Company from a
financial point of view.
(f) Consideration Received. For purposes of any computation respecting
consideration received pursuant to Section 17(d) and (e), the following shall
apply:
(1) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made
for any commissions, discounts or other expenses incurred by
the Company for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to be
the fair market value thereof as determined in good faith by
the Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive,
and described in a Board resolution which shall be filed with
the Warrant Agent;
(3) in the case of the issuance of securities
convertible into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of
such securities plus the additional minimum consideration, if
any, to be received by the
17
<PAGE> 19
Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this
subsection); and
(4) in the case of the issuance of shares of Common
Stock pursuant to rights, options or warrants which rights,
options or warrants were originally issued together with one
or more other securities as part of a unit at a price per
unit, the consideration shall be deemed to be the fair value
of such rights, options or warrants at the time of issuance
thereof as determined in good faith by the Board of Directors
whose determination shall be conclusive and described in a
Board resolution which shall be filed with the Warrant Agent
plus the additional minimum consideration, if any, to be
received by the Company upon the exercise, conversion or
exchange thereof (as determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(g) Fair Value. In Section 17(d) and (e) hereof, the "Fair Value" per
security at any date of determination shall be (1) in connection with a sale by
the Company to a party that is not an Affiliate of the Company in an
arm's-length transaction (a "Non-Affiliate Sale"), the price per security at
which such security is sold and (2) in connection with any sale by the Company
to an Affiliate of the Company, (a) the last price per security at which such
security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination or (b) if clause (a) is not applicable,
the fair market value of such security determined in good faith by (i) a
majority of the Board of Directors, including a majority of the Disinterested
Directors, and approved in a Board resolution delivered to the Warrant Agent or
(ii) a nationally recognized investment banking, appraisal or valuation firm,
which is not an Affiliate of the Company, in each case, taking into account,
among all other factors deemed relevant by the Board of Directors or such
investment banking, appraisal or valuation firm, the trading price and volume
of such security on any national securities exchange or automated quotation
system on which such security is traded. Notwithstanding the foregoing, any
sale to Donaldson, Lufkin & Jenrette Securities Corporation (or any successor
thereto) pursuant to an underwritten public offering registered under the
Securities Act shall be deemed to be and treated as a Non-Affiliate Sale.
In Sections 17(b) and (c) hereof, the "Fair Value" per security at any
date of determination shall be (a) the last price per security at which such
security was sold by the Company in a Non-Affiliate Sale within the three-month
period preceding such date of determination or (b) if clause (a) is not
applicable, the fair market value of such security determined in good faith by
(i) a majority of the Board of Directors, including a majority of the
Disinterested Directors, and approved in a Board resolution delivered to the
Warrant Agent or (ii) a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of the Company, in each case, taking
into account, among all other factors deemed relevant by the Board of Directors
or such investment banking, appraisal or valuation firm, the trading price and
volume of such security on any national securities exchange or automated
quotation system on which such security is traded.
For purposes of this Section 17(g), "Disinterested Director" means, in
connection with any issuance of securities that gives rise to a determination
of the Fair Value thereof, each member of the Board of Directors who is not an
officer, employee, director or other Affiliate of
18
<PAGE> 20
the party to whom the Company is proposing to issue the securities giving rise
to such determination.
For purposes of this Section 17(g), "Affiliate" of any specified
Person means (A) any other person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
person and (B) any director, officer or employee of such specified person. For
purposes of this definition "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with") as
used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
agreement or otherwise.
(h) When De Minimis Adjustment May Be Deferred. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 17 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be, it being
understood that no such rounding shall be made under Section 17(p).
(i) When No Adjustment Required. No adjustment need be made for a
transaction referred to Section 17(a), (b), (c), (d) or (e) hereof, if Warrant
holders are to participate (without being required to exercise their Warrants)
in the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction. No adjustment need be
made for (i) rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest or (ii) a change in the par value or no
par value of the Common Stock. To the extent the Warrants become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
(j) Notice of Adjustment. Whenever the Exercise Price is adjusted, the
Company shall provide the notices required by Section 19 hereof.
(k) Notice of Certain Transactions. If (i) the Company takes any
action that would require an adjustment in the Exercise Price pursuant to
Section 17(a), (b), (c), (d) or (e) hereof and if the Company does not arrange
for Warrant holders to participate pursuant to Section 17(i) hereof, (ii) the
Company takes any action that would require a supplemental Warrant Agreement
pursuant to Section 17(l) hereof or (iii) there is a liquidation or dissolution
of the Company, then the Company shall mail to Warrant holders a notice stating
the proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification, consolidation,
merger, transfer, lease, liquidation or dissolution. The Company shall mail the
notice at least 15 days before such date. Failure to mail the notice or any
defect in it shall not affect the validity of the transaction.
(l) Reorganization of Company. Immediately after April 22, 1999, if
the Company consolidates or merges with or into, or transfers or leases all or
substantially all its assets to, any person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind
and amount of securities, cash or other assets which the holder of a
19
<PAGE> 21
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or
conveyance shall have been made, shall enter into (i) a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 17(l) and (ii) a supplement to the Warrant Registration Rights
Agreement, dated as of the date hereof, between the Company and the Initial
Purchaser (the "Warrant Registration Rights Agreement") providing for the
assumption of the Company's obligations thereunder. The successor Company shall
mail to Warrant holders a notice describing the supplemental Warrant Agreement
and Warrant Registration Rights Agreement. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental Warrant Agreement
is an affiliate of the formed, surviving, transferee or lessee corporation,
that issuer shall join in the supplemental Warrant Agreement and Warrant
Registration Rights Agreement. If this Section 17(l) applies, Sections 17(a),
(b), (c), (d) and (e) hereof do not apply.
(m) Company Determination Final. Any determination that the Company or
the Board of Directors must make pursuant to Section 17(a), (b), (c), (d), (e),
(f), (g), (h) or (i) hereof is conclusive.
(n) Warrant Agent's Disclaimer. The Warrant Agent has no duty to
determine when an adjustment under this Section 17 should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether any provisions of a supplemental Warrant Agreement under Section 17(l)
hereof are correct. The Warrant Agent makes no representation as to the
validity or value of any securities or assets issued upon exercise of Warrants.
The Warrant Agent shall not be responsible for the Company's failure to comply
with this Section 17.
(o) When Issuance or Payment May Be Deferred. In any case in which
this Section 17 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Price and (ii) paying to such holder
any amount in cash in lieu of a fractional share pursuant to Section 18 hereof;
provided that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence of
the event requiring such adjustment.
(p) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to Section 17(a) and (b), each Warrant outstanding
prior to the making of the adjustment in the Exercise Price shall thereafter
evidence the right to receive upon payment of the adjusted Exercise Price that
number of shares of Common Stock (calculated to the nearest hundredth) obtained
from the following formula:
20
<PAGE> 22
<TABLE>
<S> <C>
N' = N x E
--------
E'
</TABLE>
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 18. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
18, be issuable on the exercise of any Warrants (or specified portion thereof),
the Company shall pay an amount in cash equal to the Fair Value per Warrant
Share, as determined on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction, computed to the nearest
whole U.S. cent.
SECTION 19. Notices to Warrant Holders. (a) Upon any adjustment of the
Exercise Price pursuant to Section 17 hereof, the Company shall promptly
thereafter (i) cause to be filed with the Warrant Agent a certificate of a firm
of independent public accountants of recognized standing selected by the Board
of Directors of the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
Warrants at the address appearing on the Warrant register for each such
registered holder written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 19.
21
<PAGE> 23
(b) In case:
(i) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common Stock
or of any other subscription rights or warrants;
(ii) the Company shall authorize the distribution to
all holders of shares of Common Stock of evidences of its
indebtedness or assets (other than dividends or cash
distributions paid out of consolidated current or retained
earnings as shown on the books of the Company prepared in
accordance with generally accepted accounting principles or
dividends payable in shares of Common Stock or distributions
referred to in Section 17(a) hereof);
(iii) of any consolidation or merger to which the
Company is a party and for which approval of any stockholders
of the Company is required, or of the conveyance or transfer
of the properties and assets of the Company substantially as
an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock;
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(v) the Company proposes to take any action (other
than actions of the character described in Section 17(a)
hereof) which would require an adjustment of the Exercise
Price pursuant to Section 17 hereof;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of Warrants at his address
appearing on the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (i) or (ii) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (x)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to
be determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 19 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
22
<PAGE> 24
(c) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
SECTION 20. Merger, Consolidation or Change of Name of Warrant Agent.
(a) Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 22 hereof. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, and
in case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent; and in case at that
time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
(b) In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 21. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken,
23
<PAGE> 25
suffered or omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Agreement except as a result of its negligence,
bad faith or willful misconduct.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent and any recovery of judgment shall be for
the ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal
entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own negligence, bad
faith or willful misconduct.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or
with respect to the method employed in making the same. The Warrant Agent shall
not be
24
<PAGE> 26
accountable with respect to the validity or value or the kind or amount of any
Warrant Shares or of any securities or property which may at any time be issued
or delivered upon the exercise of any Warrant or with respect to whether any
such Warrant Shares or other securities will when issued be validly issued and
fully paid and nonassessable, and makes no representation with respect thereto.
SECTION 22. Change of Warrant Agent. If the Warrant Agent shall become
incapable of acting as Warrant Agent, the Company shall appoint a successor to
such Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such incapacity by
the Warrant Agent or by the registered holder of a Warrant Certificate, then
the registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to such Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company. The holders of a majority of the unexercised Warrants shall be
entitled at any time to remove the Warrant Agent and appoint a successor to
such Warrant Agent. Such successor to the Warrant Agent need not be approved by
the Company or the former Warrant Agent. After appointment, the successor to
the Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; provided that the former Warrant Agent shall deliver and
transfer to the successor to the Warrant Agent any property at the time held by
it hereunder and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in this
Section 24, however, or any defect therein, shall not affect the legality or
validity of the appointment of a successor to the Warrant Agent.
SECTION 23. Registration. Holders shall be able to exercise their
Warrants for cash only if a registration statement relating to the Warrant
Shares is then in effect, or the exercise of such Warrants is exempt from the
registration requirements of the Securities Act, and such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the states in which the various holders of the Warrants or other
persons to whom it is proposed that the Warrant Shares be issued on exercise of
the Warrants reside.
(a) The Company shall prepare and cause to be filed within 60 days of
the issuance date of the Warrants with the Securities and Exchange Commission
(the "Commission") pursuant to Rule 415 under the Securities Act a shelf
registration statement (the "Registration Statement") on the appropriate form
relating to the offer and sale by the Company of the Warrant Shares to the
holders of Warrants upon exercise of the Warrants.
(b) The Company shall use its reasonable best efforts to cause such
Registration Statement to be declared effective by the Commission on or before
150 days from the date of issuance of the Warrants.
(c) The Company shall use its reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act in order
to permit the prospectus included therein to be lawfully delivered by the
Company to the holders exercising the Warrants until the later of (i) two years
following the effective date of the Registration Statement and (ii) the earlier
of (A) the Expiration Date and (B) the first date as of which all Warrants have
been
25
<PAGE> 27
exercised; provided that, except as provided below with respect to any Black
Out Period (as defined herein), the Company shall be deemed not to have used
its reasonable best efforts to keep the Registration Statement effective during
the requisite period if it voluntarily takes any action that would result in it
not being able to offer and sell the Warrant Shares upon exercise of the
Warrants during that period, unless such action is required by applicable law.
Notwithstanding the foregoing, the Company shall not be required to amend or
supplement the Registration Statement, any related prospectus or any document
incorporated therein by reference, for a period (a "Black Out Period") not to
exceed, for so long as this Agreement is in effect, an aggregate of 60 days in
any calendar year, in the event that (i) an event occurs and is continuing as a
result of which the Registration Statement, any related prospectus or any
document incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii)(A) the Company determines in its good faith
judgment that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Company or (B)
the disclosure otherwise relates to a material business transaction which has
not yet been publicly disclosed; provided, further, that such Black Out Period
shall be extended for any period, not to exceed an aggregate of 30 days in any
calendar year, during which the Commission is reviewing any proposed amendment
or supplement to the Registration Statement, any related prospectus or any
document incorporated therein by reference which has been filed by the Company;
and provided, further, that no Black Out Period may be in effect during the
three months prior to the Expiration Date.
(d) The Company shall cause the Registration Statement and the related
prospectus and any amendment or supplement thereto, as of the effective date of
the 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 the
light of the circumstances under which they were made, not misleading.
(e) The Company shall give prompt written notice to the holders of the
Warrants, the Initial Purchaser and the Warrant Agent of (i) the effectiveness
of the Registration Statement or any post-effective amendment thereto, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation or threatening of any proceedings
for that purpose, (iii) the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the Warrant
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (iv) the happening of any event that requires the
Company to make changes in the Registration Statement or the prospectus in
order to make the statements therein not misleading or untrue and (v) the
commencement and termination of any Black Out Period.
(f) The Company shall use its reasonable best efforts to prevent the
issuance or obtain the withdrawal of any order suspending the effectiveness of
the Registration Statements at the earliest possible time.
26
<PAGE> 28
(g) Upon the occurrence of any event contemplated by Section 23(e)(iv)
hereof or the commencement of any Black Out Period (subject to the last
sentence of Section 23(c) hereof) the Company shall promptly prepare a
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to holders of the Warrants, the prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading and will contain the current information required by
the Securities Act.
(h) Not later than the effective date of the Registration Statement,
the Company will provide a CUSIP number for the Warrant Shares and provide the
Warrant Agent with printed certificates for the Warrant Shares in a form
eligible for deposit with the Depository Trust Company.
(i) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Registration
Statement.
(j) The Company shall register or qualify or cooperate with the
holders in connection with the registration or qualification of the Warrant
Shares for offer and sale by the Company upon exercise of the Warrants under
the securities or blue sky laws of such states of the United States as any
holder reasonably requests and do any and all other acts or things necessary or
advisable to enable such offer and sale in such jurisdictions; provided that
the Company shall not be required to (i) qualify to do business in any
jurisdiction in which 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 in which it is not then so subject.
(k) The Company shall bear all expenses incurred by it in connection
with the performance of its obligations under this Section 23.
(l) The Company acknowledges and agrees that any remedy at law for
breach of any provision of this Section 23 will be inadequate and that, in
addition to any other remedies that the holder may have, the holders shall be
entitled to the remedy of specific performance to ensure the Company performs
its obligations under this Section 23. The election of any one or more remedies
by the holders hereunder shall not constitute a waiver of the right to pursue
other available remedies.
(m) No person is entitled to include any securities of the Company
held by such person in, or to have such securities registered under, the
Registration Statement.
SECTION 24. Reports.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Warrants or the Warrant Shares are outstanding, the
Company shall furnish to the Warrant Agent and the holders of Warrants or
Warrant Shares (i) 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, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent
27
<PAGE> 29
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations of
the Commission, the Company shall file a copy of all such information and
reports with the Commission for public availability (unless the Commission
shall not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all such reports that the Warrant Agent may be required to
deliver to the holders of the Warrants and the Warrant Shares under this
Section 24.
SECTION 25. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant to or on the Company shall be sufficiently
given or made when received if deposited in the mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
R&B Falcon Corporation.
901 Threadneedle
Houston, Texas 77079
Telephone: (281) 496-5000
Attention: Leighton E. Moss, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder(s) of any Warrant to the Warrant Agent shall be
sufficiently given when received if deposited in the mail, first-class,
certified or registered, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company) to the Warrant Agent as
follows:
American Stock Transfer & Trust Company
Corporate Trust Administration
40 Wall Street
New York, New York 10005
Telephone: (718) 921-8275
Attention: Paula Caroppoli
SECTION 26. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of the holders of Warrants. Any amendment or
supplement to this Agreement that
28
<PAGE> 30
has a material adverse effect on the interests of the holders of Warrants shall
require the written consent of the holders of a majority of the then
outstanding Warrants (excluding Warrants held by the Company or any of its
affiliates). The consent of each holder of Warrants affected shall be required
for any amendment pursuant to which the Exercise Price would be increased or
the number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided in this Agreement.
SECTION 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. Termination. This Agreement shall terminate at 5:00 p.m.,
New York City time on May 1, 2009. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date if all Warrants have been
exercised. The provisions of Section 23 shall survive such termination.
SECTION 29. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with
the internal laws of said State.
SECTION 30. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of Warrants.
SECTION 31. Counterparts. This Agreement may be executed in two
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Signature Page Follows]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
R&B FALCON CORPORATION
By: /s/ ROBERT FULTON
---------------------------------
Name: Robert Fulton
Title: EVP
AMERICAN STOCK TRANSFER
& TRUST COMPANY, as Warrant Agent
By: /s/ HERBERT J. LEMMER
---------------------------------
Name: Herbert J. Lemmer
Title: Vice President
30
<PAGE> 32
EXHIBIT A
FORM OF WARRANT
[Face of Warrant Certificate]
EXERCISABLE ON OR AFTER THE SEPARATION DATE
CUSIP No. Warrants
--------- --------
No.
---------------
Warrant Certificate
R&B FALCON CORPORATION
[UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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 SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 10 OF THE WARRANT AGREEMENT.](1)
[THESE WARRANTS (OR THEIR PREDECESSORS) AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
- ------------------------
(1) This legend is used for a Global Warrant.
31
<PAGE> 33
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
(AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THESE WARRANTS OR WARRANT SHARES EXCEPT (A) TO THE ISSUER OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (D) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT
AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF
WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE
WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THESE WARRANTS IN
VIOLATION OF THE FOREGOING.](2)
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of _______ Warrants expiring May 1, 2009 (the
"Warrants") set forth above [or such lesser amount as is set forth on Schedule
A hereto](3) to purchase Common Stock. Each Warrant entitles the holder upon
exercise to receive from the Company commencing on or after the Separation Date
until 5:00 p.m., New York City Time, on May 1, 2009, the number of fully paid
and non-assessable Warrant Shares as set forth in the Warrant Agreement,
subject to adjustment as set forth in Section 17 of the Warrant Agreement, at
the initial exercise price (the "Exercise Price") of $9.50 per Warrant Share
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office or agency
of the Warrant Agent, but only subject to the conditions set forth herein and
in
- -------------------
(2) Restrictive Legend only used for Transfer Restrictive Warrants.
(3) This clause is used only for Global Warrant.
32
<PAGE> 34
the Warrant Agreement referred to on the reverse hereof. Notwithstanding the
foregoing, Warrants may be exercised without the exchange of funds pursuant to
the net exercise provisions of Section 12 of the Warrant Agreement. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement. No Warrant may be exercised after 5:00 p.m.,
New York City Time, on May 1, 2009, and to the extent not exercised by such
time such Warrants shall become void. Reference is hereby made to the further
provisions of this Warrant Certificate set forth on the reverse hereof and such
further provisions shall for all purposes have the same effect as though fully
set forth at this place. This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement. This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
33
<PAGE> 35
IN WITNESS WHEREOF, R&B Falcon Corporation has caused this Warrant
Certificate to be signed by the undersigned officer and may cause its corporate
seal to be affixed hereunto or imprinted hereon.
Dated:
-----------------
R&B FALCON CORPORATION
By:
----------------------------------------
Name:
Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
----------------------------------------
Name:
Title:
34
<PAGE> 36
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring May 1, 2009 entitling the holder on
exercise to receive shares of Common Stock, and are issued or to be issued
pursuant to a Warrant Agreement dated as of April 22, 1999 (the "Warrant
Agreement"), duly executed and delivered by the Company to American Stock
Transfer & Trust Company, as warrant agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or after the Separation Date
and on or before May 1, 2009; provided that holders shall be able to exercise
their Warrants for cash only if a registration statement relating to the
Warrant Shares is then in effect in the case of Warrants resold pursuant to a
shelf registration statement, or the exercise of such Warrants is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of the Warrants or other persons to whom it is proposed that
the Warrant Shares be issued on exercise of the Warrants reside. In order to
exercise all or any of the Warrants represented by this Warrant Certificate,
the holder must deliver to the Warrant Agent at its New York corporate trust
office set forth in Section 19 of the Warrant Agreement this Warrant
Certificate and the form of election to purchase on the reverse hereof duly
filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, as adjusted as provided in the
Warrant Agreement, for the number of Warrant Shares in respect of which such
Warrants are then exercised. No adjustment shall be made for any dividends on
any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted under certain
circumstances, the Warrant Agreement provides that the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be adjusted. No
fractions of a share of Common Stock will be issued upon the exercise of any
Warrant, but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
The Company has agreed under the terms of the Warrant Agreement to
file and use its reasonable best efforts to make effective on or before 150
days after the issuance of the Warrants a shelf registration statement on the
appropriate form under the Securities Act, and (subject to Black Out Periods)
to use its reasonable best efforts to keep such registration statement
continuously effective under the Securities Act in order to permit the
prospectus included therein to be lawfully delivered by the Company to the
holders exercising the Warrants until the later of (i) two years following the
effective date of the registration statement and (ii) the earlier of (A) the
expiration of the Warrants and (B) the first date as of which all Warrants have
been exercised. In addition, the Company has agreed pursuant to a separate
Warrant Registration
35
<PAGE> 37
Rights Agreement dated as of April 22, 1999 (the "Warrant Registration Rights
Agreement") to file within 60 days after the issuance of the Warrants and use
its reasonable best efforts to make effective on or before 150 days after such
date a shelf registration statement on the appropriate form under the
Securities Act, and to use its reasonable best efforts to keep such
registration statement continuously effective under the Securities Act in order
to permit the resale of the Warrants and Warrant Shares by the holders thereof
for the period of time referred to in the immediately preceding sentence.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
36
<PAGE> 38
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of the Company
in the amount of $______ in accordance with the terms hereof unless the holder
is exercising Warrants pursuant to the net exercise provisions of Section 12 of
the Warrant Agreement in which case the holder shall receive such number of
Warrant Shares equal to the product of (A) the number of Warrant Shares for
which this Warrant Certificate is exercisable as of the date of exercise (if
the Exercise Price were being paid in cash) and (B) the Cashless Exercise Ratio
(as defined in the Warrant Agreement). The undersigned requests that a
certificate for such shares be registered in the name
of_______________________________, whose address is _______________________ and
that such shares be delivered to ________________ whose address is
______________________________. If said number of shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________, whose address is____________________,
and that such Warrant Certificate be delivered to _________________, whose
address is __________________.
Date: ____________________, ____
-----------------------------------------
(Signature)
-----------------------------------------
(Signature Guaranteed)
37
<PAGE> 39
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL WARRANTS(4)
<TABLE>
<CAPTION>
Date of Exchange Amount of decrease Amount of increase in Number of Warrants Signature of
in Number of Number of Warrants of of this Global authorized officer
Warrants of this this Global Warrant Warrant following of Warrant Agent
Global Warrant such decrease or
increase
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------------
(4) This is to be included only if the Warrant is in global form.
<PAGE> 40
EXHIBIT B
FORM OF PURCHASER LETTER
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Telephone: (281) 496-5000
Attention: Leighton E. Moss, Esq.
American Stock Transfer & Trust Company
Corporate Trust Administration
40 Wall Street
New York, New York 10005
Telephone: (718) 921-8275
Attention: Paula Caroppoli
Re: Warrants to Purchase Common Stock of R&B Falcon Corporation, a
Delaware corporation (CUSIP:____________).
Reference is hereby made to the Warrant Agreement, dated as of April
22, 1999 (the "Warrant Agreement"), between R&B Falcon Corporation (the
"Issuer") and American Stock Transfer & Trust Company, as warrant agent.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Warrant Agreement.
In connection with our proposed purchase of Warrants or Warrant
Shares:
we confirm that:
1. We understand that any subsequent transfer of the Warrants
or Warrant Shares or any interest therein is subject to certain
restrictions and conditions set forth in the Warrant Agreement and the
undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Warrants or Warrant Shares or any interest
therein except in compliance with, such restrictions and conditions
and the United States Securities Act of 1933, as amended (the
"Securities Act").
2. We understand that the offer and sale of the Warrants and
Warrant Shares have not been registered under the Securities Act, and
that the Warrants and Warrant Shares and any interest therein may not
be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Warrants
or Warrant Shares or any interest therein, we will do so only (A) to
the Issuer or any subsidiary thereof, (B) to a person whom we
reasonably believe is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act)(a "QIB"), (C) to an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under
<PAGE> 41
the Securities Act) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to the
Issuer a signed letter substantially in the form of this letter and,
an Opinion of Counsel in form reasonably acceptable to the Issuer to
the effect that such transfer is in compliance with the Securities
Act, (D) pursuant to the provisions of Rule 144(k) under the
Securities Act, (E) in accordance with another exemption from the
registration requirements of the Securities Act, or (F) pursuant to an
effective registration statement under the Securities Act and, in each
case, in accordance with the applicable securities laws of any state
of the United States or any other applicable jurisdiction and we
further agree to provide to any person purchasing the Warrants or
Warrant Shares from us in a transaction meeting the requirements of
clauses (A) through (F) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein. We
further understand that the Warrants or Warrant Shares purchased by us
will bear a legend to the foregoing effect.
3. We understand that, on any proposed resale of the Warrants
or Warrant Shares or beneficial interest therein, we will be required
to furnish to you and the Issuer such certifications, legal opinions
and other information as you and the Issuer may reasonably require to
confirm that the proposed sale complies with the foregoing
restrictions. We further understand that any subsequent transfer by us
of the Warrants or Warrant Shares or beneficial interest therein
acquired by us must be effected through the Warrant Agent.
4. We are a QIB and have such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Warrants or Warrant Shares,
and we and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
5. We are acquiring the Warrants or Warrant Shares for our
own account (or for accounts as to which we exercise sole investment
discretion and have full power to make, and do make, the statements
contained in this letter on behalf of each such account) for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution of the Warrants or Warrant Shares in
violation of the Securities Act, subject, nevertheless, to the
understanding that the disposition of our property or the property of
such investor account or accounts shall at all times be and remain
within our control.
2
<PAGE> 42
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
---------------------------------------
[Insert name of QIB]
By:
Name:
Title:
Dated:
_____________________, 1999
3
<PAGE> 43
EXHIBIT C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Paula Caroppoli
Corporate Trust Administration
Reference is hereby made to the Warrant Agreement, dated as of April
22, 1999 (the "Warrant Agreement"), between R & B Falcon Corporation and
American Stock Transfer & Trust Company, as Warrant Agent. Capitalized terms
used but not defined herein shall have the meanings given them in the Warrant
Agreement.
In connection with our proposed purchase of ______________ Warrants
represented by:
(a) o Beneficial interests in Warrants, or
(b) o Definitive Warrants,
we confirm that:
(i) we are an entity which is an "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933, as amended (the "Securities Act"), or an entity in which
all of the equity owners are accredited investors within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor");
(ii) any purchase of Warrants by us will be for our own
account or for the account of one or more other Institutional
Accredited Investors:
(iii) in the event that we purchase any Warrants, we will
acquire Warrants having a minimum purchase price of at least $100,000
for our own account and for each separate account for which we are
acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and
risks of purchasing Warrants;
(v) we are not acquiring Warrants with a view to any
distribution thereof in a transaction that would violate the
Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; provided that the
disposition of our property and the property of any accounts for which
we are acting as fiduciary shall remain at all times within our
control; and
<PAGE> 44
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
purchase Warrants.
We understand that the Warrants are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Warrants have not been registered under the Securities Act, and we agree,
on our own behalf and on behalf of each account for which we acquire any
warrants, that (A) such Warrants may be offered, resold, pledged or otherwise
transferred only (i) to a person whom we reasonably believe to be a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, in a transaction meeting the
requirements of Rule 144 under the Securities Act or in accordance with another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel if the Company so requests), (ii) to the Company or
(iii) pursuant to an effective registration statement under the Securities Act,
and, in each case, in accordance with any applicable securities laws of any
State of the United States or any other applicable jurisdiction and (B) we
will, and each subsequent holder is required to, notify any subsequent
purchaser from it of the resale restrictions set forth in (A) above. We
understand that the registrar and transfer agent will not be required to accept
for registration of transfer any Warrants, except upon presentation of evidence
satisfactory to the Company that the foregoing restrictions on transfer have
been complied with. We further understand that the Warrants purchased by us
will bear a legend reflecting the substance of this paragraph.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchaser. We
acknowledge that you, the Company and the Initial Purchaser will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
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<PAGE> 45
------------------------------------
(Name of Purchaser)
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
----------------------------
3
<PAGE> 1
EXHIBIT 4.2
- -------------------------------------------------------------------------------
WARRANT REGISTRATION RIGHTS AGREEMENT
Dated as of April 22, 1999
by and between
R&B FALCON CORPORATION
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
- -------------------------------------------------------------------------------
<PAGE> 2
This Warrant Registration Rights Agreement (this "AGREEMENT") is
made and entered into as of April 22, 1999, by and between R&B Falcon
Corporation, a Delaware corporation (the "COMPANY"), and Donaldson, Lufkin &
Jenrette Securities Corporation (the "INITIAL PURCHASER"), who has agreed to
purchase the Company's Warrants (the "WARRANTS") to purchase 10,500,000 shares
of the Company's common stock pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated
April 15, 1999 (the "PURCHASE AGREEMENT"), by and among the Company and the
Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Warrants, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchaser set forth in Section 3 of the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Warrant Agreement, dated April
22, 1999, between the Company and American Stock Transfer & Trust Company, as
Warrant Agent, relating to the Warrants (the "WARRANT AGREEMENT").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
ACT: The Securities Act of 1933, as
amended.
AFFILIATE: As defined in Rule 144 of the Act.
CERTIFICATED SECURITIES: Definitive Warrants, as defined in
the Warrant Agreement.
CLOSING DATE: The date hereof.
COMMON STOCK: Common Stock, $0.01 par value per
share, of the Company
COMMISSION: The Securities and Exchange
Commission.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934,
as amended.
EXEMPT RESALES: The transactions in which the Initial
Purchaser propose to sell the Warrants to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, to certain
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Act.
FILING DEADLINE: As defined in Sections 3(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a
Registration Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, all material
incorporated by reference into such
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<PAGE> 3
Prospectus and any information previously omitted in reliance upon Rule 430A of
the Act.
RECOMMENCEMENT DATE: As defined in Section 4(b) hereof.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 3 hereof.
SUSPENSION NOTICE: As defined in Section 4(b) hereof.
TRANSFER RESTRICTED SECURITIES: The Warrants and the Warrant Shares,
upon original issuance thereof, and at all times subsequent thereto, until, in
the case of any such Warrants or Warrant Shares, (a) the date on which such
Warrants or Warrant Shares have been disposed of in accordance with a Shelf
Registration Statement, (b) the date on which such Warrants or Warrant Shares
are distributed to the public pursuant to Rule 144 or are saleable pursuant to
Rule 144 (or similar provisions then in effect) under the Act or (c) the date
on which such Warrants or Warrant Shares cease to be outstanding.
WARRANTS: Warrants entitling the holders
thereof to purchase an aggregate of 10,500,000 shares of Common Stock, each
such Warrant entitling the holder thereof to purchase 35 shares of Common Stock
at an exercise price of $9.50 per share, pursuant to the terms of the Warrant
Agreement.
WARRANT SHARES: The shares of Common Stock
purchasable upon exercise of the Warrants.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. As soon as practicable after the Closing
Date but in no event later than 60 days after the Closing Date (the such 60th
day, "FILING DEADLINE"), the Company shall file with the Commission a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT"), relating to all Transfer Restricted Securities, and
shall use its best efforts to cause such Shelf Registration Statement to become
effective on or prior to 150 days after the Closing Date (such 150th day, the
"EFFECTIVENESS DEADLINE").
The Company shall use its best efforts to keep any Shelf Registration
Statement required by this Section 3(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Sections 4(a)(i)
and (ii) hereof to the extent necessary to ensure that it is available for
sales of Transfer Restricted Securities by the Holders thereof entitled to the
benefit of this Section 3(a), and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for the shorter of (i) two
years following the earlier of the first date as of which no Warrants remain
outstanding and (ii) if the Warrants expire unexercised, the expiration of the
Warrants.
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<PAGE> 4
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. Each selling Holder
agrees to promptly furnish additional information required to be disclosed in
order to make the information previously furnished to the Company by such
Holder not materially misleading.
SECTION 4. SHELF REGISTRATION PROCEDURES
(a) In connection with the Shelf Registration Statement, the Company
shall:
(i) use its best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 3(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof (including, without limitation, one or more underwritten
offerings) within the time periods and otherwise in accordance with the
provisions hereof. The Company shall not be permitted to include in the Shelf
Registration Statement any securities other than the Transfer Restricted
Securities.
(ii) use its best efforts to contact all Holders of Transfer
Restricted Securities and notify each Holder of its right to include its
Transfer Restricted Securities in such Shelf Registration Statement.
(iii) use its best efforts to keep such Shelf Registration
Statement continuously effective and provide all requisite financial statements
for the period specified in Section 3 of this Agreement. Upon the occurrence of
any event that would cause any such Shelf Registration Statement or the
Prospectus contained therein (1) to contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading or (2) not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement,
the Company shall file promptly an appropriate amendment to such Shelf
Registration Statement curing such defect, and, if Commission review is
required, use its best efforts to cause such amendment to be declared effective
as soon as practicable.
(iv) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement effective for the
applicable period set forth in Section 3 hereof, cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Act, and to comply fully with Rules
424, 430A and 462, as applicable, under the Act in a timely manner; and comply
with the provisions of the Act;
(v) advise the Holders and underwriters, if any, promptly
and, if requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any stop
order suspending
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<PAGE> 5
the effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(vi) subject to Section 4(a)(iii), if any fact or event
contemplated by Section 4(a)(v)(D) above shall exist or have occurred, prepare
a supplement or post-effective amendment to the Shelf Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the purchasers
of Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(vii) furnish to each Holder named in any Shelf Registration
Statement or Prospectus and underwriter, if any, in connection with such sale
before filing with the Commission, copies of any Shelf Registration Statement
or any Prospectus included therein or any amendments or supplements to any such
Shelf Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Shelf Registration
Statement), which documents will be subject to the review and comment of such
Persons in connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Shelf Registration
Statement or Prospectus or any amendment or supplement to any such Shelf
Registration Statement or Prospectus (including all such documents incorporated
by reference) to which such Persons shall reasonably object within five
Business Days after the receipt thereof. Any such Person shall be deemed to
have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Act;
(viii) make available at reasonable times for inspection by
the Holders and underwriters, if any, and any attorney or accountant retained
by such Holders, or underwriters, if any, all financial and other records,
pertinent corporate documents of the Company and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Holder, underwriters, if any, attorney or accountant in connection with
such Shelf Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(ix) if requested by any Holders or underwriters, if any, in
connection with such sale, promptly include in any Shelf Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Holders or underwriters, if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities; and make all required filings of such Prospectus
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<PAGE> 6
supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(x) furnish to each Holder and underwriter, if any, without
charge, at least one copy of the Shelf Registration Statement, as first filed
with the Commission, and of each amendment thereto, each, upon request;
(xi) deliver to each Holder and underwriter, if any, without
charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons reasonably
may request; the Company hereby consents to the use (in accordance with law) of
the Prospectus and any amendment or supplement thereto by each Holder and each
underwriter, if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xii) upon the request of any Holder or underwriter in
connection with any underwritten offering pursuant to a Shelf Registration
Statement filed pursuant to this Agreement, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted Securities
pursuant to any Shelf Registration Statement contemplated by this Agreement as
may be reasonably requested by such Person in connection with any sale or
resale pursuant to any applicable Shelf Registration Statement and in such
connection, the Company shall:
(A) upon request of any Holder or underwriter, if any, furnish (or
in the case of paragraphs (2) and (3) below, use its best
efforts to cause to be furnished) to each Holder or underwriter,
if any, upon the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in
Sections 6(ff), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as the Holders may reasonably
request;
(2) an opinion, dated the date of effectiveness of the Shelf
Registration Statement, of counsel for the Company covering
matters similar to those set forth in paragraph (d) of
Section 9 of the Purchase Agreement and such other matter as
the selling Holders may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate
upon the statements of officers and other representatives of
the Company and without independent check or verification),
no facts came to such counsel's attention that caused such
counsel to believe that the Shelf Registration Statement, at
the time such Shelf Registration Statement or any
post-effective amendment thereto became effective, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus contained in such Shelf Registration Statement as
of its date, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to
make
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<PAGE> 7
the statements therein, in the light of the circumstances
under which they were made, not misleading. Without limiting
the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules and
other financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Sections 9(g) and 9(h)
of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the Holders and underwriters, if any, to
evidence compliance with the matters set forth in clause (A)
above and with any customary conditions contained in the any
agreement entered into by the Company pursuant to this clause
(xii);
(xiii) prior to any public offering of Transfer Restricted
Securities, cooperate with the Holders, and their respective counsel in
connection with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions as such
Persons may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the Shelf
Registration Statement, in any jurisdiction where it is not now so subject;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such names as the
Holders may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xv) (A) list all Shares of Common Stock covered by such
Shelf Registration Statement on any securities exchange on which the Common
Stock is then listed or (B) authorize for quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or the National
Market System of Nasdaq all Shares of Common Stock covered by such Shelf
Registration Statement if the Common Stock is then so authorized for quotation.
(xvi) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Shelf Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xiii) above;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Shelf Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust Company;
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<PAGE> 8
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the Act);
and
(xix) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section 13
or Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 4(a)(v)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 4(a)(v)(D) hereof (in each case, a "SUSPENSION
NOTICE"), such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
(A) such Holder's has received copies of the supplemented or amended Prospectus
contemplated by Section 4(a)(vi) hereof, or (B) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received requested copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). The Company shall not allow more than 60 days in the aggregate per year
to pass between the dates of Suspension Notices and the applicable
Recommencement Dates. Each Holder receiving a Suspension Notice hereby agrees
that it will either (x) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (y) deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice.
SECTION 5. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Shelf Registration Statement required by this Agreement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Common Stock to be issued upon
conversion of the Warrants and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company; (v) all application and filing fees in connection with listing the
Common Stock on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchaser and the
Holders selling Transfer Restricted Securities pursuant to the "Plan of
Distribution" contained in the Shelf Registration Statement, for the reasonable
fees and disbursements of not more than one counsel, who shall be Akin, Gump,
Strauss, Hauer & Feld, L.L.P., unless another firm shall be chosen by the
Holders of a majority of shares of the Transfer Restricted Securities for whose
benefit such Shelf Registration Statement is being prepared.
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<PAGE> 9
SECTION 6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder,
its directors, its officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act and Section 20 of the Exchange
Act), from and against any and all losses, claims, damages, liabilities,
judgments, (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Shelf Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto) provided by
the Company to any Holder or any prospective purchaser of registered Warrants
or registered shares of Common Stock or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based
upon information relating to any of the Holders furnished in writing to the
Company by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and its directors
and officers, and each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the
same extent as the foregoing indemnity from the Company set forth in section
(a) above, but only with reference to information relating to such Holder
furnished in writing to the Company by such Holder expressly for use in any
Registration Statement. In no event shall any Holder, its directors, its
officers or any Person, if any, who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Shelf Registration Statement exceeds (i) the amount
paid by such Holder for such Transfer Restricted Securities and (ii) the amount
of any damages that such Holder, its directors, its officers or any Person, if
any, who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 6(a) or 6(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 6(a) and 6(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 6(c), but may
employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the
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<PAGE> 10
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified
parties and all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 6(a), and
by the Company, in the case of parties indemnified pursuant to Section 6(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
6(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
6(d)(i) above but also the relative fault of the Company on the one hand, and
of the Holders, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Holders, on the other hand,
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 by the Holders, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in the second
paragraph of Section 5(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 6, no Holder or its related
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Indemnified Holders shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 6(c) are several in proportion to the shares of Transfer
Restricted Securities held by each of the Holders hereunder and not joint.
SECTION 7. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15(d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 8. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations under Section 3 hereof may result
in material irreparable injury to the Initial Purchaser or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 3
hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of this
Section 9(c)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding shares of Transfer Restricted Securities (excluding
Transfer Restricted Securities held by the Company or its Affiliates).
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders
hereunder.
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(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture; and
(ii) if to the Company:
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Telecopier No.: (281) 496-0285
Attention: Leighton E. Moss, Esq.
With a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
1000 Louisiana, Suite 3400
Houston, Texas 77002
Telecopier No.: (713) 276-5555
Attention: Frank Putman
All such 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 on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Warrant Agent at
the address specified in the Warrant Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Warrant Agreement. If any transferee of any
Holder shall acquire Transfer Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Transfer Restricted Securities such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such Person shall be
entitled to receive the benefits hereof.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that 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.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
R&B FALCON CORPORATION
By: /s/ ROBERT FULTON
------------------------------------
Name: Robert Fulton
Title: EVP
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ TREVOR TURBIDY
---------------------------------
Name: Trevor Turbidy
Title: Vice President
<PAGE> 1
EXHIBIT 5.1
[GARDERE WYNNE SEWELL & RIGGS, L.L.P. LETTERHEAD]
June 21, 1999
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-3 (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 selling securityholders described therein of up to 10,500,000
shares the Company's common stock, par value $0.01 per share (the "Shares"),
and common stock purchase warrants to purchase the Shares (the "Warrants").
As the basis for the opinions expressed below, we have examined the
Registration Statement, the Prospectus contained therein, the Certificate of
Incorporation of the Company 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.
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 Warrants have been duly authorized,
and have been validly issued and are fully paid and non-assessable, and that
the Shares that will be issued upon the exercise of the Warrants have been duly
authorized, and when issued and delivered to the holders of the Warrants
against payment therefor as provided in the warrant agreement governing the
Warrants, will have been validly issued and will be fully paid and
non-assessable.
<PAGE> 2
Board of Directors
R&B Falcon Corporation
June 21, 1999
Page Two
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 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-3, its Form 10-Q for the quarter ended March
31, 1999, which includes our report dated April 28, 1999 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 18, 1999
<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-3 of our report dated March
26, 1999 included in R&B Falcon Corporation's Form 10-K for the year ended
December 31, 1998 and to all references to our Firm in this registration
statement.
ARTHUR ANDERSEN LLP
- -----------------------------------
Houston, Texas
June 18, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-3) and related Prospectus of R&B Falcon Corporation for the
registration of 10.5 million shares of Common Stock and 0.3 million Common
Stock Purchase Warrants of our report dated February 13, 1998, with respect to
the consolidated financial statements of Cliffs Drilling Company included in its
Annual Report (Form 10-K) for the year ended December 31, 1997 and incorporated
by reference in the R&B Falcon Corporation Current Report on Form 8-K/A
Amendment No. 1 dated January 20, 1999, both filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Houston, Texas
June 18, 1999
