<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
R&B FALCON CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1381 76-0544217
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
</TABLE>
901 THREADNEEDLE
HOUSTON, TEXAS 77079
(281) 496-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
LEIGHTON E. MOSS
R&B FALCON CORPORATION
901 THREADNEEDLE
HOUSTON, TEXAS 77079
(281) 496-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
W. MARK YOUNG
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
1000 LOUISIANA, SUITE 3400
HOUSTON, TEXAS 77002-5007
(713) 276-5864
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this registration
statement and upon consummation of the exchange offer described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the offering. [ ]
------------------
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
12 1/4% Senior Notes due 2006..... $200,000,000 100% $200,000,000 $55,600
- ------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SUBJECT TO COMPLETION, DATED MAY 25, 1999
PROSPECTUS
R&B FALCON CORPORATION
OFFER TO EXCHANGE
ALL OUTSTANDING
$200,000,000 12 1/4% SENIOR NOTES DUE 2006
FOR
$200,000,000 12 1/4% SENIOR NOTES DUE 2006
-------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED
-------------------------
TERMS OF EXCHANGE OFFER
- - We are offering to exchange a total of $200 million of our registered 12 1/4%
Senior Notes due 2006 for an equal amount of our outstanding restricted
12 1/4% Senior Notes due 2006
- - The exchange offer expires 5:00 p.m., New York City time, ,1999, unless
extended
- - The exchange offer is not subject to any condition other than that it not
violate applicable law or any applicable interpretation of the staff of the
Securities and Exchange Commission
- - We will exchange all outstanding notes that are validly tendered and not
validly withdrawn
- - Tenders of outstanding notes may be withdrawn any time prior to the expiration
of the exchange offer
- - The exchange of notes will not be a taxable exchange for the U.S. federal
income tax purposes
- - We will not receive any proceeds from the exchange offer
- - The terms of the notes to be issued are substantially identical to the
outstanding notes, except the exchange notes do not contain the transfer
restrictions and registration rights that apply to the outstanding notes
-------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF MATTERS THAT
YOU SHOULD CONSIDER PRIOR TO DECIDING WHETHER TO EXCHANGE YOUR NOTES IN THE
EXCHANGE OFFER.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE DISTRIBUTED IN THE
EXCHANGE OFFER, NOR HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
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.
-------------------------
The date of this Prospectus is , 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY..................................................... 1
RISK FACTORS................................................ 10
FORWARD-LOOKING STATEMENTS.................................. 14
THE EXCHANGE OFFER.......................................... 15
USE OF PROCEEDS............................................. 21
CAPITALIZATION.............................................. 22
DESCRIPTION OF THE NOTES.................................... 23
DESCRIPTION OF SIGNIFICANT INDEBTEDNESS..................... 56
UNITED STATES FEDERAL TAX CONSEQUENCES FOR NON-UNITED STATES
HOLDERS................................................... 57
PLAN OF DISTRIBUTION........................................ 59
WHERE YOU CAN FIND MORE INFORMATION......................... 60
INCORPORATION BY REFERENCE.................................. 60
LEGAL MATTERS............................................... 60
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 61
</TABLE>
<PAGE> 4
SUMMARY
This summary highlights selected information from this prospectus to help
you understand the exchange offer and the exchange notes. You should carefully
read the entire prospectus to understand fully the terms of the exchange offer
and the exchange notes, as well as the tax and other considerations that are
important to you in making your investment decision. You should pay special
attention to the "Risk Factors" section beginning on page 10 of this prospectus.
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.
RECENT DEVELOPMENTS
On March 26, 1999, we issued the $200 million of our 12 1/4% Senior Notes
due 2006 that are the subject of this exchange offer. Also on that date, RBF
Finance Co., a limited purpose finance company affiliated with us, issued $400
million of its 11% Senior Secured Notes due 2006 and $400 million of its 11 3/8%
Senior Secured Notes due 2009. We borrowed the proceeds from these notes from
RBF Finance Co. in ten separate loans, each of which is secured by one of our
drilling rigs or the construction contract to build a drilling rig. We also
guaranteed the notes that RBF Finance Co. issued. We are using the proceeds from
the loans from RBF Finance Co. to finance the costs of acquiring, constructing,
repairing and improving the drilling rigs that are security for the loans. To
the extent we have already paid these costs, we are using the proceeds for
general corporate purposes, including the repayment of debt. We are using the
net proceeds from our offering of the $200 million senior notes for general
corporate purposes, including the repayment of debt. For accounting purposes, we
will record the debt of RBF Finance Co. because we guarantee this debt.
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.
1
<PAGE> 5
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.
SUMMARY OF TERMS OF EXCHANGE OFFER
In March 1999, we completed the private offering of $200 million principal
amount of our 12 1/4% Senior Notes due 2006. In connection with that offering,
we agreed to deliver this prospectus to you and to use our best efforts to
complete the exchange offer by , 1999.
THE EXCHANGE OFFER......... We are offering to exchange up to $200 million
principal amount of our registered 12 1/4% Senior
Notes due 2006 for an equal amount of our
outstanding restricted 12 1/4% Senior Notes due
2006.
The form and terms of the exchange notes are
identical in all material respects to the form and
terms of the outstanding notes except that the
exchange notes have been registered under the
Securities Act. In order to be exchanged, an
outstanding note must be properly tendered and
accepted. You may tender outstanding notes only in
integral multiples of $1,000.
As of this date, $200 million in principal amount
of notes are outstanding. The exchange offer is not
conditioned on any minimum aggregate principal
amount of outstanding notes being tendered for
exchange.
RESALE OF THE EXCHANGE
NOTES...................... Based on interpretations by the staff of the SEC
set forth in no-action letters issued to third
parties, we believe that you may offer, resell or
otherwise transfer the notes we will issue to you
in the exchange offer without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that:
- you are acquiring the notes issued in the
exchange offer in the ordinary course of
business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to
participate, in the distribution of the
notes issued to you in the exchange offer;
- you are not a broker-dealer who purchased
those outstanding notes directly from us for
resale under Rule 144A or any other
available exemption under the Securities
Act; and
- you are not an "affiliate" of our company.
Each broker-dealer that acquires notes in the
exchange offer for its own account in exchange for
notes that it acquired as a result of market-making
or other trading activities must acknowledge that
it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of the notes issued in the exchange
offer. The letter of transmittal states that by
making this acknowledgment and by delivering a
prospectus, a broker-dealer will not admit
2
<PAGE> 6
that it is an "underwriter" within the meaning of
the Securities Act. A broker-dealer may use this
prospectus for an offer to resell, resale or other
retransfer of the notes issued to it in the
exchange offer. We have agreed that, for a period
of 180 days after the date of this prospectus, we
will make this prospectus and any amendment or
supplement to this prospectus available to any such
broker-dealer for use in connection with any such
resales. We believe that no registered holder of
the outstanding notes is an affiliate (as this term
is defined in Rule 405 of the Securities Act) of
our company.
EXPIRATION DATE............ The exchange offer will expire at 5:00 p.m., New
York City time, , 1999, unless we
extend the expiration date.
ACCRUED INTEREST ON THE
EXCHANGE NOTES AND THE
OUTSTANDING NOTES........ The exchange notes will bear interest from March
26, 1999. Holders of outstanding notes that we
accept for exchange will not have the right to
receive any payment of interest on those notes
accrued from March 26, 1999 to the date of the
issuance of the exchange notes. Consequently,
holders who exchange their outstanding notes for
exchange notes will receive the same interest
payment on September 15, 1999 (the first interest
payment date) that they would have received had
they not accepted the exchange offer.
TERMINATION OF THE EXCHANGE
OFFER.................... We may terminate the exchange offer if we determine
that our ability to proceed with the exchange offer
could be materially impaired due to any legal or
governmental action, new law, statute, rule or
regulation or any interpretation of the staff of
the SEC of any existing law, statute, rule or
regulation. We do not expect any of these
conditions to occur, although there can be no
assurance that these conditions will not occur. We
must pay increased interest on the notes if we do
not complete the exchange offer.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES........ If you are a holder of a note and you wish to
tender your note for exchange in the exchange
offer, you must send to U.S. Trust Company of
Texas, N.A., as exchange agent, on or before the
expiration date:
either
- a properly completed and duly executed
letter of transmittal, which accompanies
this prospectus, or a facsimile of the
letter of transmittal, including all other
documents required by the letter of
transmittal, to the exchange agent at the
address set forth on the cover page of the
letter of transmittal; or
- an agent's message transmitted by means of
The Depository Trust Company's Automated
Tender Offer Program system and received by
the exchange agent and forming a part of a
confirmation of book entry transfer in which
you acknowledge and agree to be bound by the
terms of the letter of transmittal;
and, the exchange agent must receive on or
before the expiration date either
3
<PAGE> 7
- a timely confirmation of book-entry transfer
of your outstanding notes into the exchange
agent's account at The Depository Trust
Company under the procedure for book-entry
transfers described in this prospectus under
the heading "The Exchange
Offer -- Procedures for Tendering
Outstanding Notes"; or
- the documents necessary for compliance with
the guaranteed delivery procedures described
below.
By executing the letter of transmittal, each holder
will represent to us that:
- the person receiving the exchange notes is
obtaining the exchange notes in the ordinary
course of business of the person receiving
such exchange notes, whether or not such
person is the holder;
- neither the holder nor any other person
acting for the holder has an arrangement or
understanding with any person to participate
in the distribution of the exchange notes;
and
- neither the holder nor any such other person
is an "affiliate," as defined in Rule 405
under the Securities Act, of our company.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......... If you are the beneficial owner of notes and your
name does not appear on a security position listing
of The Depository Trust Company as the holder of
your notes, or if you are a beneficial owner of
registered notes that are registered in the name of
a broker, dealer, commercial bank, trust company or
other nominee, and you wish to tender your notes in
the exchange offer, you should contact the person
in whose name your notes are registered promptly
and instruct that person to tender on your behalf.
If you wish to tender on your own behalf you must,
prior to completing and executing the letter of
transmittal and delivering your outstanding notes,
either make appropriate arrangements to register
ownership of the outstanding notes in your name or
obtain a properly completed bond power from the
registered holder. The transfer of record ownership
may take considerable time.
GUARANTEED DELIVERY
PROCEDURES................. If you wish to tender your notes and time will not
permit your required documents to reach the
exchange agent by the expiration date of the
exchange offer, or you cannot complete the
procedure for book-entry transfer or deliver
certificates for registered notes on time, you may
tender your notes under the procedures described in
this prospectus under the heading "The Exchange
Offer -- Guaranteed Delivery Procedure."
WITHDRAWAL RIGHTS.......... You may withdraw the tender of your notes at any
time prior to 5:00 p.m. on the expiration date.
FEDERAL TAX CONSEQUENCES... The exchange of the notes will generally not be a
taxable event for United States federal income tax
purposes.
USE OF PROCEEDS............ We will not receive any proceeds from the issuance
of notes in the exchange offer. We will pay all
expenses of the exchange offer.
4
<PAGE> 8
EXCHANGE AGENT............. U.S. Trust Company of Texas, N.A., the trustee
under the indenture governing the notes, is serving
as the exchange agent in connection with the
exchange offer. The exchange agent can be reached
at:
U.S. Trust Company of Texas, N.A.
c/o United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Services
The telephone number for the exchange agent is
(800) 548-6565, and the facsimile number for the
exchange agent is (212) 780-0592.
CONSEQUENCES OF NOT EXCHANGING
OUTSTANDING NOTES........ If you do not exchange your outstanding notes for
exchange notes, you will no longer be able to
require us to register the outstanding notes under
the Securities Act. In addition, you will not be
able to offer or sell the outstanding notes unless:
- they are registered under the Securities
Act; or
- you offer or sell them under an exemption
from the registration requirements of the
Securities Act.
See "The Exchange Offer" for more detailed information concerning the terms
of the exchange offer.
SUMMARY OF TERMS OF EXCHANGE NOTES
SECURITIES OFFERED......... $200,000,000 aggregate principal amount of 12 1/4%
Senior Notes due 2006.
MATURITY DATE.............. March 15, 2006.
INTEREST PAYMENT DATES..... March 15 and September 15 of each year, beginning
September 15, 1999.
OPTIONAL REDEMPTION........ We may redeem the notes at any time prior to their
stated maturity at a make-whole premium.
SUBSIDIARY GUARANTEES...... Any subsidiary that guarantees any of our
indebtedness after March 26, 1999 (including
indebtedness under a bank facility) will be
required to guarantee the notes.
RANKINGS................... The notes will be our senior obligations and will
rank equally in right of payment with claims of our
creditors that hold indebtedness or other
liabilities that are not expressly subordinated to
the notes. The notes will effectively be
subordinated to our $800.0 million in secured loans
from RBF Finance Co., our other secured
indebtedness and the indebtedness and other
liabilities of our subsidiaries. As of March 31,
1999, our subsidiaries had approximately $225.8
million of indebtedness, in addition to other
substantial liabilities (primarily trade payables
and accrued expenses).
CHANGE OF CONTROL.......... So long as the notes are rated by Standard & Poors
and Moody's, we will not have to make an offer to
purchase the notes upon the occurrence of a change
of control unless the notes are downgraded or we
are put on a negative credit watch or a default has
occurred and is continuing. In these cases, we will
be required to offer to repurchase all the notes at
a purchase price equal to 101% of the principal
amount plus accrued and unpaid interest to the date
of repurchase.
5
<PAGE> 9
COVENANTS.................. The indenture governing the notes restricts our
ability, and the ability of our subsidiaries, to:
- borrow money;
- pay dividends on stock or purchase stock or
make payments on subordinated indebtedness;
- make investments;
- use assets as security in other
transactions;
- engage in sale/leaseback transactions;
- sell substantially all of its assets or
merge or consolidate with other companies;
- sell assets; and
- enter into transactions with affiliates.
These limitations are subject to important
qualifications and exceptions.
RISK FACTORS
See "Risk Factors" for a discussion of factors you should carefully
consider before deciding whether to exchange your notes in the exchange offer.
6
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data set forth below gives effect to the
merger of Falcon Drilling Company, Inc. and Reading & Bates Corporation, which
occurred on December 31, 1997, under the "pooling-of-interests" method of
accounting. This means that these companies are treated as if they have always
been combined for accounting and financial reporting purposes. The summary
consolidated financial data as of and for the three months ended March 31, 1998
and 1999 have been derived from our unaudited condensed consolidated financial
statements and include all adjustments (consisting of only normal recurring
adjustments) that management considers necessary for a fair presentation of the
interim periods. Results of interim periods are not necessarily indicative of
results for the full year. The summary financial data for the years ended
December 31, 1995, 1996, 1997 and 1998 were derived from our audited
consolidated financial statements, and for the year ended December 31, 1994 from
the separate audited consolidated financial statements of Reading & Bates and
Falcon. You should read this data together with our historical consolidated
financial statements, which are incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1998 1999
------- ---------
(IN MILLIONS, EXCEPT
PER SHARE AND RATIO
AMOUNTS)
(UNAUDITED)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $279.3 $ 243.8
Operating income............................................ 116.8 32.7
Income from continuing operations before income tax expenses
and minority interest..................................... 105.2 9.3
Net income(1)............................................... 69.8 1.6
Income from continuing operations per common share:
Basic..................................................... .42 .01
Diluted................................................... .42 .01
OTHER DATA:
Ratio of earnings to fixed charges(2)....................... 5.3x --
Depreciation................................................ $ 21.4 $ 36.5
Capital expenditures and acquisitions....................... $237.4 $ 236.3
BALANCE SHEET DATA AS OF MARCH 31, 1999:
Working capital............................................. $ 639.1
Total assets................................................ 4,442.2
Total debt.................................................. 2,720.5
Stockholders' equity........................................ 1,253.0
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998(3)
----------- ------ -------- -------- --------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $307.6 $390.3 $ 609.6 $ 933.0 $1,032.6
Operating income............................................ 22.4 64.9 178.8 160.4 215.8
Income (loss) from continuing operations before
extraordinary item........................................ (12.7) 23.5 106.7 29.8 91.0
Net income (loss)(1)........................................ (12.7) 26.9 106.7 (6.2) 102.8
Net income (loss) from continuing operations per common
share:
Basic..................................................... (.18) .16 .70 .18 .54
Diluted................................................... (.18) .15 .67 .18 .54
OTHER DATA:
Ratio of earnings to fixed charges(2)....................... -- 1.8x 3.4x 2.6x 2.0x
Depreciation and amortization............................... $ 38.4 $ 46.9 $ 62.3 $ 84.7 $ 97.6
Capital expenditures and acquisitions....................... 124.7 186.9 383.2 600.2 1,166.5
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................................. $ 9.2 $ 57.7 $ 195.3 $ (15.2) $ 175.3
Total assets................................................ 810.9 946.8 1,455.8 1,933.0 3,709.3
Total debt.................................................. 288.6 308.7 514.2 827.4 1,995.9
Stockholders' equity........................................ 356.3 472.6 716.7 728.0 1,250.2
</TABLE>
7
<PAGE> 11
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(1) After extraordinary gain of $3.4 million in 1995, loss from discontinued
operations of $36.0 million in 1997, extraordinary loss of $24.2 million and
income from discontinued operations of $36.0 million in 1998, income from
discontinued operations of $8.3 million for the three months ended March 31,
1998, and extraordinary loss of $1.7 million for the three months ended
March 31, 1999.
(2) For the purpose of this calculation "earnings" represents income (loss) from
continuing operations before income tax expense, minority interest, and
extraordinary gain, plus fixed charges exclusive of interest capitalized.
"Fixed charges" consist of interest, whether expensed or capitalized,
amortization of debt expense and an estimated portion of rentals
representing interest expense. For the year ended December 31, 1994 and the
three months ended March 31, 1999, earnings were insufficient to cover fixed
charges by $3.4 million and $5.3 million, respectively. Fixed charges for
the year ended December 31, 1997 and 1998 and the three months ended March
31, 1998 and 1999 exclude interest cost of $7.3 million, $22.5 million, $4.5
million and $3.7 million, respectively, related to the debt of joint venture
companies guaranteed by us or our subsidiaries. Approximately $273.4 million
of outstanding indebtedness at December 31, 1998 was retired with a portion
of our borrowings from RBF Finance Co. and the proceeds from the sale of our
$200 million senior notes. Giving effect to this retirement and assuming an
average effective interest rate of approximately 11.76% on this debt and
giving effect to the amortization of debt issuance costs, the pro forma
ratio of earnings to fixed charges for the year ended December 31, 1998 was
1.8x and, for the three months ended March 31, 1999, earnings were
insufficient to cover fixed charges by $12.3 million.
(3) Includes results of Cliffs Drilling Company, which we acquired on December
1, 1998, only for the month of December 1998 because we accounted for this
acquisition under the purchase method.
8
<PAGE> 12
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The summary unaudited pro forma combined financial data set forth below for
the year ended December 31, 1998 was derived from our historical financial
statements and from the historical financial statements of Cliffs Drilling
Company, which we acquired on December 1, 1998. The summary unaudited pro forma
combined financial data is presented as if the acquisition of Cliffs Drilling
and certain other acquisition and financing transactions were consummated at the
beginning of the period. The summary unaudited pro forma combined financial data
does not purport to represent what our company's and Cliffs Drilling's combined
results of operations actually would have been if the acquisition of Cliffs
Drilling had occurred as of the date indicated or will be for any future
periods. The summary unaudited pro forma combined financial data should be read
in conjunction with the unaudited pro forma condensed statement of operations
and our historical financial statements, which are incorporated by reference in
this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998(4)
-------------
(IN MILLIONS,
UNAUDITED)
<S> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $1,349.0
Operating income............................................ 305.1
Income from continuing operations........................... 138.9
OTHER DATA:
EBITDA(1)................................................... $ 544.6
Ratio of EBITDA to interest expense(2)...................... 6.7x
Ratio of earnings to fixed charges(3)....................... 2.4x
Depreciation and amortization............................... $ 130.0
</TABLE>
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(1) "EBITDA" means income from continuing operations before extraordinary loss,
interest expense, taxes, depreciation, amortization, cancellation of
conversion projects and merger expenses. EBITDA should not be considered as
an alternative to net income as an indicator of our operating performance,
or as an alternative to cash flow as a better measure of liquidity. EBITDA
measures presented may not be comparable to other similarly titled measures
of other companies. We believe EBITDA is a widely accepted financial
indicator of a company's ability to service debt.
(2) We believe that the ratio of EBITDA to interest expense provides an investor
with information as to its current ability to meet its interest costs.
(3) For the purpose of this calculation "earnings" represent income from
continuing operations before income tax expense, minority interest, and
extraordinary loss, plus fixed charges exclusive of interest capitalized.
"Fixed charges" consist of interest, whether expensed or capitalized,
amortization of debt expense, and an estimated portion of rentals
representing interest expense. Fixed charges for the year ended December 31,
1998 exclude interest cost of $22.5 million related to the debt of joint
venture companies guaranteed by us or our subsidiaries.
(4) The pro forma data does not reflect any of the proceeds from our offering of
the outstanding notes completed in December 1998, or the application of the
net proceeds from that offering, as we used the net proceeds for general
corporate purposes, including funding our deepwater construction program.
Additionally, the pro forma data does not reflect the proceeds from the
senior note offering completed in March 1999 or the application of the loans
from RBF Finance Co. funded with the proceeds from the secured note
offerings of RBF Finance Co., since we used these proceeds to repay our
revolving credit facility and our short-term obligations and for general
corporate purposes, including funding our deepwater construction program,
and the impact of repaying the revolving credit facility and short-term
obligations did not have a material effect. Likewise, the pro forma data
does not reflect any proceeds from our offering in April 1999 of preferred
stock and warrants since we are using these proceeds for general corporate
purposes, including funding our deepwater rig construction program.
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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 the outstanding notes as well as the exchange
notes.
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 $0.9 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 during 1998 we 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. Similarly, although our EBITDA increased by $114.5 million from 1997 to
1998, we experienced a decline in EBITDA from $136.7 million in the first
quarter of 1998 to $71.5 million in 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 our ability to repay the notes.
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.
We must generate substantial cash flow in order to repay the notes. The
amount of cash flow we generate depends 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 declines
that started in 1997. These declines have adversely affected our rig utilization
and dayrates. Utilization of our domestic jack-up fleet has declined from
approximately 100% in January 1998 to approximately 32% in March 1999, and
dayrates on new contracts have declined from a range of $35,000 to $40,000 in
January 1998 to a range of $10,000 to $13,000 at present. Dayrates for our
domestic barge drilling rig fleet have not declined materially, but utilization
of the fleet declined from approximately 96% in January 1998 to approximately
24% in March 1999. Our international jack-up fleet has experienced declines in
utilization and dayrates since January 1998, but such declines have not been as
dramatic as those experienced in the domestic jack-up fleet. If conditions in
the oil and gas industry do not improve in the future, we may be unable to repay
the notes.
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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 the required payments on the notes;
- 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.
RESTRICTIONS ON OUR ABILITY TO REDEEM THE NOTES MAY LIMIT OUR FINANCIAL
FLEXIBILITY.
We are subject to restrictions with respect to the notes that may limit our
flexibility in structuring or refinancing existing or future debt. We may redeem
the notes, but only upon payment of a make-whole premium. As of March 31, 1999
we had $1.3 billion of indebtedness with maturity dates on or prior to the
maturity of the notes. These substantial repayment obligations may adversely
affect our ability to refinance the notes at maturity.
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 ability
to repay the notes.
MOST OF THE FUNDS TO PAY OUR DEBT OBLIGATIONS WILL COME FROM OUR SUBSIDIARIES,
AND YOUR RIGHT TO RECEIVE PAYMENT ON THE NOTES IS JUNIOR TO THE INDEBTEDNESS OF
OUR NON-GUARANTOR SUBSIDIARIES.
Most of our operating income and cash flow from operations is generated by
our subsidiaries. We expect that funds necessary to meet our debt service
obligations will be provided primarily by distributions or advances from our
subsidiaries. Our ability to obtain cash from our subsidiaries to meet our debt
service obligations, including the payment of principal and interest on the
notes, may be limited by contractual and legal restrictions on our subsidiaries
and by their financial condition and requirements for cash to conduct their
operations.
None of our subsidiaries currently guarantee the notes. Our subsidiaries
will not be obligated with respect to the notes unless any subsidiary guarantees
any of our indebtedness on or after the date the notes were issued. If this
occurs, the subsidiary will be obligated to equally and ratably guarantee the
notes. Because our subsidiaries do not guarantee the notes, the claims of
creditors of our subsidiaries effectively have priority on the assets and
earnings of the subsidiaries over the claims of the holders of the notes. If
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any subsidiary is required to guarantee the notes in the future, its guarantee
will be subordinate to any secured indebtedness of the subsidiary to the extent
of the value of the collateral securing the indebtedness.
In the event of an insolvency, liquidation or reorganization of any of our
subsidiaries, any creditors of the subsidiary, including trade creditors, would
be entitled to payment in full from the assets of the subsidiary before we, as a
stockholder, would be entitled to receive any distribution from the subsidiary.
As of March 31, 1999, our subsidiaries had approximately $225.8 million of
indebtedness, in addition to other substantial liabilities (primarily trade
payables and accrued expenses). All of this indebtedness and these other
liabilities effectively ranks senior to the notes.
YOUR RIGHT TO RECEIVE PAYMENT ON THE NOTES IS JUNIOR TO OUR SECURED
INDEBTEDNESS.
We have $800 million of secured indebtedness under our loan agreements with
RBF Finance Co. that is secured by liens on ten drilling rigs or construction
contracts for rigs. Accordingly, RBF Finance Co. has claims on these drilling
rigs that are prior to your claims as the holders of the notes. If we default in
paying the notes or if we declare or undergo bankruptcy, liquidation or
reorganization, these assets will be applied to satisfy our obligations for the
secured indebtedness before any payment from these assets could be used to pay
the notes. This means that the secured indebtedness will be senior to the notes
to the extent that the value of the collateral is adequate to satisfy the
secured indebtedness.
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 our ability to meet our
obligations under the notes.
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 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 our ability to meet our obligations under the notes.
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.
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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 and make it more difficult for us to make the required
payments on the notes.
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.
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
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our costs of doing business, discourage our customers from exploring for oil and
gas and reduce demand for our services.
THERE IS NO ESTABLISHED MARKET FOR THE NOTES.
The notes that are currently outstanding have not been registered under the
Securities Act or any state securities law. Therefore, these notes may not be
offered or sold except under an effective registration statement or an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and any applicable state securities laws.
Although the exchange notes may be resold or otherwise transferred by
holders who are not affiliates of our company without compliance with the
registration requirements under the Securities Act, they will be new securities
for which there is currently no established trading market. We do not intend to
apply for listing of the exchange notes on a national securities exchange or for
quotation of the exchange notes on an automated dealer quotation system. The
liquidity of any market for the exchange notes will depend upon the number of
holders of the exchange notes, the interest of securities dealers in making a
market in the exchange notes and other factors. Accordingly, there can be no
assurance as to the development or liquidity of any market for the exchange
notes. If an active trading market for the exchange notes does not develop, the
market price and liquidity of the exchange notes may be adversely affected. If
the exchange notes are traded, they may trade at a discount from their face
value, depending upon prevailing interest rates, the market for similar
securities, our performance and other factors. The exchange notes will be
eligible for trading in The PORTAL Market.
Even though we are registering our offer of the exchange notes in the
exchange offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of our company may publicly offer for sale or resell the
exchange notes only in compliance with provisions of Rule 144 under the
Securities Act.
YOUR NOTES WILL CONTINUE TO BE SUBJECT TO TRANSFER RESTRICTIONS IF YOU DO NOT
EXCHANGE THEM IN THE EXCHANGE OFFER.
If you do not exchange your notes for the exchange notes in the exchange
offer, you will continue to be subject to the restrictions on transfer of your
notes described in the legend on your notes. The restrictions on transfer of
your outstanding notes arise because we issued the notes under exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, you may only
offer or sell the currently outstanding notes if they are registered under the
Securities Act and applicable state securities laws, or are offered and sold
under an exemption from these registration requirements. We do not intend to
register the currently outstanding notes under the Securities Act. In addition,
if you exchange your notes in the exchange offer for the purpose of
participating in a distribution of the exchange notes, you may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent the amount of the
currently outstanding notes decreases because noteholders tender their notes in
the exchange offer, the trading market, if any, for the currently outstanding
notes after the closing of the exchange offer would be adversely affected.
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
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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;
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.
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OUTSTANDING NOTES
Subject to the terms and conditions set forth in this prospectus and in the
letter of transmittal, we are offering to exchange up to $200 million in
aggregate principal amount of our registered 12 1/4% Senior Notes due 2006 for
an equal amount of our outstanding restricted 12 1/4% Senior Notes due 2006. We
will accept for exchange restricted 12 1/4% Senior Notes due 2006 which are
properly tendered on or prior to the expiration date and not withdrawn as
permitted below. As used in this prospectus, the term "expiration date" means
5:00 p.m., New York City time, on , 1999; provided, however, that if
we, in our sole discretion, have extended the period of time during which the
exchange offer is open, the term "expiration date" means the latest time and
date to which we extend the exchange offer.
The outstanding notes were issued on March 26, 1999 in a private offering.
As of the date of this prospectus, $200 million aggregate principal amount of
restricted 12 1/4% Senior Notes due 2006 are outstanding. This prospectus and
the letter of transmittal are first being sent on or about , 1999, to
all holders of outstanding notes known to us.
We expressly reserve the right, at any time or from time to time, to extend
the period of time during which the exchange offer is open, and thereby delay
acceptance for exchange of any outstanding notes, by giving oral or written
notice of such extension to the holders of outstanding notes as described below.
During any extension, all outstanding notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. We will
return at no expense to the holder any outstanding notes not accepted for
exchange as promptly as practicable after the expiration or termination of the
exchange offer.
Outstanding notes tendered in the exchange offer must be in denominations
of principal amount of $1,000 and any integral multiple thereof.
If any of the events specified in "-- Conditions to the Exchange Offer"
should occur, we expressly reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any outstanding notes not already accepted
for exchange. We will give oral or written notice of any extension, amendment,
non-acceptance or termination to holders of outstanding notes as promptly as
practicable. In the case of an extension, we will issue a press release or other
public announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
Following consummation of the exchange offer, we may, in our sole
discretion, commence one or more additional exchange offers to those holders of
currently outstanding notes who do not exchange their notes in this exchange
offer on terms which may differ from those contained in this prospectus. We may
use this prospectus, as amended or supplemented from time to time, in connection
with additional
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exchange offers. These additional exchange offers may take place from time to
time until all of the currently outstanding notes have been exchanged for
exchange notes.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
The tender by a holder of the outstanding notes and our acceptance of that
holder's notes will constitute a binding agreement between us and that holder
subject to the terms and conditions set forth in this prospectus and the
accompanying letter of transmittal. Except as set forth below in the section
entitled "Guaranteed Delivery Procedures", to tender in the exchange offer, a
holder must transmit to U.S. Trust Company of Texas, N.A., the exchange agent,
at the address set forth under "-- Exchange Agent" on or prior to the expiration
date either:
- a properly completed and duly executed letter of transmittal, including
all other documents required by the letter of transmittal, or
- if the notes are tendered under the book-entry procedures set forth
below, the tendering note holder may transmit an agent's message
(described below) instead of the letter of transmittal.
In addition, on or prior to the expiration date, either:
- the exchange agent must receive the certificates for the notes along with
the letter of transmittal; or
- the exchange agent must receive a timely confirmation of a book-entry
transfer of the tendered notes into the exchange agent's account at The
Depository Trust Company according to the procedure for book-entry
transfer described below, along with a letter of transmittal or an
agent's message in lieu of the letter of transmittal; or
- the holder must comply with the guaranteed delivery procedures described
below.
An "agent's message" is a message, transmitted by The Depository Trust
Company and received by the Exchange Agent and forming a part of the book-entry
confirmation, which states that The Depository Trust Company has received an
express acknowledgment from the tendering holder that the holder has received
and agrees to be bound by the letter of transmittal and that we may enforce the
letter of transmittal against the holder.
The method of delivery of outstanding notes, letters of transmittal or
agent's messages and all other required documents is at the election and risk of
the holders. If such delivery is by mail, we recommend registered mail, properly
insured, with return receipt requested. In all cases, you should allow
sufficient time to assure timely delivery. Do not send letters of transmittal,
agent's messages or outstanding notes to us.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the outstanding notes surrendered for
exchange are tendered either by a registered holder of the notes who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal or for the account of an eligible
institution. An "eligible institution" is a firm which is a member of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States. If signatures on a letter of
transmittal or a notice of withdrawal are required to be guaranteed, the
guarantor must be an eligible institution. If outstanding notes are registered
in the name of a person other than a signer of the letter of transmittal, the
outstanding notes surrendered for exchange must be endorsed by, or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by us in our sole discretion, duly executed by
the registered holder with the signature guaranteed by an eligible institution.
We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of outstanding notes tendered for
exchange in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any and all tenders of outstanding notes
improperly tendered or to not accept any outstanding notes which acceptance
might, in our judgment or
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that of our counsel, be unlawful. We also reserve the absolute right to waive
any defects or irregularities or conditions of the exchange offer as to any
outstanding notes either before or after the expiration date (including the
right to waive the ineligibility of any holder who seeks to tender outstanding
notes in the exchange offer). Our interpretation of the terms and conditions of
the exchange offer as to any particular outstanding notes either before or after
the expiration date (including the letter of transmittal and its instructions)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of outstanding notes for exchange must
be cured within such reasonable period of time as we shall determine. Neither
us, the exchange agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of
outstanding notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If a person other than the registered holder of outstanding notes signs the
letter of transmittal, the outstanding notes must be endorsed or accompanied by
appropriate powers of attorney, in either case signed exactly as the name of the
registered holder that appears on the outstanding notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or powers of
attorney, such persons should so indicate when signing, and you must submit
proper evidence satisfactory to us of such persons' authority to so act unless
we waive this requirement.
By tendering, each holder represents to us that, among other things, the
exchange notes acquired in the exchange offer are being obtained in the ordinary
course of business of the person receiving the exchange notes, whether or not
the person is the holder, and that neither the holder nor any person for whom
the holder is acting has any arrangement or understanding with any person to
participate in the distribution of the exchange notes. In the case of a holder
that is not a broker-dealer, the holder, by tendering, also represents to us
that the holder is not engaged in, nor intends to engage in, a distribution of
the exchange notes. If any holder or any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of our company, or is engaged in
or intends to engage in or has an arrangement or understanding with any person
to participate in a distribution of the exchange notes to be acquired in the
exchange offer, the holder or any such other person could not rely on the
applicable interpretations of the staff of the SEC and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
exchange notes for its own account in exchange for outstanding notes, where the
outstanding notes were acquired by that broker dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
See "Plan of Distribution." The letter of transmittal states that by
acknowledging and by delivering a prospectus, a broker-dealer will not admit
that it is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all outstanding notes
properly tendered and will issue the exchange notes promptly after acceptance of
the outstanding notes. See "-- Conditions to the Exchange Offer." For purposes
of the exchange offer, we shall be deemed to have accepted properly tendered
outstanding notes for exchange when, as and if we have given oral or written
notice to the exchange agent, with written confirmation of any oral notice to be
given promptly thereafter.
For each outstanding note accepted for exchange, the outstanding note
holder will receive an exchange note having a principal amount and maturity
equal to that of the surrendered outstanding note. Interest on the exchange
notes will accrue from March 26, 1999, the original issue date of the
outstanding notes. If we do not complete the exchange offer by September 22,
1999, then we are obligated to pay special interest on the outstanding notes.
The special interest amount shall be, with respect to the first 90-day period,
an amount equal to $0.05 per week per $1,000 principal amount of notes. The
special interest amount will increase by an additional $0.05 per week per $1,000
principal amount of notes for each subsequent 90-day period until we complete
the exchange offer, up to a maximum amount of
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<PAGE> 21
$0.50 per week per $1,000 principal amount of notes. Payments of this special
interest, if any, on outstanding notes in exchange for which exchange notes were
issued will be made to the persons who, at the close of business on March 1 or
September 1 immediately preceding the interest payment date, are registered
holders of the outstanding notes if such record date occurs prior to the
exchange, or are registered holders of the exchange notes if the record date
occurs on or after the date of the exchange, even if notes are cancelled after
the record date and on or before the interest payment date.
In all cases, issuance of exchange notes for outstanding notes in the
exchange offer will be made only after the exchange agent timely receives either
certificates for the outstanding notes or a book-entry confirmation of the
outstanding notes into the exchange agent's account at The Depository Trust
Company, a properly completed and duly executed letter of transmittal and all
other required documents or, in the case of a book-entry confirmation, an
agent's message. If for any reason set forth in the terms and conditions of the
exchange offer we do not accept any tendered notes or if outstanding notes are
submitted for a greater principal amount than the holder desired to exchange, we
will return such unaccepted or non-exchanged outstanding notes without expense
to the tendering holder (or, in the case of outstanding notes tendered by
book-entry transfer into the exchange agent's account at The Depository Trust
Company under the book-entry procedures described below, such unaccepted or
non-exchanged outstanding notes will be credited to an account maintained with
The Depository Trust Company) as promptly as practicable after the expiration or
termination of the exchange offer.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the outstanding notes at The Depository Trust Company for the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in The Depository Trust Company's systems may
make book-entry delivery of outstanding notes by causing The Depository Trust
Company to transfer such outstanding notes into the exchange agent's account at
The Depository Trust Company in accordance with The Depository Trust Company's
procedures for transfer. However, although delivery of outstanding notes may be
effected through book-entry transfer at The Depository Trust Company, the letter
of transmittal or facsimile thereof, with any required signature guarantees, or
an agent's message in lieu of a letter of transmittal, and any other required
documents, must, in any case, be transmitted to and received by the exchange
agent at one of the addresses set forth below under "-- Exchange Agent" on or
prior to the expiration date or the guaranteed delivery procedures described
below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the outstanding notes desires to tender such
outstanding notes and the outstanding notes are not immediately available, or
time will not permit such holder's outstanding notes or other required documents
to reach the exchange agent before the expiration date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed letter of
transmittal (or a facsimile thereof) and notice of guaranteed delivery,
substantially in the form provided by us (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address
of the holder of outstanding notes and the amount of outstanding notes
tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange trading days after the date of
execution of the notice of guaranteed delivery, the certificates for all
physically tendered outstanding notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, and any other documents
required by the letter of transmittal will be deposited by the eligible
institution with the exchange agent; and
- the exchange agent receives the certificates for all physically tendered
outstanding notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and all other documents
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<PAGE> 22
required by the letter of transmittal, within three New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw tenders of outstanding notes at any time prior to the
expiration date.
For a withdrawal to be effective, you must send a written notice of
withdrawal to the exchange agent at one of the addresses set forth below under
"-- Exchange Agent." Any notice of withdrawal must specify the name of the
person having tendered the outstanding notes to be withdrawn, identify the
outstanding notes to be withdrawn and the principal amount of those outstanding
notes, and, if certificates for outstanding notes have been transmitted, specify
the name in which such outstanding notes are registered, if different from that
of the withdrawing holder. If certificates for outstanding notes have been
delivered or otherwise identified to the exchange agent, then, prior to the
release of such certificates the withdrawing holder must also submit the serial
numbers of the particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an eligible institution unless such
holder is an eligible institution. If outstanding notes have been tendered under
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at The Depository Trust Company
to be credited with the withdrawn outstanding notes and otherwise comply with
the procedures of The Depository Trust Company. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by us. Our determination will be final and binding on all parties.
Any outstanding notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the exchange offer. Any outstanding notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder without cost to the holder (or, in the case of
outstanding notes tendered by book-entry transfer into the exchange agent's
account at The Depository Trust Company under the book-entry transfer procedures
described above, such outstanding notes will be credited to an account
maintained with The Depository Trust Company for the outstanding notes) as soon
as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn outstanding notes may be retendered by
following one of the procedures described under "-- Procedures for Tendering
Outstanding Notes" above at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue exchange notes in exchange for, any
outstanding notes. We may terminate or amend the exchange offer, if at any time
before the acceptance of such outstanding notes for exchange or the exchange of
the exchange notes for such outstanding notes, the exchange offer is determined
by us, in our sole and absolute discretion, to violate applicable law or any
applicable interpretation of the staff of the SEC.
EXCHANGE AGENT
We have appointed U.S. Trust Company of Texas, N.A., as the exchange agent
for the exchange offer. All executed letters of transmittal should be directed
to the exchange agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this prospectus or of
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<PAGE> 23
the letter of transmittal and requests for notices of guaranteed delivery should
be directed to the exchange agent addressed as follows:
<TABLE>
<S> <C>
By Overnight Delivery: by Facsimile:
U.S. Trust Company of Texas, N.A. (212) 780-0592
c/o United States Trust Company of New York
770 Broadway, 13th Floor Confirm by Telephone:
New York, New York 10003 (800) 548-6565
Attention: Corporate Trust Services
By Registered or Certified Mail:
U.S. Trust Company of Texas, N.A.
c/o United States Trust Company of New York
P. O. Box 843
Cooper Station
New York, New York 10276
Attention: Corporate Trust Services
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE IS NOT VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the exchange offer.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offer, which are estimated in the aggregate to be $175,000.
TRANSFER TAXES
Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes in connection with the tender, except that
holders who instruct us to register exchange notes in the name of, or request
that outstanding notes not tendered or not accepted in the exchange offer be
returned to, a person other than the registered tendering holder will be
responsible for the payment of any applicable transfer tax thereon.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OUTSTANDING NOTES
Holders of outstanding notes who do not exchange their outstanding notes
for exchange notes in the exchange offer will continue to be subject to the
provisions in the indenture regarding transfer and exchange of the outstanding
notes and the restrictions on transfer of such outstanding notes as set forth in
the legend thereon as a consequence of the issuance of the outstanding notes
under exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the outstanding notes may not be offered or sold, unless registered
under the Securities Act, except under an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We do
not currently anticipate that we will register outstanding notes under the
Securities Act. See "Description of the Notes -- Registered Exchange Offer;
Registration Rights."
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties, we believe that exchange notes issued in the
exchange offer in exchange for outstanding notes may be offered for resale,
resold or otherwise transferred by holders (other than any holder which is an
"affiliate" of our company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that the exchange
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<PAGE> 24
notes are acquired in the ordinary course of the holders' business and the
holders have no arrangement or understanding with any person to participate in
the distribution of the exchange notes. However, we do not intend to request the
SEC to consider, and the SEC has not considered, the exchange offer in the
context of a no-action letter and we cannot guarantee that the staff of the SEC
would make a similar determination with respect to the exchange offer as in
these other circumstances.
Each holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of exchange notes
and has no arrangement or understanding to participate in a distribution of
exchange notes. If any holder is an affiliate of our company, is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the exchange notes to be acquired in the exchange offer, that
holder:
- could not rely on the applicable interpretations of the staff of the SEC,
and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes, where the outstanding notes were acquired by the
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. See "Plan of Distribution."
In addition, to comply with state securities laws, the exchange notes may
not be offered or sold in any state unless they have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with. The offer and sale of the
exchange notes to "qualified institutional buyers" (as such term is defined
under Rule 144A of the Securities Act) is generally exempt from registration or
qualification under the state securities laws. We currently do not intend to
register or qualify the sale of the exchange notes in any state where an
exemption from registration or qualification is required and not available.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes. In consideration for issuing the exchange notes as contemplated in this
prospectus, we will receive in exchange outstanding notes in like principal
amount. The form and terms of the exchange notes are identical in all material
respects to the form and terms of the outstanding notes, except that:
- the offering of the exchange notes has been registered under the
Securities Act;
- the exchange notes will not be subject to transfer restrictions; and
- the holders of the exchange notes will not be entitled to registration or
other rights under the registration rights agreement, including the
payment of liquidated damages upon our failure to complete the exchange
offer.
The outstanding notes surrendered in exchange for exchange notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the
exchange notes will not result in a change in our indebtedness.
The net proceeds from the private offering of the outstanding notes were
approximately $194.3 million after deducting discounts, commissions and
estimated fees and expenses. The net proceeds from the private offering have
been or will be used for planned capital expenditures, working capital and other
general corporate purposes.
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<PAGE> 25
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization as
of March 31, 1999 and our unaudited consolidated capitalization as adjusted to
reflect our offering of preferred stock and warrants in April 1999, and the
application of the net proceeds from that offering. You should read this table
along with our consolidated financial statements and the related notes that are
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1999
-------------------------
AS
ACTUAL ADJUSTED
----------- -----------
(IN MILLIONS, UNAUDITED)
<S> <C> <C>
Cash and cash equivalents................................... $ 545.1 $ 834.1
======== ========
Current portion of long-term debt........................... 6.2 6.2
Long-term debt, excluding current portion:
Loans from RBF Finance Co. due 2006(1).................... 400.0 400.0
Loans from RBF Finance Co. due 2009(2).................... 400.0 400.0
12 1/4% Senior Notes due 2006............................. 200.0 200.0
6 1/2% Senior Notes due 2003.............................. 249.2 249.2
6 3/4% Senior Notes due 2005.............................. 348.2 348.2
6.95% Senior Notes due 2008............................... 249.2 249.2
7 3/8% Senior Notes due 2018.............................. 248.0 248.0
9 1/8% Senior Notes due 2003.............................. 100.0 100.0
9 1/2% Senior Notes due 2008.............................. 300.0 300.0
10 1/4% Senior Notes due 2003............................. 202.4 202.4
Other debt................................................ 17.3 17.3
-------- --------
Total long-term debt, including current portion... 2,720.5 2,720.5
-------- --------
Minority interest........................................... 44.6 44.6
-------- --------
Mandatorily redeemable preferred stock(3)................... -- 242.8
-------- --------
Stockholders' equity:
Common stock, par value $.01 per share.................... 1.9 1.9
Capital in excess of par.................................. 1,061.1 1,061.1
Warrants(4)............................................... -- 46.2
Retained earnings......................................... 200.7 200.7
Other..................................................... (10.7) (10.7)
-------- --------
Total stockholders' equity.................................. 1,253.0 1,299.2
-------- --------
Total capitalization, including short-term obligations and
current portion of long-term debt......................... $4,018.1 $4,307.1
======== ========
</TABLE>
- ---------------
(1) Comprised of ten tranches with interest rates of 11.02%.
(2) Comprised of ten tranches with interest rates of 11.395%.
(3) We have discounted the $300 million liquidation preference of the preferred
stock by the preliminary estimated fair value of the warrants and a portion
of the estimated offering costs.
(4) We have based the fair value of the warrants on our preliminary estimate,
and we will finalize the fair value based on a third party appraisal.
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<PAGE> 26
DESCRIPTION OF THE NOTES
The outstanding notes were issued under an Indenture, dated as of March 26,
1999 (the "Indenture"), between our company and the U.S. Trust Company of Texas,
N.A., as Trustee (the "Trustee"). Upon the issuance of the exchange notes the
Indenture will be subject to and governed by the Trust Indenture Act of 1939.
The following is a summary of the material provisions of the Indenture and
the notes. It does not state these provisions in their entirety. You should read
the Indenture because it, and not this description, defines your rights as
holders of the exchange notes. Capitalized terms used in this description and
not otherwise defined have the meanings set forth in the section
"-- Definitions." These definitions apply only to this section of this
prospectus. As used in this section only, references to "we," "us" and the
"Company" refer to R&B Falcon Corporation and exclude our Subsidiaries. Unless
otherwise indicated, references to the "notes" shall include the outstanding
notes and the exchange notes.
TERMS OF THE NOTES
The exchange notes will be our general unsecured obligations, are limited
to $200.0 million in aggregate principal amount and will mature on March 15,
2006. The exchange notes will bear interest at the rate per annum of 12 1/4%
from the date of original issuance of the outstanding notes, or from the most
recent date to which interest has been paid or provided for. Interest shall be
payable semiannually to Holders of record at the close of business on the March
1 or September 1 immediately preceding the interest payment date on March 15 and
September 15 of each year, commencing September 15, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The interest rate on the outstanding notes will increase if we do not
complete the exchange offer by September 22, 1999. See "-- Registered Exchange
Offer; Registration Rights."
The exchange notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge shall be made for any registration of transfer or exchange of the
notes, but we may require payment of a sum sufficient to cover any transfer tax
or other similar governmental charge payable in connection therewith.
Our Subsidiaries currently have no direct obligation to pay amounts due on
the notes. However, if a Restricted Subsidiary guarantees any of our
Indebtedness after the Issue Date, that Restricted Subsidiary will be obligated
to guarantee (a "Subsidiary Guarantee") the notes.
REDEMPTIONS
Optional Redemption. The exchange notes will be redeemable at our option,
at any time in whole or from time to time in part upon not less than 30 and not
more than 60 days' prior notice mailed by first class mail to each Holder's
registered address appearing in the register for the notes, on any date prior to
maturity at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest (including Special Interest, if any) to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to the
redemption date) plus the Make-Whole Premium applicable to the notes. In no
event will the redemption price ever be less than 100% of the principal amount
of the notes plus accrued and unpaid interest (including Special Interest, if
any) to the redemption date.
The amount of the Make-Whole Premium with respect to any notes (or portion
thereof) to be redeemed will be equal to the excess, if any, of:
(a) the sum of the present values, calculated as of the redemption
date, of:
(1) each interest payment that, but for such redemption, would have
been payable on the notes (or portion thereof) being redeemed on each
interest payment date occurring after the redemption date (excluding any
accrued and unpaid interest for the period prior to the redemption
date); and
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<PAGE> 27
(2) the principal amount that, but for such redemption, would have
been payable at the final maturity of the notes (or portion thereof)
being redeemed, over
(b) the principal amount of the notes (or portion thereof) being
redeemed.
The present values of interest and principal payments referred to in clause
(a) above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the Treasury Rate (as defined below) plus 50 basis
points.
The Make-Whole Premium will be calculated by the Independent Investment
Banker. For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the notes, calculated to the nearest
1/12th of a year (the "Remaining Term"). The Treasury Yield will be determined
as of the third business day immediately preceding the applicable redemption
date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200 of 1% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in comparable the H.15 Statistical
Release or otherwise, then the Treasury Yield will be calculated by
interpolation of comparable rates selected by the Independent Investment Banker.
Selection of Notes for Redemption. In the case of any partial redemption,
selection of the notes for redemption will be made by the Trustee on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no note of $1,000 in then
outstanding principal amount or less shall be redeemed in part. If any note is
to be redeemed in part only, the notice of redemption relating to such note
shall state the portion of the principal amount thereof to be redeemed. A note
in principal amount equal to the unredeemed portion thereof will be issued in
the name of the holder thereof upon cancellation of the original note.
SUBSIDIARY GUARANTEES
If a Restricted Subsidiary is required to become a Subsidiary Guarantor, it
will irrevocably and unconditionally guarantee on a joint and several, senior
unsecured basis our obligations for payment of the principal of, and premium, if
any and interest (including Special Interest, if any) on the notes, the other
Subsidiary Guarantors' obligations for payment of all sums of money payable
under the Subsidiary Guarantees and performance of all other provisions
contained in the Indenture (collectively, the "Obligations"). See
"-- Covenants -- Future Subsidiary Guarantors." Each Subsidiary Guarantee will
be limited in amount to an amount not to exceed the maximum amount that can be
guaranteed by the applicable Subsidiary Guarantor without rendering the
applicable Subsidiary Guarantee voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally or otherwise being void, voidable or unenforceable
under any bankruptcy,
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<PAGE> 28
reorganization, insolvency, liquidation or other similar legislation or legal
principles under any applicable foreign law. Each Subsidiary Guarantor that
makes a payment or a distribution under its Subsidiary Guarantee shall be
entitled to a contribution from each other Subsidiary Guarantor in a pro rata
amount based upon the Adjusted Net Assets of each other Subsidiary Guarantor. If
a Subsidiary Guarantee were to be rendered voidable, it could be subordinated by
a court to all other indebtedness (including guarantees and other contingent
liabilities) of the applicable Subsidiary Guarantor, and, depending on the
amount of such indebtedness, a Subsidiary Guarantor's liability on its
Subsidiary Guarantee could be reduced to zero.
Upon the sale or other disposition (by merger or otherwise) of all the
Capital Stock of a Subsidiary Guarantor or the sale or disposition of all or
substantially all the assets of a Subsidiary Guarantor (in each case other than
to us or an Affiliate of ours) permitted by the Indenture and the application of
such proceeds as described under "-- Covenants -- Limitation on Asset Sales,"
such Subsidiary Guarantor will be released and relieved from all its obligations
under its Subsidiary Guarantee; provided that any such release shall occur only
to the extent that all Obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, our other Indebtedness shall also terminate or be
released upon such sale or other disposition. Each Subsidiary Guarantor that is
designated as an Unrestricted Subsidiary in accordance with the Indenture shall
be released from its Subsidiary Guarantee and the related Obligations set forth
in the Indenture so long as it remains an Unrestricted Subsidiary.
The Indenture provides that any Subsidiary Guarantee by a Subsidiary
Guarantor shall be automatically and unconditionally released and discharged, as
evidenced by a supplemental indenture executed by us, the Subsidiary Guarantors,
if any, and the Trustee, upon the release or discharge of the guarantee which
resulted in the creation of such Restricted Subsidiary's Guarantee and all other
guarantees of the Obligations of any Obligor on the notes, except a discharge or
release by, or as a result of, payment under such guarantee.
RANKING
The indebtedness evidenced by the outstanding notes is, and the
indebtedness evidenced by the exchange notes will be, our senior unsecured
obligations. The notes rank equally in right of payment with all of our existing
and future indebtedness and other liabilities that are not expressly
subordinated by their express terms to the outstanding notes and are senior in
right of payment to all of our Indebtedness that is so subordinated. The
exchange notes will be our general, unsecured obligations. Therefore, claims of
the holders of the outstanding notes will be effectively subordinate to claims
of our secured creditors to the extent of the value, priority and validity of
the Liens securing such Indebtedness, including the $800 million aggregate
principal amount of Indebtedness evidenced by the loans of RBF Finance Co.
The exchange notes will be effectively subordinated to claims of creditors
(other than us or any Subsidiary Guarantors) of our Subsidiaries other than any
Subsidiary Guarantors. Claims of creditors (other than us or a Subsidiary
Guarantor) of such Subsidiaries, including trade creditors, tort claimants,
secured creditors, taxing authorities and creditors holding guarantees, will
generally have priority as to assets of such Subsidiaries over our claims and
equity interests and/or those of the Subsidiary Guarantors and, thereby
indirectly, the holders of our or the Subsidiary Guarantors' indebtedness, as
applicable, including the notes and the Subsidiary Guarantees. Under limited
circumstances the Indenture permits the creation of, or the designation of
existing Subsidiaries as Unrestricted Subsidiaries. The outstanding notes are,
and the exchange notes will be, effectively subordinated to claims of creditors
(other than us or a Subsidiary Guarantor) of any Unrestricted Subsidiaries.
Any Subsidiary Guarantee will be the senior unsecured obligation of the
applicable Subsidiary Guarantor, and will rank (i) equally in priority of
payment with all other Indebtedness and other liabilities of such Subsidiary
Guarantor that are not subordinated by their express terms to such Subsidiary
Guarantee, and (ii) senior in priority of payment to all other Indebtedness of
such Subsidiary Guarantor that by its terms is subordinated or junior in right
of payment to such Subsidiary Guarantee. However, the
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<PAGE> 29
Subsidiary Guarantees will be effectively subordinated to secured Indebtedness
of the Subsidiary Guarantors to the extent of the value of the assets securing
such Indebtedness. In the event of a bankruptcy, liquidation or reorganization
of a Subsidiary Guarantor, the assets of such Subsidiary Guarantor securing such
secured Indebtedness will be available to satisfy obligations with respect to
such secured Indebtedness before any payment from those assets could be made on
the notes or the Subsidiary Guarantees.
Although the Indenture limits our or any Restricted Subsidiary's ability to
incur Indebtedness, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any limitation on our or
our Restricted Subsidiary's ability to incur liabilities that are not considered
Indebtedness under the Indenture. Our operations are to a significant extent
conducted through our Subsidiaries and, therefore, we are dependent upon those
entities to meet our obligations. If our assets and cash flow are insufficient
to meet the obligations under the notes, our claims will be effectively
subordinated to the claims of creditors (including trade creditors, tort
claimants, taxing authorities and other creditors) of our Subsidiaries. As of
March 31, 1999, our Subsidiaries had approximately $225.8 million of
Indebtedness outstanding on a combined consolidated basis, excluding
indebtedness owed to us.
BOOK-ENTRY, DELIVERY, FORM AND TRANSFER
The exchange notes initially will be in the form of one or more registered
global notes without interest coupons (collectively, the "Global Notes"). Upon
issuance, the Global Notes will be deposited with the Trustee, as custodian for
The Depository Trust Company, in New York, New York, and registered in the name
of The Depository Trust Company or its nominee, in each case for credit to the
accounts of The Depository Trust Company's Direct and Indirect Participants (as
defined below). All registered global notes are referred to in this section
collectively as "Global Notes."
Transfer of beneficial interests in any Global Notes will be subject to the
applicable rules and procedures of The Depository Trust Company and its Direct
or Indirect Participants (including, if applicable, those of Euroclear and
Cedel), which may change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of The Depository Trust Company or to a successor of The
Depository Trust Company or its nominee in limited circumstances. Beneficial
interests in the Global Notes may be exchanged for notes in certificated form in
limited circumstances. See "-- Transfers of Interests in Global Notes for
Certificated Notes." Initially, the Trustee will act as Paying Agent and
Registrar. The notes may be presented for registration of transfer and exchange
at the offices of the Registrar.
Depositary Procedures
The Depository Trust Company has advised us that it is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Direct Participants") and to facilitate the clearance and
settlement of transactions in those securities between Direct Participants
through electronic book-entry changes in accounts of Participants. The Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, including Euroclear and
Cedel. Access to The Depository Trust Company's system is also available to
other entities that clear through or maintain a direct or indirect, custodial
relationship with a Direct Participant (collectively, the "Indirect
Participants").
Under the Depository Trust Company's procedures, (i) upon deposit of the
Global Notes representing the exchange notes, The Depository Trust Company will
credit the accounts of the Direct Participants designated by the Exchange Agent
with the appropriate portions of the principal amount of the Global Notes, and
(ii) The Depository Trust Company will maintain records of the ownership
interests of such Direct Participants in the Global Notes and the transfer of
ownership interests by and between Direct Participants. The Depository Trust
Company will not maintain records of the ownership interests of, or the transfer
of ownership interests by and between, Indirect Participants or other owners of
beneficial interests
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in the Global Notes. Direct Participants and Indirect Participants must maintain
their own records of the ownership interests of, and the transfer of ownership
interests by and between, Indirect Participants and other owners of beneficial
interests in the Global Notes.
Investors in the Global Notes may hold their interests in the Global Notes
directly through The Depository Trust Company, if they are Direct Participants
in The Depository Trust Company, or indirectly through organizations that are
Direct Participants in The Depository Trust Company, or directly through
Euroclear or Cedel or indirectly through organizations that are participants in
Euroclear or Cedel. Morgan Guaranty Trust Company of New York, Brussels office,
is the operator and depositary of Euroclear and Citibank, N.A. is the operator
and depositary of Cedel (each, a "Nominee" of Euroclear and Cedel,
respectively). Therefore, they will each be recorded on The Depository Trust
Company's records as the holders of all ownership interests held by them on
behalf of Euroclear and Cedel, respectively. Euroclear and Cedel will maintain
on their records the ownership interests and transfer of ownership interests by
and between, their own customer's securities accounts. The Depository Trust
Company will not maintain records of the ownership interests of, or the transfer
of ownership interests by and between, customers of Euroclear or Cedel. All
ownership interests in any Global Notes, including those of customers'
securities accounts held through Euroclear or Cedel, may be subject to the
procedures and requirements of The Depository Trust Company.
The laws of some states in the United States require that some types of
security holders take physical delivery in definitive, certificated form, of
securities that they own. This may limit or curtail the ability to transfer
beneficial interests in a Global Note to these persons. Because The Depository
Trust Company can act only on behalf of Direct Participants, which in turn act
on behalf of Indirect Participants and others, the ability of a person having a
beneficial interest in a Global Note to pledge such interest to persons or
entities that are not Direct Participants in The Depository Trust Company, or to
otherwise take actions in respect of such interests, may be affected by the lack
of physical certificates evidencing such interests.
Except as described in "-- Transfers of Interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes will not
have the exchange notes registered in their names, will not receive physical
delivery of the exchange notes in certificated form and will not be considered
the registered owners or Holders thereof under the Indenture for any purpose.
Under the terms of the Indenture, we and the Trustee will treat the persons
in whose names the exchange notes are registered (including the exchange notes
represented by Global Notes) as the owners thereof for the purpose of receiving
payments and for any and all other purposes whatsoever. Payments in respect of
the principal, premium, Special Interest, if any, and interest on Global Notes
registered in the name of The Depository Trust Company or its nominee will be
payable by the Trustee to The Depository Trust Company or its nominee as the
registered holder under the Indenture. Consequently, neither we, the Trustee nor
any of our agents or the Trustee's agents has or will have any responsibility or
liability for (i) any aspect of The Depository Trust Company's records or any
Direct Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of The Depository Trust Company's
records or any Direct Participant's or Indirect Participant's records relating
to the beneficial ownership interests in any Global Note or (ii) any other
matter relating to the actions and practices of The Depository Trust Company or
any of its Direct Participants or Indirect Participants.
The Depository Trust Company has advised us that its current payment
practice (for payments of principal, interest and the like) with respect to
securities such as the exchange notes is to credit the accounts of the relevant
Direct Participants with such payment on the payment date in amounts
proportionate to such Participant's respective ownership interests in the Global
Notes as shown on The Depository Trust Company's records. Payments by Direct
Participants and Indirect Participants to the beneficial owners of the exchange
notes will be governed by standing instructions and customary practices
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between them and will not be the responsibility of The Depository Trust Company,
the Trustee, or us. Neither we nor the Trustee will be liable for any delay by
The Depository Trust Company or its Direct Participants or Indirect Participants
in identifying the beneficial owners of the exchange notes and we and the
Trustee may conclusively rely on and will be protected in relying on
instructions from The Depository Trust Company or its nominee as the registered
owner of the exchange notes for all purposes.
The Global Notes will trade in The Depository Trust Company's Same-day
Funds Settlement System and, therefore, transfers between Direct Participants in
The Depository Trust Company will be effected in accordance with The Depository
Trust Company's procedures, and will be settled in immediately available funds.
Transfers between Indirect Participants (other than Indirect Participants who
hold an interest in the exchange notes through Euroclear or Cedel) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interest in the exchange notes through Euroclear and Cedel will be effected in
the ordinary way in accordance with their respective rules and operating
procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes described herein, crossmarket transfers between Direct
Participants in The Depository Trust Company, on the one hand, and Indirect
Participants who hold interests in the exchange notes through Euroclear or
Cedel, on the other hand, will be effected by Euroclear or Cedel's respective
nominee through The Depository Trust Company in accordance with The Depository
Trust Company's rules on behalf of Euroclear or Cedel; however, delivery of
instructions relating to cross-market transactions must be made directly to
Euroclear or Cedel, as the case may be, by the counterparty in accordance with
the rules and procedures of Euroclear or Cedel and within their established
deadlines (Brussels time for Euroclear and UK time for Cedel). Indirect
Participants who hold interest in the exchange notes through Euroclear and Cedel
may not deliver instructions directly to Euroclear's or Cedel's Nominee.
Euroclear or Cedel will, if the transaction meets its settlement requirements,
deliver instructions to its respective Nominee to deliver or receive interests
on Euroclear's or Cedel's behalf in the relevant Global Note in The Depository
Trust Company, and make or receive payment in accordance with normal procedures
for same-day fund settlement applicable to The Depository Trust Company.
Because of time zone differences, the securities accounts of an Indirect
Participant who holds an interest in the notes through Euroclear or Cedel
purchasing an interest in a Global Note from a Direct Participant in The
Depository Trust Company will be credited, and any such crediting will be
reported to Euroclear or Cedel during the European business day immediately
following the settlement date of The Depository Trust Company in New York.
Although recorded in The Depository Trust Company's accounting records as of The
Depository Trust Company's settlement date in New York, Euroclear and Cedel
customers will not have access to the cash amount credited to their accounts as
a result of a sale of an interest in a Global Note to a The Depository Trust
Company Participant until the European business day of Euroclear or Cedel
immediately following The Depository Trust Company's settlement date.
The Depository Trust Company has advised us that it will take any action
permitted to be taken by a holder of exchange notes only at the direction of one
or more Direct Participants to whose accounts interests in the Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of the exchange notes as to which such Direct Participant or Direct Participants
has or have given direction. However, if there is an Event of Default under the
exchange notes, The Depository Trust Company reserves the right to exchange
Global Notes (without the direction of one or more of its Direct Participants)
for exchange notes in certificated form, and to distribute such certificated
forms of exchange notes to its Direct Participants. See "-- Transfers of
Interests in Global Notes for Certificated Notes."
Although The Depository Trust Company, Euroclear and Cedel have agreed to
these procedures to facilitate transfers of interests in the Global Notes among
Direct Participants, Euroclear and Cedel, they are under no obligation to
perform or to continue to perform these procedures, and these procedures may be
discontinued at any time. Neither we nor the Trustee will have any
responsibility for the performance
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by The Depository Trust Company, Euroclear and Cedel or their respective Direct
and Indirect Participants of their obligations under the rules and procedures
governing any of their operations.
The information in this section concerning The Depository Trust Company,
Euroclear and Cedel and their book-entry systems has been obtained from sources
we believe to be reliable, but we take no responsibility for the accuracy
thereof.
Transfers of Interests in Global Notes for Certificated Notes
An entire Global Note may be exchanged for definitive notes in registered
certificated form without interest coupons ("Certificated Notes") if (1) The
Depository Trust Company (A) notifies us that it is unwilling or unable to
continue as depositary for the Global Notes and we thereupon fail to appoint a
successor depositary within 90 days or (B) has ceased to be a clearing agency
registered under the Exchange Act, (2) we, at our option, notify the Trustee in
writing that it elects to cause the issuance of Certificated Notes or (3) there
shall have occurred and be continuing a Default or an Event of Default with
respect to the notes. In any such case, we will notify the Trustee in writing
that, upon surrender by the Direct and Indirect Participants of their interest
in such Global Note, Certificated Notes will be issued to each person that such
Direct and Indirect Participants and The Depository Trust Company identify as
being the beneficial owner of the related notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to The
Depository Trust Company, by such Direct Participant (for itself or on behalf of
an Indirect Participant), to the Trustee in accordance with customary The
Depository Trust Company procedures. Certificated Notes delivered in exchange
for any beneficial interest in any Global Note will be registered in the names,
and issued in any approved denominations, requested by The Depository Trust
Company on behalf of such Direct and Indirect Participants (in accordance with
The Depository Trust Company's customary procedures).
Neither we nor the Trustee will be liable for any delay by the Holder of
the notes The Depository Trust Company in identifying the beneficial owner of
notes, and we and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Holder of the Global Note or The Depository
Trust Company for all purposes.
Same Day Settlement and Payment
The Indenture requires that payments in respect of the notes represented by
the Global Notes (including principal, premium, if any, interest and Special
Interest, if any) be made by wire transfer of immediately available same day
funds to the accounts specified by the holder of interests in such Global Notes.
With respect to Certificated Notes, we will make all payments of principal,
premium, if any, interest and Special Interest, if any, by wire transfer of
immediately available same day funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. We expect that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
CERTIFICATED NOTES
The notes represented by the Global Notes are exchangeable for Certificated
Notes in definitive form of like tenor as such notes in denominations of $1,000
and integral multiples thereof if (i) the Depositary notifies us that it is
unwilling or unable to continue as Depositary for the Global Notes or if at any
time the Depositary ceases to be a clearing agency registered under the Exchange
Act, and we fail to appoint a successor Depository within 90 days of such
notice, (ii) we, in our discretion, at any time determine not to have all the
notes represented by the Global Notes or (iii) an Event of Default entitling the
Holders of the notes to accelerate the maturity thereof has occurred and is
continuing. Any Global Note that is exchangeable under the preceding sentence is
exchangeable for Certificated Notes issuable in authorized denominations and
registered in such names as the Depositary shall direct. Otherwise, a Global
Note is not exchangeable for Certificated Notes, except for a Global Note of the
same aggregate denomination to
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be registered in the name of the Depositary or its nominee. Upon the transfer of
a note in definitive form, such note will, unless the Global Note has previously
been exchanged for notes in definitive form, be exchanged for an interest in the
Global Note representing the principal amount of notes being transferred.
SAME-DAY PAYMENT
The Indenture requires that payments in respect of notes (including
principal, premium, if any, interest and Special Interest, if any) be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof or, if no such account is specified, by mailing a check to each
such Holder's registered address.
REGISTERED EXCHANGE OFFER; REGISTRATION RIGHTS
We have agreed under a registration rights agreement with the initial
purchaser of the notes, for the benefit of the Holders of the notes, that we
will use our best efforts to cause the registration statement of which this
prospectus is a part to be declared effective by August 23, 1999. Upon the
effectiveness of the registration statement, we will offer the exchange notes in
exchange for surrender of the outstanding notes. We will keep the exchange offer
open for not less than 30 days (or longer if required by applicable law) after
the date notice of the exchange offer is mailed to the Holders of the
outstanding notes. For each outstanding note surrendered to us in to the
exchange offer, the Holder of such outstanding note will receive an exchange
note having a principal amount equal to that of the surrendered note. Interest
on each exchange note will accrue from the last interest payment date on which
interest was paid on the outstanding note surrendered in exchange thereof or, if
no interest has been paid on such outstanding note, from the date of its
original issue. Under existing SEC interpretations, the exchange notes would be
freely transferable by Holders other than our affiliates after the exchange
offer without further registration under the Securities Act if the Holder of the
exchange notes represents that it is acquiring the exchange notes in the
ordinary course of its business, that it has no arrangement or understanding
with any person to participate in the distribution of the exchange notes and
that it is not an affiliate of our Company, as such terms are interpreted by the
SEC; provided, however, that broker-dealers ("Participating Broker-Dealers")
receiving exchange notes in the Registered Exchange Offer will have a prospectus
delivery requirement with respect to resales of such exchange notes. The SEC has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to exchange notes (other than a
resale of an unsold allotment from the original sale of the outstanding notes)
with this prospectus. Under the registration rights agreement, we are required
to allow Participating Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements to use this prospectus in connection with the
resale of such exchange notes.
A Holder of outstanding notes who wishes to exchange those notes for
exchange notes in the exchange offer must represent that it will acquire the
exchange notes in the ordinary course of its business and that at the time of
the commencement of the exchange offer it has no arrangement or understanding
with any person to participate in the distribution, within the meaning of the
Securities Act, of the exchange notes. The Holder must also represent that it is
not an "affiliate" of our company, as defined in Rule 405 of the Securities Act,
or if it is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act.
If interpretations of the staff of the SEC do not permit us to effect the
exchange offer, or if for any other reason we do not complete the exchange offer
by September 22, 1999, or if the initial purchaser of the outstanding notes so
requests with respect to outstanding notes not eligible to be exchanged for
exchange notes in the exchange offer, or if any Holder of outstanding notes is
not eligible to participate in the exchange offer or does not receive freely
tradable exchange notes in the exchange offer, we will, at our cost, (1) as
promptly as practicable, file a shelf registration statement covering resales of
the outstanding notes or the exchange notes, as the case may be, (2) use our
best efforts to cause the shelf registration statement to be declared effective
under the Securities Act and (3) keep the shelf registration statement effective
until the earlier of (A) the time when the outstanding notes covered by the
shelf registration statement can be sold under Rule 144 without any limitations
under clauses (c), (e), (f) and (h) of
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Rule 144 and (B) March 26, 2001. If we file a shelf registration statement, we
will provide to each Holder for whom we filed the shelf registration statement
copies of the prospectus which is a part of the shelf registration statement,
notify these Holders when the shelf registration statement has become effective
and take other actions to permit unrestricted resales of the outstanding notes
or the exchange notes. A Holder selling outstanding notes or exchange notes
under the shelf registration statement generally would be required to be named
as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to the civil liability provisions
under the Securities Act in connection with these sales and will be bound by the
provisions of the registration rights agreement, including indemnification
obligations. Holders of notes must deliver information to us to be used in
connection with the shelf registration statement and provide comments on the
shelf registration statement within specific time periods in order to have their
outstanding notes included in the shelf registration statement.
If (a) we fail to file a shelf registration statement that is required by
the registration rights agreement by the required date, (b) any of the
registration statements we are obligated to file under the registration rights
agreement is not declared effective by the SEC by the required date (the
"Effectiveness Target Date"), (c) we fail to complete the exchange offer within
30 days of the Effectiveness Target Date with respect to the registration
statement, or (d) the shelf registration statement or the registration statement
of which this prospectus forms a part is declared effective but then ceases to
be effective or usable in connection with resales of outstanding notes or
exchange notes during the period specified in the registration rights agreement
(each such event referred to in clauses (a) through (d) above, a "Registration
Default"), then we are obligated to pay Special Interest to each Holder of the
notes to which the Registration Default applies. For the first 90-day period
following a Registration Default, the Special Interest will equal $.05 per week
per $1,000 principal amount of notes. The amount of the Special Interest will
increase by an additional $.05 per week per $1,000 principal amount of
outstanding notes for each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Special Interest of $.50 per
week per $1,000 principal amount of notes. We will pay all accrued Special
Interest on each interest payment date to the Holders of the Global Notes by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Notes by wire transfer to the accounts specified by them
or by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Special Interest will cease.
If we effect the exchange offer, we will be entitled to close the exchange
offer 30 days after we start the exchange offer if we have accepted all
outstanding notes validly tendered under the exchange offer.
This summary of the material provisions of the registration rights
agreement is not a complete description of all the provisions of the
registration rights agreement. We have filed a copy of the registration rights
agreement as an exhibit to the registration statement of which this prospectus
is a part.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), we shall make an offer to repurchase all then outstanding notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, and Special Interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest (including Special Interest, if any) due on the relevant
interest payment date):
- any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that for purposes of this
clause (i) such person shall be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of our
Voting Stock;
- during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of our
company (together with any new directors whose election by such Board of
Directors or whose nomination for election by our shareholders was
approved by a
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vote of 66 2/3% of our directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; and
- the merger or consolidation of our company with or into another Person or
the merger of another Person with or into our company, or the sale of all
or substantially all of our assets or of the assets of our company and
our Restricted Subsidiaries taken as a whole to another Person, and, in
the case of any such merger or consolidation, our securities that are
outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of our Voting Stock are changed into
or exchanged for cash, securities or property, unless in the transaction
such securities are changed into or exchanged for, in addition to any
other consideration, securities of the surviving corporation that
represent immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred if (1) the ratings assigned to the notes by Moody's and S&P prior
to the announcement are not downgraded or placed on a negative credit watch by
either such rating agency as a result thereof and (2) no Default has occurred
and is continuing.
Within 30 days following any Change of Control, we shall mail a notice to
each Holder with a copy to the Trustee stating, among other things: (1) that a
Change of Control has occurred and that such Holder has the right to require us
to purchase such Holder's notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Special Interest,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest and Special Interest, if any, on
the relevant interest payment date); (2) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to
such Change of Control); (3) the repurchase date (which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed); and (4) the
instructions determined by us, consistent with the covenant described hereunder,
that a Holder must follow in order to have its notes purchased.
We shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of notes under this covenant. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of the covenant described hereunder, we shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached our obligations under the covenant described hereunder by virtue
thereof.
The Change of Control purchase feature is solely a result of negotiations
between us and the initial purchaser of the notes. We do not have any present
intention to engage in a transaction involving a Change of Control, although it
is possible that we could decide to do so in the future. Subject to the
limitations discussed below, we could, in the future, enter into transactions,
including acquisitions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the Indenture, but that could increase the
amount of Indebtedness outstanding at such time or otherwise affect our capital
structure or credit ratings. Restrictions on our ability and the ability of our
Restricted Subsidiaries to incur additional Indebtedness are contained in the
covenants described under "-- Covenants -- Limitation on Indebtedness,"
"-- Limitation on Liens" and "-- Limitation on Sale/Leaseback Transactions."
Such restrictions can only be waived with the consent of the Holders of a
majority in aggregate principal amount of the notes then outstanding. Such
provisions may not necessarily afford the Holders of the notes protection in the
event of a highly leveraged transaction, including a reorganization,
restructuring, merger or other similar transactions involving our company, that
may adversely affect the Holders because such transactions may not involve a
shift in voting power or beneficial ownership or, even if they do, may not
involve a shift of the magnitude required under the definition of Change of
Control to require us to make a Change of Control offer. In addition, the
existence of the Holder's right to require us to
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repurchase such Holder's notes upon the occurrence of a Change of Control may or
may not deter a third party from seeking to acquire our company in a transaction
that would constitute a Change of Control.
Our ability to repurchase notes in a Change of Control offer may be limited
by a number of factors. Some of our existing debt documents contain similar
change of control provisions. We will be required under the terms of those debt
documents to offer to purchase any of that debt that is validly tendered in the
change of offer contained in those debt documents upon a Change of Control.
Future Indebtedness of our company or our Restricted Subsidiaries may also
contain prohibitions on the occurrence of events that would constitute a Change
of Control or require such Indebtedness to be repurchased upon a Change of
Control. Finally, our ability to purchase notes following the occurrence of a
Change of Control may also be limited by our then existing financial resources.
There can be no assurance that sufficient funds will be available when necessary
to make any required repurchases. If a Change of Control offer occurs at a time
when we do not have sufficient available funds to pay the purchase price for all
notes validly tendered in the offer, an Event of Default would occur under the
Indenture. Our failure to purchase tendered notes would constitute a breach of
the Indenture which could, in turn, constitute a default under other
Indebtedness and could lead to the acceleration of such other Indebtedness.
One of the events that constitutes a Change of Control under the Indenture
is a sale, conveyance, lease or transfer of all or substantially all of the
assets or our company and our Restricted Subsidiaries taken as a whole. The
Indenture is governed by New York law, and there is no established quantitative
definition under New York law of "substantially all" of the assets of a
corporation. Accordingly, if we and/or our Restricted Subsidiaries were to
engage in a transaction in which it or they disposed of less than all of the
assets of our company and our Restricted Subsidiaries taken as a whole, a
question of interpretation could arise as to whether such disposition was of
"substantially all" of our or their assets, as the case may be, and whether we
were required to make a Change of Control offer.
COVENANTS
Covenant Suspension
If at any time (1) the ratings assigned to the notes by both of the Rating
Agencies are Investment Grade Ratings and (2) no Default has occurred and is
continuing under the Indenture, we and our Restricted Subsidiaries will no
longer be subject to the provisions of the Indenture described below under
"-- Limitation on Indebtedness" and "-- Limitation on Restricted Payments"
(together, the "Suspended Covenants"). If we are not subject to the Suspended
Covenants for any period of time as a result of the preceding sentence and,
subsequently, one or both Rating Agencies withdraws its ratings or downgrades
the ratings assigned to the notes below the required Investment Grade Ratings,
then we and our Restricted Subsidiaries will again be subject to the Suspended
Covenants and compliance with the Suspended Covenants with respect to Restricted
Payments made after the time of such withdrawal or downgrade will be calculated
in accordance with the terms of the "-- Limitation on Restricted Payments"
covenant as if such covenant had been in effect during the entire period of time
from the date of the Indenture.
Limitation on Indebtedness. (a) We will not, and will not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that we may Incur Indebtedness if the Consolidated EBITDA
Coverage Ratio at the date of such Incurrence and after giving effect thereto
exceeds 2.25 to 1.0.
(b) Notwithstanding paragraph (a), the following Indebtedness may be
Incurred:
(1) Indebtedness of our company under to one or more Credit
Facilities (and the guarantee of such Indebtedness by Restricted
Subsidiaries); provided, however, that the aggregate amount of such
Indebtedness outstanding at such time shall not exceed $350 million,
less any amounts derived from Asset Sales and applied to the required
permanent reduction of Senior Indebtedness (and a permanent reduction of
the related commitment to lend or amount available to be reborrowed in
the case of a revolving credit facility) under such Credit Facilities as
contemplated by the "Limitation on Asset Sales" covenant;
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(2) Indebtedness of our company or a Restricted Subsidiary owed to
and held by a Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owed to and held by us; provided, however, that any
subsequent issuance or transfer of any Capital Stock that results in
such Restricted Subsidiary to whom Indebtedness is owed ceasing to be a
Restricted Subsidiary or any transfer of such Indebtedness (other than
us or another Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness;
(3) The Subsidiary Guarantees, if any, and Indebtedness incurred in
exchange for, or the proceeds of which are used to Refinance any
Indebtedness permitted by this clause (3); provided, however, that (i)
the principal amount of the Indebtedness so Incurred shall not exceed
the principal amount of the Indebtedness so Refinanced (plus the amount
of reasonable fees and expenses incurred in connection therewith,
including any premium or defeasance costs) and (ii) the Indebtedness so
Incurred (A) shall not mature prior to the Stated Maturity of the
Indebtedness so Refinanced and (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Indebtedness so
Refinanced;
(4) Indebtedness of our company or any Restricted Subsidiary (other
than Indebtedness described in clause (1), (2) or (3) above) (x)
outstanding on the Issue Date (including without limitation, the loans
from RBF Finance Co., our guarantee issued under the indenture governing
RBF Finance Co.'s $800 million senior secured notes and any subsidiary
guarantees issued thereunder, our 6 1/2% Senior Notes due 2003, our
6 3/4% Senior Notes due 2005, our 6.95% Senior Notes due 2008, our
7 3/8% Senior Notes due 2018, our 9 1/8% Senior Notes due 2003, our
9 1/2% Senior Notes due 2008 and the 10 1/4% Senior Notes due 2003 of
Cliffs Drilling Company) or Incurred pursuant to agreements as in effect
on the Issue Date and (y) Indebtedness Incurred in exchange for, or the
proceeds of which are used to Refinance, any Indebtedness permitted by
this clause (4) or permitted by clause (a) above; provided, however,
that (i) the principal amount of the Indebtedness so Incurred shall not
exceed the principal amount of the Indebtedness Refinanced (plus the
amount of reasonable fees and expenses incurred in connection therewith,
including any premium or defeasance costs); and (ii) the Indebtedness so
Incurred (A) shall not mature prior to the Stated Maturity of the
Indebtedness so Refinanced and (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Indebtedness so
Refinanced;
(5) Indebtedness of our company or any Restricted Subsidiary
consisting of guarantees in connection with any synthetic lease
obligations of Persons Incurred to finance the construction or upgrade
of the drillship Deepwater Frontier and the drillship Deepwater
Pathfinder pursuant to agreements governing such obligations;
(6) Acquired Indebtedness of any Restricted Subsidiary in an
aggregate amount not to exceed $300 million, provided that we on a pro
forma basis could Incur $1.00 of additional Indebtedness under paragraph
(a) of this covenant;
(7) Indebtedness of our company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation, shares of Capital
Stock;
(8) The Incurrence by our Unrestricted Subsidiaries of Non-Recourse
Indebtedness; provided, however, that if any such Indebtedness ceases to
be Non-Recourse Indebtedness of any Unrestricted Subsidiary, subject to
the definition of "Unrestricted Subsidiary," such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary
that was not permitted by this clause (8);
(9) Obligations of our company or a Restricted Subsidiary under
performance or surety bonds relating to building contracts for the
construction of drilling rigs, drillships or similar vessels or
contracts for the installation of related equipment;
(10) Hedging Obligations; and
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(11) Indebtedness of our company or any Restricted Subsidiary in an
aggregate principal amount which, together with all other Indebtedness
of our company then outstanding (other than Indebtedness permitted by
clauses (1) through (10) of this paragraph (b) or paragraph (a)) does
not exceed $50.0 million.
(c) Notwithstanding paragraphs (a) and (b), we shall not issue any
Indebtedness if the proceeds thereof are used, directly or indirectly, to
repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to
notes to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this covenant, (i) if
an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described above, we, in our sole discretion, will classify the
item of Indebtedness and only be required to include the amount and type of
the Indebtedness in one of the above clauses and (ii) an item of
Indebtedness may be divided and classified in more than one of the types of
Indebtedness described above.
Limitation on Liens. We will not, and will not permit any Restricted
Subsidiary of our company to, issue, assume or guarantee any Indebtedness for
borrowed money secured by any Lien on any property or asset now owned or
hereafter acquired by us or such Restricted Subsidiary without making effective
provision whereby any and all notes then or thereafter outstanding will be
secured by a Lien equally and ratably with any and all other obligations thereby
secured for so long as any such obligations shall be so secured.
This restriction does not, however, apply to:
(1) Liens existing on the date on which the notes are originally
issued or provided for under the terms of agreements existing on such date
(including liens securing the loans from RBF Finance Co.);
(2) Liens on property securing (a) all or any portion of the cost of
acquiring, constructing, altering, improving or repairing any property or
assets, real or personal, or improvements used or to be used in connection
with such property or (b) Indebtedness incurred by us or any Restricted
Subsidiary of our company prior to or within one year after the later of
the acquisition, the completion of construction, alteration, improvement or
repair or the commencement of commercial operation thereof, which
indebtedness is incurred for the purpose of financing all or any part of
the purchase price thereof or construction or improvements thereon;
(3) Liens securing Indebtedness owed by a Restricted Subsidiary of our
company or to any other Restricted Subsidiary of our company;
(4) Liens on property existing at the time of acquisition of such
property by us or any of our Restricted Subsidiary or Liens on the property
of any Person existing at the time such Person becomes our Restricted
Subsidiary and, in any case, not incurred as a result of (or in connection
with or in anticipation of) the acquisition of such property or such Person
becoming our Restricted Subsidiary, provided that such Liens do not extend
to or cover any property or assets of our company or any of its Restricted
Subsidiaries other than the property encumbered at the time such property
is acquired by our company or any of its Restricted Subsidiaries or such
Person becomes a Restricted Subsidiary of our company and, in any case, do
not secure Indebtedness with a principal amount in excess of the principal
amount outstanding at such time;
(5) Liens on any property securing (a) Indebtedness incurred in
connection with the construction, installation or financing of pollution
control or abatement facilities or other forms of industrial revenue bond
financing or (b) Indebtedness issued or guaranteed by the United States or
any State thereof or any department, agency or instrumentality of either;
(6) any Lien extending, renewing or replacing (or successive
extensions, renewals or replacements of) any Lien of any type permitted
under clause (1), (2), (4) or (5) above, provided that
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such lien extends to or covers only the property that is subject to the
Lien being extended, renewed or replaced and that the principal amount of
the Indebtedness secured thereby shall not exceed the principal amount of
Indebtedness so secured at the time of such extension, renewal or
replacement; or
(7) Liens (exclusive of any Lien of any type otherwise permitted under
clauses (1) through (6) above) securing Indebtedness for borrowed money of
ours or any Restricted Subsidiary in an aggregate principal amount which,
together with the aggregate amount of Attributable Indebtedness deemed to
be outstanding in respect of all Sale/Leaseback Transactions entered into
pursuant to clause (1) of the covenant described under "Limitation on
Sale/Leaseback Transactions" below (exclusive of any such Sale/Leaseback
Transactions otherwise permitted under clauses (1) through (6) above), does
not at the time such Indebtedness is incurred exceed 15% of our
Consolidated Net Worth (as shown in the most recent audited consolidated
balance sheet of our company and our Restricted Subsidiaries).
Limitation on Restricted Payments. (a) We will not, and will not permit any
Restricted Subsidiary, directly or indirectly, to:
(1) declare or pay any dividend or make any distribution on or in
respect of our or such Restricted Subsidiary's Capital Stock (including any
payment in connection with any merger or consolidation involving us) or to
the direct or indirect holders of that Capital Stock, except:
(A) dividends or distributions payable solely in our or such
Restricted Subsidiary's Non-Convertible Capital Stock or in options,
warrants or other rights to purchase that Non-Convertible Capital Stock;
(B) dividends or distributions payable to us or a Restricted
Subsidiary; and
(C) pro rata dividends or distributions on the Capital Stock of a
Restricted Subsidiary held by minority stockholders (including, without
limitation, minority stockholders of Arcade Drilling AS, a Norwegian
corporation);
(2) purchase, redeem or otherwise acquire or retire for value any of
our Capital Stock or of any direct or indirect parent of us, or any
Restricted Subsidiary (except Capital Stock held by us or a Restricted
Subsidiary);
(3) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligation (other than the
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition); or
(4) make any Investment other than a Permitted Investment (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a
"Restricted Payment"),
if at the time we or such Restricted Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or would result
therefrom); or
(ii) we would not be permitted to Incur an additional $1.00 of
Indebtedness under paragraph (a) under "-- Limitation on Indebtedness"
after giving pro forma effect to such Restricted Payment; or
(iii) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter during which the notes were originally issued to the end of the
most recent fiscal quarter ending at least 45 days prior to the date of
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such Restricted Payment (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit);
(B) 100% of the aggregate net proceeds (including the fair market
value of non-cash proceeds, which shall be determined in good faith by
our Board of Directors) received by us from the issue or sale of its
Capital Stock (other than Redeemable Stock or Exchangeable Stock)
subsequent to the Issue Date (other than an issuance or sale to a
Restricted Subsidiary or an employee stock ownership plan or similar
trust);
(C) the amount by which our Indebtedness is reduced on our balance
sheet upon the conversion or exchange (other than by a Restricted
Subsidiary) subsequent to our Incurrence of any Indebtedness convertible
or exchangeable for our Capital Stock (other than Redeemable Stock or
Exchangeable Stock), less the amount of any cash, or other property,
distributed by us upon such conversion or exchange;
(D) to the extent not otherwise included in Consolidated Net
Income, the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances, or other
transfers of assets, in each case to our company or any Restricted
Subsidiary after the Issue Date from any Unrestricted Subsidiary or from
the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of
Investment), not to exceed in the case of any Restricted Subsidiary the
total amount of Investments (other than Permitted Investments) in such
Restricted Subsidiary made by us and our Restricted Subsidiaries in such
Unrestricted Subsidiary after the Issue Date; and
(E) $20.0 million.
(b) The provisions of Section (a) shall not prohibit:
(1) Any purchase or redemption of our Capital Stock or our
Subordinated Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, our Capital Stock (other than
Redeemable Stock or Exchangeable Stock and other Capital Stock issued or
sold to a Restricted Subsidiary or an employee stock ownership plan);
provided, however, that (i) such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments and (ii) the Net
Cash Proceeds from such sale shall be excluded from clauses (iii)(B) and
(iii)(C) of Section (a);
(2) Any purchase or redemption of our Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, our Indebtedness which is permitted to be issued under the provisions
of "-- Limitation on Indebtedness" above; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(3) Dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with this
provision; provided, however, that at the time of payment of such dividend,
no other Default shall have occurred and be continuing (or would result
therefrom); provided further, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments (unless already
included in determining the amount of Restricted Payments previously made
upon the declaration of such dividend); and
(4) If we issue Preferred Stock which is Non-Convertible Capital Stock
and receive at least $100.0 million of net proceeds therefrom, Dividends on
such Preferred Stock in an aggregate amount not to exceed $30.0 million,
provided that such Dividends constitute Restricted Payments for purposes of
calculating the amount of Restricted Payments made under clause (iii) of
Section (a) above.
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Limitation on Sale/Leaseback Transactions. We will not, and will not permit
any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with any
Person (other than us or a Restricted Subsidiary) unless:
(1) we or such Restricted Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback Transaction, secured by a Lien on the
property subject to such Sale/Leaseback Transaction under the covenant
described under "Limitation on Liens" above without equally and ratably
securing the notes pursuant to such covenant;
(2) after the Issue Date and within a period commencing six months
prior to the consummation of such Sale/Leaseback Transaction and ending six
months after the consummation thereof, we or such Restricted Subsidiary
shall have expended for property used or to be used in the ordinary course
of our business and the business of our Restricted Subsidiaries an amount
equal to all or a portion of the net proceeds of such Sale/Leaseback
Transaction and we shall have elected to designate such amount as a credit
against such Sale/Leaseback Transaction (with any such amount not being so
designated to be applied as set forth in clause (3) below); or
(3) during the 12-month period after the effective date of such
Sale/Leaseback Transaction, we shall have applied to the voluntary
defeasance or retirement of the notes or any Pari Passu Indebtedness in an
amount equal to the greater of the net proceeds of the sale or transfer of
the property leased in such Sale/Leaseback Transaction and the fair value,
as determined by our Board of Directors, of such property at the time of
entering into such Sale/Leaseback Transaction (in either case adjusted to
reflect the remaining term of the lease and any amount expended by us as
set forth in clause (2) above), less an amount equal to the principal
amount of notes and Pari Passu Indebtedness voluntarily defeased or retired
by us within such 12-month period and not designated as a credit against
any other Sale/Leaseback Transaction entered into by us or any Restricted
Subsidiary during such period.
Limitation on Mergers and Consolidations. Neither we nor any Subsidiary
Guarantor (other than any Subsidiary Guarantor that shall have been released
from its Subsidiary Guarantee under the provisions of the Indenture) will
consolidate with or merge into any Person, continue in another jurisdiction, or
sell, lease, convey, transfer or otherwise dispose of all or substantially all
of its assets to any Person, unless:
(1) the Person formed by or surviving such consolidation or merger (if
other than us or such Subsidiary Guarantor, as the case may be), or to
which such sale, lease, conveyance, transfer or other disposition shall be
made (collectively, the "Successor"), is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia (or, alternatively, in the case of a Subsidiary
Guarantor organized under the laws of a jurisdiction outside the United
States, a corporation organized and existing under the laws of such foreign
jurisdiction), and the Successor assumes by supplemental indenture in a
form satisfactory to the Trustee all of the applicable Obligations of our
company or such Subsidiary Guarantor, as the case may be, under the
Indenture and the Subsidiary Guarantees;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(3) in the case of our company, immediately after giving effect to
such transactions, the resulting, surviving or transferee Person would be
able to incur at least $1.00 of Indebtedness under paragraph (a) of the
"Limitation on Indebtedness" covenant.
SEC Reports. Notwithstanding that we may not be required to remain subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, we
shall file with the SEC and provide the Trustee and Holders with such annual
reports and such information, documents and other reports specified in Sections
13 and 15(d) of the Exchange Act.
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In addition, whether or not required by the rules and regulations of the
SEC, we will file a copy of all such information and reports with the SEC for
public availability (unless the SEC will not accept such filing). In addition,
we shall furnish to the Holders and to prospective investors, upon the requests
of such Holders, any information required to be delivered under Rule 144A(d)(4)
under the Securities Act so long as the notes are not freely transferable under
the Securities Act.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. We shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions, in cash or otherwise, on its
Capital Stock to us or any Restricted Subsidiary or pay any Indebtedness owed to
us or any Restricted Subsidiary, (b) make any loans or advances to us or any
Restricted Subsidiary or (c) transfer any of its property or assets to us or any
Restricted Subsidiary, except:
(i) any encumbrance or restriction pursuant to an agreement in effect
or entered into on the Issue Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Acquired Indebtedness
or Preferred Stock Incurred by such Restricted Subsidiary on or prior to
the date on which such Restricted Subsidiary became a Restricted Subsidiary
or was acquired by us (other than Indebtedness or Preferred Stock Incurred
as consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions in which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by us or otherwise Incurred in anticipation of
such acquisition) and outstanding on such date;
(iii) any encumbrance or restriction relating to any assets acquired
after the Issue Date, so long as such encumbrance or restriction relates
only to the assets so acquired and is not or was not created in
anticipation of such acquisition;
(iv) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Indebtedness or Preferred Stock Incurred pursuant to an
agreement referred to in clause (i), (ii) or (iii) of this covenant or this
clause (iv) or contained in any amendment to an agreement referred to in
clause (i), (ii) or (iii) of this covenant or this clause (iv); provided,
however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such refinancing agreement or
amendment are in the aggregate no less favorable to the Holders of the
notes than the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such predecessor agreements;
(v) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests or in
license agreements to the extent such provisions restrict the assignment of
such agreement and any rights granted or property leased thereunder;
(vi) in the case of clause (iii) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages; and
(vii) any temporary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the
sale or disposition of all or substantially all the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition.
Nothing contained in this covenant shall prevent us or any Restricted
Subsidiary from entering into any agreement permitting the incurrence of Liens
otherwise permitted by "-- Covenants -- Limitation on Liens"
Limitation on Asset Sales. We shall not, and shall not permit any of our
Restricted Subsidiaries to, engage in any Asset Sales unless (i) we or the
applicable Restricted Subsidiary, as the case may be,
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receive consideration at the time of such Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of (as determined in good
faith by our Board of Directors), and (ii) at least 75% of the consideration
received by us or the Restricted Subsidiary, as the case may be, from such Asset
Sale at the time of such disposition shall be in the form of cash or Temporary
Cash Equivalents (or the assumption of our indebtedness and liabilities or the
indebtedness and liabilities of such Restricted Subsidiary and the release of
our company or such Restricted Subsidiary from all liability thereon) or notes
or marketable securities that are converted into cash or Temporary Cash
Equivalents within 180 days after the date of such Asset Sale; provided that any
Asset Sale of shares of Capital Stock of Reading & Bates Development Co. or
assets owned by Reading & Bates Development Co. shall not have to comply with
the provisions of this clause (ii). If we or a Restricted Subsidiary engages in
an Asset Sale in compliance with the previous sentence, then we shall or shall
cause a Restricted Subsidiary to apply an amount equal to such excess Net
Available Cash within 360 days of the Asset Sale either (i) to repay our Senior
Indebtedness of or the Senior Indebtedness of a Restricted Subsidiary (other
than in each case Indebtedness owed to an Affiliate of our company), (ii) to
invest in Additional Assets or (iii) treat (no later than the end of such
360-day period) such excess Net Available Cash (to the extent not applied under
clauses (i) or (ii) above) as Sale Excess Proceeds.
If, as of the first day of any calendar month, the aggregate amount of Sale
Excess Proceeds exceeds 10% of our consolidated total assets, and if the excess
aggregate amount of such Excess Proceeds in excess of 10% of consolidated total
assets that have not previously been subject to an Excess Proceeds Offer (the
"Excess Proceeds Offer Amount") totals at least $10.0 million, we must, not
later than the fifteenth Business Day of such month, make an offer (an "Excess
Proceeds Offer") to purchase notes from the Holders pursuant to and subject to
the conditions contained in the indenture and from holders of RBF Finance Co.'s
$800 million secured notes pursuant to the indenture governing those notes at a
purchase price equal to 100% of their principal amount, plus any accrued
interest (including Special Interest, if any) to the date of purchase and RBF
Finance Co.'s secured notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and Special
Interest, if any) to the date of purchase in an aggregate principal amount equal
to the Excess Proceeds Offer Amount. Any amounts remaining after all of our
notes and RBF Finance Co.'s secured notes validly tendered are purchased shall
no longer constitute Excess Proceeds.
We shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the purchase of notes in an Excess Proceeds Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions in the Indenture governing Excess Proceeds Offers, we shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the covenant described hereunder by virtue
thereof.
Limitation on Asset Swaps. We will not, and will not permit any Restricted
Subsidiary to, engage in any Asset Swaps, unless:
(i) at the time of entering into the agreement with respect thereto
and immediately after giving effect to the proposed Asset Swap, no Default
shall have occurred and be continuing;
(ii) the aggregate fair market values of the Additional Assets and
other consideration to be received by us or the applicable Restricted
Subsidiary is, at the time the Asset Swap is agreed to, substantially equal
to the aggregate fair market of the property being disposed of by us or
such Restricted Subsidiary (to be determined in good faith by our Board of
Directors and to be evidenced by a resolution of the Board set forth in an
Officer's Certificate delivered to the Trustee); and
(iii) the cash payments, if any, received by us or such Restricted
Subsidiary in connection with such Asset Swap are treated as Net Available
Cash received from an Asset Sale.
Limitation on Affiliate Transactions. (a) We shall not, and shall not
permit any Restricted Subsidiary to, enter into any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of our company
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(an "Affiliate Transaction") unless the terms thereof (1) are no less favorable
to us or such Restricted Subsidiary than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not such
an Affiliate, (2) if such Affiliate Transaction involves an amount in excess of
$500,000, (i) are set forth in writing and (ii) have been approved by a majority
of the members of our Board of Directors having no personal stake in such
Affiliate Transaction and (3) if such Affiliate Transaction involves an amount
in excess of $10.0 million, have been determined by an investment banking firm
of national reputation or, in the case of the sale or transfer of assets subject
to valuation, an appropriate independent qualified appraiser of national
reputation, given the size and nature of the transaction, to be fair, from a
financial standpoint, to us and our Restricted Subsidiaries.
(b) The provisions of paragraph (a) shall not prohibit (i) any Restricted
Payment permitted to be paid under the covenant described under "-- Limitation
on Restricted Payments," (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements of our company, stock options, stock ownership and
other employee benefit plans approved by our Board of Directors, (iii) the grant
of stock options or similar rights to our employees, officers and directors
pursuant to plans approved by its Board of Directors, (iv) loans or advances to
employees in the ordinary course of business in accordance with the past
practices of our company or our Subsidiaries, but in any event not to exceed
$1.0 million in aggregate principal amount outstanding at any one time, (v) the
payment of reasonable fees to directors of our company and our Restricted
Subsidiaries who are not our employees or the employees of our Restricted
Subsidiaries and (vi) any Affiliate Transaction among our company, RBF Finance
Co., the Restricted Subsidiaries, Arcade Drilling AS, any entity owning or
operating any of the Deepwater Pathfinder, the Deepwater Frontier or the
Seillean (but only for transactions relating to such vessels) and Navis AS.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. We shall not sell or otherwise dispose of any Capital Stock of a
Restricted Subsidiary, and shall not permit any such Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except (i) to us or a Wholly Owned Restricted Subsidiary, (ii) if,
immediately after giving effect to such issuance, sale or other disposition,
neither we nor any of our Subsidiaries own any Capital Stock of such Restricted
Subsidiary, (iii) to Persons who are entering into joint ventures or other
similar business relationships with us or any Subsidiary other than a Subsidiary
Guarantor; provided, however, that transactions under this clause (iii) are
approved in the manner set forth in paragraph (a) under "-- Limitation on
Affiliate Transactions," (iv) directors' qualifying shares, (v) if, immediately
after giving effect to such issuance, sale or other disposition, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect thereto would have been permitted
to be made under the covenant described under "-- Limitation on Restricted
Payments" if made on the date of such issuance, sale or other disposition or
(vi) pursuant to the loan arrangement with Nisho-Iwai.
Future Subsidiary Guarantors. The Indenture provides that we may not permit
any Restricted Subsidiary, directly or indirectly, to guarantee any of our
Indebtedness ("Guaranteed Indebtedness") unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a Subsidiary Guarantee of payment of the notes by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against us or any
other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee. If the Guaranteed Indebtedness ranks
equally in right of payment with the notes, then the guarantee of such
Guaranteed Indebtedness shall rank equally in right of payment with or be
subordinated to the Subsidiary Guarantee; and if the Guaranteed Indebtedness is
subordinated to the notes, then the guarantee of such Guaranteed Indebtedness
shall be subordinated to the Subsidiary Guarantee at least to the extent that
all Guaranteed Indebtedness is subordinated to the notes. Any Subsidiary
Guarantee by a Restricted Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon the release or
discharge of the guarantee which resulted in the creation of such
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Restricted Subsidiary's Subsidiary Guarantee, except a discharge or release by,
or as a result of, payment under such guarantee.
DEFAULTS
An Event of Default is defined in the Indenture as
(i) a default in the payment of interest (including Special Interest,
if any) on the notes when due, continued for 30 days,
(ii) (a) default in the payment of principal of, or premium, if any,
on any note when due at its Stated Maturity, upon redemption, required
repurchase, declaration of acceleration or otherwise or
(b) our failure to redeem or purchase notes when required by the
Indenture,
(iii) our failure to comply with our obligations under
"-- Covenants -- Limitation on Mergers and Consolidations," or in the
covenants described above under "-- Change of Control" or
"-- Covenants -- Limitation on Asset Sales."
(iv) our failure and failure by the Subsidiary Guarantors to comply
with our or their other agreements contained in the Indenture, and such
failure or event of default continues for 60 days after notice,
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness by us or any of our Restricted Subsidiaries (or the payment of
which is guaranteed by us or any of our Restricted Subsidiaries) whether
such Indebtedness or guarantee now exists, or is created after the date of
the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of
such default unless being contested in good faith by appropriate
proceedings (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $20.0
million or more;
(vi) failure by us or any of our Restricted Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, discharged or stayed for a period of 30 days;
(vii) certain events of bankruptcy or insolvency with respect to us or
any of our Significant Subsidiaries or group of Restricted Subsidiaries
that, taken together (as of our latest audited consolidated financial
statements), would constitute a Significant Subsidiary; or
(viii) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of the Indenture and such
Subsidiary Guarantee) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee, as applicable.
However, a default under clause (v) will not constitute an Event of Default
until the Trustee provides a written notice to us, or the Holders of 25% in
aggregate principal amount of the outstanding notes provide a written notice to
us and the Trustee, of the default and we do not cure such default within the
time specified after receipt of such notice.
If an Event of Default occurs and is continuing with respect to the
Indenture (other than certain events of bankruptcy, insolvency or
reorganization), the Trustee or the Holders of not less than 25% in principal
amount of the notes outstanding may declare the principal of and premium, if
any, and accrued but unpaid interest (including Special Interest, if any) on all
the notes to be due and payable. Upon such a declaration, such principal,
premium, if any, and interest (including Special Interest, if any) will be due
and payable immediately.
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If an Event of Default relating to certain events of bankruptcy, insolvency
or reorganization occurs and is continuing, the principal of and premium, if
any, and interest (including Special Interest, if any) on the notes will become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders of the notes.
The amount due and payable on the acceleration of any note will be equal to
100% of the principal amount of such note, plus accrued and unpaid interest
(including Special interest, if any) to the date of payment.
Under limited circumstances, the Holders of a majority in principal amount
of the outstanding notes may rescind any such acceleration with respect to the
notes and its consequences.
No Holder of a note may pursue any remedy under the Indenture unless
- the Trustee shall have received written notice of a continuing Event of
Default,
- the Trustee shall have received a request from Holders of at least 25% in
principal amount of notes to pursue such remedy,
- the Trustee shall have been offered indemnity reasonably satisfactory to
it and
- the Trustee shall have failed to act for a period of 60 days after
receipt of such notice and offer of indemnity; however, such provision
does not affect the right of a Holder of a note to sue for enforcement of
any overdue payment.
The Holders of a majority in aggregate principal amount of the outstanding
notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. These right are subject to restrictions. The
Trustee, however, may refuse to follow any direction that conflicts with law or
the Indenture or that the Trustee determines is unduly prejudicial to the rights
of any other Holder of a note or that would involve the Trustee in personal
liability. Subject to the provisions of the Indenture relating to the duties of
the Trustee in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of the notes unless
such Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder of the notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any note, the Trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the Holders of the notes.
In addition, we are required to deliver to the Trustee, within 120 days after
the end of each fiscal year, a certificate indicating whether the officers
signing the certificate know of any Default that occurred during the previous
year. We also are required to deliver to the Trustee, within five Business Days
after the occurrence thereof, written notice of any event which would constitute
a Default or an Event of Default, its status and what action we are taking or
proposes to take in respect of the Default or Event of Default.
AMENDMENTS AND WAIVERS
We and the Trustee may amend the Indenture with the consent of the Holders
of a majority in aggregate principal amount of the notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the notes) and any past Default or Event of Default or compliance with any
provisions may also be waived with the consent of the Holders of a majority in
aggregate principal amount of the notes then outstanding. However, without the
consent of each Holder of a then outstanding note affected by the amendment, no
amendment may (1) change the Stated Maturity of the principal of, or any
installment of interest on, any note, or reduce the principal amount (or
premium, if any) due upon maturity of the note, or the interest that would be
due and payable on the note, or change the place of
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payment where, or the coin or currency in which, any note or any premium or
interest is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity, (2) reduce the percentage
in principal amount at Stated Maturity of the then outstanding notes, the
consent of whose Holders is necessary for any such supplemental indenture or
required for any waiver of compliance with provisions of the Indenture, or
Defaults under the Indenture, (3) modify our Obligations to make offers to
purchase notes upon a Change of Control or from the proceeds of Asset Sales, (4)
subordinate in right of payment the notes or the Subsidiary Guarantees, if any,
to any other Indebtedness, (5) amend, supplement or otherwise modify the
provisions of the Indenture relating to Subsidiary Guarantees or (6) modify any
of the provisions of this paragraph (except to increase any percentage set
forth).
Without the consent of any Holder of the notes, we and the Trustee may
amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of our obligations under
the Indenture to provide for uncertificated notes in addition to or in place of
certificated notes (provided that the uncertificated notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated notes are described in Section 163(f)(2)(B) of the
Code), to add additional guarantees with respect to the notes, to provide
security for the notes, to add to our covenants for the benefit of the Holders
of the notes or to surrender any right or power conferred upon us, to make any
change that does not adversely affect the rights of any Holder of the notes or
to comply with any requirement of the SEC in connection with the qualification
of the Indenture under the Trust Indenture Act.
The consent of the Holders of the notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, we are required to
mail to Holders of the notes a notice briefly describing such amendment.
However, the failure to give such notice to all Holders of the notes, or any
defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The outstanding notes were, and the exchange notes will be, issued in
registered form and will be transferable, subject to applicable federal and
state securities laws, only upon the surrender of the notes being transferred
for registration of transfer. We may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge payable in connection
with transfers and exchanges.
DEFEASANCE
We may at any time terminate all of our obligations under the notes and the
Indenture ("legal defeasance"), except for specified obligations, including
those respecting the defeasance trust and obligations, to register the transfer
or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes
and to maintain a registrar and paying agent in respect of the notes and except
for our optional redemption rights. We may at any time terminate our repurchase
obligations under "-- Change of Control" and under the covenants described under
"-- Covenants" (other than the covenant described under "-- Limitation on
Mergers and Consolidations,"), the operation of the cross acceleration
provision, the bankruptcy provisions with respect to Significant Subsidiaries
and the judgment default provision described under "-- Defaults" above and the
limitations contained in clause (3) of the first paragraph under
"-- Covenants -- Limitation on Mergers and Consolidations" above ("covenant
defeasance").
We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option. If we exercise our legal defeasance
option, payment of the notes may not be accelerated because of an Event of
Default with respect thereto. If we exercise our covenant defeasance option,
payment of the notes may not be accelerated because of an Event of Default
specified in clause (iii) (other than the covenant described under
"-- Limitation on Mergers and Consolidations") or (v) under "-- Defaults" above
or because of the failure of us to comply with clause (3) of the first paragraph
under "-- Covenants -- Limitation on Mergers and Consolidations" above. If we
exercise our legal defeasance
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option, we and each Subsidiary Guarantor will be released from all our
obligations with respect to the notes and the Subsidiary Guarantees, as
applicable.
In order to exercise either defeasance option, we must irrevocably deposit
in trust (the "defeasance trust") with the Trustee money or U.S. Government
Obligations for the payment of principal, premium, if any, and interest
(including Special Interest, if any) on the notes to redemption or maturity, as
the case may be, and must comply with other conditions, including delivery to
the Trustee of an opinion of counsel to the effect that Holders of the notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject to federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred (and, in the case
of legal defeasance only, such Opinion of Counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable federal income tax
law).
CONCERNING THE TRUSTEE
U.S. Trust Company of Texas, N.A. is the Trustee under the Indenture and
has been appointed by us as Registrar and Paying Agent with regard to the notes.
The Holders of a majority in aggregate principal amount of the outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent Person in the conduct of its own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any Holder of
notes, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense and then
only to the extent required by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that the Indenture and the notes are governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law, except to the extent
that the application of the law of another jurisdiction would be required
thereby.
CONSENT TO JURISDICTION AND SERVICE
We have appointed CT Corporation System as our agent for actions brought
under federal or state securities laws brought in any federal or state court
located in the Borough of Manhattan in The City of New York and have submitted
to such jurisdiction under the terms of the Indenture. The Indenture provides
that each Subsidiary Guarantor will appoint CT Corporation System as its agent
for actions brought under federal or state securities laws brought in any
federal or state court located in the Borough of Manhattan in The City of New
York and will submitted to such jurisdiction.
DEFINITIONS
The following is a summary of some of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
these terms and for the definitions of other capitalized terms used in this
description of the notes and not defined below.
"Acquired Indebtedness" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with, or
in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
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"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by us or another Restricted Subsidiary or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; provided, however, that any such Restricted Subsidiary described in
clause (ii) or (iii) above is primarily engaged in a Related Business.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
amount by which the fair value of the assets and property of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of Voting Stock, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided, however, that "Affiliate" shall also mean any beneficial owner of
Capital Stock representing 5% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of such a Person or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable).
"Asset Sale" means any direct or indirect sale, capital lease, transfer or
other disposition (or series of related sales, capital leases, transfers or
dispositions) by us or any Restricted Subsidiary, including any disposition by
means of a merger, consolidation or similar transaction (each referred to for
the purposes of this definition as a "disposition") in one transaction or a
series of related transactions (including the receipt of proceeds of insurance
paid on account of the actual or constructive total loss or damage to any asset
and awards of compensation for any asset taken by condemnation, eminent domain,
nationalization, expropriation or similar proceeding or action, but excluding
the receipt of proceeds of business interruption insurance or environmental
damage insurance or similar types of policies) of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than us or a
Restricted Subsidiary), (ii) any drillship or drilling rig or all or
substantially all the assets of any division or line of business of our company
or any Restricted Subsidiary or (iii) any other assets of our company or any
Restricted Subsidiary outside of the ordinary course of business of our company
or such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii)
above, (u) a disposition by a Restricted Subsidiary to us or by us or a
Restricted Subsidiary to a Wholly Owned Restricted Subsidiary, (v) for purposes
of the covenant described under "-- Covenants -- Limitation on Asset Sales"
only, a disposition that constitutes a Restricted Payment permitted by the
covenant described under "-- Covenants -- Limitation on Restricted Payments,"
(w) Asset Swaps permitted under "-- Covenants -- Limitation on Asset Swaps," (x)
dispositions of Incidental Assets, (y) dispositions of Temporary Cash
Investments and (z) a disposition of assets with a fair market value of less
than $100,000).
"Asset Swap" means a substantially concurrent purchase and sale, or
exchange, of assets constituting Additional Assets described in clause (i) of
the definition thereof between us or any Restricted Subsidiary and another
Person or group of Persons; provided, however, that the cash and other assets to
be received by us or such Restricted Subsidiary which do not constitute
Additional Assets do not constitute more than 25% of the total consideration to
be received by us or such Restricted Subsidiary in such Asset Swap.
"Attributable Indebtedness," when used with respect to any Sale/Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease included
in such transaction) of the total obligations of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for
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property rights) during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of a Person or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligation" of any Person means any obligation of such
Person to pay rent or other amounts under a lease of property, real or personal,
that is required to be capitalized for financial reporting purposes in
accordance with GAAP and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants or options (whether or not currently
exercisable), participations or other equivalents of or interests in (however
designated) the equity (which includes, but is not limited to, common stock,
preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities that are convertible into, or exchangeable for,
such equity).
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated EBITDA Coverage Ratio" as of any date of determination means
the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (b) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) if we have or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
EBITDA Coverage Ratio is an issuance of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been issued on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period,
(2) if since the beginning of such period we or any Restricted
Subsidiary shall have made any asset disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such asset
disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period, and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of us or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to us and our continuing
Subsidiaries in connection with such asset dispositions for such period
(or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent we and our
continuing Subsidiaries are no longer liable for such Indebtedness after
such sale),
(3) if since the beginning of such period we or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring
in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit
of a business (which shall include the
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acquisition or construction of a vessel or drilling rig, provided we have
paid 75% or more of the cost thereof and such vessel or drilling rig is
reasonably expected to be delivered within 90 days), EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the issuance of any
Indebtedness) as if such Investment or acquisition occurred on the first
day of such period, and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into us
or any Restricted Subsidiary since the beginning of such period) shall have
made any asset disposition or any Investment that would have required an
adjustment under clause (2) or (3) above if made by us or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto as if
such asset disposition or Investment occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto,
and the amount of Consolidated Interest Expense associated with any Indebtedness
issued in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of our company.
If any Indebtedness bears a floating rate of interest and is being give pro
forma effect, the interest of such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has a
remaining term in excess of 12 months).
For purposes of this definition, in the case of the acquisition since the
beginning of such period of a drilling rig or drillship (or of a Restricted
Subsidiary owning same) by us or by a Restricted Subsidiary pursuant to a
binding purchase agreement or the delivery since the beginning of such period of
a drilling rig or drillship to us or a Restricted Subsidiary pursuant to a
binding construction contract, which drilling rig or drillship has been subject
for at least one full fiscal quarter to a binding drilling contract constituting
a Qualifying Contract, then, for purposes of making the pro forma calculations
provided for in the first sentence of the preceding paragraph, the financial or
accounting officer of our company shall give pro forma effect to the earnings
(losses) of such drilling rig or drillship as if such drilling rig or drillship
were acquired on the first day of such period, by basing such earnings (losses)
on the annualized (x) historical revenues actually earned from such Qualifying
Contract and (y) actual expenses related thereto, in each case for each quarter
during such period in which the Qualifying Contract is in effect.
"Consolidated Interest Expense" means, for any period, the total interest
expense of our company and our consolidated Restricted Subsidiaries, plus, to
the extent not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations,
(2) amortization of debt discount and debt issuance cost,
(3) capitalized interest,
(4) non-cash interest payments,
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing,
(6) net costs under Interest Rate Protection Agreements (including
amortization of fees),
(7) dividends in respect of any Redeemable Stock held by Persons other
than us or a Restricted Subsidiary,
(8) interest expense attributable to deferred payment obligations, and
(9) interest expense on Indebtedness of another person to the extent
that such Indebtedness is guaranteed by us or a Restricted Subsidiary.
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"Consolidated Net Income" means, for any period, the net income of our
company and its consolidated subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income of any Person if such Person is not a Restricted
Subsidiary, except that (1) our equity in the net income of any such Person
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during such
period to us or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (c) below) and (2) our
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(b) any net income of any Person acquired by us or a Restricted
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(c) any net income of any Restricted Subsidiary to the extent such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to us, except that (1) the
net income of Cliffs Drilling Company shall be included notwithstanding the
foregoing, (2) the net income of a Restricted Subsidiary shall be included
to the extent such net income could be paid to us or a Restricted
Subsidiary by loans, advances, intercompany transfers, principal repayments
or otherwise; (3) our equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to us or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution to another Restricted Subsidiary, to the
limitation contained in this clause) and (4) our equity in a net loss of
any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(d) any gain (but not loss) realized upon the sale or other
disposition of any of our property, plant or equipment or our consolidated
subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(e) extraordinary, unusual or nonrecurring charges;
(f) charges relating to the extinguishment of debt obligations of R&B
Falcon Holdings Inc.; and
(g) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" of a Person means the consolidated stockholders'
equity of such Person and its Subsidiaries, as determined in accordance with
GAAP.
"Credit Facilities" means, with respect to our company or any Restricted
Subsidiary, one or more debt facilities or commercial paper facilities, in each
case with banks or other institutional lenders providing for revolving credit
loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Default" means any act, event or condition which is, or after notice or
passage of time or both would be, an Event of Default.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following (but without duplication) to the extent deducted in
calculating such Consolidated Net Income for such period: (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation expense and (d)
amortization expense.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than our Capital Stock which is neither
Exchangeable Stock nor Redeemable Stock).
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Hedging Obligations" of any Person means the net obligation (not the
notional amount) of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Holder" or "Noteholder" means the Person in whose name a note is
registered on the Registrar's books.
"Incidental Asset" is defined to mean any equipment, outfit, furniture,
furnishings, appliances, spare or replacement parts or stores owned by us or a
Restricted Subsidiary that have become obsolete or unfit for use or no longer
useful, necessary or profitable in the conduct of the business of our company or
such Restricted Subsidiary, as the case may be. In no event shall the term
"Incidental Asset" include a drilling rig or a drillship.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for, provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
"Indebtedness" of any Person at any date means, without duplication:
(1) all indebtedness of such Person for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof),
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments,
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (or reimbursement obligations with respect
thereto), other than standby letters of credit and performance bonds issued
by such Person in the ordinary course of business, to the extent not drawn
or, to the extent drawn, if such drawing is reimbursed not later than the
third Business Day following demand for reimbursement,
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business,
(5) all Capitalized Lease Obligations of such Person,
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(6) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, to the
extent of the fair market value of all the assets of such Person subject to
such Lien,
(7) all Indebtedness of others guaranteed by such Person to the extent
of such guarantee,
(8) Redeemable Stock, and
(9) all Hedging Obligations of such Person.
For purposes of clause (8) of the preceding sentence, Redeemable Stock
shall be valued at the maximum fixed redemption, repayment or repurchase price,
which shall be calculated in accordance with the terms of such Redeemable Stock
as if such Redeemable Stock were repurchased on any date on which Indebtedness
shall be required to be determined under the Indenture; provided, however, that
if such Redeemable Stock is not then permitted to be redeemed, repaid or
repurchased, the redemption, repayment or repurchase price shall be the book
value of such Redeemable Stock. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any guarantees at
such date; provided that for purposes of calculating the amount of any
non-interest bearing or other discount security, such Indebtedness shall be
deemed to be the principal amount thereof that would be shown on the balance
sheet of the issuer thereof dated such date prepared in accordance with GAAP but
that such security shall be deemed to have been Incurred only on the date of the
original issuance thereof. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect us or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under the "Limitation on Restricted Payments" covenant (i)
"Investment" shall include the portion (proportionate to our equity interest in
such Subsidiary) of the fair market value of the net assets of any Subsidiary of
our company at the time that such Subsidiary is designated an Unrestricted
Subsidiary, provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, we shall be deemed to continue to have a permanent
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to our equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by our Board of Directors.
"Investment Grade Rating" means BBB- or above, in the case of S&P (or its
equivalent under any successor rating categories of S&P), Baa3 or above, in the
case of Moody's (or its equivalent under any successor rating categories of
Moody's), and the equivalent in respect of the ratings categories of any Rating
Agencies substituted for S&P or Moody's.
"Issue Date" means the date on which the outstanding notes were originally
issued.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
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agreement to give or grant a Lien or any lease, condition sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing). For the purposes of this Indenture, we or any of our Subsidiaries
shall be deemed to own subject to a Lien any asset which we have acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement
relating to such asset.
"Moody's" is defined to mean Moody's Investor Service, Inc. and its
successors.
"Net Available Cash" from an Asset Sale means cash payments or Temporary
Cash Equivalents received from the Asset Sale (including any cash payments
received by way of deferred payment of principal under a note or installment
receivable or otherwise and proceeds from the sale or other disposition of any
securities received as consideration, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such
properties or assets or received in any other noncash form), in each case net of
(i) all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability under GAAP, as a consequence of such Asset
Sale, (ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Sale, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset Sale, or
by applicable law, be repaid out of the proceeds from such Asset Sale, (iii) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale and
(iv) the deduction of appropriate amounts provided by the seller as a reserve,
in accordance with GAAP, against any liabilities associated with the property or
other assets disposed in such Asset Sale and retained by us or any Restricted
Subsidiary after such Asset Sale.
"Net Cash Proceeds" means, with respect to any issuance or sale of Capital
Stock, the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Capital Stock" means, with respect to any Person, any
non-convertible Capital Stock of such Person and any Capital Stock of such
Person convertible solely into non-convertible common stock of such Person;
provided, however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of an Unrestricted Subsidiary as to which neither we or any
Restricted Subsidiary:
(1) provides credit support including any undertaking, agreement or
instrument which would constitute Indebtedness; or
(2) is directly or indirectly liable for such Indebtedness.
"Pari Passu Indebtedness" means any Indebtedness of our company, whether
outstanding on the date on which the outstanding notes were originally issued or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness the instrument creating or evidencing the same or pursuant to which
the same is outstanding expressly provides that such Indebtedness shall be
subordinated in right of payment to notes.
"Permitted Investments" means:
(a) certificates of deposit, bankers acceptances, time deposits,
Eurocurrency deposits and similar types of Investments routinely offered by
commercial banks with final maturities of one year or less issued by
commercial banks having capital and surplus in excess of $100 million;
(b) commercial paper issued by any corporation, if such commercial
paper has credit ratings of at least "A-1" by S&P and at least "P-1" by
Moody's;
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(c) U.S. Government Obligations with a maturity of four years or less;
(d) repurchase obligations for instruments of the type described in
clause (c);
(e) shares of money market mutual or similar funds having assets in
excess of $100.0 million;
(f) payroll advances in the ordinary course of business;
(g) other advances and loans to officers and employees of our company
or any Restricted Subsidiary, so long as the aggregate principal amount of
such advances and loans does not exceed $1.0 million at any one time
outstanding;
(h) Investments in any Person in the form of a capital contribution of
our common stock;
(i) Investments made by us in our Restricted Subsidiaries (or any
Person that will be a Restricted Subsidiary as a result of such Investment)
or by a Restricted Subsidiary in our company or in one or more Restricted
Subsidiaries (or any Person that will be a Restricted Subsidiary as a
result of such Investment);
(j) Investments in stock, obligations or securities received in
settlement of debts owing to us or any Restricted Subsidiary as a result of
bankruptcy or insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of us or any Restricted Subsidiary, in
each case as to debt owing to us or any Restricted Subsidiary that arose in
the ordinary course of business of our company or any such Restricted
Subsidiary;
(k) Investments made in exchange for Indebtedness permitted by
Sections (b)(4) and (b)(5) of the "Limitation on Indebtedness" covenant;
(l) Investments in the capital stock of Navis ASA, a Norwegian
corporation, in exchange for cash and non-cash assets (the fair market
value of which shall be determined in good faith by our Board of
Directors), in an aggregate amount not to exceed $50 million at any time
outstanding;
(m) Investments consisting of the redesignation of the Subsidiary
owning or operating the drillship Deepwater Frontier or the semisubmersible
RBS8M as an Unrestricted Subsidiary, or the contribution, transfer or other
disposition of the drillship Deepwater Frontier or the semisubmersible
RBS8M and related equipment and assets (including any drilling contract) by
us or any Restricted Subsidiary to a Person other than a Restricted
Subsidiary, in connection with the refinancing of the Indebtedness Incurred
to finance the construction of such rigs;
(n) Investments in a Person other than a Restricted Subsidiary for the
purpose of financing the construction or upgrade prior to delivery of the
drillship Deepwater Frontier or the semisubmersible RBS8M pursuant to the
terms of applicable construction and equipment installation agreements;
(o) Investments in a Person other than a Restricted Subsidiary for the
purpose of financing the construction or upgrade of new drilling rigs,
drillships or similar vessels and related equipment, in an aggregate amount
not to exceed at any time outstanding (i) $100 million less (ii) the
aggregate amount of all payments actually made under paragraph (n) of this
definition that represent payments for amounts in excess of our estimated
costs for the vessels referred to therein, as in effect on the Issue Date;
provided, however, that at the time of such Investment, we or such Person
has entered into a Qualifying Contract with respect thereto;
(p) Investments represented by that portion of the proceeds from Asset
Sales that is not required to be cash or Temporary Cash Equivalents by the
covenant described in "-- Covenants -- Limitation on Asset Sales;" and
(q) Investments in Devco in an aggregate amount not to exceed $10.0
million at any time outstanding.
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"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"Qualifying Contract" with respect to a drilling rig, drillship or similar
vessel means a contract for the use thereof (i) between us or a Restricted
Subsidiary or, for the purposes of clause (o) of the definition of "Permitted
Investments," a Person other than a Restricted Subsidiary and a counterparty
that, as certified in an officers' certificate delivered to the Trustee in
connection therewith, is either generally recognized in the offshore drilling
industry as a major oil company or has an investment grade rating on its
long-term debt from Moody's or S&P, (ii) having a minimum term of two years and
(iii) containing a minimum dayrate for such drilling, rig, drillship or similar
vessel.
"Rating Agencies" means (a) S&P and Moody's or (b) if S&P or Moody's or
both of them are not making ratings of the notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the cases may be,
selected by us, which will be substituted for S&P or Moody's or both, as the
case may be.
"Redeemable Stock" means, with respect to the notes, any Capital Stock
that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable, under a sinking fund obligation or otherwise, or redeemable at the
option of the holder thereof, in whole or in part, on or prior to the date on
which the notes mature. Notwithstanding the preceding sentence, any Capital
Stock that would constitute Redeemable Stock solely because the holders thereof
have the right to require us to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Redeemable Stock if the terms of such Capital Stock provide that we may not
repurchase or redeem any such Capital Stock pursuant to such provisions unless
such repurchase or redemption complies with the covenants described above under
the caption "-- Change of Control," "-- Covenants -- Limitation on Asset Sales,"
"Redemptions" and "-- Covenants -- Limitation on Restricted Payments."
"Related Business" means any business related, ancillary or complementary
to our businesses and the business of the Restricted Subsidiaries on the Issue
Date.
"Restricted Subsidiary" means any Subsidiaries other than an Unrestricted
Subsidiary.
"S&P" is defined to mean Standard & Poors Ratings Group, a division of
McGraw-Hill Companies, Inc. and its successors.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by us or any of our Restricted Subsidiaries, for a
period of more than three years, of any real or tangible personal property,
which property has been or is to be sold or transferred by us or such Restricted
Subsidiary to such Person in contemplation of such leasing.
"Senior Indebtedness" of any Person means (i) Indebtedness of such Person,
whether outstanding on the Issue Date or thereafter Incurred, and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to us to the extent
post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the notes or the Subsidiary Guarantees, as applicable; provided,
however, that Senior Indebtedness shall not include (1) any obligation of such
Person to any Subsidiary of
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such Person, (2) any liability for federal, state, local, foreign or other taxes
owed or owing by such Person, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness of
such Person (and any accrued and unpaid interest in respect thereof) which is
subordinate or junior in any respect to any other Indebtedness or other
obligation of such Person or (5) that portion of any Indebtedness which at the
time of Incurrence is Incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary Guarantor and any other
Restricted Subsidiary that would be a "Significant Subsidiary" of our company
within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including under any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of our company or a
Subsidiary Guarantor, as the case may be (whether outstanding on the Issue Date
or thereafter Incurred), which is subordinate or junior in right of payment to
the notes or the Subsidiary Guarantee, as applicable, whether pursuant to a
written agreement to that effect or by operation of law.
"Subsidiary" means, with respect to any Person:
(1) any corporation of which more than 50% of the total voting power
of all classes of the capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors is
owned by such Person directly or through one or more other Subsidiaries of
such Person, and
(2) any entity other than a corporation of which at least a majority
of the capital stock or other equity interest (however designated) entitled
(without regard to the occurrence of any contingency) or vote in the
election of the governing body, partners, managers or others that will
control the management of such entity is owned by such Person directly or
through one or more other Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary of our company, whether now
owned or hereafter formed, which shall execute and deliver a Subsidiary
Guarantee.
"Subsidiary Guarantee" means a guarantee of our obligations with respect to
the notes issued by a Subsidiary of our company.
"Tangible Property" means all land, buildings, machinery and equipment and
leasehold interests and improvements which would be reflected on a balance sheet
of our company prepared in accordance with GAAP, excluding (a) all rights,
contracts and other intangible assets of any nature whatsoever and (b) all
inventories and other current assets.
"Temporary Cash Investments" means Investments described in clauses (a),
(b), (c) and (d) of the definition of "Permitted Investments."
"Unrestricted Subsidiary" means:
(a) any Subsidiary of our company that at the time of determination
will be designated an Unrestricted subsidiary by our Board of Directors as
provided below and
(b) any Subsidiary of an Unrestricted Subsidiary.
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Our Board of Directors may designate any of our Subsidiaries as an
Unrestricted Subsidiary so long as:
(1) it has no Indebtedness other than Non-Recourse Indebtedness;
provided, however, that notwithstanding any other provision of this
Indenture, a Subsidiary shall not fail to constitute an Unrestricted
Subsidiary by reason of (a) the guarantee by us or a Restricted Subsidiary
in connection with synthetic lease obligations Incurred to finance the
construction or upgrade of drilling rigs, drillships or similar vessels;
and (b) our obligations or the obligations of a Restricted Subsidiary
relating to Indebtedness of an Unrestricted Subsidiary if such Indebtedness
constituted a Permitted Investment or a Restricted Payment permitted by the
"Limitation on Restricted Payments" covenant at the time of its Incurrence
or at the time of designation of such Subsidiary as an Unrestricted
Subsidiary; and
(2) after giving effect thereto, such designation was permitted by the
"Limitation on Restricted Payments" covenant.
Any such designation by our Board of Directors shall be evidenced to the
Trustee by filing a resolution of the Board of Directors with the Trustee giving
effect to such designation. Our Board of Directors may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation, (A) no Default or Event of Default shall have
occurred and be continuing and (B) we could incur $1.00 of additional
Indebtedness under paragraph (a) of the "Limitation on Indebtedness" covenant.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at our option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by us
or one or more Wholly Owned Restricted Subsidiaries.
DESCRIPTION OF SIGNIFICANT INDEBTEDNESS
BANK FACILITIES
As of December 31, 1998, we had $150.0 million outstanding under our
revolving credit facility. We repaid all amounts on March 26, 1999 out of the
proceeds of our borrowings from RBF Finance Co. Upon repayment, we terminated
this Credit Facility.
Cliffs Drilling currently maintains a $35 million revolving credit facility
that matures May 31, 2000. At March 31, 1999, Cliffs Drilling had $0.4 million
in letters of credit outstanding, leaving $34.6 million available under this
credit facility.
R&B FALCON NOTES
In April 1998, we issued four series of the senior notes with an aggregate
principal amount of $1.1 billion (the "$1.1 Billion Senior Notes"). As a result,
we received net proceeds of $1,082 million after deducting estimated offering
related expenses. The $1.1 Billion Senior Notes bear interest at varying rates
from 6.5% to 7.375%. Interest on the $1.1 Billion Senior Notes is payable
semiannually on April 15 and October 15; and the $1.1 Billion Senior Notes
mature at varying times from 2003 to 2018. The $1.1 Billion Senior Notes are
unsecured obligations, ranking equally in right of payment with all of our
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other existing and future senior unsecured indebtedness. We used the proceeds
from the offering of the $1.1 Billion Senior Notes to repay indebtedness of
$874.4 million. We used the remainder of the net proceeds for planned capital
expenditures, working capital and other general corporate purposes.
In December 1998, we issued $100 million principal amount of our 9 1/8%
Senior Notes due 2003 and $300 million principal amount of our 9 1/2% Senior
Notes due 2008. Interest on these senior notes is payable semiannually on June
15 and December 15. These senior notes are unsecured obligations, ranking
equally in right of payment with all of our other existing and future senior
unsecured indebtedness. We received net proceeds from the issuance of these
senior notes of approximately $392 million, after deducting estimated offering
related expenses. We used the proceeds from the offering of these notes to
reduce borrowings under our then existing revolving credit facility.
On March 26, 1999, we issued the $200 million of 12 1/4% Senior Notes due
2006 that are the subject of the exchange offer. Also on that date, RBF Finance
Co., a limited purpose finance company affiliated with us, issued $400 million
of its 11% Senior Secured Notes due 2006 and $400 million of its 11 3/8% Senior
Secured Notes due 2009. We borrowed the proceeds from these notes from RBF
Finance Co. in ten separate loans, each of which is secured by one of our
drilling rigs or the construction contract to build a drilling rig. We also
guaranteed the notes that RBF Finance Co. issued. We are using the proceeds from
the loans from RBF Finance Co. to finance the costs of acquiring, constructing,
repairing and improving the drilling rigs that are security for the loans. To
the extent we have already paid these costs, we are using the proceeds for
general corporate purposes, including the repayment of debt. We are using the
net proceeds from our offering of the $200 million Senior Notes for general
corporate purposes, including the repayment of debt. For accounting purposes, we
will consolidate RBF Finance Co.
CLIFFS DRILLING NOTES
Cliffs Drilling has outstanding an aggregate principal amount of $200.0
million of its 10 1/4% Senior Notes due 2003 (the "Cliffs Drilling Notes") and
debt premium, net of amortization, of $2.8 million as of March 31, 1999.
Interest on the Cliffs Drilling Notes is payable semi-annually during each May
and November. The Cliffs Drilling Notes are unconditionally guaranteed on a
senior unsecured basis by some of Cliffs Drilling's subsidiaries (the "Cliffs
Subsidiary Guarantors"), which guarantees rank equally in right of payment with
all senior indebtedness of the Cliffs Subsidiary Guarantors and senior to all
subordinated indebtedness of the Cliffs Subsidiary Guarantors. The Cliffs
Drilling Notes are redeemable on or after May 15, 2000 at a declining premium.
The indenture under which the Cliffs Drilling Notes are issued imposes
significant operating and financial restrictions on Cliffs Drilling. These
restrictions affect, and in many respects limit or prohibit, the ability of
Cliffs Drilling to incur additional indebtedness, make capital expenditures,
create liens, sell assets, make dividends or other payments and take other
actions.
UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of United States federal income and
estate tax consequences of the acquisition, ownership and disposition of notes
by an initial beneficial owner of notes that, for United States federal tax
purposes, is not a "United States person" (a "Non-United States Holder"). This
discussion is based upon the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, all as in effect on the date hereof, which are
subject to change, possibly retroactively. For purposes of this discussion, a
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in the United
States or under the law of the United States or of any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury regulations
provide otherwise), an estate whose income is subject to United States federal
income taxation regardless of its source, or a trust if a U.S. court is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. Notwithstanding
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the previous sentence, to the extent provided in Treasury regulations, some
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons will also be United States persons. This discussion applies only to
those Non-United States Holders who purchase notes from the initial purchaser at
the price set forth on the cover page of this prospectus and hold the notes as a
capital asset. The tax treatment of the holders of the notes may vary depending
upon their particular situations. United States persons acquiring the notes are
subject to different rules than those discussed below. In addition, other
holders (including insurance companies, tax exempt organizations, financial
institutions and broker-dealers) may be subject to special rules not discussed
below. Prospective investors are urged to consult their tax advisors regarding
the United States federal tax consequences of acquiring, holding and disposing
of notes, as well as any tax consequences that may arise under the laws of any
relevant foreign, state, local or other taxing jurisdiction.
INTEREST
Interest that we pay to a Non-United States Holder will not be subject to
United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-United States Holder and, among other things, such Non-
United States Holder (i) does not actually or constructively own 10% or more of
the total combined voting power of all classes of our stock; (ii) is not a
controlled foreign corporation with respect to the United States and to which we
are a related person and (iii) certifies to us, our paying agent or the person
who would otherwise be required to withhold United States tax, on Form W-8 or
W-9 or substantially similar form signed under penalties of perjury, that such
holder is not a United States person and provides such holder's name and address
(the "Certification Requirement"). In the case of interest on a note that is not
"effectively connected with the conduct of a trade or business within the United
States" and does not satisfy the three requirements of the preceding sentence,
the Non-United States Holder's interest on a note would generally be subject to
United States withholding tax at a flat rate of 30% (or a lower applicable
treaty rate). If a Non-United States Holder's interest on a note is "effectively
connected with the conduct of a trade or business within the United States,"
then the Non-United States Holder will be subject to United States federal
income tax on such interest income in essentially the same manner as a United
States person and, in the case of a Non-United States Holder that is a foreign
corporation, may also be subject to the branch profits tax.
GAIN ON DISPOSITION
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain recognized on a sale, redemption or
other disposition of a note unless (i) the gain is effectively connected with
the conduct of a trade or business within the United States by the Non-United
States Holder or (ii) in the case of a Non-United States Holder who is a
nonresident alien individual and holds the note as a capital asset, such holder
is present in the United States for 183 or more days in the taxable year and
other requirements are met.
FEDERAL ESTATE TAXES
If interest on a note is exempt from withholding of United States federal
income tax under the rules described above, the note held by an individual who
at the time of death is a Non-United States Holder generally will not be subject
to United States federal estate tax as a result of such individual's death.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, when required, report to the holders of the notes and the Internal
Revenue Service ("IRS") the amount of any interest paid on the notes in each
calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments of interest to Non-United States Holders, the
general 31% backup withholding tax and certain information reporting will not
apply to such payments if either the
58
<PAGE> 62
Certification Requirement has been satisfied or an exemption has otherwise been
established, provided that neither we nor our payment agent has actual knowledge
that the holder is a United States person or that the conditions of any other
exemption are not in fact satisfied. Information reporting and backup
withholding requirements will apply to the gross proceeds paid to a Non-United
States Holder on the disposition of the notes by or through a United States
office of a United States or foreign broker, unless the holder certifies to the
broker under penalties of perjury as to its name, address and status as a
foreign person or the holder otherwise establishes an exemption. Information
reporting requirements, but not backup withholding, will also apply to a payment
of the proceeds of a disposition of the notes by or through a foreign office of
a United States broker or foreign brokers with certain types of relationships to
the United States unless such broker has documentary evidence in its file that
the holder of the notes is not a United States person and such broker has no
actual knowledge to the contrary, or the holder establishes an exception.
Neither information reporting nor backup withholding generally will apply to a
payment of the proceeds of a disposition of the notes by or through a foreign
office of a foreign broker not subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
The United States Treasury Department recently promulgated new regulations
regarding the withholding and information reporting rules discussed above. In
general, the new regulations do not significantly alter the substantive
withholding and information reporting requirements but rather unify current
certification procedures and forms and clarify reliance standards. The new
regulations require, however, that a foreign person furnish its taxpayer
identification number in certain circumstances to claim a reduction in United
States federal withholding tax and new rules are provided for foreign persons
that hold debt instruments thorough a foreign intermediary. The new regulations
are generally effective for payments made after December 31, 1999, subject to
transition rules. NON-UNITED STATES HOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF THE NEW REGULATIONS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes where
such outstanding notes were acquired as a result of market-making activities or
other trading activities. We have agreed that for a period of 180 days after the
Expiration Date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resales.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account in the exchange offer and any broker or dealer that participates in a
distribution of such exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of exchange
notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
59
<PAGE> 63
We have been advised by Donaldson, Lufkin & Jenrette Securities Corporation
that following completion of the exchange offer they intend to make a market in
the exchange notes to be issued in the exchange offer. However, they are under
no obligation to do so and any market activities with respect to the exchange
notes may be discontinued at any time.
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.
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 exchange notes offered hereby will be
passed upon for us by Gardere Wynne Sewell & Riggs, L.L.P., Houston, Texas.
60
<PAGE> 64
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.
61
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
4.1 -- Indenture dated as of March 26, 1999 between R&B Falcon
Corporation, as Issuer, and U.S. Trust Company of Texas,
National Association, as Trustee, with respect to
$200,000,000 12 1/4% Senior Notes due 2006 (incorporated
by reference to Exhibit 4.2 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1999).
4.2 -- Registration Rights Agreement dated as of March 26, 1999
among R&B Falcon Corporation and Donaldson, Lufkin &
Jenrette Securities Corporation (incorporated by
reference to Exhibit 4.4 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1999).
5.1* -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P., counsel
for R&B Falcon Corporation.
10.1* -- Purchase Agreement dated March 19, 1999 among R&B Falcon
Corporation and Donaldson, Lufkin & Jenrette Securities
Corporation.
12.1* -- Statement regarding computation of ratio of earnings to
fixed charges.
15.1* -- Letter Regarding Unaudited Interim Financial Information.
23.1* -- Consent of Arthur Andersen LLP.
23.2* -- Consent of Ernst & Young LLP.
24.1* -- Power of Attorney (set forth on the signature pages
contained in Part II of this Registration Statement).
25.1* -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 on Form T-1.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* Filed herewith
II-1
<PAGE> 66
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) of 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(c) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE> 67
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 May 19, 1999.
R&B FALCON CORPORATION
BY: /s/ STEVEN A. WEBSTER
----------------------------------
STEVEN A. WEBSTER
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Tim W. Nagle, Robert F. Fulton and Leighton E.
Moss, and each of them, each of whom may act without joinder of the other, his
or her true and lawful attorneys and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all pre- and post-effective amendments to
this Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, and each of them, or
the substitute or substitutes of any or all of them, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEVEN A. WEBSTER Chief Executive Officer, President and May 19, 1999
- -------------------------------------- Director
Steven A. Webster (Principal Executive Officer)
/s/ PAUL B. LOYD Chairman of the Board and Director May 19, 1999
- --------------------------------------
Paul B. Loyd
/s/ ROBERT F. FULTON Executive Vice President May 19, 1999
- -------------------------------------- (Principal Financial Officer)
Robert F. Fulton
/s/ TIM W. NAGLE Executive Vice President (Principal May 19, 1999
- -------------------------------------- Accounting Officer)
Tim W. Nagle
/s/ PURNENDU CHATTERJEE Director May 19, 1999
- --------------------------------------
Purnendu Chatterjee
/s/ ARNOLD L. CHAVKIN Director May 19, 1999
- --------------------------------------
Arnold L. Chavkin
</TABLE>
II-3
<PAGE> 68
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CHARLES A. DONABEDIAN Director May 19, 1999
- --------------------------------------
Charles A. Donabedian
/s/ DOUGLAS A.P. HAMILTON Director May 19, 1999
- --------------------------------------
Douglas A.P. Hamilton
Director
- --------------------------------------
Macko A.E. Laqueur
Director
- --------------------------------------
Michael E. Porter
/s/ ROBERT L. SANDMEYER Director May 19, 1999
- --------------------------------------
Robert L. Sandmeyer
/s/ WILLIAM R. ZIEGLER Director May 19, 1999
- --------------------------------------
William R. Ziegler
/s/ DOUGLAS E. SWANSON Director May 19, 1999
- --------------------------------------
Douglas E. Swanson
</TABLE>
II-4
<PAGE> 69
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 -- Indenture dated as of March 26, 1999 between R&B Falcon
Corporation, as Issuer, and U.S. Trust Company of Texas,
National Association, as Trustee, with respect to
$200,000,000 12 1/4% Senior Notes due 2006 (incorporated
by reference to Exhibit 4.2 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1999).
4.2 -- Registration Rights Agreement dated as of March 26, 1999
among R&B Falcon Corporation and Donaldson, Lufkin &
Jenrette Securities Corporation (incorporated by
reference to Exhibit 4.4 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1999).
5.1* -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P., counsel
for R&B Falcon Corporation.
10.1* -- Purchase Agreement dated March 19, 1999 among R&B Falcon
Corporation and Donaldson, Lufkin & Jenrette Securities
Corporation.
12.1* -- Statement regarding computation of ratio of earnings to
fixed charges.
15.1* -- Letter Regarding Unaudited Interim Financial Information.
23.1* -- Consent of Arthur Andersen LLP.
23.2* -- Consent of Ernst & Young LLP.
24.1* -- Power of Attorney (set forth on the signature pages
contained in Part II of this Registration Statement).
25.1* -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 on Form T-1.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
May 25, 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-4 (the "Registration Statement") being filed with the
Securities and Exchange Commission on this date relating to the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of the
offer by the Company (the "Exchange Offer") of certain notes to be exchanged
(the "Exchange Notes") for up to $200 million aggregate principal amount of its
12 1/4 % Senior Notes Due 2006 (the "Outstanding Notes"). The Exchange Notes
are to have terms substantially identical in all material respects to the
Outstanding Notes, except that such Exchange Notes will not contain terms with
respect to transfer restrictions. The Exchange Notes are proposed to be issued
in accordance with the provisions of the Indenture, dated as of March 26, 1999,
between the Company and U.S. Trust Company of Texas, N.A., as Trustee (the
"Indenture").
As the basis for the opinions expressed below, we have examined the
Registration Statement, the Prospectus contained therein, the Indenture, which
is filed as an exhibit to the Prospectus, and such statutes, regulations,
corporate records and documents, certificates of corporate and public officials
and other instruments as we have deemed necessary or advisable for the purposes
of this opinion. In such examination, we have assumed (i) that the signatures
on all documents that we have examined are genuine, (ii) the authenticity of
all documents submitted to us as originals, and (iii) the conformity with the
original documents of all documents submitted to us as copies.
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective, (ii) the Indenture will have been
qualified under the Trust Indenture Act of 1939, as amended, and (iii) the
Exchange Notes will be issued and exchanged in compliance with applicable
federal and state securities laws and in the manner stated in the Registration
Statement.
<PAGE> 2
Board of Directors
R&B Falcon Corporation
May 25, 1999
Page Two
Based upon the foregoing, subject to the qualifications hereinafter
set forth, and having regard for such legal considerations as we have deemed
relevant, we are of the opinion that the Exchange Notes proposed to be issued
pursuant to the Exchange Offer have been duly authorized for issuance and,
subject to the Registration Statement becoming effective under the Securities
Act and in compliance with any applicable state securities laws, when executed,
authenticated, issued, delivered and exchanged in accordance with the Exchange
Offer and the Indenture, will be legally issued and will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms.
The opinion expressed above with respect to the Exchange Notes is
subject to the qualifications (x) that the enforcement of the Exchange Notes
may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and (y) that a
waiver of rights under any usury laws may be unenforceable. Furthermore, we
express no opinion as to the enforceability of any provisions of the Exchange
Notes that would require the performance thereof in the presence of fraud or
illegality on the part of the holders of the Exchange Notes or the Trustee.
The opinions expressed herein are limited exclusively to the federal
laws of the United States of America, the laws of the State of Texas and the
General Corporation Law of the State of Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of the Company and is
not to be used, circulated, copied, quoted or referred to without our prior
written consent. We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the statements made with respect to us
under the caption "Legal Matters" in the Prospectus included as part of the
Registration Statement.
Very truly yours,
/s/ WILLIAM MARK YOUNG
William Mark Young, Partner
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
------------------------
R&B FALCON CORPORATION
$200,000,000 PRINCIPAL AMOUNT OF
12 1/4% SENIOR NOTES DUE 2006
MARCH 19, 1999
------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE> 2
$200,000,000 12 1/4% SENIOR NOTES DUE 2006
R&B FALCON CORPORATION
PURCHASE AGREEMENT
March 19, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
AS INITIAL PURCHASER
277 PARK AVENUE
NEW YORK, NEW YORK 10172
Dear Sirs:
R&B Falcon Corporation, a Delaware corporation (the "COMPANY"), proposes to
issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation (the
"INITIAL PURCHASER") an aggregate of $200,000,000 in principal amount of its 12
1/4% Senior Notes due 2006 (the "RESTRICTED NOTES"), subject to the terms and
conditions set forth herein. The Restricted Notes are to be issued pursuant to
the provisions of an indenture (the "INDENTURE"), to be dated as of the Closing
Date (as defined below), among the Company and United States Trust Company of
Texas, National Association, as trustee (the "TRUSTEE"). The Restricted Notes
and the Exchange Notes (as defined below), issuable in exchange therefor, are
collectively referred to herein as the "NOTES." Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Indenture.
1. OFFERING MEMORANDUM. The Restricted Notes will be offered and sold
to the Initial Purchaser pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). The Company has prepared a preliminary offering memorandum, dated March
15, 1999 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final offering
memorandum, dated March 19, 1999 (the "OFFERING MEMORANDUM"), relating to the
Restricted Notes.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Restricted Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S.
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<PAGE> 3
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"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER
REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY 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 AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
AIA THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY) OR (G) 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
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<PAGE> 4
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," U.S. PERSON"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, the aggregate principal amount of Restricted Notes at
a purchase price equal to 97.25% of the principal amount thereof (the "PURCHASE
Price").
3. TERMS OF OFFERING. The Initial Purchaser has advised, and represents
and warrants to, the Company that the Initial Purchaser will make offers and
sales (the "EXEMPT RESALES") of the Restricted Notes purchased hereunder on the
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to (i) persons whom the Initial Purchaser reasonably believes to be "qualified
institutional buyers" (as defined in Rule 144A promulgated under the Act)
("QIBS"), and (ii) to persons permitted to purchase the Restricted Notes in
offshore transactions in reliance upon Regulation S under the Act (each a
"REGULATION S PURCHASER") (QIBs and Regulation S Purchasers being referred to
herein as the "ELIGIBLE PURCHASERS"). The Initial Purchaser will offer the
Restricted Notes to Eligible Purchasers initially at a price equal to the
percentage of the principal amount thereof set forth on the cover page of the
Offering Memorandum.
Holders (including subsequent transferees) of the Restricted Notes will
have the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Restricted Notes constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file (i) with the Securities and Exchange Commission (the "Commission")
under the circumstances set forth therein (A) a registration statement under the
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to two new series of
the Company's Senior Notes of like amounts having identical terms (the "EXCHANGE
NOTES") to be offered in exchange for the Restricted Notes (such offer to
exchange being referred to as the "EXCHANGE OFFER") and/or (B) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Restricted Notes and (ii) to use its reasonable best efforts to
cause such Registration Statements to be declared and remain effective and
usable for the periods specified in the Registration Rights Agreement and to
consummate the Exchange Offer. This Agreement, the Indenture, the Restricted
Notes, and the Registration Rights Agreement are referred to herein as the
"OPERATIVE Documents."
4. DELIVERY AND PAYMENT.
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<PAGE> 5
(a) Delivery of, and payment of the Purchase Price for, the Notes
shall be made at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., in
Houston, Texas, or such other location as may be mutually acceptable. Such
delivery and payment shall be made at 9:00 a.m. New York City time, on March 26,
1999 or at such other time or date as shall be agreed upon by the Initial
Purchaser and the Company in writing. The time and date of such delivery and the
payment for the Notes are herein called the "CLOSING DATE."
(b) One or more of the Restricted Notes in definitive global form,
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Restricted Notes (collectively, the "GLOBAL NOTES"),
shall be delivered by the Company to the Initial Purchaser (or as the Initial
Purchaser direct) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchaser of the Purchase Price thereof
by wire transfer in same day funds to the order of the Company. The Global Notes
shall be made available to the Initial Purchaser for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with the
Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by
the Initial Purchaser, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Restricted Notes for offering or sale in
any jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company shall use its
best efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Restricted Notes under any state securities or
Blue Sky laws and, if at any time any state securities commission or other
federal or state regulatory authority shall issue an order suspending the
qualification or exemption of any Restricted Notes under any 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.
(b) To furnish the Initial Purchaser and those persons identified
by the Initial Purchaser to the Company as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchaser may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchaser's
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchaser in connection with
Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchaser an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any
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<PAGE> 6
Restricted Notes are outstanding, (i) not to make any amendment or supplement to
the Offering Memorandum of which the Initial Purchaser shall not previously have
been advised or to which the Initial Purchaser shall reasonably object after
being so advised and (ii) to prepare promptly upon the Initial Purchaser's
reasonable request based on the opinion of its counsel, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with such Exempt Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchaser, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchaser, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchaser and such other
persons as the Initial Purchaser may designate such number of copies thereof as
the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Restricted Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchaser and
counsel to the Initial Purchaser in connection with the registration or
qualification of the Restricted Notes for offer and sale to the Initial
Purchaser and pursuant to Exempt Resales under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchaser may reasonably request and to
continue such registration or qualification in effect so long as required for
Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither the Company shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction in which it is not now so
subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis if such report is required to be made
available pursuant to Section 4.13 of the Indenture (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial reports
to include a consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and a consolidated statement of
stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the independent public accountants of the Company, as applicable, and (ii) to
mail or make generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal year) to
such holders, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar financial
reports of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year of the Company, as applicable.
(g) So long as the Notes are outstanding, to furnish upon request
to the Initial
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<PAGE> 7
Purchaser as soon as available copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company as the Initial Purchaser may reasonably
request.
(h) So long as any of the Restricted Notes remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make
available to any holder of Restricted Notes in connection with any sale thereof
and any prospective purchaser of such Restricted Notes from such holder, the
information ("RULE 144A INFORMATION") required by Rule 144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Restricted Notes to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees and expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the
Offering Memorandum and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering of copies
thereof to the Initial Purchaser and persons designated by it in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Restricted Notes to the Initial Purchaser and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Restricted Notes, (iv) all expenses in connection with the
registration or qualification of the Restricted Notes for offer and sale under
the securities or Blue Sky laws of the several states and all costs of printing
or producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and fees and disbursements of counsel for
the Initial Purchaser in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Restricted Notes, (vi) all expenses and listing fees in connection with the
application for quotation of the Restricted Notes in The PORTAL Market
("PORTAL") of The Nasdaq Stock Market, Inc. ("Nasdaq"), (vii) the fees and
expenses of the Trustee and the Trustee's counsel in connection with the
Indenture and the Notes, (viii) the costs and charges of any transfer agent,
registrar and/or depositary (including DTC), (ix) any fees charged by rating
agencies for the rating of the Notes, (x) all costs and expenses of the Exchange
Offer and any Registration Statement, as set forth in the Registration Rights
Agreement, and (xi) and all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise
made in this Section.
(j) To use its best efforts, with the cooperation of the Initial
Purchaser, to effect the inclusion of the Restricted Notes in PORTAL and to
maintain the listing of the Restricted Notes on PORTAL for so long as any
Restricted Notes are outstanding.
(k) To obtain, with the cooperation of the Initial Purchaser, the
approval of DTC for "book-entry" transfer of the Notes, and to comply with all
of its agreements set forth in the representation letters of the Company to DTC
relating to the approval of the Notes by DTC for "book-entry" transfer.
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<PAGE> 8
(l) Except as described in the Offering Memorandum, during the
period beginning on the date hereof and continuing to and including the Closing
Date, not to offer, sell, contract to sell or otherwise transfer or dispose of
any debt securities of the Company or any warrants, rights or options to
purchase or otherwise acquire debt securities of the Company substantially
similar to the Notes (other than (i) the Notes and (ii) commercial paper issued
in the ordinary course of business), without the prior written consent of the
Initial Purchaser.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Restricted Notes to the Initial
Purchaser or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Restricted Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts
to claim, the benefit of any usury laws against the holders of any Notes.
(o) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(p) To use its best efforts to do and perform all things required
or necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Restricted Notes.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. As of the
date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchaser that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) The Company and its subsidiaries has been duly incorporated,
is validly existing as a corporation or limited liability company in good
standing under the laws of its jurisdiction of incorporation or formation and
has the corporate or limited liability company power and authority to carry on
its business as described in the Preliminary Offering Memorandum and the
Offering Memorandum and to own, lease and operate its properties, and each is
duly qualified and is in good standing as a foreign corporation or entity
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE
Effect"), as the case may be. Each of the subsidiaries of the Company listed on
Schedule B hereto (the "SUBSIDIARIES"), which
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<PAGE> 9
Subsidiaries in the aggregate directly own substantially all of the assets held
by the Company and all of its subsidiaries on a consolidated basis and which
constitute all of the Company's "significant subsidiaries" (as such term is
defined in Regulation S-X under the Act), has been duly incorporated, is validly
existing as a corporation or limited liability company in good standing under
the laws of its jurisdiction of incorporation or formation and has the corporate
or limited liability company power and authority to carry on its business and to
own, lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation or entity authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect.
(c) All outstanding shares of capital stock of the Company and its
subsidiaries have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Indenture has been duly authorized by the Company and, on
the Closing Date, will have been validly executed and delivered by the Company.
When the Indenture has been duly executed and delivered by the Company, the
Indenture will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA" or "TRUST INDENTURE ACT"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(f) The Restricted Notes have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Restricted Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement, the Restricted
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, the Restricted Notes will conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(g) On the Closing Date, the Exchange Notes will have been duly
authorized by the Company. When the Exchange Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Exchange Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
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<PAGE> 10
(h) The Registration Rights Agreement has been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
by the Company. When the Registration Rights Agreement has been duly executed
and delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, the Registration Rights Agreement will conform as to legal matters
to the description thereof in the Offering Memorandum.
(i) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the performance
of any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its subsidiaries to which the Company or its
subsidiaries is a party or by which the Company or its subsidiaries, or their
respective property, is bound.
(j) The execution, delivery and performance of this Agreement and
the other Operative Documents by the Company, compliance by the Company with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or its subsidiaries or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the Company
and its subsidiaries, taken as a whole, to which the Company or its subsidiaries
is a party or by which the Company or its subsidiaries, or their respective
property is bound, (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Company or its subsidiaries or their
respective property, (iv) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which the Company or its subsidiaries is a party or by which the their
respective property is bound (other than Liens granted under or contemplated by
the Operative Documents), or (v) result in the termination, suspension or
revocation of any Authorization (as defined below) of the Company or result in
any other impairment of the rights of the holder of any such Authorization.
(k) There are no legal or governmental proceedings pending or, to
the knowledge of the Company or any of its subsidiaries, threatened, to which
the Company or its subsidiaries are a party or to which any of their respective
property is subject, which, if determined adversely against the Company or its
subsidiaries, would, singly or in the aggregate, have a Material Adverse Effect.
(l) Except as disclosed in the Offering Memorandum, neither the
Company nor any of its subsidiaries has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any provisions of the
Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
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<PAGE> 11
(m) Except as disclosed in the Offering Memorandum, neither the
Company nor any of its subsidiaries are obligated for costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
(n) Each of the Company and the Company's subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
the Company's subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; except where
such burden or failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(o) The accountants, Arthur Andersen LLP and Ernst & Young LLP,
that have and/or as of the Closing will have certified the financial statements
and supporting schedules of the Company or, one or more of the Company's
subsidiaries, are independent public accountants with respect to the Company and
its subsidiaries, as required by the Act and the Exchange Act. The summary and
selected historical consolidated financial data of the Company and the
historical financial statements, together with related schedules and notes, in
the Preliminary Offering Memorandum and the Offering Memorandum or incorporated
by reference complied as to form in all material respects with the requirements
applicable to (i) registration statements under the Act or (ii) with respect to
financial information incorporated therein by reference, reports required to be
filed under the Exchange Act, except that the historical financial statements
incorporated therein have not been adjusted to reflect the previously discounted
oil and gas exploration and production operations as continuing operations for
accounting purposes and that an unqualified audit report with respect to such
financial statements will not be delivered until Closing.
(p) The historical financial statements, together with related
schedules and notes incorporated by reference in the Offering Memorandum (and
any amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and its subsidiaries on the basis stated in the Offering Memorandum at the
respective dates or for the respective periods to which they apply, except that
the historical financial statements incorporated therein have not been adjusted
to reflect the previously discounted oil and gas exploration and production
operations as continuing operations for accounting purposes and that an
unqualified audit report with respect to such financial statements will not be
delivered until Closing; such statements and related schedules and notes have
been prepared in accordance with generally accepted accounting principles
10
<PAGE> 12
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.
(q) The pro forma financial statements included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a basis
consistent with the historical financial statements of the Company and its
subsidiaries, as adjusted to reflect the previously discontinued oil and gas
exploration and production operations as continuing operations for accounting
purposes only, and give effect to assumptions used in the preparation thereof on
a reasonable basis and in good faith and such pro forma financial statements
comply as to form in all material respects with the requirements applicable to
pro forma financial statements included in a registration statement under the
Act. The other pro forma financial and statistical information and data included
in the Offering Memorandum are, in all material respects, accurately presented
and prepared on a basis consistent with the pro forma financial statements.
(r) The Company is not and, after giving effect to the offering
and sale of the Restricted Notes and the application of the net proceeds thereof
as described in the Offering Memorandum, will not be, an "investment company,"
as such term is defined in the Investment Company Act of 1940, as amended.
(s) Except as disclosed in the Offering Memorandum and required
under the terms of the Company's $400 million senior note offering in December
1998, there are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement.
(t) Neither the Company or its subsidiaries nor any agent thereof
acting on the behalf of them has taken, and none of them will take, any action
that might cause this Agreement or the issuance or sale of the Restricted Notes
to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(u) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company's retaining any rating
assigned to the Company or any securities of the Company or (ii) has indicated
to the Company that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company or any securities of the Company,
except in the case of (i) and (ii) as publicly announced by such nationally
recognized statistical rating organization.
(v) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or, to
the Company's or its subsidiaries' knowledge, any development involving a
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<PAGE> 13
prospective material adverse change in the condition, financial or otherwise, or
the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any adverse change or,
to the Company's or its subsidiaries' knowledge, any development involving a
prospective adverse change in the capital stock or in the long-term debt of the
Company or its subsidiaries and (iii) neither the Company nor its subsidiaries
has incurred any material liability or obligation, direct or contingent.
(w) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains or incorporates by reference all the
information specified in, and meeting the requirements of, Rule 144A(d)(4) under
the Act.
(x) When the Restricted Notes are issued and delivered pursuant to
this Agreement, the Restricted Notes will not be of the same class (within the
meaning of Rule 144A under the Act) as any security of the Company that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(y) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
respective representatives (other than the Initial Purchaser, as to whom the
Company makes no representation) in connection with the offer and sale of the
Restricted Notes contemplated hereby, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
No securities of the same class as the Restricted Notes have been issued and
sold by the Company within the six-month period immediately prior to the date
hereof.
(z) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(aa) None of the Company nor any of its affiliates or any person
acting on its or their behalf (other than the Initial Purchaser, as to whom the
Company makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S under the Act ("REGULATION
S") with respect to the Restricted Notes.
(bb) The sale of the Restricted Notes pursuant to Regulation S is
not part of a plan or scheme to evade the registration provisions of the Act.
(cc) No registration under the Act of the Restricted Notes is
required for the sale of the Restricted Notes to the Initial Purchaser as
contemplated hereby or for the Exempt Resales assuming the accuracy of the
Initial Purchaser's representations and warranties and agreements set forth in
Section 7 hereof.
(dd) Each certificate signed by any officer of the Company or its
subsidiaries and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by the Company to
the Initial Purchaser as to the matters covered thereby.
(ee) The Company and its subsidiaries have good and marketable
title to all real property and to all personal property owned by them which is
material to the business of the Company
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<PAGE> 14
in each case free and clear of all Liens, except such as are described in the
Offering Memorandum or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries. Except as otherwise described in
the Offering Memorandum or incorporate reference, the Company and its
subsidiaries do not own any real property or buildings with such exceptions, and
any real property and buildings held under lease by the Company or its
subsidiaries are held by them under valid, subsisting and enforceable leases
that do not have such exceptions, unless in any case such exceptions are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or its subsidiaries.
(ff) All indebtedness of the Company that will be repaid with the
proceeds of the issuance and sale of the Restricted Notes was incurred, and the
indebtedness represented by the Restricted Notes is being incurred, for proper
purposes and in good faith and the Company was, at the time of the incurrence of
such indebtedness that will be repaid with the proceeds of the issuance and sale
of the Restricted Notes, and the Company will be on the Closing Date (after
giving effect to the application of the proceeds from the issuance of the
Restricted Notes) solvent, and the Company had at the time of the incurrence of
such indebtedness that will be repaid with the proceeds of the issuance and sale
of the Restricted Notes and will have on the Closing Date (after giving effect
to the application of the proceeds from the issuance of the Restricted Notes)
sufficient capital for carrying on its respective business and was, at the time
of the incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Restricted Notes, and the Company will be on the
Closing Date (after giving effect to the application of the proceeds from the
issuance of the Restricted Notes), able to pay its debts as they mature.
(gg) The Company and its respective affiliates and all persons
acting on their behalf (other than the Initial Purchaser, as to whom the Company
makes no representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Restricted Notes outside the United States and, in connection therewith, the
Offering Memorandum will contain the disclosure required by Regulation S.
The Company acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial
Purchaser represents and warrants to, and agrees with, the Company:
(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Restricted Notes.
(b) Such Initial Purchaser (A) is not acquiring the Restricted
Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Restricted Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Restricted Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
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<PAGE> 15
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by the Initial Purchaser or any of its
representatives in connection with the offer and sale of the Restricted Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, the Initial Purchaser will solicit offers to buy the Restricted Notes
only from, and will offer to sell the Restricted Notes only to, Eligible
Purchasers. Each Initial Purchaser further agrees that it will offer to sell the
Restricted Notes only to, and will solicit offers to buy the Restricted Notes
only from (A) Eligible Purchasers that the Initial Purchaser reasonably believes
are QIBs and (B) Regulation S Purchasers, in each case, that agree that (x) the
Restricted Notes purchased by them may be resold, pledged or otherwise
transferred within the time period referred to under Rule 144(k) (taking into
account the provisions of Rule 144(d) under the Act, if applicable) under the
Act, as in effect on the date of the transfer of such Restricted Notes, only (I)
to the Company or any of its subsidiaries, (II) 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 under the Act,
(III) in an offshore transaction (as defined in Rule 902 under the Act) meeting
the requirements of Rule 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Restricted Note and, if such transfer is in respect of an aggregate principal
amount of Restricted Notes less than $250,000, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Act, (VI) in
accordance with another exemption from the registration requirements of the Act
(and based upon an opinion of counsel acceptable to the Company) or (VII)
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 (y) they will deliver to each person to whom
such Restricted Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person acting
on its or their behalf have not engaged or will not engage in any directed
selling efforts within the meaning of Regulation S with respect to the
Restricted Notes or the Guarantee.
(f) The Restricted Notes, if any, offered and sold by the Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Restricted Notes offered and sold by the
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(h) The Initial Purchaser agrees that it has not offered or sold
and will not offer or sell the Restricted Notes in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Act (i) as part of its distribution at
any time and (ii) otherwise until 40 days after the later of the commencement of
the offering of the Restricted Notes pursuant hereto and the Closing Date, other
than in accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that,
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<PAGE> 16
during such 40-day restricted period, it will not cause any advertisement with
respect to the Restricted Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Restricted Notes, except such
advertisements as are permitted by and include the statements required by
Regulation S.
(i) The Initial Purchaser agrees that, at or prior to confirmation
of a sale of Restricted Notes by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(c)(2) under the Act, it will send to
such distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect:
"THE RESTRICTED NOTES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF YOUR DISTRIBUTION AT
ANY TIME OR (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE, EXCEPT IN EITHER
CASE IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (OR RULE
144A OR TO ACCREDITED INSTITUTIONS IN TRANSACTIONS THAT ARE EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT), AND IN CONNECTION
WITH ANY SUBSEQUENT SALE BY YOU OF THE RESTRICTED NOTES COVERED HEREBY
IN RELIANCE ON REGULATION S DURING THE PERIOD REFERRED TO ABOVE TO ANY
DISTRIBUTOR, DEALER OR PERSON RECEIVING A SELLING CONCESSION, FEE OR
OTHER REMUNERATION, YOU MUST DELIVER A NOTICE TO SUBSTANTIALLY THE
FOREGOING EFFECT. TERMS USED ABOVE HAVE THE MEANINGS ASSIGNED TO THEM
IN REGULATION S."
The Initial Purchaser acknowledges that the Company and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchaser
will rely upon the accuracy and truth of the foregoing representations and the
Initial Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser, their directors, their officers and each person, if any, who controls
the Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses reasonably 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 the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Company to any holder or prospective
purchaser of Restricted Notes pursuant to Section 5(h) 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
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<PAGE> 17
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to the Initial Purchaser
furnished in writing to the Company by the Initial Purchaser; provided, however,
that the foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Memorandum (as then amended or supplemented, provided
by the Company to the several Initial Purchaser in the requisite quantity and on
a timely basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages and liabilities and judgements
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, 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, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Final Offering Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold harmless
the Company and its respective 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 to the Initial Purchaser, but only with reference to information
relating to the Initial Purchaser furnished in writing to the Company by the
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") 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 8(a) and 8(b), the Initial Purchaser shall not be required to
assume the defense of such action pursuant to this Section 8(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 Initial Purchaser). 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 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 the Initial Purchaser, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(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
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<PAGE> 18
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 the indemnification provided for in this Section
8 is unavailable to an indemnified party or insufficient 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 and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser on the other hand from the
offering of the Restricted Notes or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company, on the one hand, and
the Initial Purchaser, 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
benefits received by the Company, on the one hand and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Restricted Notes (after underwriting discounts
and commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by the Initial Purchaser bear to the
total price to investors of the Restricted Notes, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault of
the Company, on the one hand, and the Initial Purchaser, 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 the Initial Purchaser, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, on the one hand, and the Initial Purchaser, on the
other hand, agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to 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 8, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total discounts and commissions received by the Initial Purchaser
exceeds the amount of any damages which the Initial Purchaser 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)
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shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchaser to purchase the Restricted Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and its
subsidiaries contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
(b) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal of, or
of any review (or of any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
the Company or any securities of the Company (including, without limitation, the
placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is defined
for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred
any change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any securities of the
Company by any such rating organization and (iii) no such rating organization
shall have given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any adverse change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there shall not have been any
material adverse change or any development involving a prospective material
adverse change in the capital stock or in the long-term debt of the Company and
(iii) the Company shall not have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(c)(i),
9(c)(ii) or 9(c)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Restricted Notes on the terms and
in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchaser shall have received on the Closing Date
a certificate dated the Closing Date, signed by the Chief Executive Officer and
the Secretary of the Company, confirming the matters set forth in Sections 6(x),
9(a) and 9(c) and stating that the Company has complied with all the agreements
and satisfied all of the conditions herein contained and required to be complied
with or satisfied on or prior to the Closing Date.
(e) The Initial Purchaser shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the Initial Purchaser), dated
the Closing Date, of Gardere Wynne Sewell & Riggs, L.L.P., counsel for the
Company, to the effect that:
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<PAGE> 20
(i) the Company has been duly incorporated or formed,
is validly existing as a corporation in good standing under the
laws of Delaware and has the corporate power and authority to
carry on its business as described in the Offering Memorandum and
to own, lease and operate its properties;
(ii) the Restricted Notes have been duly authorized
and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement,
will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company, enforceable in
accordance with their terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
(iii) the Indenture has been duly authorized,
executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is a valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer or similar laws affecting creditors' rights
generally, (y) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability and (z) the enforceability of the
indemnification provisions thereof may be limited by federal and
state securities laws;
(vi) the Exchange Notes have been duly authorized;
(vii) the statements under the captions "Risk
Factors," "Description of the Secured Notes, " "Description of
the New Senior Notes," "Description of Certain Indebtedness,"
"United States Federal Income Tax Considerations for Non-U.S.
Holders," "Description of Security for the Secured Notes," "Plan
of Distribution," "Notice to Investors in the Secured Notes" and
"Notice to Investors in the New Senior Notes," in the Offering
Memorandum, insofar as such statements constitute a summary of
legal matters, fairly present in all material respects such legal
matters;
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(viii) the execution, delivery and performance of
this Agreement and the other Operative Documents by the Company,
and the issuance and sale of the Restricted Notes and compliance
with the terms and provisions thereof and of the other Operative
Documents will not (i) violate its charter or bylaws, (ii)
require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency
of the United States or the States of Texas or New York (except
such as may be required under the securities or Blue Sky laws of
the various states), (iii) conflict with or constitute a breach
of any of the terms or provisions of, or a default under the
indentures executed, or senior notes issued, by the Company in
connection with debt offerings by the Company of $1.1 billion in
April 1998 and $400 million in December 1998 or, to such
counsel's actual knowledge, any other indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the
Company or the Significant Subsidiaries is a party or by which
the Company or the Significant Subsidiaries or their respective
property is bound, which conflict, breach or default is likely to
have, either individually or in the aggregate, a Material Adverse
Effect, or (iv) violate or conflict with any applicable law or
any rule or regulation, or to such counsel's actual knowledge,
any judgment, order or decree, in each case of any court or any
governmental body or agency of the United States or the States of
Texas or New York having jurisdiction over the Company or the
Significant Subsidiaries or their respective property;
(ix) the Company is not and, after giving effect to
the offering and sale of the Restricted Notes and the application
of the net proceeds thereof as described in the Offering
Memorandum, will not be, an "investment company" as such term is
defined in the Investment Issuer Act of 1940, as amended;
(x) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder; it is not necessary in connection with the
offer, sale and delivery of the Restricted Notes to the Initial
Purchaser in the manner contemplated by this Agreement or in
connection with the Exempt Resales to qualify the Indenture under
the TIA;
(xi) no registration under the Act of the Restricted
Notes is required for the sale of the Restricted Notes to the
Initial Purchaser as contemplated by this Agreement or for the
Exempt Resales assuming that (i) the Initial Purchaser is a QIB
or a Regulation S Purchaser, (ii) the accuracy of, and compliance
with, the Initial Purchaser's representations and agreements
contained in Section 7 of this Agreement and (iii) the accuracy
of the representations of the Company set forth in Sections 5(f)
and 6(dd), (ee) and (ff) of this Agreement; and
(xii) such counsel has participated in conferences
with officers and other representatives of the Company,
representatives of the Company's accountants, the Initial
Purchaser's representatives and counsel for the Initial
Purchaser, at which conferences the contents of the Offering
Memorandum and
20
<PAGE> 22
related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for and shall
not be deemed to have independently verified the accuracy,
completeness or fairness of the statements contained in the
Offering Memorandum no facts have come to the attention of such
counsel that lead such counsel to believe that the Offering
Memorandum 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 contained therein not misleading
or that the Offering Memorandum on the date thereof or on the
date hereof (other than the financial statements and notes
thereto and the other financial information, including the
information referred to under the caption "Experts" as to which
such counsel does not comment) contained any untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
The opinion of Gardere Wynne Sewell & Riggs, L.L.P. described in
Section 9(e) above shall be rendered to you at the request of the Company and
shall so state therein. In giving such opinion with respect to the matters
covered by Section 9(e)(xii), Gardere Wynne Sewell & Riggs, L.L.P. may state
that their opinion and belief are based upon their participation in the
preparation of the Offering Memorandum and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification except as specified.
(f) The Initial Purchaser shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the Initial Purchaser), dated
the Closing Date, of Leighton E. Moss, Senior Vice President and Co-Counsel for
the Company, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of Delaware and has the corporate power and authority to carry on
its business as described in the Offering Memorandum and to own,
lease and operate its properties;
(ii) the Company is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, or
application has been made and is pending except where the failure
to be so qualified would not have a Material Adverse Effect;
(iii) R&B Falcon Holdings, Inc. ("HOLDINGS") has been
duly incorporated, is validly existing as a corporation and in
good standing under the laws of its jurisdiction of
incorporation, has the corporate authority to carry on its
business and to own, lease and operate its properties; is duly
qualified and is in good standing as a foreign corporation or
entity authorized to do business in each state of the United
States in which the nature of its business or its ownership or
leasing of property requires such qualification, or application
has been made and is pending except where the failure to be so
qualified would not have a Material Adverse Effect;
21
<PAGE> 23
(iv) R&B Falcon Drilling (International & Deepwater)
("DEEPWATER") Inc. has been duly incorporated, is validly
existing as a corporation and in good standing under the laws of
its jurisdiction of incorporation, has the corporate and
authority to carry on its business and to own, lease and operate
its properties; is duly qualified and is in good standing as a
foreign corporation or entity authorized to do business in each
state of the United States in which the nature of its business or
its ownership or leasing of property requires such qualification,
or application has been made and is pending except where the
failure to be so qualified would not have a Material Adverse
Effect;
(v) Cliffs Drilling Company ("CLIFFS") has been duly
incorporated, is validly existing as a corporation and in good
standing under the laws of its jurisdiction of incorporation, has
the corporate and authority to carry on its business and to own,
lease and operate its properties; is duly qualified and is in
good standing as a foreign corporation or entity authorized to do
business in each state of the United States in which the nature
of its business or its ownership or leasing of property requires
such qualification, or application has been made and is pending
except where the failure to be so qualified would not have a
Material Adverse Effect;
(vi) R&B Falcon Drilling USA, Inc. ("DRILLING USA")
has been duly incorporated, is validly existing as a corporation
and in good standing under the laws of its jurisdiction of
incorporation, has the corporate and authority to carry on its
business and to own, lease and operate its properties; is duly
qualified and is in good standing as a foreign corporation or
entity authorized to do business in each state of the United
States in which the nature of its business or its ownership or
leasing of property requires such qualification, or application
has been made and is pending except where the failure to be so
qualified would not have a Material Adverse Effect;
(vii) R&B Falcon Drilling Co. ("DRILLING CO.") has
been duly incorporated, is validly existing as a corporation and
in good standing under the laws of its jurisdiction of
incorporation, has the corporate and authority to carry on its
business and to own, lease and operate its properties; is duly
qualified and is in good standing as a foreign corporation or
entity authorized to do business in each state of the United
States in which the nature of its business or its ownership or
leasing of property requires such qualification, or application
has been made and is pending except where the failure to be so
qualified would not have a Material Adverse Effect;
(viii) all the outstanding shares of capital stock of
the Company, Deepwater, Holdings and Cliffs have been duly
authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights;
(ix) the Company has the corporate power and
authority to perform
22
<PAGE> 24
its obligations under the Operative Documents;
(x) the Restricted Notes have been duly authorized,
executed and delivered by the Company;
(xi) the Indenture has been duly authorized, executed
and delivered by the Company;
(xii) this Agreement has been duly authorized,
executed and delivered by the Company;
(xiii) the Registration Rights Agreement has been
duly authorized, executed and delivered by the Company;
(xiv) the execution and delivery of Exchange Notes
have been duly authorized by the Company;
(xv) to such counsel's knowledge, (a) none of the
Company or the Significant Subsidiaries is in violation of its
respective charter or bylaws and, (b) neither the Company nor the
Significant Subsidiaries is in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and the Significant
Subsidiaries, taken as a whole, to which the Company or the
Significant Subsidiaries is a party or by which the Company or
the Significant Subsidiaries or their respective property is
bound, which default could reasonably be expected to result in a
Material Adverse Effect;
(xvi) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and
the issuance and sale of the Restricted Notes and compliance with
the terms and provisions thereof and the other Operative
Documents will not (i) violate its charter or bylaws, (ii)
require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency
of the United States or the States of Texas or New York (except
such as may be required under the securities or Blue Sky laws of
the various states), (iii) conflict with or constitute a breach
of any of the terms or provisions of, or a default under the
indenture executed, or senior notes issued, by the Company in
connection with debt offerings by the Company of $1.1 billion in
April 1998 and $40.0 million in December 1998 or, to such
counsel's actual knowledge, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the
Company or the Significant Subsidiaries is a party or by which
the Company or the Significant Subsidiaries or their respective
property is bound, which conflict, breach or default is likely to
have, either individually or in the aggregate, a Material Adverse
Effect, or (iv) violate or conflict with any applicable law or
any rule or regulation, or to such counsel's actual knowledge,
any judgment, order or decree, in each case of any court or any
governmental body or agency having jurisdiction over the Company
23
<PAGE> 25
or the Significant Subsidiaries or their respective property.
(xvii) such counsel has no knowledge of any legal or
governmental proceedings pending or threatened to which the
Company or the Significant Subsidiaries is or could be a party or
to which any of their respective property is or could be subject,
which could reasonably be expected to result, singly or in the
aggregate, in a Material Adverse Effect.
(xviii) to such counsel's knowledge, the Company and
the Significant Subsidiaries has such Authorizations of, and has
made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under
any applicable Environmental Laws, as are necessary to own,
lease, license and operate its respective properties and to
conduct its business, except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. To
such counsel's knowledge, (a) each such Authorization is valid
and in full force and effect and each the Company and the
Significant Subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and (b) no event has occurred (including the receipt of
any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results
or, after notice or lapse of time or both, would result in any
other impairment of the rights of the holder of any such
Authorization; and (c) such Authorizations contain no
restrictions that are burdensome to the Company or the
Significant Subsidiaries; except where such failure to be valid
and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a
Material Adverse Effect;
(xix) to such counsel's knowledge, neither the
Company nor its subsidiaries has violated any Environmental Law
or any provisions of ERISA, any provisions of the Foreign Corrupt
Practices Act of the rules and regulations promulgated
thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect;
(xx) to such counsel's knowledge, except as disclosed
in the Offering Memorandum, there are no contracts, agreements or
understandings (other than the Registration Rights Agreement)
between the Company and any person granting such person the right
to require such Company to include such securities with the New
Senior Notes registered pursuant to any Registration Statement;
and
(xxi) such counsel has participated in conferences
with officers and other representatives of the Company,
representatives of the Company's accountants, the Initial
Purchaser's representatives and counsel for the Initial
24
<PAGE> 26
Purchaser, at which conferences the contents of the Offering
Memorandum and related matters were discussed and, although such
counsel is not passing upon and do not assume any responsibility
for and shall not be deemed to have independently verified the
accuracy, completeness or fairness of the statements contained in
the Offering Memorandum, no facts have come to the attention of
such counsel that lead such counsel to believe (a) that the
Offering Memorandum 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 contained therein not
misleading or (b) that the Offering Memorandum on the date
thereof or on the date hereof contained any untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) The Initial Purchaser shall have received on the Closing Date
an opinion, dated the Closing Date, of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., counsel for the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser.
(h) The Initial Purchaser shall have received, at the Closing
Date, a letter dated the Closing Date, as the case may be, in the form attached
hereto as Annex I, from Ernst & Young LLP, independent public accountants.
(i) The Initial Purchaser shall have received, at the Closing
Date, a letter dated the Closing Date, in the form attached hereto as Annex II,
from Arthur Andersen LLP, independent public accountants.
(j) The Initial Purchaser shall have received a copy of the
Company's audit report for the three years ended December 31, 1998 and as of
December 1998 and 1997 from Arthur Andersen LLP on or before the Closing Date
and such report shall not contain any qualification relating to the financial
condition of the Company and its subsidiaries. Such audited financial statements
shall reflect historical consolidated financial results and position of the
Company identical to those contained in the Preliminary Offering Memorandum and
the Offering Memorandum and the notes thereto shall not contain information
different from that included in the Preliminary Offering Memorandum or the
Offering Memorandum or material information in addition thereto.
(k) The Restricted Notes shall have been approved by Nasdaq for
trading and duly listed in PORTAL.
(l) The closing of the Secured Notes offering (as defined in the
Offering Memorandum) shall have occurred.
(m) The Initial Purchaser shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(n) The Company shall have executed the Registration Rights
Agreement and the Initial Purchaser shall have received an original copy
thereof, duly executed by the Company.
(o) The Company shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
25
<PAGE> 27
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchaser by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
judgment, makes it impracticable to market the Restricted Notes on the terms and
in the manner contemplated in the Offering Memorandum, (ii) the suspension or
material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to R&B Falcon
Corporation, 901 Threadneedle, Houston, TX 77079 (telephone number:
281-496-5000) and (ii) if to the Initial Purchaser, Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and its subsidiaries and the
Initial Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Restricted Notes, regardless of (i) any investigation, or statement as
to the results thereof, made by or on behalf of the Initial Purchaser, the
officers or directors of the Initial Purchaser, any person controlling the
Initial Purchaser, the Company, the officers or directors of the Company, or any
person controlling the Company, (ii) acceptance of the Restricted Notes and
payment for them hereunder and (iii) termination of this Agreement.
If for any reason the Restricted Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company agrees to
reimburse the Initial Purchaser for all out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(i) hereof. The Company also
agrees to reimburse the Initial Purchaser and their officers, directors and each
person, if any, who controls the Initial Purchaser within the meaning of Section
15 of the Act or Section 20 of the Exchange Act for any and all fees and
expenses (including without limitation the fees and expenses of counsel)
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchaser, the Initial Purchaser's directors and
26
<PAGE> 28
officers, any controlling persons referred to herein, the directors and officers
of the Company and its respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Restricted Notes from the Initial
Purchaser merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without regard to the conflict of law rules
thereof.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
27
<PAGE> 29
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchaser.
Very truly yours,
R&B FALCON CORPORATION
By: /s/ STEVEN A. WEBSTER
-------------------------------------------
Name: Steven A. Webster
Title: CEO
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ CRAIG KLAASMEYER
-------------------------------------------
Name: Craig Klaasmeyer
Title: Senior Vice President
<PAGE> 30
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 31
SCHEDULE B
SIGNIFICANT SUBSIDIARIES
R&B Falcon Holdings Inc.
R&B Falcon Drilling (International & Deepwater) Inc.
Cliffs Drilling Company
R&B Falcon Drilling USA, Inc.
R&B Falcon Drilling Co.
R&B Falcon Exploration Co.
Double Eagle Marine, Inc.
Arcade Drilling AS
<PAGE> 1
EXHIBIT 12.1
R&B FALCON CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ IN MILLIONS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
For The Three
Months Ended March 31,
-----------------------
1999 1998
---------- -----------
<S> <C> <C>
Income (loss) from continuing operations before income
tax expense, minority interest and extraordinary gain....................... $ 9.3 $ 105.2
Add
Portion of rents representative of the interest factor ...................... 3.0 3.3
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... 28.4 13.4
------ -------
Income as adjusted ........................................ $ 40.7 $ 121.9
------ -------
Fixed charges
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... $ 28.4 13.4
Interest capitalized ...................................... 14.6 6.3
Portion of rents representative of the interest factor .... 3.0 3.3
------ -------
Fixed charges ............................................. $ 46.0(a) $ 23.0(a)
------ -------
Ratio of earnings to fixed charges ................................................. -(b) 5.3
------ -------
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Income (loss) from continuing operations before income
tax expense, minority interest and extraordinary gain ....................... $ 161.2 $ 123.9 $ 140.4
Add
Portion of rents representative of the interest factor ...................... 14.3 12.1 6.8
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... 63.9(a) 41.6(a) 40.8
======== ======== ========
Income as adjusted ........................................ $ 239.4 $ 177.6 $ 188.0
======== ======== ========
Fixed charges
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... $ 63.9 $ 41.6 $ 40.8
Interest capitalized ...................................... 39.1 13.7 7.6
Portion of rents representative of the interest factor .... 14.3 12.1 6.8
-------- -------- --------
Fixed charges ............................................. $ 117.3 $ 67.4(a) $ 55.2
======== ======== ========
Ratio of earnings to fixed charges ................................................. 2.0 2.6 3.4
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Income (loss) from continuing operations before income
tax expense, minority interest and extraordinary gain ....................... $ 32.6 $ (2.8)
Add
Portion of rents representative of the interest factor ...................... 3.2 5.9
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... 34.6 26.4
======== ========
Income as adjusted ........................................ $ 70.4 $ 29.5
======== ========
Fixed charges
Interest on indebtedness inclusive of amortization
of deferred financing charges ....................................... $ 34.6 $ 26.4
Interest capitalized ...................................... 0.4 0.6
Portion of rents representative of the interest factor .... 3.2 5.9
-------- --------
Fixed charges ............................................. $ 38.2 $ 32.9
======== ========
Ratio of earnings to fixed charges ................................................. 1.9 -(b)
======== ========
</TABLE>
(a) Fixed charges for the three months ended March 31, 1999 and 1998 and for the
years ended December 31, 1998 and 1997 exclude interest cost of $3.7
million, $4.5 million, $22.5 million and $7.3 million, respectively, related
to the debt of joint venture companies guaranteed by R&B Falcon Corporation.
(b) As a result of the loss incurred in the three months ended March 31, 1999
and the year ended December 31, 1994, earnings did not cover fixed charges
by $5.3 million and $3.4 million, respectively.
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
($ IN MILLIONS)
The following computation reflects on a pro-forma basis, earnings available for
fixed charges and resultant ratio. The computation gives effect to the sale of
the senior notes.
<TABLE>
<CAPTION>
For The Three Year Ended
Months Ended December 31,
March 31, 1999 1998
---------------- ------------
<S> <C> <C>
Income as adjusted ........................................................................... $ 40.7 $ 239.4
====== ========
Fixed charges ................................................................................ $ 46.0 $ 117.3
Pro forma adjustments
Interest on portion of senior notes that will be used to retire existing debt .............. 12.0 36.3
Amortization of deferred financing charges on portion of senior notes that will be used
to retire existing debt .................................................................. .9 3.6
Interest requirements reduction attributable to substitution of proceeds from the sale of the
senior notes offered hereby for the debt that is to be retired ........................... (5.9) (22.4)
------ --------
Pro-forma fixed charges ...................................................................... $ 53.0 $ 134.8
------ --------
Pro-forma ratio of earnings to fixed charges ................................................. -(a) 1.8
====== ========
</TABLE>
(a) As a result of the pro forma loss for the three months ended March 31, 1999
pro forma earnings did not cover fixed charges by $12.3 million.
<PAGE> 1
EXHIBIT 15.1
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
R&B Falcon Corporation:
We are aware that R&B Falcon Corporation has incorporated by reference in this
registration statement on Form S-4, its Form 10-Q for the quarter ended March
31, 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
May 25, 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-4 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
May 25, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement (Form S-4) and related Prospectus of R&B Falcon Corporation for the
registration of $800 million Senior Notes 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
May 25, 1999
<PAGE> 1
EXHIBIT 25.1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF
1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Ave, Suite 2700 75201
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Ave, Suite 2700
Dallas, Texas 75201
(214) 754-1200
(Name, address and telephone number of agent for service)
---------------
R & B Falcon Corporation
(Exact name of obligor as specified in its charter)
Delaware 76-0544217
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
901 Threadneedle
Houston, TX 77079
(Address of principal executive offices) (Zip Code)
---------------
12 1/4% Senior Notes due 2006
(Title of the indenture securities)
===============================================================================
<PAGE> 2
GENERAL
1. General Information.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of Dallas (11th District), Dallas, Texas
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Dallas, Texas
The Office of the Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of
the Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting securities
of the Trustee:
As of May 21, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Col A. Col B.
- -------------------------------------------------------------------------------
<S> <C>
Title of Class Amount Outstanding
- -------------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
</TABLE>
4. Trusteeships under Other Indentures.
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor
or Underwriters.
Not Applicable
<PAGE> 3
6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person
Owning 50 Percent or More of the Voting Securities of the Obligor.
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
Not Applicable
13. Defaults by the Obligor.
Not Applicable
14. Affiliations with the Underwriters.
Not Applicable
15. Foreign Trustee.
Not Applicable
16. List of Exhibits.
T-1.1 - A copy of the Articles of Association of U.S. Trust
Company of Texas, N.A.; incorporated herein by reference
to Exhibit T-1.1 filed with Form T-1 Statement,
Registration No. 22-21897.
<PAGE> 4
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee
to commence business; incorporated herein by reference to
Exhibit T-1.2 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise
corporate trust powers; incorporated herein by reference
to Exhibit T-1.3 filed with Form T-1 Statement,
Registration No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of
Texas, N.A., as amended to date; incorporated herein by
reference to Exhibit T-1.4 filed with Form T-1 Statement,
Registration No. 22-21897.
T-1.6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of May 21, 1999, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of May 21, 1999, U.S. T.L.P.O.
Corp. had 35 shares of Capital Stock outstanding, all of which are owned by
U.S. Trust Corporation. U.S. Trust Corporation had outstanding 18,597,534
shares of $1 par value Common Stock as of May 21, 1999.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the
Trustee disclaims responsibility for the accuracy or completeness of such
information.
---------------
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
U.S Trust Company of Texas, N.A., a national banking association organized
under the laws of the United States of America, has duly caused this statement
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
21st day of May, 1999.
U.S. Trust Company
of Texas, N.A., Trustee
By: /s/ CHRISTINE C. COLLINS
--------------------------
Authorized Officer
<PAGE> 6
Exhibit T-1.6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of R & B Falcon
Corporation, Senior Notes, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefore.
U.S. Trust Company of Texas, N.A.
By: /s/ CHRISTINE C. COLLINS
------------------------------
Authorized Officer
<PAGE> 7
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-005
Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council OMB Number: 1557-0081
Expires March 31, 2001
- -----------------------------------------------------------------------------------------------------------
(1)
Please Refer to Page I,
(LOGO) Table of Contents, for the required
disclosure of estimated burden.
- -----------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND
INCOME FOR A BANK WITH DOMESTIC OFFICES
ONLY AND TOTAL ASSETS OF LESS THAN $100 (19990331)
MILLION OR MORE BUT LESS THAN $300 ---------
MILLION - - FFIEC 033 (RCRI 9999)
REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1999
This report is required by law: 12 This report form is to be filed by banks
U.S.C. Section 324 (State with domestic offices only. Banks with
member banks); 12 U.S.C. Section 1817 branches and consolidated subsidiaries
(State nonmember banks); and in U.S. territories and possessions,
12 U.S.C. Section 161 (National banks). Edge or Agreement subsidiaries, foreign
branches, consolidated foreign
subsidiaries, or International Banking
Facilities must file FFIEC 031.
- -----------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and The Reports of Condition and Income are
Income must be signed by an authorized to be prepared in accordance with
officer and the Report of Condition must Federal regulatory authority
be attested to by not less than two instructions. NOTE: these instructions
directors (trustees) for State nonmember may in some cases differ from generally
banks and three directors for State accepted accounting principles.
member and National Banks.
I, Alfred B. Childs, Managing Director We, the undersigned directors
--------------------------------------- (trustees), attest to the correctness of
Name and Title of Officer Authorized to Sign Report this Report of Condition (including the
supporting schedules) and declare that
it has been examined by us and to the best
of the named bank do hereby declare that of our knowledge and belief has been prepared
these Reports of Condition and Income (including the in conformance with the instructions issued
supporting schedules) have been prepared in by the appropriate Federal regulatory
conformance with the instructions issued authority and is true and correct.
by the appropriate Federal regulatory authority
and are true to the best of my knowledge and
belief.
/s/ Stuart M. Pearman
---------------------------------------
/s/ Alfred B. Childs Director (Trustee)
- -----------------------------------
Signature of Officer Authorized to Sign Report /s/ J. T. More, Jr.
---------------------------------------
April 21, 1999 Director (Trustee)
- -----------------------------------
Date of Signature /s/ Arthur White
---------------------------------------
Director (Trustee)
- -----------------------------------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of For electronic filing assistance,
Condition and Income either: contact EDS Call Report Services, 2150
North Prospect Avenue, Milwaukee, WI
53202, telephone (800) 255-1571.
(a) in electronic form and then file the
computer data file directly with the
banking agencies' collection agent, To fulfill the signature and attestation
Electronic Data Systems Corporation requirement for the Reports of Condition
(EDS), by modem or on computer and Income for this report date, attach
diskette; or this signature page to the hard-copy
record of the completed report that the
(b) in hard-copy (paper) form and bank places in its files.
arrange for another party to convert
the paper report to electronic form.
That party (if other than EDS) must
transmit the bank's computer data
file to EDS.
- -----------------------------------------------------------------------------------------------------------
FDIC Certificate Number 33217 US TRUST COMPANY OF TEXAS, NATIONAL ASSOCIATION
----------- -----------------------------------------------
(RCRI 9050) Legal Title of Bank (TEXT 9010)
DALLAS
-----------------------------------------------
City (TEXT 9130)
TX 75201
-----------------------------------------------
State Abbrev. (TEXT 9200) Zip Code. (TEXT 9220)
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 8
<TABLE>
<S> <C> <C> <C> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 3/31/1999 State #: 48-6797 FFIEC 033
2001 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 RC-1
DALLAS, TX 75201 Transit #: 11101765
---------------
9
---------------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C200
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions: RCON
----
a. Noninterest-bearing balances and currency and coin (1,2) 0081 1,297 1.a
------------- ------ ------- ----------
b. Interest bearing balances (3) 0071 696 1.b
---------------------------------------- ------ ------- ----------
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a
----------- ------ ------- ----------
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 131,683 2.b
-------- ------ ------- ----------
3. Federal funds sold (4) and securities purchased under agreements
to resell: 1350 6,000 3
----------
4. Loans and lease financing receivables: RCON
----
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 22,709 4.a
------- --------
b. LESS: Allowance for loan and lease losses 3123 260 4.b
--------------------------- --------
c. LESS: Allocated transfer risk reserve 3128 0 4.c
------------------------------- --------
RCON
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c) 2125 22,249 4.d
---------------------------------------- ------ ------- ----------
5. Trading assets 3545 0 5.
---------------------------------------------------------- ------ ------- ----------
6. Premises and fixed assets (including capitalized leases) 2145 917 6.
---------------- ------ ------- ----------
7. Other real estate owned (from Schedule RC-M) 2150 0 7.
----------------------------- ------ ------- ----------
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 0 8.
----------------------------------------------------- ------ ------- ----------
9. Customers' liability to this bank on acceptances outstanding 2155 0 9.
------------- ------ ------- ----------
10. Intangible assets (from Schedule RC-M) 2143 1,950 10.
----------------------------------- ------ ------- ----------
11. Other assets (from Schedule RC-F) 2160 2,527 11.
---------------------------------------- ------ ------- ----------
12. Total assets (sum of items 1 through 11) 2170 167,519 12.
--------------------------------- ------ ------- ----------
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Included time certificates of deposit not held for trading.
<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 3/31/1999 State #: 48-6797 FFIEC 033
2001 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 RC-2
DALLAS, TX 75201 Transit #: 11101765
---------------
10
---------------
</TABLE>
SCHEDULE RC - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
RCON
13. Deposits: ----
a. In domestic offices (sum of totals of RCON 2200 141,618 13.a
columns A and C from Schedule RC-E) ---- ----------
-----------------------------
(1) Noninterest-bearing(1) 6631 8,794 13.a.1
------------------------------------------ --------
(2) Interest-bearing 6636 132,824 13.a.2
----------------------------------------------- --------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
-------
(1) Noninterest-bearing
--------------------------------------------
(2) Interest-bearing RCON
------------------------------------------------ ----
14. Federal funds purchased(2) and securities sold under agreements to 2800 0 14
repurchase: ----------
15. a. Demand notes issued to the U.S. Treasury 2840 0 15.a
----------------------------- ------ ------- ----------
b. Trading liabilities 3548 0 15.b
-------------------------------------------------- ------ ------- ----------
16. Other borrowed money:
----------
A. WITH A REMAINING MATURITY OF ONE YEAR OR LESS 2332 0 16.a
----------------------- ------ ------- ----------
B. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR THROUGH THREE
YEARS A547 2,000 16.b
--------------------------------------------------------------- ------ ------- ----------
C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS A548 1,000 16.c
------------------- ------ ------- ----------
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 2920 0 18.
--------------- ------ ------- ----------
19. Subordinated notes and debentures 3200 0 19.
--------------------------------------- ------ ------- ----------
20. Other liabilities (from Schedule RC-G) 2930 2,317 20.
----------------------------------- ------ ------- ----------
21. Total liabilities (sum of items 13 through 20) 2948 146,935 21.
--------------------------- ------ ------- ----------
22. Not applicable
EQUITY CAPITAL RCON
----
23. Perpetual preferred stock and related surplus 3838 7,000 23.
--------------------------- ------ ------- ----------
24. Common stock 3230 500 24.
------------------------------------------------------------ ------ ------- ----------
25. Surplus (exclude all surplus related to preferred stock) 3839 8,384 25.
----------------- ------ ------- ----------
26. a. Undivided profits and capital reserves 3632 4,406 26.a
------------------------------- ------ ------- ----------
b. Net unrealized holding gains (losses) on available-for-sale
securities 8434 294 26.b
---------------------------------------------------------- ------ ------- ----------
27. Cumulative foreign currency translation adjustments
---------------------- ----------
28. Total equity capital (sum of items 23 through 27) 3210 20,584 28.
------------------------ ------ ------- ----------
29. Total liabilities and equity capital (sum of items 21 and 28) 2257 167,519 29.
------------ ------ ------- ----------
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION. NUMBER
---------
1. Indicate in the box at the right the number of the statement below that best 6724 1 M.1
describes the most comprehensive level of auditing work performed for the bank
by independent external auditors as of any date during 1998
-------------------
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by certified external auditors (may be required by state
public accounting firm which submits a report on the bank chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in accordance work)
with generally accepted auditing standards by a certified 8 = No external audit work
public accounting firm (may be required by state chartering
authority)
</TABLE>
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
R&B FALCON CORPORATION
OFFER TO EXCHANGE
12 1/4 % SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
12 1/4 % SENIOR NOTES DUE 2006
PURSUANT TO THE PROSPECTUS DATED , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer Is:
U.S. TRUST COMPANY OF TEXAS, N.A.
c/o United States Trust Company of New York
<TABLE>
<S> <C>
By Mail By Hand or Overnight Delivery
United States Trust Company of New York United States Trust Company of New York
P.O. Box 843 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276 Attention Corporate Trust Services
Attention Corporate Trust Services
By Facsimile Transmission Confirm by Telephone:
(212) 780-0592 (800) 548-6565
</TABLE>
For Inquiries:
Ms. Christine C. Collins
(212) 852-1676
------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE
NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
For purposes of this Letter of Transmittal, the outstanding 12 1/4%
Senior Notes due 2006 shall be defined as the "Outstanding Notes." All other
capitalized terms used but not defined herein shall have the same meanings
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders (which term,
for purposes of this Letter of Transmittal, shall include any participant in
The Depository Trust Company ("DTC")) either if (a) certificates are to be
forwarded herewith or (b) tenders are to be made pursuant to the procedures for
tender by book-entry transfer set forth under "The Exchange Offer--Procedures
for Tendering Outstanding Notes" in the Prospectus and an Agent's Message (as
defined below) is not delivered. Certificates, or book-entry confirmation of a
book-entry transfer of such Outstanding
<PAGE> 2
Notes into the Exchange Agent's account at DTC, as well as this Letter of
Transmittal (or a facsimile thereof or delivery of an Agent's Message in lieu
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at its address set forth herein on or
prior to the Expiration Date. Tenders by book-entry transfer may also be made
by delivering an Agent's Message in lieu of this Letter of Transmittal. The
term "book-entry confirmation" means a timely confirmation of a book-entry
transfer of Outstanding Notes into the Exchange Agent's account at DTC. The
term "Agent's Message" means a message, transmitted by DTC to and received by
the Exchange Agent and forming part of a book-entry confirmation, that states
that DTC has received an express acknowledgment from the tendering participant,
which acknowledgment states that such participant has received and agrees to be
bound by this Letter of Transmittal and that R&B Falcon Corporation may enforce
this Letter of Transmittal against such participant.
Holders of Outstanding Notes whose certificates (the "Certificates") for such
Outstanding Notes are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date or who cannot complete the procedures for book-entry
transfer on or prior to the Expiration Date must tender their Outstanding Notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering Outstanding" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
2
<PAGE> 3
THE UNDERSIGNED HAS COMPLETED THE APPROPRIATE BOXES BELOW AND SIGNED
THIS LETTER OF TRANSMITTAL TO INDICATE THE ACTION THE UNDERSIGNED DESIRES TO
TAKE WITH RESPECT TO THE EXCHANGE OFFER.
--------------------------------------------
DESCRIPTION OF THE OUTSTANDING NOTES (CUSIP NO. 74912EAN1)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
TENDERED FOR
CERTIFICATE AGGREGATE EXCHANGE
NAME(S) AND ADDRESS(ES) OF REGISTERED NUMBER(S) PRINCIPAL (MUST BE IN
HOLDER(S) OF THE PRIVATE NOTE(S), EXACTLY (ATTACH SIGNED AMOUNT INTEGRAL
AS NAME(S) APPEAR(S) ON CERTIFICATE(S) LIST IF REPRESENTED BY MULTIPLES OF
(PLEASE FILL IN, IF BLANK) NECESSARY)(1) CERTIFICATE(S) $1,000)(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $
----------------------------------------------------------------
$ $
----------------------------------------------------------------
$ $
----------------------------------------------------------------
$ $
- ---------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF OUTSTANDING NOTES TENDERED: $ $
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY HOLDERS. SUCH HOLDERS SHOULD CHECK
THE APPROPRIATE BOX BELOW AND PROVIDE THE REQUESTED INFORMATION.
(2) NEED NOT BE COMPLETED IF TENDERING FOR EXCHANGE ALL OUTSTANDING NOTES
HELD. OUTSTANDING NOTES MAY BE TENDERED IN WHOLE OR IN PART IN
INTEGRAL MULTIPLES OF $1,000 IN AGGREGATE PRINCIPAL AMOUNT. ALL
OUTSTANDING NOTES HELD SHALL BE DEEMED TENDERED UNLESS A LESSER NUMBER
IS SPECIFIED IN THIS COLUMN.
- -------------------------------------------------------------------------------
2
<PAGE> 4
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS
(DEFINED IN INSTRUCTION 1) ONLY)
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
--------------------------------------
DTC Account Number
-------------------------------------------------
Transaction Code Number
--------------------------------------------
By crediting the Outstanding Notes to the Exchange Agent's account at
DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer,
including transmitting an Agent's Message to the Exchange Agent in which the
holder of the Outstanding Notes acknowledges and agrees to be bound by the
terms of this Letter of Transmittal, the participant in ATOP confirms on behalf
of itself and the beneficial owners of such Outstanding Notes all provisions of
this Letter of Transmittal applicable to it and such beneficial owners as fully
as if it had completed the information required herein and executed and
transmitted this Letter of Transmittal to the Exchange Agent.
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED
DELIVERY IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name of Registered Holder
------------------------------------------
Window Ticket Number (if any)
--------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------
Name of Institution Which Guaranteed Delivery
----------------------
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution
--------------------------------------
DTC Account Number
-------------------------------------------------
Transaction Code Number
--------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED
OUTSTANDING NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING
NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name
---------------------------------------------------------------
Address
------------------------------------------------------------
Area Code and Telephone Number
-------------------------------------
Contact Person
-----------------------------------------------------
4
<PAGE> 5
Ladies and Gentlemen:
The undersigned hereby tenders to R&B Falcon Corporation, a Delaware
corporation (the "Company"), the above-described aggregate principal amount of
its 12 1/4 % Senior Outstanding Notes Due in 2006 in exchange for a like
aggregate principal amount of its 12 1/4% Senior Notes due 2006, which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), upon the terms and subject to the conditions set forth in the Prospectus
dated , 1999 (as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitutes the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or
any portion of the Outstanding Notes tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), subject only
to the right of withdrawal described in the Prospectus to (i) deliver
Certificates for Outstanding Notes to the Company together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of
the Exchange Notes to be issued in exchange for such Outstanding Notes, (ii)
present Certificates for such Outstanding Notes for registration of transfer,
and transfer the Outstanding Notes on the books of the Company, and (iii)
receive for the account of the Company all benefits and otherwise exercise all
rights of beneficial ownership of such Outstanding Notes, all in accordance
with the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED
HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE
OUTSTANDING NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS
OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) (which term,
for the purposes of this Letter of Transmittal, shall include any participant
in DTC) of the Outstanding Notes tendered hereby should be printed above, if
they are not already set forth above, as they appear on the Certificates
representing such Outstanding Notes. The Certificate number(s) of the
Outstanding Notes that the undersigned wishes to tender should be indicated in
the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more
Outstanding Notes than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Outstanding Notes will be returned (or, in the
case of Outstanding Notes tendered by book-entry transfer, such Outstanding
Notes will be credited to an account maintained at DTC), without expense to the
tendering holder, promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant
to any one of the procedures described under "The Exchange Offer--Procedures
for Tendering Outstanding Notes" in the Prospectus and in the instructions
herein will, upon the Company's acceptance for exchange of such tendered
Outstanding Notes, constitute a binding agreement between the undersigned and
the Company upon the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Notes tendered hereby.
5
<PAGE> 6
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, the undersigned hereby directs that the Exchange
Notes be issued in the name of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below, please deliver Exchange Notes to the undersigned
at the address shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES
ACT, (II) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING
ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN
THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE
UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. BY TENDERING
OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, A
HOLDER OF OUTSTANDING NOTES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES,
CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT (A) SUCH OUTSTANDING NOTES HELD BY THE BROKER-DEALER ARE
HELD ONLY AS A NOMINEE OR (B) SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM
TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH
ANY RESALE OF SUCH EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY
DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT
IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER IN
CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR OUTSTANDING
NOTES, WHERE SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH PARTICIPATING
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO
EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR,
IF EARLIER, WHEN ALL SUCH EXCHANGE NOTES HAVE BEEN DISPOSED OF BY SUCH
PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH PARTICIPATING BROKER-DEALER,
BY TENDERING SUCH OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL,
OR EFFECTING DELIVERY OF AN AGENT'S MESSAGE IN LIEU THEREOF, AGREES THAT, UPON
RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT THAT MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR THAT CAUSES THE
PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR OF THE OCCURRENCE
OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH
PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES PURSUANT TO
THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO
CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED
OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER, OR THE COMPANY
HAS GIVEN NOTICE THAT THE SALE
6
<PAGE> 7
OF THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY GIVES
SUCH NOTICE TO SUSPEND THE USE OF THE PROSPECTUS, IT SHALL EXTEND THE 180-DAY
PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED
TO USE THE PROSPECTUS IN CONNECTION WITH THE RESALE OF EXCHANGE NOTES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF
SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE EXCHANGE NOTES OR TO AND INCLUDING THE DATE ON WHICH THE
COMPANY HAS GIVEN NOTICE THAT THE USE OF THE PROSPECTUS MAY BE RESUMED, AS THE
CASE MAY BE.
AS A RESULT, A PARTICIPATING BROKER-DEALER WHO INTENDS TO USE THE
PROSPECTUS IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE
FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER MUST NOTIFY THE COMPANY,
OR CAUSE THE COMPANY TO BE NOTIFIED, ON OR PRIOR TO THE EXPIRATION DATE, THAT
IT IS A PARTICIPATING BROKER-DEALER. SUCH NOTICE MAY BE GIVEN IN THE SPACE
PROVIDED ABOVE OR MAY BE DELIVERED TO THE EXCHANGE AGENT AT THE ADDRESS SET
FORTH IN THE PROSPECTUS UNDER "THE EXCHANGE OFFER--EXCHANGE AGENT."
The exchange notes will bear interest from March 26, 1999. Holders of
outstanding notes that we accept for exchange will not have the right to
receive any payment of interest on those notes accrued from March 26, 1999 to
the date of the issuance of the exchange notes. Consequently, holders who
exchange their outstanding notes for exchange notes will receive the same
interest payment on September 15, 1999 (the first interest payment date) that
they would have received had they not accepted the exchange offer.
The undersigned agrees that acceptance of any tendered Outstanding
Notes and transfer of tendered Outstanding Notes in exchange therefor shall
constitute performance in full by the Company of its obligations under the
Registration Rights Agreement.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOXES ENTITLED "DESCRIPTION OF
OUTSTANDING NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED
TO HAVE TENDERED THE OUTSTANDING NOTES AS SET FORTH IN EACH SUCH BOX.
7
<PAGE> 8
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) (which term, for purposes of
this Letter of Transmittal, shall include any participant in DTC) exactly as
name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby tendered
or on the register of holders maintained by the Company, or by any person
authorized to become the registered holder by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Company for the Outstanding Notes
to comply with the restrictions on transfer applicable to the Outstanding
Notes). If signature is by an attorney-in-fact, executor, administrator,
trustee, guardian, officer of a corporation or another acting in a fiduciary or
representative capacity, please set forth the signer's full title. See
Instruction 5.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(SIGNATURE OF HOLDER(S) OR AUTHORIZED SIGNATORY)
Date: , 1999
-----------------------
Name(s):
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
---------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
------------------------------------------------
Tax Identification or Social Security Number(s):
-------------------------------
SIGNATURE(S) GUARANTEE
(IF REQUIRED--SEE INSTRUCTIONS 2 AND 5)
- -------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date: , 1999
------------------------------------------
Name of Eligible Institution Guaranteeing Signatures:
--------------------------
Capacity (full title):
---------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
------------------------------------------------
8
<PAGE> 9
===============================================================================
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or any Outstanding Notes
that are not tendered are to be issued in the name of someone other than the
registered holder of the Outstanding Notes whose name appears above.
Issue
[ ] Exchange Notes and/or
Outstanding Notes not tendered
Designate Series
---------------------------------------------------------------
to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
(Area Code and Phone Number)
- -------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
===============================================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or any Outstanding Notes
that are not tendered are to be sent to someone other than the registered
holder of the Outstanding Notes whose name appears above, or to such registered
holder at an address other than that shown above.
Mail
[ ] Exchange Notes and/or
Outstanding Notes not tendered
Designate Series
---------------------------------------------------------------
to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
(Area Code and Phone Number)
- -------------------------------------------------------------------------------
(Tax Identification or Social Security Number(s))
===============================================================================
9
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if
(a) Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth under
"The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus and an Agent's Message is not delivered. Certificates, or book-entry
confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at DTC, as well as this Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in lieu thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Outstanding Notes may be tendered in whole or in part in integral
multiples of $1,000 in aggregate principal amount.
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available or (ii) who cannot deliver
their Outstanding Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on or prior
to the Expiration Date, may tender their Outstanding Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth under "The Exchange Offer--Procedures
for Tendering Outstanding Notes" in the Prospectus. Pursuant to such
procedures: (a) such tender must be made by or through an Eligible Institution
(as defined below); (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Company,
must be received by the Exchange Agent on or prior to the Expiration Date; and
(c) the Certificates (or a book-entry confirmation (as defined in the
Prospectus)) representing all tendered Outstanding Notes, in proper form for
transfer, together with a Letter of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Outstanding Notes to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or prior to the Expiration Date. As used herein and in the Prospectus,
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as "an eligible guarantor institution," including (as
such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association recognized program.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY ON OR
PRIOR TO THE EXPIRATION DATE. NO DOCUMENTS SHOULD BE SENT TO THE COMPANY.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by executing a Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), waives any right to
receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Letter of Transmittal, shall include
any participant in DTC whose name appears on a security position
listing as the owner of the Outstanding Notes) of Outstanding Notes
tendered herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or
(ii) such Outstanding Notes are tendered for the account of a firm
that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature on this Letter of Transmittal. See Instruction 5.
10
<PAGE> 11
3. INADEQUATE SPACE. If the space provided in the boxes captioned
"Description of Outstanding Notes" is inadequate, the Certificate numbers
and/or the principal amount of Outstanding Notes and any other required
information should be listed on a separate signed schedule that is attached to
this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Outstanding Notes
will be accepted only in integral multiples of $1,000 in aggregate principal
amount. If less than all the Outstanding Notes evidenced by any Certificate
submitted are to be tendered, fill in the principal amount of Outstanding Notes
that are to be tendered in the box entitled "Principal Amount of Outstanding
Notes Tendered (If Less than All)." In such case, a new Certificate for the
remainder of the Outstanding Notes that were evidenced by the old Certificate
will be sent to the holder of the Outstanding Notes promptly after the
Expiration Date, unless the appropriate boxes on this Letter of Transmittal are
completed. All Outstanding Notes represented by Certificates delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may
be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth above or in the Prospectus on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Outstanding Notes to be withdrawn, the aggregate
principal amount of Outstanding Notes to be withdrawn, and (if Certificates for
Outstanding Notes have been tendered) the name of the registered holder of the
Outstanding Notes as set forth on the Certificate for the Outstanding Notes, if
different from that of the person who tendered such Outstanding Notes. If
Certificates for the Outstanding Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Certificates for the Outstanding Notes, the tendering holder must submit the
serial numbers shown on the particular Certificates for the Outstanding Notes
to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Outstanding Notes
tendered for the account of an Eligible Institution. If Outstanding Notes have
been tendered pursuant to the procedures for book-entry transfer set forth
under "The Exchange Offer--Procedures for Tendering Outstanding Notes," the
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawal of Outstanding Notes, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written or
facsimile transmission on or prior to the Expiration Date. Withdrawals of
tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company, in
its sole discretion, which determination shall be final and binding on all
parties. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Outstanding Notes that
have been tendered but are withdrawn on or prior to the Expiration Date will be
returned to the holder thereof without cost to such holder promptly after
withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the
Outstanding Notes tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) or on a security
position listing without alteration, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof or Agent's Messages in
lieu thereof) as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company, in its sole discretion, of such persons'
authority to so act.
When this Letter of Transmittal is signed by the registered owner of
the Outstanding Notes listed and transmitted hereby, no endorsement of
Certificates or separate bond powers are required unless Exchange Notes are to
be issued in the name of a person other than the registered holder. Signatures
on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Outstanding Notes listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
of the
11
<PAGE> 12
registered owner appears on the Certificates, and also must be accompanied by
such opinions of counsel, certifications and other information as the Company
or the Exchange Agent may require in accordance with the restrictions on
transfer applicable to the Outstanding Notes. Signatures on such Certificates
or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are
to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Notes not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal
are completed. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tender of Outstanding
Notes, which determination shall be final and binding on all parties. The
Company reserves the absolute right to reject any and all tenders determined by
it not to be in proper form or the acceptance of which, or exchange for, may,
in the view of counsel to the Company, be unlawful. The Company also reserves
the absolute right, subject to applicable law, to waive any of the conditions
of the Exchange Offer set forth in the Prospectus under "The Exchange
Offer--Certain Conditions to Exchange Offer," or any conditions or
irregularities in any tender of Outstanding Notes of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders. The Company's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Outstanding Notes will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. The Company, any affiliates or assigns of the
Company, the Exchange Agent, or any other person shall not be under a duty to
give notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. The holder should promptly
notify the Exchange Agent if any Certificates representing Outstanding Notes
have been lost, destroyed or stolen. The holder will then be instructed as to
the steps that must be taken in order to replace the Certificates. This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen Certificates have been followed.
9. SECURITY TRANSFER TAXES. Holders who tender their Outstanding Notes
for exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Outstanding Notes in connection with the Exchange
Offer, then the amount of any such transfer tax (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. The amount of such transfer taxes will be billed directly to such
tendering holder if satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with this Letter of Transmittal.
10. INCORPORATION OF LETTER OF TRANSMITTAL. This Letter of Transmittal
shall be deemed to be incorporated in and acknowledged and accepted by any
tender through the DTC's ATOP procedures by any participant in DTC on behalf of
itself and the beneficial owners of any Outstanding Notes so tendered.
11. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive satisfaction of any or all conditions enumerated in the Prospectus.
12. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering holders of Outstanding Notes, by
executing this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of Outstanding Notes for exchange.
Questions and requests for assistance may be directed to the Exchange
Agent at its address and telephone number set forth on the front of this Letter
of Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed
Delivery and this Letter of Transmittal may be obtained from the Exchange Agent
or from the holder's broker, dealer, commercial bank, trust company or other
nominee.
None of the Company, the Exchange Agent or any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Outstanding Notes nor shall any of them incur any liability for
failure to give any such notice.
12
<PAGE> 13
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF OR AN AGENT'S
MESSAGE IN LIEU HEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE EXCHANGE AGENT AT OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Outstanding
Notes are accepted for exchange is required by law to provide the Exchange
Agent with such holder's correct taxpayer identification number ("TIN") on the
Substitute Form W-9 included herein or otherwise establish a basis for
exemption from backup withholding. If such holder is an individual, the TIN is
his or her social security number. If the Exchange Agent is not provided with
the correct TIN, the Internal Revenue Service may subject the holder or
transferee to a $50 penalty. In addition, delivery of such holder's Exchange
Notes may be subject to backup withholding. Failure to comply truthfully with
the backup withholding requirements also may result in the imposition of severe
criminal and/or civil fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that holder's foreign status. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any payments made to the holder or other transferee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to
Outstanding Notes exchanged in the Exchange Offer, the holder is required to
provide the Exchange Agent with either: (i) the holder's correct TIN by
completing the form included herein, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that
(a) the holder has not been notified by the Internal Revenue Service that the
holder is subject to backup withholding as a result of failure to report all
interest or dividends or (b) the Internal Revenue Service has notified the
holder that the holder is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form
W-9. If the holder furnishes the Exchange Agent with its TIN within 60 days
after the date of the Substitute Form W-9, the amounts retained during the
60-day period will be remitted to the holder and no further amounts shall be
retained or withheld from payments made to the holder thereafter. If, however,
the holder has not provided the Exchange Agent with its TIN within such 60-day
period, amounts withheld will be remitted to the Internal Revenue Service as
backup withholding. In addition, 31% of all payments made thereafter will be
withheld and remitted to the Internal Revenue Service until a correct TIN is
provided.
NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the registered
holder of the Outstanding Notes or of the last transferee appearing on the
transfers attached to, or endorsed on, the Outstanding Notes. If the
Outstanding Notes are held in more than one name or are held not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
13
<PAGE> 14
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE Part I -- PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY ----------------------------------
FORM W-9 SIGNING AND DATING BELOW Social Security Number
OR
----------------------------------
DEPARTMENT OF THE TREASURY Employer Identification Number
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
-------------------------------------------------------------------------------------
Part II -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you are subject to backup withholding, you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2).
- ------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE
---------------------------------------------------------------- ---------------------
Part III --
NAME (please print) Awaiting TIN [ ]
---------------------------------------------------------------------------------
ADDRESS (please print)
------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON FORM
W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE FORM W-9
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within sixty (60)
days, 20 percent of all reportable payments made to me thereafter will be
withheld until I provide a number. In addition, I understand that if, after
seven business days after this certification is received, the Company is
required to make a payment to me which, in its judgment, will close my account,
or cause the cessation of my relationship, with the Company, then such payment
may be subject to backup withholding.
- ---------------------------- ----------------------------------------
Date Signature
- -------------------------------------------------------------------------------
14
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
12 1/4% SENIOR NOTES DUE 2006
of
R&B FALCON CORPORATION
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 12 1/4% Senior Notes due 2006
(the "Outstanding Notes) are not immediately available, (ii) Outstanding Notes,
the Letter of Transmittal and all other required documents cannot be delivered
to U.S. Trust Company of Texas, N.A. (the "Exchange Agent") on or prior to the
Expiration Date (as defined in the Prospectus defined below), or (iii) the
procedures for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand, overnight
courier or mail, or transmitted by facsimile transmission, to the Exchange
Agent. See "The Exchange Offer--Procedures for Tendering Outstanding Notes" and
"--Guaranteed Delivery Procedures" in the Prospectus. In addition, in order to
utilize the guaranteed delivery procedure to tender Outstanding Notes pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal
relating to the Outstanding Notes (or facsimile thereof) must also be received
by the Exchange Agent on or prior to the Expiration Date. Capitalized terms
used but not defined herein have the meanings assigned to them in the
Prospectus.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ,1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer Is:
U.S. TRUST COMPANY OF TEXAS, N.A.
c/o United States Trust Company of New York
<TABLE>
<S> <C>
By Mail By Hand or Overnight Delivery
United States Trust Company of New York United States Trust Company of New York
P.O. Box 843 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276 Attention Corporate Trust Services
Attention Corporate Trust Services
By Facsimile Transmission Confirm by Telephone:
(212) 780-0592 (800) 548-6565
</TABLE>
For Inquiries:
Ms. Christine C. Collins
(212) 852-1676
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A
FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to R&B Falcon Corporation, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated , 1999 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Outstanding Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering
Outstanding Notes" and "--Guaranteed Delivery Procedures."
OUTSTANDING NOTES (CUSIP NO. 74912EAN1)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AGGREGATE PRINCIPAL TENDERED FOR EXCHANGE
CERTIFICATE NUMBER(S) AMOUNT REPRESENTED BY (MUST BE IN INTEGRAL
(IF AVAILABLE) CERTIFICATE(S) MULTIPLES OF $1,000)*
<S> <C> <C>
$ $
$ $
$ $
$ $
TOTAL AMOUNT OF OUTSTANDING
NOTES TENDERED: $ $
</TABLE>
* NEED NOT BE COMPLETED IF TENDERING FOR EXCHANGE ALL OUTSTANDING NOTES
HELD. OUTSTANDING NOTES MAY BE TENDERED IN WHOLE OR IN PART IN INTEGRAL
MULTIPLES OF $1,000 IN AGGREGATE PRINCIPAL AMOUNT. ALL OUTSTANDING NOTES
HELD SHALL BE DEEMED TENDERED UNLESS A LESSER NUMBER IS SPECIFIED IN THIS
COLUMN.
---------------------------------
2
<PAGE> 3
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH, INCAPACITY, OR DISSOLUTION OF THE UNDERSIGNED AND EVERY OBLIGATION OF
THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
If Outstanding Notes will be tendered by book- entry transfer, please provide
the following information:
Name of Tendering Institution
- -------------------------------------------------------------------------------
The Depository Trust Company
Account No.
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
- -------------------------------------------------------------------------------
Signature(s)
- -------------------------------------------------------------------------------
Name(s) (Please Print)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Address (Include Zip Code)
- -------------------------------------------------------------------------------
(Area Code and Phone Number)
- -------------------------------------------------------------------------------
Date
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Outstanding Notes exactly as its (their) name(s) appear on
certificates for Outstanding Notes, or by person(s) authorized to become
registered holder(s) by endorsements and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es):
Name(s)
------------------------------------------------------------------------
Capacity
-----------------------------------------------------------------------
Address(es)
--------------------------------------------------------------------
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in a Recognized Signature Guarantee
Medallion Program, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Outstanding Notes
tendered hereby in proper form for transfer, or confirmation of the book-entry
transfer of such Outstanding Notes into the Exchange Agent's account at the
Depository Trust Company, pursuant to the procedure for book-entry transfer set
forth in the Prospectus, and any other required documents, all by 5:00 p.m.,
New York City time, on the third New York Stock Exchange trading day following
the Expiration Date (as defined in the Prospectus).
- -------------------------------------------------------------------------------
Name of Firm
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------------
Area Code and Telephone No.
- -------------------------------------------------------------------------------
Authorized Signature
- -------------------------------------------------------------------------------
Name (please print)
- -------------------------------------------------------------------------------
Title
- -------------------------------------------------------------------------------
Date
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
4
