As filed with the Securities and Exchange Commission on June 16, 2000
Registration No. 333-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
R&B Falcon Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0544217
(State or Other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Identification No.)
901 Threadneedle
Houston, Texas 77079
(281) 496-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------
Wayne K. Hillin, General Counsel
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 to the public: As soon
as practicable after the effective date of this registration statement, as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. ___
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box: _x_
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration 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(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. ______________
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: ___
CALCULATION OF REGISTRATION FEE
================================================================================
| | Proposed | Proposed |
| | Maximum | Maximum |
Title of Shares | Amount To Be | Aggregate | Aggregate | Amount of
To Be Registered | Registered | Price Per | Offering |Registration
| | Unit (1) | Price | Fee (2)
--------------------------------------------------------------------------------
Senior Debt Securities(3) | | | |
--------------------------------------------------------------------------------
Subordinated Debt | | | |
Securities (3) | | | |
--------------------------------------------------------------------------------
Preferred Stock, par | | | |
value $0.01 per share(4) | | | |
--------------------------------------------------------------------------------
Depositary Shares(4) | | | |
--------------------------------------------------------------------------------
Common Stock, par value | | | |
$0.01 per share(4)(5) | | | |
--------------------------------------------------------------------------------
Warrants (6) | | | |
--------------------------------------------------------------------------------
Total | $500,000,000 | 100% | $500,000,000| $132,000
================================================================================
(1) The proposed maximum price per unit will be determined from time to
time by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(2) The registration fee has been calculated pursuant to Rule 457(o) under
the Securities Act.
(3) If any Senior Debt Securities and Subordinated Debt Securities are
issued at an original issue discount, then the offering price shall be
in the greater principal amount as shall result in an aggregate
initial offering price not to exceed $500,000,000 less the dollar
amount of any securities previously issued hereunder.
(4) There is being registered hereunder an indeterminate number of shares
of Common Stock, Preferred Stock, Depositary Shares, Senior Debt
Securities and Subordinated Debt Securities as may be issued from time
to time upon conversion or exchange of Senior Debt Securities,
Subordinated Debt Securities, Preferred Stock or Depositary Shares or
upon exercise of Warrants.
(5) Also includes associated Rights to purchase shares of the Registrant's
Series A Junior Participating Preferred Stock, which Rights (a) are
not currently separable from the shares of Common Stock and (b) are
not currently exercisable.
(6) Warrants to purchase Senior Debt Securities, Subordinated Debt
Securities, Preferred Stock or Common Stock may be sold separately or
with Senior Debt Securities, Subordinated Debt Securities, Preferred
Stock or Common Stock.
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.
Prospectus Subject to Completion - June 16, 2000
$500,000,000
R&B Falcon Corporation
Senior Debt Securities
Subordinated Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
--------------
Consider carefully The Offering
the Risk Factors
beginning on page 4. We may offer from time to time:
We will provide - senior debt securities;
additional terms of
our securities in one - subordinated debt securities;
or more supplements
to this prospectus. - preferred stock;
You should read this
prospectus and the - depositary shares;
related prospectus
supplement carefully - common stock; and
before you invest in
our securities. This - warrants.
prospectus may not be
used to offer and Our common stock is listed on the New
sell our securities York Stock Exchange under the symbol
unless accompanied by "FLC."
a prospectus
supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is , 2000
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.
Table of Contents
About this Prospectus . . . . . . . . . . . . . . . . . . . 3
About R&B Falcon . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 4
Forward-Looking Information . . . . . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 8
Ratio of Earnings to Fixed Charges and to Combined
Fixed Charges and Preferred Stock Expense . . . . . . . . 9
Description of Debt Securities . . . . . . . . . . . . . . 10
Description of Capital Stock . . . . . . . . . . . . . . . 17
Description of Depositary Shares . . . . . . . . . . . . . 24
Description of Warrants . . . . . . . . . . . . . . . . . . 26
Plan of Distribution . . . . . . . . . . . . . . . . . . . 28
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 30
Independent Public Accountants . . . . . . . . . . . . . . 30
Where You Can Find More Information . . . . . . . . . . . . 31
Information We Incorporate by Reference . . . . . . . . . . 31
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information
we have provided or incorporated by reference in this prospectus or any
prospectus supplement. We have not authorized anyone to provide you with
additional or different information. We are not making an offer of these
securities in any jurisdiction where the offer is not permitted. You should
assume that the information in this prospectus or any prospectus supplement
is accurate only as of the date on the front of the document and that any
information we have incorporated by reference is accurate only as of the
date of the document incorporated by reference.
About This Prospectus
This prospectus is part of a "shelf" registration statement we have
filed with the Securities and Exchange Commission. Under the shelf process,
we may offer any combination of the securities described in this prospectus
in one or more offerings with a total initial offering price of up to
$500,000,000. This prospectus provides you with a general description of
the securities we may offer, which include senior debt securities,
subordinated debt securities, preferred stock, depositary shares, common
stock and warrants. Each time we use this prospectus to offer securities,
we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this prospectus. Please
carefully read this prospectus and the prospectus supplement together with
the additional information described under the heading "Where You Can Find
More Information."
About R&B Falcon
We are a leading provider of contract offshore drilling services to the
petroleum industry. Our company is the result of the 1997 merger of Reading
& Bates Corporation and Falcon Drilling Company, Inc. and the subsequent
acquisition of Cliffs Drilling Company in 1998. Our drilling rig 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 marine
drilling industry or geographic region.
Our principal executive offices are located at 901 Threadneedle, Houston,
Texas 77079, and our phone number is (281) 496-5000.
Risk Factors
You should carefully consider the following risk factors together with
the other information contained in this prospectus, any accompanying
prospectus supplement and the information we have incorporated by
reference. The risks and uncertainties described below are not the only
ones relating to these securities or facing our company. Additional risks
and uncertainties not presently known to us or that we currently do not
believe are material may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected.
In this case, the trading price of the securities offered in this
prospectus could decline and you may lose all or part of your investment.
Risk Factors Relating to Our Business
Depressed industry conditions in 1999, combined with our substantial
capital requirements, have adversely affected our liquidity.
In 1999 we incurred losses of approximately $69.5 million, or
approximately $103.2 million including dividends on our preferred stock.
In addition, we have incurred substantial capital expenditures and have
significant capital commitments relating primarily to our deepwater rig
construction program. The combination of our recent operating losses and
capital expenditures has significantly reduced our liquidity, and our
remaining capital commitments will continue to adversely affect our
liquidity. We believe projected levels of cash flows from operations,
which assumes an industry recovery in 2000, cash on hand and potential
asset sales will be sufficient to satisfy our short-term and long-term
working capital needs, planned investments, capital expenditures, debt,
lease and other payment obligations. If we are able to build excess cash
balances, we will most likely use a portion of the excess to retire debt
obligations and to repurchase or redeem preferred stock. However, if cash
flows from operations are not as we anticipate, or if we incur greater than
anticipated capital expenditure due to cost overruns or delays in our
deepwater rig construction program or for other reasons, our liquidity will
be adversely affected.
We are dependent on the oil and gas industry and market prices. Uncertainty
regarding future oil and gas prices has limited the increases in our
dayrates and rig utilization.
Our financial condition and results of operations are dependent upon the
price of oil and natural gas, as demand for our services is primarily
dependent upon the level of spending by oil and gas companies for
exploration, development and production activities. Activity in the
contract drilling industry and related oil service businesses deteriorated
significantly in 1999 due to decreased worldwide demand for drilling rigs
and related services resulting from a substantial decline in crude oil
prices experienced in 1998. Although crude oil and natural gas prices have
generally improved, market prices remain volatile. There can be no
assurance that demand for drilling rigs and related services will continue
to increase, and demand may decrease. Our oil and gas company customers
reduced their 1999 exploration and production spending as a result of the
low commodity prices at the end of 1998, and generally have not
significantly increased their 2000 exploration and production budgets due
to uncertainty as to future oil and gas prices. This has led to
significantly lower dayrates and utilization for offshore drilling
companies, particularly in the U.S. Gulf of Mexico. If crude oil prices
decline from current levels, or a weakness in crude oil prices continued
for an extended period, rig utilization and dayrates could suffer.
We have a significant amount of debt, which exposes us to greater business
risks than those of our competitors with lower levels of debt.
We have a significant amount of debt. At December 31, 1999, our total
indebtedness and preferred stock obligations were approximately $3.2
billion, which was approximately 65% of our total book value
capitalization. This substantial indebtedness will have important
consequences to you. For example, it will:
-make it more difficult for us to make our required debt payments;
-increase our vulnerability to general adverse economic and industry
conditions;
-limit our ability to fund future capital expenditures and to satisfy
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; and
-place us at a competitive disadvantage compared to our competitors that
have less debt.
Our debt agreements may limit our flexibility in responding to changing
market conditions or in pursuing business opportunities.
Our debt agreements contain restrictions and requirements relating to,
among other things:
-additional borrowing;
-maintaining financial ratios;
-granting liens on our assets;
-selling assets;
-paying dividends; and
-merging.
These restrictions and requirements may limit our flexibility in responding
to changing market conditions or in pursuing business opportunities that we
believe would have a positive effect on our business.
We have committed significant resources to the deepwater drilling market,
and any weakening in this market would adversely affect our results of
operations.
We have committed significant financial resources to the deepwater
drilling market through our deepwater rig construction projects. As of
March 31, 2000, we had incurred capital expenditures of approximately $2.4
billion relating to the nine deepwater rigs we have built or are currently
building and the two deepwater rig projects that we have canceled, and had
remaining capital commitments of approximately $430 million relating to
these 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 weakens, 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
drillship Deepwater Frontier, we will be obligated to pay the full dayrate
of $165,000 to the limited liability company that owns this rig, without
regard to whether we have a customer for this rig. These developments would
result in reduced cash flows and profitability, and adversely affect our
results of operations.
Our customers may seek to cancel or renegotiate contracts during depressed
market conditions.
During depressed market conditions, 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 canceled 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. In addition, our customers for our
drillship Deepwater Navigator and our semisubmersible Falcon 100 canceled
their contracts with us because of our late delivery of these rigs. If our
customers cancel some of our significant contracts and we are unable to
secure new contract on substantially similar terms, it could have a
material adverse effect on our financial condition and results of
operations.
Our deepwater rigs utilize sophisticated technologies. Some of these
technologies are relatively new and unproven, and can therefore encounter
operational problems. 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 periods
of market weakness. If our customers cancel some of our significant
contracts, it could have a material adverse effect on our financial
condition and results of operations.
Our construction and upgrade projects are subject to delays and cost
overruns, which could adversely affect our results of operations and
liquidity.
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 Deepwater Navigator and semisubmersible Falcon 100 have
cancelled their drilling contracts due to late delivery of these rigs.
Also, the customer for our drillship Deepwater Expedition, which has
commenced operations for this customer, has given notice to us of a claim
of approximately $10.0 million for late delivery of the rig. We may also be
subject to late delivery penalties under the cancelled contract for our
semisubmersible Falcon 100. Any additional cost overruns or delays will
adversely affect our financial condition and results of operations.
Reduced dayrates resulting from competition may adversely affect 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, there is 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 that expose us to significant potential
liabilities.
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 and contractual indemnity protection
may not be sufficient to protect us under all circumstances or against all
risks.
We conduct turnkey drilling operations, which exposes us to risks normally
borne by the operator under a daywork drilling contract.
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. However, we provide a 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 under a turnkey
drilling contract we normally assume most of the risks associated with
drilling operations, including (1) risk of blowout, (2) loss of hole, (3)
stuck drill stem, (4) machinery breakdowns, (5) abnormal drilling
conditions and (6) risks associated with subcontractors' services, supplies
and personnel. These risks are generally assumed by the operator in a
daywork contract.
We conduct foreign operations, which exposes us to additional risks not
present in domestic 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,
nationalization, confiscation, expropriation or deprivation of property.
Offshore drilling operations are subject to government regulation.
Compliance with these regulations can be expensive, and failure to comply
with these regulations can expose us to significant liabilities.
A number of federal, state, local and foreign laws and regulations
govern our operations. These include laws and regulations that restrict the
discharge of materials into the environment or otherwise relate to the
protection of the environment, the safety of our personnel and vessels and
other matters. Environmental laws and regulations could impose significant
liability on us for damages, clean-up costs and penalties if we spill oil
or other pollutants in the course of our operations. Some of these laws
impose liability without regard to negligence or fault. Environmental and
other laws and regulations may increase our costs of doing business,
discourage our customers from exploring for oil and gas and reduce demand
for our services. While we maintain insurance protection against some of
these risks and seek to obtain indemnity agreements from our customers, our
insurance and contractual indemnity protection may not be sufficient to
protect us under all circumstances or against all risks.
Risks Relating to Our Debt Securities
We are primarily a holding company and depend substantially on our
subsidiaries for funds to meet our financial obligations.
We are primarily a holding company that owns subsidiary companies. Our
subsidiary companies own most of our assets and conduct substantially all
of our business. This structure results in two principal risks:
-our subsidiaries may be restricted by contractual provisions or
applicable laws from providing us the cash that we need to pay parent
company debt service obligations, including payments on senior debt
securities or subordinated debt securities; and
-in any liquidation, reorganization or insolvency proceeding involving
our company, your claim as a holder of our debt securities will be
effectively junior to the claims of holders of any indebtedness or
preferred stock of our subsidiaries.
Risks Relating to Our Common Stock
Sales of substantial amounts of our common stock eligible for future sale
may cause a significant decline in the market price of our common stock.
We have previously issued options, warrants and other rights to purchase
approximately 22.4 million shares of our common stock that may be exercised
within 60 days of the date of this prospectus. Most of these shares may be
sold immediately upon exercise. Sales of substantial amounts of common
stock, including shares issued upon the exercise of stock options or
warrants, or the perception that sales of substantial amounts of common
stock could occur, could adversely affect the market price for our common
stock.
Our certificate of incorporation and bylaws contain anti-takeover
provisions. In addition, our common stock is subject to a rights plan.
These anti-takeover provisions or the rights plan could prevent or
discourage an acquisition or change of control that stockholders might
believe to be in their best interests.
Our certificate of incorporation authorizes our board of directors to
issue preferred stock without stockholder approval. If our board of
directors elects to issue preferred stock, it could be more difficult for a
third party to acquire control of us. In addition, provisions of the
certificate of incorporation and bylaws, such as those providing for a
classified board of directors with staggered terms, no stockholder action
by written consent and limitations on stockholder proposals at meetings of
stockholders, could also make it more difficult for a third party to
acquire control of us. Our common stock is also subject to a rights plan
that could prevent or discourage an unsolicited takeover attempt. These
anti-takeover provisions or the rights plan may prevent or discourage
transactions that stockholders might believe to be in their best interests,
including those in which stockholders might receive a premium for their
stock over its then market price.
Forward-Looking Information
Some of the statements contained in this prospectus under the caption
"Risk Factors," and some of the statements included in the documents that
we have incorporated by reference, are "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These statements:
-address activities, events or developments that we expect, believe,
anticipate or estimate will or may occur in the future;
-are based on assumptions and analyses that we have made and that we
believe are reasonable under the circumstances when made; and
-are subject to many risks, uncertainties and other factors, many of
which are beyond our control.
Our actual results could differ materially from those anticipated in the
forward-looking statements as a result of these risks, uncertainties and
other factors, which could materially affect our future results of
operations. When considering these forward-looking statements, you should
keep in mind the risk factors and other cautionary statements contained in
this prospectus, any prospectus supplement and the documents we have
incorporated by reference. We will not update these statements unless the
securities laws require us to do so.
Use of Proceeds
Unless we inform you otherwise in the prospectus supplement, we will use
the net proceeds from the sale of securities for general corporate
purposes. These purposes may include:
-repayments or refinancings of debt;
-working capital;
-capital expenditures;
-investments in our drilling rig fleet, including construction or
refurbishment of drilling rigs;
-acquisitions;
-repurchases or redemptions of debt securities; and
-repurchases or redemptions of outstanding equity securities.
Ratio of Earnings to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Expense
For purposes of computing the ratio of earnings to fixed charges,
"earnings" represent income (loss) from continuing operations before income
tax expense, minority interest and extraordinary gain, plus fixed charges
exclusive of capitalized interest. "Fixed charges" consist of interest,
whether expensed or capitalized, amortization of debt expense, and an
estimated portion of rental expense on operating leases deemed to be the
equivalent of interest. "Preferred stock expense" represents the amount of
pre-tax earnings required to pay dividends on outstanding preferred stock.
The following table sets forth our consolidated ratio of earnings to
fixed charges for the periods shown:
Years Ended December 31,
-------------------------------- Three Months Ended
1995 1996 1997 1998 1999 March 31, 2000
---- ---- ---- ---- ---- --------------
Ratio of earnings
to fixed charges 1.8x 3.4x 2.6x 2.0x -(1) -(1)
The following table sets forth our consolidated ratio of earnings to
combined fixed charges and preferred stock dividends for the periods shown:
Years Ended December 31,
-------------------------------- Three Months Ended
1995 1996 1997 1998 1999 March 31, 2000
---- ---- ---- ---- ---- --------------
Ratio of earnings
to combined fixed
charges and
preferred stock
expense 1.6x 3.2x 2.6x 2.0x -(2) -(2)
_____________________________
(1) For the year ended December 31, 1999 and for the three months ended
March 31, 2000, earnings were insufficient to cover fixed charges by
$161.2 million and $71.1 million, respectively.
(2) For the year ended December 31, 1999 and for the three months ended
March 31, 2000, earnings were insufficient to cover combined fixed
charges and preferred stock expense by $214.1 million and $89.7
million, respectively.
Description of Debt Securities
The debt securities covered by this prospectus will be our general
unsecured obligations. We will issue senior debt securities under an
indenture between us and a trustee to be named in the applicable prospectus
supplement that we will enter into before we issue any of these securities.
We will issue subordinated debt securities under an indenture between us
and a trustee to be named in the applicable prospectus supplement that we
will enter into before we issue any of these securities. These indentures
will be substantially identical, except for the provisions relating to
subordination and covenants. Please read "- Provisions Applicable Solely to
Senior Debt Securities" and "- Provisions Applicable Solely to Subordinated
Debt Securities."
We have summarized selected provisions of the indentures and the debt
securities below. This summary is not complete. For a complete description,
we encourage you to read the applicable indenture, which we have filed with
the SEC. Please read "Where You Can Find More Information."
In this summary description of the debt securities, all references to
us mean R&B Falcon Corporation only, unless we state otherwise or the
context clearly indicates otherwise.
Provisions Applicable to Both Senior and Subordinated Debt Securities
Terms. Neither the senior indenture nor the subordinated indenture
will limit the amount of debt that we may issue under that indenture. We
may issue debt securities under the indentures from time to time in one or
more series, each in an amount we authorize prior to issuance.
Unless we inform you otherwise in the prospectus supplement, the
indentures and the debt securities will not limit or restrict:
- the amount of other indebtedness or securities that we or our
subsidiaries may incur or issue;
- transactions between us and our affiliates;
- the payment of dividends and other distributions by us to our
stockholders;
- our making investments and capital expenditures;
- the transfer of assets by us to our subsidiaries;
- the sale of assets, unless that sale is for all or substantially all
our assets; and
- the repurchase or redemption of our debt or equity securities.
The prospectus supplement relating to any series of debt securities
being offered will include specific terms relating to the offering. These
terms will include some or all of the following:
- whether the debt securities will be senior or subordinated debt
securities;
- the title of the debt securities;
- the total principal amount of the debt securities;
- whether we will issue the debt securities in the form of one or
more global securities and whether we will issue any global
securities in temporary or permanent global form;
- the date or dates on which the principal of and any premium on the
debt securities will be payable;
- any interest rate, whether fixed or variable, the date from which
interest will accrue, interest payment dates and record dates for
interest payments;
- the place or places where payments on the debt securities will be
payable;
- any provisions for redemption or early repayment;
- any provisions that would obligate us to redeem, purchase or repay
the debt securities prior to maturity;
- the denominations in which we will issue the debt securities;
- the portion of the principal amount of the debt securities that will
be payable if the maturity is accelerated, if other than the entire
principal amount;
- any additional means of defeasance of the debt securities, any
additional conditions or limitations to defeasance of the debt
securities or any changes to those conditions or limitations;
- any changes or additions to the events of default or covenants
described in this prospectus;
- any restrictions or other provisions relating to the transfer or
exchange of the debt securities;
- whether payments on the debt securities will be made without
deduction for taxes, assessments or governmental charges; and
- any terms for the conversion or exchange of the debt securities for
other securities issued by us or any other entity.
We may sell the debt securities at a discount, which may be
substantial, below their stated principal amount. These debt securities may
bear no interest or interest at a rate that at the time of issuance is
below market rates. We will describe in the prospectus supplement any
material United States federal income tax consequences and other special
considerations.
Consolidation, Merger and Sale of Assets. We have agreed that we will
consolidate with or merge into any entity or transfer or dispose of all or
substantially all of our assets to any entity only if:
- we are the continuing corporation; or
- if we are not the continuing corporation, the successor is organized
and existing under the laws of any United States jurisdiction and
assumes all of our obligations under the indentures and the debt
securities; and
- in either case, immediately after giving effect to the transaction, no
default or event of default would occur and be continuing.
Events of Default. Unless we inform you otherwise in the prospectus
supplement, the following are events of default with respect to a series of
debt securities:
- our failure to pay interest or any additional amounts on that series
of debt securities for 30 days;
- our failure to pay principal of or any premium on that series of debt
securities when due;
- our failure to deposit any mandatory sinking fund payment for 30 days;
- our failure to comply with any of our covenants or agreements in that
series of debt securities or the indenture for that series, other
than an agreement, covenant or provision that we have included in the
applicable indenture solely for the benefit of other series of debt
securities, for 90 days after written notice by the trustee or by the
holders of at least 25% in principal amount of the outstanding debt
securities of the series affected by that failure; and
- bankruptcy, insolvency or reorganization events.
Depending on the terms of our other indebtedness, an event of default
under an indenture may give rise to cross defaults on our other
indebtedness. If a default or an event of default for any series of debt
securities occurs, is continuing and is known to the trustee, the trustee
will notify the holders of those debt securities within 90 days after it
occurs. The trustee may withhold notice of any default or event of default,
except in any payment on the debt securities, if the trustee in good faith
determines that withholding notice is in the interest of the holders of the
debt securities.
If an event of default for any series of debt securities occurs and is
continuing, the trustee or the holders of at least 25% in principal amount
of the outstanding debt securities of the series affected by the default
may declare the principal of and all accrued and unpaid interest on those
debt securities to be due and payable. If an event of default relating to
bankruptcy, insolvency or reorganization occurs and is continuing, the
principal of and interest on all the debt securities will become
immediately due and payable without any action on the part of the
applicable trustee or any holder. The holders of a majority in principal
amount of the outstanding debt securities of the series affected by the
default may in some cases rescind the accelerated payment requirement.
A holder of a debt security of any series may pursue any remedy under
the applicable indenture only if:
- the holder gives the applicable trustee written notice of a continuing
event of default for that series;
- the holders of at least 25% in principal amount of the outstanding
debt securities of that series make a written request to the
applicable trustee to pursue the remedy;
- the holder or holders offer to the trustee indemnity reasonably
satisfactory to it;
- the trustee fails to act for a period of 60 days after receipt of
notice and offer of indemnity; and
- during that 60-day period, the holders of a majority in principal
amount of the debt securities of that series do not give the trustee
a direction inconsistent with the request.
This provision does not, however, affect the right of a holder of a
debt security to sue for enforcement of any overdue payment.
In most cases, holders of a majority in principal amount of the
outstanding debt securities of a series may direct the time, method and
place of:
- conducting any proceeding for any remedy available to the applicable
trustee; and
- exercising any trust or power conferred on the applicable trustee
relating to or arising under an event of default.
Each indenture requires us to file annually with the applicable
trustee a written statement as to our compliance with the covenants
contained in that indenture.
Modification and Waiver. We may amend or supplement each indenture if
the holders of a majority in principal amount of the outstanding debt
securities of all series issued under the indenture and affected by the
amendment or supplement, acting as one class, consent to it. Without the
consent of the holder of each debt security affected, however, no amendment
or supplement may:
- reduce the rate of or change the time for payment of interest on any
debt security;
- reduce the principal of, premium on or any mandatory sinking fund
payment for any debt security;
- change the stated maturity of any debt security;
- reduce the amount of the principal of an original issue discount
security that would be due and payable upon a declaration of
acceleration of the maturity of that debt security;
- reduce any premium payable on the redemption of any debt security or
change the time at which any debt security may or must be redeemed;
- change any obligation to pay additional amounts on any debt security;
- make payments on any debt security payable in any currency or currency
unit other than as originally stated in that debt security;
- impair the holder's right to institute suit for the enforcement of any
payment on any debt security;
- make any change in the percentage of principal amount of debt
securities necessary to waive compliance with some provisions of the
applicable indenture or to make any change in this provision for
modification;
- waive a continuing default or event of default regarding any payment
on any debt security; or
- with respect to the subordinated indenture, modify the provisions
relating to the subordination of any subordinated debt security in a
manner adverse to the holder of that security.
We may amend or supplement each indenture without the consent of any holders
of debt securities:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of our obligations under the indenture
by a successor upon any merger, consolidation or asset transfer;
- to provide for uncertificated debt securities in addition to or in
place of certificated debt securities;
- to provide any security for any series of debt securities;
- to comply with any requirement to effect or maintain the qualification
of the indenture under the Trust Indenture Act of 1939;
- to add covenants that would benefit the holders of any debt securities
or to surrender any rights we have under the indenture;
- to add events of default with respect to any debt securities;
- to make any change that does not adversely affect any outstanding debt
securities of any series in any material respect;
- to facilitate the defeasance or discharge of any series of debt
securities if that change does not adversely affect the holders of
debt securities of that series or any other series under the
indenture in any material respect; and
- to provide for the acceptance of a successor or another trustee.
The holders of a majority in principal amount of the outstanding debt
securities of any series may waive compliance by us with any provision of
the indenture with respect to those debt securities. Those holders may not,
however, waive any default or event of default in any payment on any debt
security or compliance with a provision that cannot be amended or
supplemented without the consent of each holder affected.
Original Issue Discount. In determining whether the holders of the
required principal amount of debt securities have concurred in any
direction, amendment, supplement, waiver or consent the principal amount of
an original issue discount security will be the principal amount that would
be due and payable upon acceleration of the maturity of that debt security.
Defeasance. When we use the term defeasance, we mean discharge from
some or all of our obligations under an indenture.
If we deposit with the applicable trustee funds or government
securities sufficient to make payments on the debt securities of a series
on the dates those payments are due and payable, then, at our option,
either of the following will occur:
- we will be discharged from our obligations with respect to the debt
securities of that series ("legal defeasance"); or
- we will no longer have any obligation to comply with the restrictive
covenants under the applicable indenture, the related events of
default will no longer apply to us but some of our other obligations
under the indenture and the debt securities of that series, including
our obligation to make payments on those debt securities, will survive
("covenant defeasance").
If we elect legal defeasance of a series of debt securities, the
holders of the debt securities of the series affected will not be entitled
to the benefits of the applicable indenture, except for our obligations:
- to register the transfer or exchange of debt securities;
- to replace stolen, lost or mutilated debt securities; and
- to maintain paying agencies and hold moneys for payment in trust.
Unless we inform you otherwise in the prospectus supplement, we will
be required to deliver to the applicable trustee an opinion of counsel that
the deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for United States federal
income tax purposes.
In addition, unless we inform you otherwise in the prospectus supplement,
each indenture will cease to be of further effect with respect to debt
securities of a series, subject to exceptions relating to compensation and
indemnity of the applicable trustee and repayment to us of excess money or
securities, when:
- either:
(1) all outstanding debt securities of that series have been
delivered to that trustee for cancellation; or
(2) all outstanding debt securities of that series not delivered to
the trustee for cancellation either:
- have become due and payable;
- will become due and payable at their stated maturity
within one year; or
- are to be called for redemption within one year; and
we have deposited with the trustee funds or government securities
in trust sufficient to pay and discharge the entire indebtedness
on the debt securities of that series when due;
- we have paid all other sums payable by us with respect to those debt
securities; and
- we have delivered to the trustee other documents required by the
indenture, including an officers' certificate and an opinion of
counsel.
Governing Law. New York law will govern the indentures and the debt
securities.
The Trustee. If an event of default occurs and is continuing, the
trustee will be required to use the degree of care and skill of a prudent
person in the conduct of his own affairs. The trustee will become obligated
to exercise any of its powers under the indenture at the request of any of
the holders of any debt securities only after those holders have offered
the trustee indemnity reasonably satisfactory to it.
Each indenture limits the right of the trustee, if the trustee becomes
one of our creditors, to obtain payment of claims or to realize on some
property received for any of these claims, as security or otherwise. The
trustee may engage in other transactions with us. If it acquires any
conflicting interest, however, it must eliminate that conflict or resign
within 90 days after ascertaining that it has a conflicting interest and
after the occurrence of a default under the indenture, unless that default
has been cured, waived or otherwise eliminated within the 90-day period.
Form, Exchange, Registration and Transfer. We will issue the debt
securities in registered form. We will not charge a service charge for any
registration of transfer or exchange of the debt securities. We may,
however, require the payment of any tax or other governmental charge
payable for that registration.
Debt securities of any series will be exchangeable for other debt
securities of the same series with the same total principal amount and the
same terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present debt securities for registration
of transfer at the office of the registrar. The registrar will effect the
transfer or exchange when it is satisfied with the documents of title and
identity of the person making the request.
We will appoint the trustee under each indenture as registrar for our
debt securities issued under that indenture. We are required to maintain an
office or agency for transfers and exchanges in each place of payment. We
may at any time designate additional registrars for any series of debt
securities.
In the case of any redemption or repurchase, we will not be required
to register the transfer or exchange of any debt security either:
- if we have called the debt security for redemption in whole or in
part, except the unredeemed portion of any debt security being
redeemed in part; or
- during a period beginning 15 business days before the mailing of the
relevant notice of redemption or repurchase and ending on the close
of business on the day of mailing.
Payment and Paying Agents. Unless we inform you otherwise in a
prospectus supplement, payments on the debt securities will be made in U.S.
dollars at the office of the applicable trustee or any paying agent we
designate. At our option, we may make payments by check mailed to the
holder's registered address or by wire transfer for global debt securities.
Unless we inform you otherwise in a prospectus supplement, we will make
interest payments to the person in whose name the debt security is
registered at the close of business on the record date for the interest
payment.
Unless we inform you otherwise in a prospectus supplement, the trustee
under each indenture will be designated as our paying agent for payments on
debt securities issued under the indenture. We may at any time designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts.
In most cases, the trustee and paying agent will repay to us upon
written request any funds held by them for payments on the debt securities
that remain unclaimed for two years after the date upon which that payment
has become due. After payment to us, holders entitled to the money must
look to us for payment.
Book-Entry Debt Securities. We may issue debt securities of a series
in the form of one or more global debt securities that would be deposited
with a depositary or its nominee identified in the prospectus supplement.
We may issue global debt securities in either temporary or permanent form.
We will describe in the prospectus supplement the terms of any depositary
arrangement and the rights and limitations of owners of beneficial
interests in any global debt security.
Provisions Applicable Solely to Senior Debt Securities
Ranking. The senior debt securities will rank equally with all our
unsecured and unsubordinated debt and senior to any subordinated
indebtedness, including any subordinated debt securities.
Restrictive Covenants. We will describe any restrictive covenants
relating to the senior debt securities in a prospectus supplement.
Provisions Applicable Solely to Subordinated Debt Securities
Ranking. The subordinated debt securities will rank junior to all our
senior debt, including any senior debt securities we may issue, and may
rank equally with or senior to other subordinated debt that may be
outstanding from time to time.
Subordination. Under the subordinated indenture, payment of the
principal, interest and any premium on the subordinated debt securities
will generally be subordinated and junior in right of payment to the prior
payment in full of all senior debt. Unless we inform you otherwise in the
prospectus supplement, we may not make any payment of principal, interest
or any premium on the subordinated debt securities if:
- we fail to pay the principal, interest, premium or any other amounts
on any senior debt when due; or
- we default in performing any other covenant (a "covenant default") in
any senior debt that we have designated if the covenant default allows
the holders of that senior debt to accelerate the maturity of the
senior debt they hold.
Unless we inform you otherwise in the prospectus supplement, a
covenant default will only prevent us from making payments on the
subordinated debt securities for up to 179 days after holders of the senior
debt give the trustee for the subordinated debt securities notice of the
covenant default.
The subordination will not affect our obligation, which will be
absolute and unconditional, to pay, when due, principal of, premium, if
any, and interest on the subordinated debt securities. In addition, the
subordination will not prevent the occurrence of any default under the
subordinated indenture.
The subordinated indenture will not limit the amount of senior debt
that we may incur. As a result of the subordination of the subordinated
debt securities, if we became insolvent, holders of subordinated debt
securities may receive less on a proportionate basis than other creditors.
Unless we inform you otherwise in the prospectus supplement, "senior
debt" will mean all debt of R&B Falcon Corporation, unless the debt states
that it is not senior to the subordinated debt securities or our other
junior debt. The term "debt" of a person means:
- indebtedness for borrowed money;
- obligations evidenced by bonds, debentures, notes or similar
instruments;
- undrawn obligations relating to letters of credit or similar
instruments, other than standby letters of credit and bid or
performance bonds issued in the ordinary course of business;
- reimbursement obligations relating to drawn letters of credit and
similar instruments described in the preceding item if the drawing is
reimbursed within 30 business days following demand for reimbursement;
- obligations 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;
- capitalized lease obligations;
- indebtedness of a third party secured by a lien on any asset of that
person; and
- indebtedness of others guaranteed to the extent of the guarantee.
Description of Capital Stock
General
As of the date of this prospectus, we are authorized to issue up to
550,000,000 shares of common stock and up to 50,000,000 shares of preferred
stock. As of May 1, 2000, we had 194,191,457 shares of common stock and
344,994 shares of 13-7/8% Senior Cumulative Redeemable Preferred Stock
outstanding. As of that date, we also had approximately 29 million shares
of common stock reserved for issuance upon exercise of common stock
purchase warrants, in connection with options or other awards outstanding
under various employee or director incentive, compensation and option
plans, or under contingent obligations relating to asset purchases.
The following is a summary of the key terms and provisions of our
equity securities. You should refer to the applicable provisions of our
certificate of incorporation, bylaws, the Delaware General Corporation Law
and the documents we have incorporated by reference for a complete
statement of the terms and rights of our capital stock.
Common Stock
Voting Rights. Each holder of common stock is entitled to one vote per
share on all matters to be voted on by the stockholders. Subject to the
rights, if any, of the holders of any series of preferred stock pursuant to
applicable law or the provision of the certificate of designation creating
that series, all voting rights are vested in the holders of shares of
common stock. Holders of shares of common stock have noncumulative voting
rights, which means that the holders of more than 50% of the shares voting
for the election of directors can elect all of the directors, and the
holders of the remaining shares voting for the election of directors will
not be able to elect any directors.
Dividends. Dividends may be paid to the holders of common stock when,
as and if declared by the board of directors out of funds legally available
for their payment, subject to the rights of holders of any preferred stock.
We generally do not pay cash dividends, and we intend to retain future
earnings in order to provide funds for use in the operation and expansion
of our business. In addition, as of the date of this prospectus we are
unable to pay dividends under the covenants in some of our outstanding
senior debt due to our financial results.
Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally, in proportion to the number of shares of common
stock held by them, in any of our assets available for distribution after
the payment in full of all our debts and distributions and after the
holders of all series of our outstanding preferred stock, if any, have
received their liquidation preferences in full.
Non-Assessable. All outstanding shares of common stock are fully paid
and non-assessable. Any additional common stock we offer and issue under
this prospectus will also be fully paid and non-assessable.
No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future offerings of our common stock.
Listing. Our outstanding shares of common stock are listed on the New
York Stock Exchange under the symbol "FLC." Any additional common stock we
issue will also be listed on the NYSE.
Preferred Stock
General
Our board of directors can, without approval of our stockholders,
issue one or more series of preferred stock and determine the number of
shares of each series and the rights, preferences and limitations of each
series. The following description of the terms of the preferred stock sets
forth some of the general terms and provisions of our authorized preferred
stock. If we offer preferred stock, we will file a description with the SEC
and describe the specific designations and rights in a prospectus
supplement, including the following terms:
- the series, the number of shares offered and the liquidation value of
the preferred stock;
- the price at which the preferred stock will be issued;
- the dividend rate, the dates on which the dividends will be payable
and other terms relating to the payment of dividends on the preferred
stock;
- the liquidation preference of the preferred stock;
- the voting rights of the preferred stock;
- whether the preferred stock is redeemable or subject to a sinking
fund, and the terms of any redemption or sinking fund;
- whether the preferred stock is convertible or exchangeable for any
other securities, and the terms of any conversion; and
- any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
The description of the terms of the preferred stock to be set forth in
an applicable prospectus supplement will not be complete and will be
subject to and qualified by the certificate of designation relating to the
applicable series of preferred stock. The registration statement of which
this prospectus forms a part will include the certificate of designation as
an exhibit or will incorporate the certificate of designation by reference.
Undesignated preferred stock may enable our board of directors to
render more difficult or to discourage an attempt to obtain control of us
by means of a tender offer, proxy contest, merger or otherwise, and to
thereby protect the continuity of our management. The issuance of shares of
preferred stock may adversely affect the rights of the holders of our
common stock. For example, any preferred stock issued may rank prior to our
common stock as to dividend rights, liquidation preference or both, may
have full or limited voting rights and may be convertible into shares of
common stock. As a result, the issuance of shares of preferred stock may
discourage bids for our common stock or may otherwise adversely affect the
market price of our common stock or any existing preferred stock.
Any preferred stock will, when issued in an offering under this
prospectus and a prospectus supplement, be fully paid and non-assessable.
13-7/8% Senior Cumulative Redeemable Preferred Stock
In April 1999, our board of directors designated the 13-7/8% Senior
Cumulative Redeemable Preferred Stock as a class of preferred stock. This
class consists of a total of 1,200,000 shares, of which 300,000 shares were
issued in a private placement in April 1999, up to 300,000 were reserved
for issuance in payment of dividends in kind on the private placement
shares, and up to 600,000 were issuable in exchange for the private
placement shares and paid in kind dividends issued on the private placement
shares prior to the exchange, and in payment of dividends in kind on shares
issued in the exchange. The private placement shares were exchanged for
exchange shares in a registered exchange offer in August 1999. Therefore,
only up to a total of 600,000 shares of this class of preferred stock may
be issued, of which 344,994 shares are currently issued and outstanding.
The following is a summary of the terms of this class of preferred stock.
Liquidation Preference. Each share of this class of preferred stock
has a liquidation preference of $1,000, plus accrued and unpaid dividends.
Dividends. Dividends on this class of preferred stock are payable in
cash or, on or before May 1, 2004, at our option, in additional shares of
preferred stock, on each February 1, May 1, August 1 and November 1.
Cumulative dividends on the preferred stock accrue at the rate of 13-7/8% of
the liquidation preference per annum. Covenants contained in the indentures
governing a substantial portion of our current indebtedness limit our
ability to pay cash dividends. Because of this, we have paid and intend to
continue to pay dividends on the preferred stock in additional shares of
preferred stock for most or all of the period ending May 1, 2004.
Voting Rights. Holders of this class of preferred stock have no voting
rights except as provided by law and as provided in the certificate of
designation for the preferred stock. In the event that dividends are not
paid for any three quarters, whether or not consecutive, or upon certain
other events (including the failure to make a change of control offer, to
comply with other specified covenants or to pay the mandatory redemption
price when due), then the number of directors that make up our board of
directors will be increased to permit the holders of the majority of the
then outstanding shares of preferred stock, voting separately as a class
with any other class of securities having similar voting rights, to elect
two directors.
Mandatory redemption. We must redeem the shares of this class of
preferred stock on May 1, 2009 (subject to the legal availability of funds)
at a redemption price equal to the liquidation preference, plus accrued and
unpaid dividends to the redemption date.
Optional redemption. We may redeem any of the shares of this class of
preferred stock beginning May 1, 2004. The initial redemption price is
106.938% of the liquidation preference, declining thereafter to 100.000% on
or after May 1, 2007, in each case plus accrued and unpaid dividends to the
redemption date.
In addition, on or prior to May 1, 2002, we may redeem shares of this
class of preferred stock having an aggregate liquidation preference of up
to $105 million at a price equal to 113.875% of its liquidation preference,
plus accrued and unpaid dividends to the redemption date, with proceeds
from one or more public equity offerings. We may make one of these
redemptions only if it occurs within 45 days after completion of the public
equity offering.
Ranking. This class of preferred stock ranks (i) senior to our common
stock and to all other capital stock of our company unless the terms of the
other capital stock expressly provide that it ranks equally with this class
of preferred stock; and (ii) equally with any capital stock of our company
the terms of which expressly provide that it will rank equally with this
class of preferred stock.
Optional exchange feature. This class of preferred stock will become
exchangeable in whole, but not in part, into exchange debentures at our
option if the conditions described in the certificate of designation are
satisfied. Indentures governing a substantial portion of our current
indebtedness restrict our ability to consummate such an exchange.
Covenants. The certificate of designation contains covenants that
restrict our ability and the ability of our restricted subsidiaries to:
- issue capital stock;
- pay dividends or make distributions in respect of capital stock;
- redeem capital stock; or
- effect a consolidation or merger.
Change of control. Upon a change of control, we will be required to
make an offer to purchase all outstanding shares of this class of preferred
stock. The purchase price will equal 101% of the liquidation preference of
the preferred stock, plus accrued and unpaid dividends. We may not be
permitted under our debt agreements at the time of any change of control,
or may not have enough funds available at the time of any change of
control, to make any required purchase of this class of preferred stock.
Non-Assessable. All outstanding shares of this class of preferred
stock are fully paid and non-assessable. Any additional shares of this
class of preferred stock issued upon payment of dividends in kind will also
be fully paid and non-assessable.
No Preemptive Rights. Holders of this class of preferred stock are not
entitled to preemptive purchase rights in future offerings of our equity
securities.
Rights Plan
General. Under our rights plan, each share of common stock has
attached to it one right. The right is represented by a certificate which
is the same certificate representing the common stock. Each right entitles
the registered holder to purchase from us one one-hundreth of a share of
our Series A Junior Participating Preferred Stock. Until the distribution
date, the rights will be transferred only with our common stock
certificates. The rights are not exercisable until after the distribution
date and are subject to redemption or exchange as described below. The
rights expire at the close of business on November 1, 2007, unless we
redeem them earlier. Holding unexercised rights gives you no rights as a
stockholder, including, without limitation, the right to vote or to receive
dividends.
Distribution Date; Separation of Rights from Common Stock. The rights
will separate from our common stock and a distribution date will occur upon
the earlier of two possible times. The first such time is 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "acquiring person") has acquired, or has the right
to acquire, the ownership of 15% or more of the outstanding shares of our
common stock (the "share acquisition date"). The second possible time is 10
business days (or such later date as determined by our board of directors
prior to any person becoming an acquiring person) following the
commencement of a tender or exchange offer which would result in a person
or group owning 15% or more of our outstanding shares of common stock.
Series A Preferred Stock. The Series A Preferred Stock has a par value
of $0.01 per share and a purchase price of $150. The purchase price is
subject to adjustment. Because of the nature of the Series A Preferred
Stock's dividend, liquidation and voting rights, the value of each one one-
hundreth interest in a share of Series A Preferred Stock purchasable upon
exercise of each right should approximate the value of a share of common
stock. Each share of Series A Preferred Stock purchased upon exercise of
the rights will be entitled to a minimum preferential quarterly dividend
payment equal to the greater of (i) $1.00 per share, and (ii) 100 times the
dividend, if any, declared per share of our common stock. In the event of
liquidation, the holders of the Series A Preferred Stock will be entitled
to a minimum preferential liquidation payment equal to 100 times the par
value per share plus an amount equal to accrued and unpaid dividends and
distributions to the date of such payment. Each share of Series A Preferred
Stock will have 100 votes and will vote together with our common stock. In
the event of any merger, consolidation or other transaction in which shares
of our common stock are exchanged, each share of Series A Preferred Stock
will be entitled to receive 100 times the amount per share of our common
stock received in such merger, consolidation or other transaction. The
shares of Series A Preferred Stock will, if issued, be junior to any other
series of our preferred stock, unless the terms of any such other series
provide otherwise.
Triggering Event. In the event that any person or group becomes an
acquiring person, we will provide that each holder of a right, other than
rights beneficially owned by the acquiring person (which will be null and
void), will have the right to receive upon exercise of the right at the
current exercise price, a number of shares of our common stock having a
market value of two times the exercise price of the right. In the event
that we are acquired in a merger or other business combination transaction
or 50% or more of our consolidated assets or earning power are sold after a
person or group has become an acquiring person, we will provide that each
holder of a right will have the right to receive, upon exercise of the
right at the current exercise price, a number of shares of common stock of
the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the right.
Redemption or Exchange of Rights. At any time prior to the tenth day
after a share acquisition date, we may redeem the rights in whole, but not
in part, at a price of $0.01 per right. The redemption of the rights may be
made effective at such time, on such basis and with such conditions as our
board of directors may establish in its sole discretion.
Anti-takeover Effects. The rights may cause substantial dilution of
shareholder voting strength to a person or group that acquires 15% or more
of our common stock or otherwise attempts to acquire us in a manner that
constitutes a triggering event. The rights should not affect any
prospective offeror who is willing:
- to make an offer for all of our outstanding shares of common stock and
other voting securities at a price and terms that are in the best
interests of us and our stockholders as determined by our board of
directors; or
- to negotiate with the board of directors because as part of any
negotiated transaction the rights would either be redeemed or
otherwise made inapplicable to the transaction.
The rights should also not interfere with any merger or other business
combination approved by the board of directors since the board may, at its
option, choose to redeem the outstanding rights at the $0.01 redemption
price. The board may exercise this option at any time prior to the tenth
day after a share acquisition date.
Business Combinations Under Delaware Law
We are subject to Section 203 of the Delaware General Corporation Law,
which restricts some types of business combinations of Delaware
corporations. Section 203 prohibits us from engaging in a business
combination with an interested stockholder for a period of three years
after the time of the transaction in which the person became an interested
stockholder, unless:
- prior to the time of the business combination, our board of directors
approved the business combination or the transaction in which the
stockholder became an interested stockholder;
- as a result of the business combination, the interested stockholder
owned at least 85% of our voting stock outstanding at the time the
transaction commenced; or
- on or after the date of the business combination, our board of
directors and the holders of at least 66-2/3% of our outstanding
voting stock not owned by the interested stockholder approve the
business combination.
The DGCL defines a "business combination" generally as:
- a merger or consolidation with the interested stockholder or with any
other corporation if the merger or consolidation is caused by the
interested stockholder;
- a sale or other disposition to or with an interested stockholder of
assets with an aggregate market value greater than or equal to 10%
or more of either the aggregate market value of all our assets or the
aggregate market value of all of our outstanding stock;
- a transaction resulting in the issuance or transfer by our company or
any of our majority-owned subsidiaries of any of our stock or stock of
our subsidiary to the interested stockholder;
- any transaction involving our company or any of our majority-owned
subsidiaries that has the effect of increasing the proportionate
share of our stock or the stock of the subsidiary owned by the
interested stockholder; or
- any receipt of the interested stockholder of the benefit of any loans
or other financial benefits provided by our company or any of our
majority-owned subsidiaries.
An interested stockholder is defined generally to mean a person who,
together with its affiliates, owns, or if the person is an affiliate of the
corporation did own within the last three years, 15% or more of our
outstanding voting stock.
Certain Provisions of Our Certificate of Incorporation and Bylaws
The summary set forth below describes certain provisions of our
amended and restated certificate of incorporation and restated bylaws. The
summary is qualified in its entirety by reference to the provisions of our
certificate of incorporation and bylaws.
Some of the provisions of our certificate of incorporation and bylaws
discussed below may have the effect, either alone or in combination with
the provisions of Section 203 discussed above, of making more difficult or
discouraging a tender offer, proxy contest or other takeover attempt that
is opposed by our board of directors but that a stockholder might consider
to be in its best interest.
Classified Board of Directors. Our certificate of incorporation and
bylaws provide for a classified board of directors. Except for directors
that may be elected by the holders of our preferred stock or any other
series or class of our stock, our board is divided into three classes, with
the directors of each class as nearly equal in number as possible. The
directors of each class serve a term that expires at the third succeeding
annual meeting of our stockholders after their election, and each director
holds office until his or her successor is duly elected and qualified. At
each annual meeting of our stockholders, the term of a different class of
our directors expires. Our board of directors may not consist of more than
15 directors or less than one director. In addition, our certificate of
incorporation provides that no more than a minority of the directors
necessary to constitute a quorum of our board of directors may be non-
United States citizens.
The classification of our directors will have the effect of making it
more difficult to change the composition of our board of directors. It
could also have the effect of discouraging a third party from initiating a
proxy contest, making a tender offer or otherwise attempting to obtain
control of our company, even though such an attempt might be beneficial to
our company and our stockholders.
Under the Delaware General Corporation Law, a director of a
corporation with a classified board may be removed only for cause, unless
the certificate of incorporation provides otherwise. Our certificate of
incorporation is silent on the removal of directors. Therefore,
stockholders representing a majority of the voting power of the outstanding
shares entitled to vote at an election of directors may remove a director,
but only for cause.
Our certificate of incorporation also provides generally that any
vacancies will be filled only by the affirmative vote of a majority of our
remaining directors, even if less than a quorum. Therefore, without an
amendment to our certificate of incorporation, our board of directors could
prevent any stockholder from enlarging our board of directors and filling
the new directorships with that stockholder's own nominees.
No Stockholder Action by Written Consent; Special Meetings. Our
certificate of incorporation and bylaws generally provide that stockholder
action can be taken only at an annual or special meeting of our
stockholders and may not be taken by written consent in place of a meeting.
Our certificate of incorporation and bylaws generally provide that a
special meeting of our stockholders may be called by the Chairman or the
President and shall be called by the Chairman, the President or the
Secretary at the written request of a majority of our board of directors.
The business conducted at any special meeting of our stockholders is
limited to the business set forth in our notice of meeting provided to
stockholders.
Advance Notice Provisions for Stockholder Nominations And Stockholder
Proposals. Our bylaws establish an advance notice procedure for our
stockholders to make nominations of candidates for election as directors or
bring other business before an annual meeting of our stockholders. This
stockholder notice procedure provides that only persons who are nominated
by, or at the direction of, our board of directors, or by a stockholder who
has given timely written notice, will be eligible for election as directors
of our company. In addition, the business that may be conducted at an
annual meeting is limited to business that has been brought before the
meeting by, or at the direction of, our chairman of the board or our board
of directors or by a stockholder who has given timely written notice of
that stockholder's intention to bring that business before the meeting.
The stockholder notice procedure may have the effect of precluding a
contest for the election of directors or the consideration of stockholder
proposals if the proper procedures are not followed, and of discouraging or
deterring a third party from conducting a solicitation of proxies to elect
its own slate of directors or to approve its own proposal, without regard
to whether consideration of those nominees or proposals might be harmful or
beneficial to our company and our stockholders.
Amendments. Our certificate of incorporation provides that the
affirmative vote of the holders of 66-2/3% of all classes of capital stock
entitled to vote in the election of our directors is required to alter,
amend or adopt any charter provisions inconsistent with Article SIXTH
(which contains, among other things, provisions with respect to the
supermajority stockholder vote required for Bylaw amendments, the staggered
board, removal and replacement of directors, written consent and the
calling of special stockholder meetings). Our certificate of incorporation
also provides that a majority of the total number of authorized directors
has the power to adopt, amend or repeal our bylaws and that the affirmative
vote of the holders of 66-2/3% of the voting power of the then issued and
outstanding shares of capital stock entitled to vote in the election of
directors is required to adopt, amend or repeal our bylaws.
Description of Depositary Shares
General. We may, at our option, elect to offer fractional interests in
shares of preferred stock, rather than full shares of preferred stock. If
we do this, we will provide for the issuance by a depositary to investors
of receipts for depositary shares, each of which will represent a
fractional interest in a share of a particular series of preferred stock.
The shares of any series of the preferred stock underlying the
depositary shares will be deposited under a separate deposit agreement
between us and a depositary. The depositary will be a bank or trust company
we select having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000. The prospectus
supplement relating to a series of depositary shares will set forth the
name and address of the depositary. Each owner of a depositary share will
be entitled to all the rights and preferences of the preferred stock
underlying such depositary share (including dividend, voting, redemption,
conversion and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
under the deposit agreement.
Upon surrender of depositary receipts at the office of the depositary,
a holder of depositary shares will be entitled to receive the whole shares
of preferred stock and any money or other property represented by the
surrendered depositary receipts.
Dividends and Other Distributions. The depositary will distribute all
cash dividends or other cash distributions received on the preferred stock
to the record holders of depositary shares. The depositary will not
distribute fractions of one cent, and any balance not distributed will be
added to the next sum received by the depositary for distribution to record
holders of depositary receipts.
If we make a distribution on the underlying preferred stock other than
in cash, the depositary will distribute the property received by it to the
record holders of depositary shares, unless the depositary determines that
it is not feasible to make such distribution. If a distribution in kind of
the property is not feasible, the depositary may, with our approval, sell
the property and distribute the net proceeds from the sale to holders.
The deposit agreement will also contain provisions specifying the
manner in which any subscription or similar rights that we offer to holders
of the preferred stock will be made available to holders of depositary
receipts.
Redemption of Depositary Shares. If a series of the preferred stock
underlying the depositary shares is subject to redemption, the depositary
shares will also be subject to redemption. The depositary will mail notice
of redemption of any of the underlying shares of preferred stock it holds
not less than 30 and not more than 60 days prior to the date fixed for
redemption. The depositary will mail this notice to the record holders of
the depositary receipts to be redeemed at their respective addresses
appearing in the depositary's books. The redemption price per depositary
share will be equal to the applicable fraction of the redemption price per
share payable with respect to the preferred stock. Whenever we redeem
shares of preferred stock held by the depositary, the depositary will
redeem the number of depositary shares relating to the redeemed shares of
preferred stock. If less than all of the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by lot, on
a pro rata basis or such other equitable basis as we and the depositary may
determine.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding, and all rights of
the holders of the depositary shares will cease except the right to receive
the moneys payable upon such redemption.
Voting the Preferred Stock. Upon receipt of notice of any meeting at
which the holders of the preferred stock are entitled to vote, the
depositary will mail the information contained in the notice of meeting to
the record holders of the depositary shares relating to the preferred
stock. Each record holder of depositary shares on the record date for the
preferred stock will be entitled to instruct the depositary how to vote the
shares of preferred stock underlying the holder's depositary shares. The
depositary will use its reasonable efforts to vote in accordance with such
instructions, and we will agree to take all action which the depositary may
deem necessary to enable the depositary to do so. The depositary will
abstain from voting those shares of preferred stock for which it does not
receive specific instructions from holders.
Amendment and Termination of the Deposit Agreement. The form of
depositary receipt evidencing the depositary shares and the provisions of
the deposit agreement may be amended at any time by agreement between us
and the depositary. However, any amendment which materially and adversely
alters the rights of the existing holders of depositary shares will not
affect outstanding depositary receipts until 90 days after notice of the
amendment has been mailed to the record holders of outstanding depositary
receipts. Every holder of depositary receipts at the time the amendment
becomes effective will be deemed to consent and agree to the amendment and
to be bound by the deposit agreement, as so amended. No amendment may
impair the right of any owner of depositary shares to receive shares of the
preferred stock and any money or other property represented by those shares
upon surrender of depositary receipts.
Whenever we direct it to do so, the depositary will terminate the
deposit agreement by mailing notice of termination to the record holders of
all outstanding depositary receipts at least 30 days before the termination
date. The depositary may also terminate the deposit agreement if 60 days
have expired after the depositary delivered written notice to us of its
election to resign and a successor depositary has not been appointed and
accepted its appointment. If any depositary receipts remain outstanding
after the date of termination, the depositary will discontinue the transfer
of depositary receipts, will suspend the distribution of dividends to the
holders of depositary receipts, and will not give any further notices
(other than notice of termination) or perform any further acts under the
deposit agreement, except that the depositary will continue (1) to collect
dividends and any other distributions on the preferred stock and (2) to
deliver the preferred stock, together with the corresponding dividends and
distributions and the net proceeds of any sales of rights, preferences,
privileges or other property, without liability for interest thereon, in
exchange for depositary receipts surrendered. At any time after two years
from the date of termination, the depositary may sell the preferred stock
then held by it at public or private sales, at such place or places and
upon such terms as it deems proper, and may hold the net proceeds of any
sale, together with any money and other property then held by it, without
liability for interest thereon, for the pro rata benefit of the holders of
depositary receipts that have not been surrendered.
Charges of Depositary. We will pay all charges arising solely from the
existence of the depositary arrangements. We will pay charges of the
depositary in connection with the initial deposit of the preferred stock
and issuance of depositary receipts, all withdrawals of shares of preferred
stock by owners of depositary shares, any redemption of the preferred stock
and the distribution of information to holders of the depositary receipts.
Holders of depositary shares will pay transfer and other taxes and
governmental charges and such other charges as are expressly provided in
the deposit agreement to be for their accounts.
Miscellaneous. The depositary will forward to the holders of
depositary shares all of our reports and communications delivered to the
depositary and that we are required to furnish to the holders of the
preferred stock.
Neither we nor the depositary will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. Our obligations and the
obligations of the depositary under the deposit agreement will be limited
to performance in good faith of our and their duties under the depositary
agreement, and neither we nor they will be obligated to prosecute or defend
any legal proceeding in respect of any depositary shares or preferred stock
unless satisfactory indemnity is furnished. We and the depositary may rely
on written advice of counsel or accountants, or information provided by
persons presenting preferred stock for deposit, holders of depositary
shares or other persons believed to be competent and on documents believed
to be genuine.
Resignation and Removal of Depositary. The depositary may resign at
any time by delivering notice to us of its election to do so, and we may at
any time remove the depositary. Any such resignation or removal will take
effect upon the appointment of a successor depositary and its acceptance of
such appointment. The successor depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
Description of Warrants
General. We may issue warrants to purchase shares of common stock,
shares of preferred stock or debt securities. The preferred stock may be
represented by depositary shares. We may issue warrants independently or
together with any common stock, preferred stock or debt securities, and the
warrants may be attached to or separate from such common stock, preferred
stock or debt securities. Each series of warrants will be issued under a
separate warrant agreement that we will enter into with a warrant agent.
The warrant agent will act solely as our agent in connection with the
warrants of such series and will not assume any obligation or relationship
of agency or trust for or with any holders or beneficial owners of
warrants. The following sets forth the general terms and provisions of the
warrants. Further terms of the warrants and the applicable warrant
agreement will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe the following terms
of any warrants:
- the title of the warrants;
- a description of the securities (which may include shares of common
stock, shares of preferred stock or debt securities) for which the
warrants are exercisable;
- the price or prices at which the warrants will be issued;
- the periods during which the warrants are exercisable;
- the number of shares of common stock or preferred stock or the amount
of senior debt securities or subordinate debt securities for which
each warrant is exercisable;
- the exercise price for the warrants, including any changes to or
adjustments in the exercise price;
- the currency or currencies, including composite currencies, in which
the exercise price of the warrants may be payable;
- if applicable, the designation and terms of the shares of preferred
stock with which the warrants are issued;
- if applicable, the terms of the debt securities with which the
warrants are issued;
- if applicable, the number of warrants issued with each share of common
stock or preferred stock or debt security;
- if applicable, the date on and after which the warrants and the
related shares of common stock or preferred stock or debt securities
will be separately transferable;
- if applicable, a discussion of certain United States federal income
tax considerations;
- any listing of the warrants on a securities exchange; and
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
Prior to the exercise of their warrants, holders of warrants will not
have any of the rights of holders of the securities purchasable upon
exercise, and will not be entitled to:
- receive payments of principal of (or premium, if any) or interest, if
any, on any debt securities purchasable upon exercise;
- receive dividend payments, if any, with respect to any underlying
securities; or
- exercise the voting rights of any common stock or preferred stock
purchasable upon exercise.
Exercise of Warrants. Unless otherwise indicated in the applicable
prospectus supplement, the warrants will be issued in registered form. Each
warrant will entitle its holder to purchase for cash the principal amount
or number of securities at the exercise price set forth in, or determinable
from, the applicable prospectus supplement. Warrants may be exercised as
set forth in the applicable prospectus supplement at any time up to the
close of business on the expiration date set forth in the prospectus
supplement. After the close of business on the expiration date (or any
extended expiration date), unexercised warrants will become void.
Upon receipt of payment and of the certificate evidencing a warrant,
properly completed and duly executed, at the corporate trust office of the
warrant agent or any other office indicated in the applicable prospectus
supplement, we will, as soon as practicable, forward the securities
purchasable upon such exercise. If less than all of the warrants
represented by a surrendered warrant certificate are exercised, a new
warrant certificate will be issued for the remaining warrants.
Modifications. We and the warrant agent may amend the warrant
agreement and the terms of the warrants, without the consent of the holders
of warrants, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provision
contained in the warrant or warrant agreement, or in any other manner which
we may deem necessary or desirable and which will not materially and
adversely affect the interests of holders of outstanding warrants.
We and the warrant agent also may modify or amend certain other terms
of the warrant agreement and the warrants with the consent of the holders
of not less than a majority in number of the then-outstanding unexercised
warrants affected. However, no such modification or amendment may be made
without the consent of the affected holders if the amendment would:
- shorten the period of time during which the warrants may be exercised;
- otherwise materially and adversely affect the exercise rights of the
holders of the warrants; or
- reduce the number of outstanding warrants.
Merger, Consolidation or Sale of Assets. If at any time we undertake a
merger or consolidation, or a sale of substantially all of our assets of,
as a result of which securities underlying warrants are converted into the
right to receive stock, securities or other property, then each outstanding
warrant will thereafter only be exercisable for the kind and amount of
stock, securities or other property receivable upon the consummation of
that transaction by a holder of the number of securities underlying the
warrant.
Enforceability of Rights by Holders. The warrant agent will act solely
as our agent in connection with the issuance and exercise of any warrants.
The warrant agent will have no duty or responsibility in case of any
default by us in the performance of our obligations under the warrant
agreement or the warrant certificates. Each holder of warrants may, without
the consent of the warrant agent, enforce by appropriate legal action, on
its own behalf, its right to exercise its warrants.
Plan of Distribution
We may sell the offered securities in and outside the United States
(1) through underwriters or dealers, (2) directly to purchasers or (3)
through agents. The prospectus supplement will include the following
information:
- the terms of the offering;
- the names of any underwriters or agents;
- the name or names of any managing underwriter or underwriters;
- the purchase price of the securities from us;
- the net proceeds to us from the sale of the securities;
- any delayed delivery arrangements;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers;
and
- any commissions paid to agents.
Sale Through Underwriters or Dealers
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the
securities from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. Underwriters may offer securities to
the public either through underwriting syndicates represented by one or
more managing underwriters or directly by one or more firms acting as
underwriters. Unless we inform you otherwise in the prospectus supplement,
the obligations of the underwriters to purchase the securities will be
subject to certain conditions, and the underwriters will be obligated to
purchase all the offered securities if they purchase any of them. The
underwriters may change from time to time any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters
may purchase and sell the securities in the open market. These transactions
may include over allotment and stabilizing transactions and purchases to
cover syndicate short positions created in connection with the offering.
The underwriters may also impose a penalty bid, which means that selling
concessions allowed to syndicate members or other broker-dealers for the
offered securities sold for their account may be reclaimed by the syndicate
if the offered securities are repurchased by the syndicate in stabilizing
or covering transactions. These activities may stabilize, maintain or
otherwise affect the market price of the offered securities, which may be
higher than the price that might otherwise prevail in the open market. If
commenced, the underwriters may discontinue these activities at any time.
If we use dealers in the sale of securities, we will sell the
securities to them as principals. They may then resell those securities to
the public at varying prices determined by the dealers at the time of
resale. We will include in the prospectus supplement the names of the
dealers and the terms of the transaction.
In connection with distributions of common stock or otherwise, we may
enter into hedging transactions with broker-dealers in connection with
which the broker-dealers may sell common stock registered under the
registration statement of which this prospectus is a part in the course of
hedging through short sales the positions they assume with us.
Direct Sales and Sales Through Agents
We may sell the securities directly. In this case, no underwriters or
agents would be involved. We may also sell the securities through agents we
designate from time to time. We will name any agent involved in the offer
or sale of the offered securities in the prospectus supplement, and we will
describe any commissions payable by us to the agent. Unless we inform you
otherwise in the prospectus supplement, any agent will agree to use its
reasonable best efforts to solicit purchases for the period of its
appointment.
We may sell the securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the
Securities Act of 1933 with respect to any sale of those securities. We
will describe the terms of any such sales in the prospectus supplement.
Standby Purchaser Agreements
We may determine, from time to time, to redeem, repurchase or tender
for some or all of our outstanding indebtedness or preferred stock. If we
do so, we may determine to enter into an agreement with one or more
underwriters or other persons under which the underwriter or person would
agree to act as a "standby purchaser" and purchase from us a number of
shares of common stock or other securities as would be required to fund
some or all of the applicable redemption, repurchase or tender offer price.
Alternatively, a standby purchaser may agree to purchase directly any
redeemed, repurchased or tendered indebtedness and receive, as compensation
for such purchase, securities that we issue. The agreement might also
provide that the standby purchaser would resell the securities received
from us. If the standby purchaser resells securities it receives from us,
the standby purchaser may be deemed to be an underwriter and may be
required to resell the securities under a prospectus supplement to this
prospectus. The terms of any such agreement or arrangement, including terms
relating to compensation and the identity of the standby purchaser, would
be disclosed in a prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase securities from us at the public offering price
under delayed delivery contracts. These contracts would provide for payment
and delivery on a specified date in the future. The contracts would be
subject only to those conditions described in the prospectus supplement.
The prospectus supplement will describe the commission payable for
solicitation of those contracts.
General Information
We may have agreements with the agents, dealers and underwriters to
indemnify them against some civil liabilities, including liabilities under
the Securities Act of 1933, or to contribute with respect to payments that
the agents, dealers or underwriters may be required to make. Agents,
dealers and underwriters may be customers of, engage in transactions with
or perform services for us in the ordinary course of their businesses.
The securities we offer under this prospectus and applicable
prospectus supplements may or may not be listed on a national securities
exchange or a foreign securities exchange (other than our common stock,
which is listed on the New York Stock Exchange). Any common stock sold
under a prospectus supplement will be listed on the New York Stock
Exchange, subject to official notice of issuance. Any underwriters to whom
we sell securities for public offering and sale may make a market in those
securities, but the underwriters will not be obligated to do so and may
discontinue any market making activities at any time without notice. No
assurances can be given that there will be an active trading market for the
securities.
Legal Matters
Gardere Wynne Sewell & Riggs, L.L.P., our special counsel, will issue
opinions about the legality of the offered securities for us. Any
underwriters will be advised about other issues relating to any offering by
their own legal counsel.
Independent Public Accountants
The consolidated balance sheets of R&B Falcon Corporation as of
December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three year
period ended December 31, 1999, incorporated by reference in this
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, 2000 and 1999, 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.
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 is part of a registration statement we have filed with
the SEC relating to the securities we may offer. As permitted by SEC rules,
this prospectus does not contain all of the information we have included in
the registration statement and the accompanying exhibits and schedules we
file with the SEC. You may refer to the registration statement, the
exhibits and schedules for more information about us and our securities.
The registration statement, exhibits and schedules are available at the
SEC's Public Reference Room.
Information We Incorporate by Reference
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to
you by referring you to those documents. The information we incorporate by
reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and
supersede this information. We incorporate by reference the documents
listed below and any future filings we may make with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934. The
documents we incorporate by reference are:
- our Annual Report on Form 10-K for the year ended December 31, 1999;
- our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2000; and
- the description of our common stock and rights to purchase shares of
our Series A Junior Participating Preferred Stock contained in our
Registration Statements on Form 8-A relating to our common stock and
rights to purchase shares of our Series A Junior Participating
Preferred Stock, each as amended to date.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
R&B Falcon Corporation
Investor Relations
901 Threadneedle
Houston, Texas 77079
(281) 496-5000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses to be paid by the
Registrant in connection with the issuance and distribution of the
securities being registered. All amounts shown are estimates except for
the Securities and Exchange Commission registration fee.
Securities and Exchange Commission registration fee . . . . . $ 132,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . 100,000
Printing, EDGAR formatting and mailing expenses . . . . . . . 100,000
Accounting fees and expenses . . . . . . . . . . . . . . . . 50,000
Blue Sky qualification fees and expenses . . . . . . . . . . 25,000
Trustees' fees and expenses . . . . . . . . . . . . . . . . 25,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 68,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000
=========
Item 15. Indemnification of Directors and Officers.
The Amended and Restated Certificate of Incorporation and Bylaws of R&B
Falcon Corporation require the indemnification of directors and officers to
the fullest extent permitted by law.
Section 145 of the Delaware General Corporation Law authorizes and
empowers R&B Falcon Corporation to indemnify the directors, officers,
employees and agents of R&B Falcon Corporation against liabilities incurred
in connection with, and related expenses resulting from, any claim, action
or suit brought against any such person as a result of his relationship
with R&B Falcon Corporation, provided that such person acted in good faith
and in a manner such person reasonably believed to be in, and not opposed
to, the best interests of R&B Falcon Corporation in connection with the
acts or events on which such claim, action or suit is based. The finding of
either civil or criminal liability on the part of such persons in
connection with such acts or events is not necessarily determinative of the
question of whether such persons have met the required standard of conduct
and are, accordingly, entitled to be indemnified. The foregoing statements
are subject to the detailed provisions of Section 145 of the General
Corporation law of the State of Delaware.
Article 6.1 of the Bylaws of R&B Falcon Corporation provides that R&B
Falcon Corporation shall indemnify to the fullest extent authorized or
permitted by law, any person made, or threatened to be made, a party to or
otherwise involved in any action or proceeding by reason of the fact that
he or she is or was a director or officer of R&B Falcon Corporation, at the
request of R&B Falcon Corporation or by reason of the fact that such
director or officer at the request of R&B Falcon Corporation, is or was
serving any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in any capacity.
Item 16. Exhibits and Financial Statement Schedules.
*1.1 -- Form of Underwriting Agreement for equity securities.
*1.2 -- Form of Underwriting Agreement for debt securities.
4.1 -- Form of Indenture covering the Senior Debt Securities.
*4.2 -- Form of Senior Debt Securities.
4.3 -- Form of Indenture covering the Subordinated Debt
Securities.
*4.4 -- Form of Subordinated Debt Securities.
4.5 -- Form of Stock Warrant Agreement, including form of
Stock Warrant Certificate.
4.6 -- Form of Debt Warrant Agreement, including form of Debt
Warrant Certificate.
4.7 -- Form of Warrant Agreement for warrants not attached to
debt or equity securities, including form of Warrant
Certificate.
4.8 -- Form of Deposit Agreement, including form of Depositary
Receipt for Depositary Shares.
*4.9 -- Form of Certificate of Designation of Preferred Stock.
*5.1 -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P.
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 Gardere Wynne Sewell & Riggs, L.L.P.
(included in Exhibit 5.1).
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 of the
Trustee for the Senior Debt Securities under the Trust
Indenture Act of 1939 on Form T-1.
*25.2 -- Statement of Eligibility and Qualification of the
Trustee for the Subordinated Debt Securities under the Trust
Indenture Act of 1939 on Form T-1.
* To be filed by amendment or to be incorporated by reference in connection
with the offering of securities.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) under the Securities Act of 1933 if, in the aggregate,
the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that the undertakings set forth in paragraphs (i)
and (ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby understands 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) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, 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 Securities Act of 1933 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 Securities Act of 1933 and will
be governed by the final adjudication of such issue.
(d) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(e) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(f) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of that Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on June
15, 2000.
R&B FALCON CORPORATION
By: /s/ PAUL B. LOYD, JR.
------------------------
Paul B. Loyd, Jr.
Chief Executive Officer,
Chairman of the Board and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Paul B. Loyd, Jr., Tim W. Nagle and
Wayne K. Hillin, and each of them, each of whom may act without joinder of
the other, his or her true and lawful attorneys and agents, with full power
of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any or all pre- and
post-effective amendments to this Registration Statement, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully as to all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, or the substitute
or substitutes of any or all of them, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
/s/ PAUL B. LOYD,JR. Chief Executive Officer, Chairman June 15, 2000
------------------------- of the Board of Directors
Paul B. Loyd, Jr. (Principal Executive Officer)
/s/ TIM W. NAGLE Executive Vice President, June 15, 2000
------------------------- Chief Financial Officer
Tim W. Nagle (Principal Accounting and
Financial Officer)
Director June , 2000
-------------------------
Purnendu Chatterjee
Director June , 2000
-------------------------
Arnold L. Chavkin
/s/ CHARLES A. DONABEDIAN Director June 15, 2000
-------------------------
Charles A. Donabedian
/S/DOUGLAS A.P. HAMILTON Director June 15, 2000
-------------------------
Douglas A. P. Hamilton
/S/MACKO A.E. LAQUEUR Director June 15, 2000
--------------------------
Macko A. E. Laqueur
Director June , 2000
--------------------------
Rich A. Pattarozzi
/S/MICHAEL E. PORTER Director June 15, 2000
--------------------------
Michael E. Porter
Director June , 2000
--------------------------
Robert L. Sandmeyer
/s/ DOUGLAS E. SWANSON Director June 15, 2000
--------------------------
Douglas E. Swanson
/s/ STEVEN A. WEBSTER Director June 15, 2000
--------------------------
Steven A. Webster
/S/WILLIAM R. ZIEGLER Director June 15, 2000
--------------------------
William R. Ziegler
EXHIBIT INDEX
*1.1 -- Form of Underwriting Agreement for equity securities.
*1.2 -- Form of Underwriting Agreement for debt securities.
4.1 -- Form of Indenture covering the Senior Debt Securities.
*4.2 -- Form of Senior Debt Securities.
4.3 -- Form of Indenture covering the Subordinated Debt Securities.
*4.4 -- Form of Subordinated Debt Securities.
4.5 -- Form of Stock Warrant Agreement, including form of Stock
Warrant Certificate.
4.6 -- Form of Debt Warrant Agreement, including form of Debt
Warrant Certificate.
4.7 -- Form of Warrant Agreement for warrants not attached to debt or
equity securities, including form of Warrant Certificate.
4.8 -- Form of Deposit Agreement, including form of Depositary
Receipt for Depositary Shares.
*4.9 -- Form of Certificate of Designation of Preferred Stock.
*5.1 -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P.
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 Gardere Wynne Sewell & Riggs, L.L.P.
(included in Exhibit 5.1).
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 of the Trustee for
the Senior Debt Securities under the Trust Indenture Act of
1939 on Form T-1.
*25.2 -- Statement of Eligibility and Qualification of the Trustee for
the Subordinated Debt Securities under the Trust Indenture Act
of 1939 on Form T-1.
* To be filed by amendment or to be incorporated by reference in connection
with the offering of securities.
