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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
TRANSOCEAN SEDCO FOREX INC.,
TRANSOCEAN HOLDINGS INC.,
TSF DELAWARE INC.
and
R&B FALCON CORPORATION
Dated as of August 19, 2000
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER............................................................................................1
Section 1.1 The Merger.............................................................................1
Section 1.2 The Closing............................................................................2
Section 1.3 Effective Time.........................................................................2
ARTICLE 2 ARTICLES OF ASSOCIATION OF PARENT AND CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
ENTITY................................................................................................2
Section 2.1 Articles of Association of Parent......................................................2
Section 2.2 Certificate of Incorporation of the Surviving Entity...................................2
Section 2.3 Bylaws of the Surviving Entity.........................................................3
ARTICLE 3 DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY AND DIRECTORS OF PARENT................................3
Section 3.1 Directors of Surviving Entity..........................................................3
Section 3.2 Officers of Surviving Entity...........................................................3
Section 3.3 Board of Directors of Parent...........................................................3
ARTICLE 4 CONVERSION OF COMPANY COMMON STOCK....................................................................4
Section 4.1 Merger Ratio...........................................................................4
Section 4.2 Conversion of Capital Stock of the Company and Merger Sub..............................4
Section 4.3 Exchange of Certificates Representing Company Common Stock.............................6
Section 4.4 Adjustment of Merger Ratios............................................................8
Section 4.5 Rule 16b-3 Approval....................................................................9
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF COMPANY.............................................................9
Section 5.1 Existence; Good Standing; Corporate Authority..........................................9
Section 5.2 Authorization, Validity and Effect of Agreements.......................................9
Section 5.3 Capitalization........................................................................10
Section 5.4 Significant Subsidiaries..............................................................10
Section 5.5 Compliance with Laws; Permits.........................................................11
Section 5.6 No Conflict...........................................................................12
Section 5.7 SEC Documents.........................................................................12
Section 5.8 Litigation............................................................................13
Section 5.9 Absence of Certain Changes............................................................13
Section 5.10 Taxes.................................................................................14
Section 5.11 Employee Benefit Plans................................................................15
Section 5.12 Labor Matters.........................................................................17
Section 5.13 Environmental Matters.................................................................17
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Section 5.14 Intellectual Property.................................................................18
Section 5.15 Decrees, Etc..........................................................................18
Section 5.16 Insurance.............................................................................19
Section 5.17 No Brokers............................................................................19
Section 5.18 Opinion of Financial Advisor..........................................................19
Section 5.19 Parent Share Ownership................................................................19
Section 5.20 Vote Required.........................................................................20
Section 5.21 Ownership of Drilling Rigs and Drillships.............................................20
Section 5.22 Undisclosed Liabilities...............................................................20
Section 5.23 Certain Contracts.....................................................................20
Section 5.24 Capital Expenditure Program...........................................................21
Section 5.25 Improper Payments.....................................................................21
Section 5.26 Amendment to the Company Rights Agreement.............................................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MERGER SUB.........................................22
Section 6.1 Existence; Good Standing; Corporate Authority.........................................22
Section 6.2 Authorization, Validity and Effect of Agreements......................................23
Section 6.3 Capitalization........................................................................23
Section 6.4 Significant Subsidiaries..............................................................23
Section 6.5 Compliance with Laws; Permits.........................................................24
Section 6.6 No Conflict...........................................................................25
Section 6.7 SEC Documents.........................................................................25
Section 6.8 Litigation............................................................................26
Section 6.9 Absence of Certain Changes............................................................26
Section 6.10 Taxes.................................................................................27
Section 6.11 Employee Benefit Plans................................................................28
Section 6.12 Labor Matters.........................................................................29
Section 6.13 Environmental Matters.................................................................30
Section 6.14 Intellectual Property.................................................................30
Section 6.15 Decrees, Etc..........................................................................31
Section 6.16 Insurance.............................................................................31
Section 6.17 No Brokers............................................................................31
Section 6.18 Opinion of Financial Advisor..........................................................32
Section 6.19 Company Stock Ownership...............................................................32
Section 6.20 Vote Required.........................................................................32
Section 6.21 Ownership of Drilling Rigs and Drillships.............................................32
Section 6.22 Undisclosed Liabilities...............................................................33
Section 6.23 Certain Contracts.....................................................................33
Section 6.24 Capital Expenditure Program...........................................................34
Section 6.25 Improper Payments.....................................................................34
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ARTICLE 7 COVENANTS............................................................................................34
Section 7.1 Conduct of Company Business...........................................................34
Section 7.1A Conduct of Parent Business............................................................38
Section 7.2 No Solicitation by the Company........................................................39
Section 7.3 No Solicitation by Parent.............................................................41
Section 7.4 Meetings of Stockholders..............................................................42
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc....................................43
Section 7.6 Inspection............................................................................46
Section 7.7 Publicity.............................................................................46
Section 7.8 Registration Statement on Form S-4....................................................46
Section 7.9 Listing Applications..................................................................47
Section 7.10 Letters of Accountants................................................................48
Section 7.11 Agreements of Rule 145 Affiliates.....................................................48
Section 7.12 Expenses..............................................................................48
Section 7.13 Indemnification and Insurance.........................................................48
Section 7.14 Employee Matters......................................................................50
Section 7.15 Rights Agreement......................................................................54
Section 7.16 Delivery of Parent Ordinary Shares....................................................54
Section 7.17 Consulting Agreements.................................................................54
Section 7.18 Assets in the Coastwise Trade.........................................................54
Section 7.19 Obtaining Investment Grade Rating.....................................................54
Section 7.20 Agreement Regarding Company Redeemable Preferred Stock................................55
ARTICLE 8 CONDITIONS...........................................................................................57
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger............................57
Section 8.2 Conditions to Obligation of the Company to Effect the Merger..........................58
Section 8.3 Conditions to Obligation of Parent, Sub and Merger Sub to Effect the Merger...........59
ARTICLE 9 TERMINATION..........................................................................................60
Section 9.1 Termination by Mutual Consent.........................................................60
Section 9.2 Termination by Parent or the Company..................................................60
Section 9.3 Termination by the Company............................................................61
Section 9.4 Termination by Parent.................................................................62
Section 9.5 Effect of Termination.................................................................63
Section 9.6 Extension; Waiver.....................................................................64
ARTICLE 10 GENERAL PROVISIONS...................................................................................64
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.............................64
Section 10.2 Notices...............................................................................65
Section 10.3 Assignment; Binding Effect; Benefit...................................................65
Section 10.4 Entire Agreement......................................................................66
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Section 10.5 Amendments............................................................................66
Section 10.6 Governing Law.........................................................................66
Section 10.7 Counterparts..........................................................................66
Section 10.8 Headings..............................................................................66
Section 10.9 Interpretation........................................................................66
Section 10.10 Waivers...............................................................................67
Section 10.11 Incorporation of Exhibits.............................................................67
Section 10.12 Severability..........................................................................67
Section 10.13 Enforcement of Agreement..............................................................67
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GLOSSARY OF DEFINED TERMS
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Action.................................................................................... Section 7.13(a)
Affected Employee......................................................................... Section 7.14(b)
Agreement................................................................................. Preamble
Antitrust Laws............................................................................ Section 7.5(c)
Applicable Laws........................................................................... Section 5.5(a)
Cause..................................................................................... Section 7.14(c)
Certificate of Merger..................................................................... Section 1.3
Certificates.............................................................................. Section 4.3(b)
CIC Agreements............................................................................ Section 7.14(f)
Closing................................................................................... Section 1.2
Closing Date.............................................................................. Section 1.2
Code...................................................................................... Recitals
Common Stock Merger Ratio................................................................. Section 4.1(a)
Company................................................................................... Preamble
Company Acquisition Proposal.............................................................. Section 7.2(a)
Company Benefit Plans..................................................................... Section 5.11(a)
Company Charter Amendment................................................................. Section 5.20
Company Common Stock...................................................................... Section 4.2(b)
Company Disclosure Letter................................................................. Article 5 Preface
Company High Yield Debt................................................................... Section 7.19(a)
Company Material Adverse Effect........................................................... Section 10.9(c)
Company Material Contract................................................................. Section 5.23(a)
Company Option............................................................................ Section 4.2(e)(i)
Company Permits........................................................................... Section 5.5(b)
Company Permitted Liens................................................................... Section 5.21
Company Real Property..................................................................... Section 5.5(d)
Company Redeemable Preferred Stock........................................................ Section 4.2(c)
Company Reports........................................................................... Section 5.7
Company Right............................................................................. Section 5.3
Company Rights Agreement.................................................................. Section 5.3
Company Stock Plans....................................................................... Section 4.1(e)(i)
Company Superior Proposal................................................................. Section 7.2(a)
Confidentiality and Standstill Agreement.................................................. Section 7.2(a)
Cutoff Date............................................................................... Section 7.2(d), 7.3(d)
DGCL...................................................................................... Section 1.1
Effective Time............................................................................ Section 1.3
Eligible Company Shareholders............................................................. Recitals
Employees................................................................................. Section 7.14(d)
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Environmental Laws........................................................................ Section 5.13(a)
ERISA..................................................................................... Section 5.11(a)
ERISA Affiliate........................................................................... Section 5.11(b)
Exchange Act.............................................................................. Section 4.5
Exchange Agent............................................................................ Section 4.3(a)
Exchange Fund............................................................................. Section 4.3(a)
Form S-4.................................................................................. Section 7.8(a)
Hazardous Materials....................................................................... Section 5.13(b)
HSR Act................................................................................... Section 5.6(b)
Indemnified Parties....................................................................... Section 7.13(a)
Irrevocable Deposit....................................................................... Section 7.20(c)
Letter of Transmittal..................................................................... Section 4.3(b)
Liens..................................................................................... Section 5.4
Material Adverse Effect................................................................... Section 10.9(c)
Merger.................................................................................... Recitals
Merger Sub................................................................................ Preamble
Moody's................................................................................... Section 7.19(a)
Nasdaq National Market System............................................................. Section 5.6(b)
Non-U.S. Antitrust Laws................................................................... Section 7.5(a)(i)
NYSE...................................................................................... Section 4.1(c)
Parent.................................................................................... Preamble
Parent Acquisition Proposal............................................................... Section 7.3(a)
Parent Benefit Plans...................................................................... Section 6.11
Parent Disclosure Letter.................................................................. Article 6 Preface
Parent Guarantee.......................................................................... Section 7.19(b)
Parent Material Adverse Effect............................................................ Section 10.9(c)
Parent Material Contract.................................................................. Section 6.23(a)
Parent Ordinary Shares.................................................................... Section 2.1
Parent Ordinary Share Price............................................................... Section 4.1(e)
Parent Permits............................................................................ Section 6.5(b)
Parent Permitted Liens.................................................................... Section 6.21
Parent Preference Shares.................................................................. Section 6.3
Parent Real Property...................................................................... Section 6.5(d)
Parent Reports............................................................................ Section 6.7
Parent Superior Proposal.................................................................. Section 7.3(a)
Proxy Statement/Prospectus................................................................ Section 7.8(a)
Public Offering........................................................................... Section 7.20(b)
RBF Finance Co............................................................................ Section 7.19(a)
Regulatory Filings........................................................................ Section 5.6(b)
Returns................................................................................... Section 5.10(a)
Rule 145 Affiliates....................................................................... Section 7.11
Rule 16b-3................................................................................ Section 4.5
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S&P....................................................................................... Section 7.19(a)
SEC....................................................................................... Section 4.2(e)(ii)
Securities Act............................................................................ Section 4.3(d)
Series A Junior Preferred Stock........................................................... Section 5.3
Severance Plan............................................................................ Section 7.14(c)
Shelf Registration Statement.............................................................. Section 7.20(a)
Significant Subsidiary.................................................................... Section 5.4
Sub....................................................................................... Preamble
Subsidiary................................................................................ Section 10.9(d)
Surviving Entity.......................................................................... Section 1.1
Taxes..................................................................................... Section 5.10(e)
Third-Party Provisions.................................................................... Section 10.3
Warrant Agreement......................................................................... Section 4.2(f)
Warrants.................................................................................. Section 4.2(f)
Year 2000 Bonuses......................................................................... Section 7.14(e)
Year 2001 Bonuses......................................................................... Section 7.14(e)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 19,
2000, is by and among Transocean Sedco Forex Inc., a company incorporated under
the laws of the Cayman Islands ("Parent"), Transocean Holdings Inc., a company
organized under the laws of Delaware and a direct wholly owned subsidiary of
Parent ("Sub"), TSF Delaware Inc., a company organized under the laws of
Delaware and a direct wholly owned subsidiary of Sub ("Merger Sub"), and R&B
Falcon Corporation, a company organized under the laws of Delaware (the
"Company").
RECITALS
A. The Merger. At the Effective Time (as defined herein), the parties
intend to effect a merger of Merger Sub with and into the Company, with the
Company being the surviving entity (the "Merger"), thus enabling Sub to acquire
all of the stock of the Company solely in exchange for voting shares of Parent.
B. Intended U.S. Tax Consequences. The parties to this Agreement intend
that, for U.S. federal income tax purposes, the Merger qualify as a
reorganization under Section 368(a)(1)(B) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and that the holders of stock of the Company who
will not be "five percent transferee shareholders" as defined in Treasury
Regulation Section 1.367(a)-3(c)(5)(ii) or who enter into five-year gain
recognition agreements in the form provided in Treasury Regulation Section
1.367(a)-8(b) ("Eligible Company Shareholders") and who exchange Company Common
Stock (as defined herein) solely for Parent Ordinary Shares (as defined herein)
pursuant to the Merger not recognize taxable gain with respect to the Merger
pursuant to Section 367(a) of the Code (except with respect to cash received in
lieu of fractional shares).
C. Intended U.S. Accounting Treatment. The parties to this Agreement intend
that the Merger be treated as the purchase of the Company by Parent for U.S.
generally accepted accounting principles.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company in accordance with this Agreement, and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving entity
in the Merger (sometimes
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hereinafter referred to as the "Surviving Entity"). The Merger shall have the
effects specified herein and in the General Corporation Law of the State of
Delaware (the "DGCL").
Section 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana, Houston, Texas,
at 9:00 a.m., local time, on the first business day immediately following the
day on which the last to be fulfilled or waived of the conditions set forth in
Section 8.1, or, if on such day any condition set forth in Section 8.2 or 8.3
has not been fulfilled or waived, as soon as practicable after all the
conditions set forth in Article 8 have been fulfilled or waived in accordance
herewith or (b) at such other time, date or place as Parent and the Company may
agree. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
Section 1.3 Effective Time. Prior to the Closing, Parent, the Company and
Merger Sub shall prepare, and on the Closing Date shall cause a certificate of
merger (the "Certificate of Merger") meeting the requirements of Section 251 of
the DGCL to be properly executed and filed in accordance with such section. The
Merger shall become effective at the time of filing of the Certificate of Merger
with the Secretary of State of the State of Delaware in accordance with the DGCL
or at such later time that Parent and the Company hereto shall have agreed upon
and designated in such filing as the effective time of the Merger (the
"Effective Time").
ARTICLE 2
ARTICLES OF ASSOCIATION OF PARENT AND CERTIFICATE OF
INCORPORATION AND BYLAWS OF THE SURVIVING ENTITY
Section 2.1 Articles of Association of Parent. Subject to the approval by
the holders of the issued ordinary shares, par value $.01 per share, of Parent
("Parent Ordinary Shares") as and to the extent required by Cayman Islands law
and Parent's memorandum of association and articles of association, as of the
Effective Time:
(a) The authorized ordinary share capital of Parent shall be increased to
800,000,000 Parent Ordinary Shares.
(b) The maximum number of directors constituting the Board of Directors of
Parent shall be increased to 13.
Section 2.2 Certificate of Incorporation of the Surviving Entity. As of the
Effective Time, the certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Entity; provided, however, that at the Effective
Time, the certificate of incorporation of the Company shall be amended to delete
Articles Eighth, Ninth and Tenth thereof in their entirety.
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Section 2.3 Bylaws of the Surviving Entity. The bylaws of the Company in
effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Entity, until duly amended in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY
AND DIRECTORS OF PARENT
Section 3.1 Directors of Surviving Entity. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Entity as of the Effective Time, until their successors shall be elected and
qualified or their earlier death, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Entity.
Section 3.2 Officers of Surviving Entity. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Entity as of the Effective Time, until their successors shall be appointed or
their earlier death, resignation or removal in accordance with the certificate
of incorporation and bylaws of the Surviving Entity.
Section 3.3 Board of Directors of Parent. The number of directors
constituting the Board of Directors of Parent as of the Effective Time shall (a)
in the event that the maximum number of directors constituting the Board of
Directors of Parent is not increased pursuant to Section 2.1(b), be increased
from 10 to 12 or (b) in the event that the maximum number of directors
constituting the Board of Directors of Parent is increased pursuant to Section
2.1(b), be increased from 10 to 13, and the Board of Directors of the Company in
consultation with Parent shall designate the persons to fill the two or three,
as applicable, vacancies created by such increase, with such persons being
allocated by Parent as nearly as practicable on a proportionate basis to each of
the three classes into which the Board of Directors is divided in accordance
with Parent's articles of association. Such designations shall be made no later
than promptly after the meeting of Parent's shareholders held in accordance with
Section 7.4. Prior to the Effective Time, the Board of Directors of Parent shall
take such action as may be necessary to cause the Company designees to be
elected to the Board of Directors of Parent immediately following the Effective
Time.
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ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Merger Ratio. For purposes of this Agreement,
(a) the "Common Stock Merger Ratio" shall equal 0.5; and
(b) the "Parent Ordinary Share Price" shall mean the average of the per
share closing prices of the Parent Ordinary Shares as reported on the
consolidated transaction reporting system for securities traded on the New York
Stock Exchange, Inc. ("NYSE") (as reported in the New York City edition of The
Wall Street Journal or, if not reported thereby, another authoritative source)
for the 20 consecutive trading days ending on the fifth trading day prior to the
Closing Date, appropriately adjusted for any stock splits, reverse stock splits,
stock dividends, recapitalizations or other similar transactions.
Section 4.2 Conversion of Capital Stock of the Company and Merger Sub.
(a) At the Effective Time, each share of common stock, par value $.01 per
share, of Merger Sub outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and non-assessable share of common
stock, par value $.01 per share, of the Surviving Entity.
(b) At the Effective Time, each share of common stock, par value $.01 per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of Company Common
Stock to be canceled without payment of any consideration therefor pursuant to
Section 4.2(d)), shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive a number of
Parent Ordinary Shares equal to the Common Stock Merger Ratio to be transferred
by Sub pursuant to the Merger, and each such share of Company Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of such shares of Company Common Stock shall thereafter
cease to have any rights with respect to such shares of Company Common Stock,
except the right to receive, without interest, a certificate for Parent Ordinary
Shares and cash for fractional shares in accordance with Sections 4.3(b) and
4.3(e) upon the surrender of such Certificate.
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(c) At the Effective Time, each share of 13.875% Cumulative Redeemable
Preferred Stock of the Company (the "Company Redeemable Preferred Stock") issued
and outstanding immediately prior to the Effective Time shall remain outstanding
and unaffected by the Merger.
(d) Each share of Company Common Stock issued and held in the Company's
treasury and each share of Company Common Stock owned by any wholly owned
Subsidiary of the Company or by Parent, Sub or Merger Sub, shall, at the
Effective Time and by virtue of the Merger, cease to be outstanding and shall be
canceled and retired without payment of any consideration therefor, and no
capital shares of Parent or other consideration shall be delivered in exchange
therefor.
(e) (i) At the Effective Time, all options to acquire shares of Company
Common Stock (individually, a "Company Option" and collectively, the "Company
Options") outstanding at the Effective Time under the Company's stock plans
(collectively, the "Company Stock Plans") identified in Section 4.2(e) of the
Company Disclosure Letter (as hereinafter defined) shall remain outstanding
following the Effective Time, subject to the modifications described in this
Section 4.2(e) and in Section 7.14(h). Prior to the Effective Time, the Company
and Parent shall take all actions (if any) as may be required to permit the
assumption of such Company Options by Parent pursuant to this Section 4.2(e)(i).
At the Effective Time, the Company Options shall be assumed by Parent in such
manner that Parent (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section 424
of the Code, or (ii) to the extent that the Company Option is not or ceases to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Code, would be such a corporation were Section 424 of the Code applicable to
such option. Each Company Option assumed by Parent shall, to the extent provided
by the Company Stock Plans, the option agreements entered into pursuant thereto,
and Section 7.14(h), be fully vested and exercisable as of the Effective Time
and shall otherwise be subject to the same terms and conditions as under the
applicable Company Stock Option Plan and the applicable option agreement entered
into pursuant thereto, except that (i) immediately following the Effective Time
(A) each Company Option shall be exercisable for that whole number of Parent
Ordinary Shares equal to the product (rounded to the nearest whole share) of the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Common Stock Merger
Ratio, and (B) the exercise price per Parent Ordinary Share shall be an amount
equal to the exercise price per
5
<PAGE> 14
share of Company Common Stock subject to such Company Option in effect
immediately prior to the Effective Time divided by the Common Stock Merger Ratio
(the price per share, as so determined, being rounded down to the nearest whole
cent), and (ii) as of the Effective Time, each Company Option identified in
Section 4.2(e) of the Company Disclosure Letter shall be deemed modified to
remain exercisable for the full scheduled term of such Company Option in the
event the holder of such Company Option is involuntarily terminated, for any
reason other than Cause (as defined in Section 7.14(c)), within twelve months
after the Effective Time.
(ii) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a number of Parent Ordinary Shares
equal to the number of Parent Ordinary Shares issuable upon the exercise of
Company Options assumed by Parent pursuant to this Section 4.2(e). From and
after the date of this Agreement, no action shall be taken by the Company or its
Subsidiaries to provide for the acceleration of the exercisability of any
Company Options in connection with the Merger (except to the extent such
acceleration is required under the terms of such Company Options or as set forth
in Section 7.14(h)). On the Closing Date, Parent shall file with the U.S.
Securities and Exchange Commission (the "SEC") a Registration Statement on Form
S-8 (or a post-effective amendment on Form S-8 with respect to the Form S-4 (as
defined in Section 7.8) or such other appropriate form) covering all such Parent
Ordinary Shares and shall cause such registration statement to remain effective
(and shall cause the prospectus or prospectuses relating thereto to remain
compliant with applicable securities laws) for as long as there are outstanding
any such Company Options.
(iii) Except as otherwise specifically provided by this Section 4.2(e)
and Section 7.14(h), the terms of the Company Options and the relevant Company
Stock Plans, as in effect on the Effective Time, shall remain in full force and
effect with respect to the Company Options after giving effect to the Merger and
the assumptions by Parent as set forth above. As soon as practicable following
the Effective Time, Parent shall deliver to the holders of Company Options
appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and the agreements evidencing the grants of such
Company Options, and that such Company Options and such agreements shall be
assumed by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 4.2(e) and Section
7.14(h)).
(f) At the Effective Time, all warrants (the "Warrants") to purchase shares
of Company Common Stock issued pursuant to the Warrant Agreement dated April 22,
1999 between the Company and American Stock Transfer and Trust Company (the
"Warrant Agreement") shall be assumed by Parent in accordance with the terms of
the Warrant Agreement and the Warrant shall be adjusted as provided therein. At
the Effective Time, Parent and the Surviving Entity shall enter into a
supplemental Warrant Agreement
6
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and a supplement to the Warrant Registration Rights Agreement as contemplated by
Section 17(l) of the Warrant Agreement.
Section 4.3 Exchange of Certificates Representing Company Common Stock.
(a) As of the Effective Time, Sub shall deposit, or shall cause to be
deposited, with an exchange agent selected by Sub, which shall be Parent's
transfer agent for Parent Ordinary Shares or such other party reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock for exchange in accordance with this
Article 4, certificates representing the Parent Ordinary Shares to be issued
pursuant to Section 4.2 and delivered pursuant to this Section 4.3 in exchange
for outstanding shares of Company Common Stock. The Surviving Entity shall
provide the Exchange Agent immediately following the Effective Time cash
sufficient to pay cash in lieu of fractional shares in accordance with Sections
4.3(b) and 4.3(e) (such cash and certificates for Parent Ordinary Shares
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
(b) Promptly after the Effective Time, Sub shall cause the Exchange Agent
to mail to each holder of record of one or more certificates ("Certificates")
that immediately prior to the Effective Time represented shares of Company
Common Stock (other than to holders of shares of Company Common Stock that,
pursuant to Section 4.2(d), are canceled without payment of any consideration
therefor): (A) a letter of transmittal (the "Letter of Transmittal") which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify and (B) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing Parent Ordinary
Shares and cash in lieu of fractional shares. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such Letter of Transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole Parent Ordinary Shares and (y) a
check representing the amount of cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, which such holder has the right to
receive pursuant to the provisions of this Article 4, after giving effect to any
required withholding tax, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash in lieu of fractional
shares and
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unpaid dividends and distributions, if any, payable to holders of Certificates.
In the event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, a certificate representing
the proper number of Parent Ordinary Shares together with a check for the cash
to be paid in lieu of fractional shares, may be issued to such a transferee if
the Certificate representing such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared or made after the Effective Time with respect to
Parent Ordinary Shares with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the Parent
Ordinary Shares represented by such Certificate as a result of the conversion
provided in Section 4.2(b) or 4.2(c) until such Certificate is surrendered as
provided herein. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the holder of the Certificates
so surrendered, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Time
theretofore payable and not paid with respect to the number of whole Parent
Ordinary Shares issued pursuant to Section 4.2, less the amount of any
withholding taxes, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole Parent Ordinary Shares, less the amount of any withholding
taxes.
(d) At or after the Effective Time, the Surviving Entity shall pay from
funds on hand at the Effective Time any dividends or make other distributions
with a record date prior to the Effective Time that may have been declared or
made by the Company on shares of Company Common Stock which remain unpaid at the
Effective Time, and after the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Entity of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Entity, the
presented Certificates shall be canceled and exchanged for certificates
representing Parent Ordinary Shares and cash in lieu of fractional shares, if
any, deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 4. Certificates surrendered for
exchange by any person constituting an "affiliate" of the Company for purposes
of Rule 145(c) under
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the Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged until the Company has received a written agreement from such person as
provided in Section 7.11.
(e) No fractional Parent Ordinary Shares shall be issued pursuant hereto.
In lieu of the issuance of any fractional Parent Ordinary Shares pursuant to
Section 4.2(b), cash adjustments provided by Sub will be paid to holders in
respect of any fractional Parent Ordinary Shares that would otherwise be
issuable, and the amount of such cash adjustment shall be equal to such
fractional proportion of the Parent Ordinary Share Price.
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any certificates for Parent Ordinary Shares) that
remains undistributed to the former stockholders of the Company one year after
the Effective Time shall be delivered to Sub. Any former stockholders of the
Company who have not theretofore complied with this Article 4 shall thereafter
look only to Sub for delivery of certificates representing their Parent Ordinary
Shares and cash in lieu of fractional shares and to Parent for any unpaid
dividends and distributions on the Parent Ordinary Shares deliverable to such
former stockholder pursuant to this Agreement.
(g) None of Parent, Sub, the Company, the Surviving Entity, the Exchange
Agent or any other person shall be liable to any person for any portion of the
Exchange Fund properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Entity, the posting by such person of a bond in such reasonable amount as the
Surviving Entity may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate certificates
representing the Parent Ordinary Shares, cash in lieu of fractional shares and
unpaid dividends and distributions on Parent Ordinary Shares, as provided in
Section 4.3(c), deliverable in respect thereof pursuant to this Agreement.
Section 4.4 Adjustment of Merger Ratios. In the event that, subsequent to
the date of this Agreement but prior to the Effective Time, Parent changes the
number of Parent Ordinary Shares, or the Company changes the number of shares of
Company Common Stock issued and outstanding as a result of a stock split,
reverse stock split, stock dividend,
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recapitalization or other similar transaction, the Common Stock Merger Ratio and
other items dependent thereon shall be appropriately adjusted.
Section 4.5 Rule 16b-3 Approval. Parent agrees that the Parent Board of
Directors or the Executive Compensation Committee of the Parent Board of
Directors shall, at or prior to the Effective Time, adopt resolutions
specifically approving, for purposes of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the receipt,
pursuant to Section 4.2, of Parent Ordinary Shares, and of options to acquire
Parent Ordinary Shares, by executive officers or directors of the Company who
become executive officers or directors of Parent subject to Rule 16b-3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the disclosure letter delivered to Parent by the
Company at or prior to the execution hereof (the "Company Disclosure Letter"),
the Company represents and warrants to Parent and Merger Sub that:
Section 5.1 Existence; Good Standing; Corporate Authority. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Company is duly qualified to do
business and, to the extent such concept or similar concept exists in the
relevant jurisdiction, is in good standing under the laws of any jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary, except where
the failure to be so qualified does not and is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect (as defined
in Section 10.9). The Company has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. The copies of the Company's certificate of incorporation and bylaws
previously made available to Parent are true and correct and contain all
amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements and documents contemplated hereby to which it
is a party. The consummation by the Company of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on behalf of
the Company, other than the approvals referred to in Section 5.20. This
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights and general principles of equity. The Company
has taken all action necessary to render the
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restrictions set forth in Section 203 of the DGCL inapplicable to this Agreement
and the transactions contemplated hereby.
Section 5.3 Capitalization. As of the date of this Agreement, the
authorized capital stock of the Company consists of 550,000,000 shares of Common
Stock and 50,000,000 shares of preferred stock, par value $.01 per share, of
which 1,200,000 shares have been designated Company Redeemable Preferred Stock
and 1,688,000 shares have been designated Series A Junior Participating
Preferred Stock ("Series A Junior Preferred Stock"). As of the date of this
Agreement, there were outstanding 293,000 Warrants, each representing the right
to purchase 35 shares of Company Common Stock at an exercise price of $9.50 per
share. As of August 17, 2000, there were 193,990,737 outstanding shares of
Company Common Stock, 16,411,563 shares of Company Common Stock reserved for
issuance upon exercise of outstanding Company Options, 10,255,000 shares of
Company Common Stock reserved for issuance upon exercise of the outstanding
Warrants, 356,961.01 outstanding shares of Company Redeemable Preferred Stock
and no outstanding shares of Series A Junior Preferred Stock. All such issued
and outstanding shares of Company Common Stock and Company Redeemable Preferred
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. One right to purchase Series A Junior Preferred Stock (each,
a "Company Right") issued pursuant to the Rights Agreement, dated as of December
23, 1997 (the "Company Rights Agreement"), as amended, between the Company and
American Stock Transfer and Trust Company is associated with and attached to
each outstanding share of Company Common Stock. As of the date of this
Agreement, except as set forth in this Section 5.3, there are no outstanding
shares of capital stock and there are no options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which obligate the Company or any of its Subsidiaries to issue, transfer or sell
any shares of capital stock or other voting securities of the Company or any of
its Subsidiaries. The Company has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
Section 5.4 Significant Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of the Company's Significant
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and, to the extent such concept or similar concept exists in the
relevant jurisdiction, in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate or other entity power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing does not and is not reasonably likely to have a
Company Material Adverse Effect. As of the date of this Agreement, all of the
outstanding shares of capital stock of, or other ownership interests in, each of
the Company's Significant Subsidiaries are duly authorized, validly issued,
fully
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paid and nonassessable and are owned, directly or indirectly, by the Company
free and clear of all mortgages, deeds of trust, liens, security interests,
pledges, leases, conditional sale contracts, charges, privileges, easements,
rights of way, reservations, options, rights of first refusal and other
encumbrances ("Liens").
Section 5.5 Compliance with Laws; Permits. Except for such matters as,
individually or in the aggregate, do not or are not reasonably likely to have a
Company Material Adverse Effect and except for matters arising under
Environmental Laws (as defined herein) which are treated exclusively in Section
5.13:
(a) Neither the Company nor any Subsidiary of the Company is in violation
of any applicable law, rule, regulation, code, governmental determination,
order, treaty, convention, governmental certification requirement or other
public limitation, U.S. or non-U.S. (collectively, "Applicable Laws"), relating
to the ownership or operation of any of their respective assets, and no claim is
pending or, to the knowledge of the Company, threatened with respect to any such
matters. No condition exists that is not disclosed in the Company Disclosure
Letter and which does or is reasonably likely to constitute a violation of or
deficiency under any Applicable Law relating to the ownership or operation of
the assets of the Company or any Subsidiary of the Company.
(b) The Company and each Subsidiary of the Company hold all permits,
licenses, certifications, variations, exemptions, orders, franchises and
approvals of all governmental or regulatory authorities necessary for the
conduct of their respective businesses (the "Company Permits"). All Company
Permits are in full force and effect and there exists no default thereunder or
breach thereof, and the Company has no notice or actual knowledge that such
Company Permits will not be renewed in the ordinary course after the Effective
Time. No governmental authority has given, or to the knowledge of the Company
threatened to give, any action to terminate, cancel or reform any Company
Permit.
(c) Each drilling rig, drillship or other drilling unit owned by the
Company or a subsidiary of the Company which is subject to classification is in
class according to the rules and regulations of the applicable classifying body
and is duly and lawfully documented under the laws of its flag jurisdiction.
(d) The Company and each Subsidiary of the Company possess all permits,
licenses, operating authorities, orders, exemptions, franchises, variances,
consents, approvals or other authorizations required for the present
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ownership and operation of all its real property or leaseholds ("Company Real
Property") except where the failure to possess any of the same does not and is
not reasonably likely to have a Company Material Adverse Effect. There exists no
material default or breach with respect to, and no party or governmental
authority has taken or, to the knowledge of the Company, threatened to take, any
action to terminate, cancel or reform any such permit, license, operating
authority, order, exemption, franchise, variance, consent, approval or other
authorization pertaining to the Company Real Property.
Section 5.6 No Conflict. (a) Neither the execution and delivery by the
Company of this Agreement nor the consummation by the Company of the
transactions contemplated hereby in accordance with the terms hereof will (i)
subject to the approvals referred to in Section 5.20, conflict with or result in
a breach of any provisions of the certificate of incorporation or bylaws of the
Company, (ii) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
right of termination or cancellation of, or give rise to a right of purchase
under, or accelerate the performance required by, or result in the creation of
any Lien upon any of the properties of the Company or its Subsidiaries under, or
result in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract,
agreement, joint venture or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their properties is bound or affected or (iii) subject to
the filings and other matters referred to in Section 5.6(b), contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to the Company
or any of its Subsidiaries, except, for such matters described in clause (ii) or
(iii) as do not and are not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this Agreement nor
the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, other than (i) the filing of the Certificate of Merger provided for
in Section 1.3, (ii) the filing of the Company Charter Amendment, (iii) the
filing of a listing application with the NYSE, another national securities
exchange or the national market system of the interdealer quotation system of
the National Association of Securities Dealers, Inc. ("Nasdaq National Market
System") pursuant to Section 7.9(b) and (iv) filings required under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act or applicable state securities and
"Blue Sky" laws,
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applicable non-U.S. competition, antitrust or premerger notification laws ((i),
(ii), (iii) and (iv) collectively, the "Regulatory Filings"), except for any
consent, approval or authorization the failure of which to obtain and for any
filing or registration the failure of which to make does not and is not
reasonably likely to have a Company Material Adverse Effect.
Section 5.7 SEC Documents. The Company has filed with the SEC all documents
required to be so filed by it since January 1, 2000 pursuant to Sections 13(a),
14(a) and 15(d) of the Exchange Act, and has made available to Parent each
registration statement, report, proxy statement or information statement (other
than preliminary materials) it has so filed, each in the form (including
exhibits and any amendments thereto) filed with the SEC (collectively, the
"Company Reports"). As of its respective date, each Company Report (i) complied
in all material respects in accordance with the applicable requirements of the
Exchange Act and the rules and regulations thereunder and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of the Company and its Subsidiaries as of its
date, and each of the consolidated statements of operations, cash flows and
changes in stockholders' equity included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents
in all material respects the results of operations, cash flows or changes in
stockholders' equity, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to (x) such exceptions as may be permitted by Form 10-Q of the SEC and (y)
normal year-end audit adjustments), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Except as and to the extent set forth on the
consolidated balance sheet of the Company and its Subsidiaries included in the
Company Reports, including all notes thereto, as of the date of such balance
sheet, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against in, a balance
sheet of the Company or in the notes thereto prepared in accordance with
generally accepted accounting principles consistently applied, other than
liabilities or obligations which do not and are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 5.8 Litigation. Except as described in the Company Reports filed on
or prior to the date of this Agreement, there are no actions, suits or
proceedings pending against the Company or any of its Subsidiaries or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries,
at law or in equity, before or by any U.S. federal, state or non-U.S. court,
commission, board, bureau, agency or instrumentality,
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that are reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 5.9 Absence of Certain Changes. From December 31, 1999 to the date
of this Agreement, there has not been (i) any event or occurrence that has had
or is reasonably likely to have a Company Material Adverse Effect, (ii) any
material change by the Company or any of its Subsidiaries, when taken as a
whole, in any of its accounting methods, principles or practices or any of its
tax methods, practices or elections, (iii) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of the
Company or any redemption, purchase or other acquisition of any of its
securities or (iv) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, except in the ordinary
course of business.
Section 5.10 Taxes. (a) Each of the Company, its Subsidiaries and each
affiliated, consolidated, combined, unitary or similar group of which any such
corporation is or was a member has (i) duly filed (or there has been filed on
its behalf) on a timely basis with appropriate governmental authorities all tax
returns, statements, reports, declarations, estimates and forms ("Returns")
required to be filed by or with respect to it on or prior to the date hereof,
except to the extent that any failure to file does not and is not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect, and (ii) duly paid, or deposited in full on a timely basis or made
adequate provision in accordance with generally accepted accounting principles
(or there has been paid or deposited or adequate provision has been made on its
behalf) for the payment of, all taxes required to be paid by it, except to the
extent that any failure to pay or deposit or make adequate provision for the
payment of such taxes does not and is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
Representations made in this Section 5.10 are made to the knowledge of the
Company to the extent that the representations relate to a corporation which
was, but is not currently, a part of the Company's or any Subsidiary's
affiliated, consolidated, combined unitary or similar group.
(b) (i) No audits or other administrative proceedings or court proceedings
are presently pending with regard to any taxes or Returns of the Company or any
of its Subsidiaries as to which any taxing authority has asserted in writing any
claim which, if adversely determined, is reasonably likely to have a Company
Material Adverse Effect; (ii) no governmental authority is now asserting in
writing any deficiency or claim for taxes or any adjustment to taxes with
respect to which the Company or any of its Subsidiaries may be liable with
respect to income and other material taxes which have not been fully paid or
finally settled, which, if adversely determined, is reasonably likely to have a
Company Material Adverse Effect; (iii) as of the date of this Agreement, neither
the Company nor any of its Subsidiaries has granted any requests, agreements,
consents or waivers to extend the statutory period of
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limitations applicable to the assessment of any taxes with respect to any
Returns of the Company or any of its Subsidiaries; (iv) to the knowledge of the
Company, neither the Company nor any of its Subsidiaries is a party to any
closing agreement described in Section 7121 of the Code or any predecessor
provision thereof or any similar agreement under state, local, or non-U.S. tax
law; (v) to the knowledge of the Company, neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement; (vi) neither the Company nor any of its Subsidiaries is a party to
an agreement that provides for the payment of any amount in connection with the
Merger that would be reasonably likely to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code; (vii) to the knowledge
of the Company, neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code; (viii) to the knowledge of the
Company, neither the Company nor any of its Subsidiaries has any liability for
taxes under Treas. Reg. Section 1.1502-6 or any similar provision of state,
local, or non-U.S. tax law, except for taxes of the affiliated group of which
the Company is the common parent, within the meaning of Section 1504(a)(1) of
the Code or any similar provision of state, local, or non-U.S. tax law; and (ix)
to the knowledge of the Company, the Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
at any time within the past five years.
(c) To the knowledge of the Company, Section 5.10 of the Company Disclosure
Letter lists the net operating loss carryovers, within the meaning of Section
172 of the Code, of the Company and its Subsidiaries, together with the year of
expiration and any restrictions thereon.
(d) Neither the Company nor any of the Company Subsidiaries knows of any
fact, or has taken any action or has failed to take any action, that is
reasonably likely to (i) prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code or (ii) cause the Eligible
Company Shareholders who exchange Company Common Stock solely for Parent
Ordinary Shares pursuant to the Merger to recognize taxable gain with respect to
the Merger pursuant to Section 367(a) of the Code (except with respect to cash
received in lieu of fractional shares).
(e) For purposes of this Agreement, "tax" or "taxes" means all net income,
gross income, gross receipts, sales, use, ad valorem, transfer, accumulated
earnings, personal holding company, excess profits, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
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occupation, premium, property, disability, capital stock, or windfall profits
taxes, customs duties or other taxes, fees, assessments or governmental charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority (U.S. or non-U.S.).
Section 5.11 Employee Benefit Plans. (a) Section 5.11 of the Company
Disclosure Letter contains a list of all the Company Benefit Plans. The term
"Company Benefit Plans" means all material employee benefit plans and other
material benefit arrangements, including all "employee benefit plans" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), whether or not U.S.-based plans, and all other employee
benefit, bonus, incentive, deferred compensation, stock option (or other
equity-based), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, practices
or agreements, whether or not subject to ERISA or U.S.-based and whether written
or oral, sponsored, maintained or contributed to or required to be contributed
to by the Company or any of its Subsidiaries, to which the Company or any of its
Subsidiaries is a party or is required to provide benefits under applicable law
or in which any person who is currently, has been or, prior to the Effective
Time, is expected to become an employee of the Company is a participant. The
Company will provide Parent, within 30 days after the date hereof, with true and
complete copies of the Company Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan.
(b) Except as for such matters as, individually or in the aggregate, do not
or are not reasonably likely to have a Company Material Adverse Effect: all
applicable reporting and disclosure requirements have been met with respect to
the Company Benefit Plans; there has been no "reportable event," as that term is
defined in Section 4043 of ERISA, with respect to the Company Benefit Plans
subject to Title IV of ERISA for which the 30-day reporting requirement has not
been waived; to the extent applicable, the Company Benefit Plans comply with the
requirements of ERISA and the Code or with the regulations of any applicable
jurisdiction, and any Company Benefit Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS; the Company Benefit Plans have been maintained and operated in
accordance with their terms, and, to the Company's knowledge, there are no
breaches of fiduciary duty in connection with the Company Benefit Plans; there
are no pending or, to the Company's knowledge, threatened claims against or
otherwise involving any Company Benefit Plan, and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of the
Company Benefit Plan activities) has been brought against or with respect to any
such Company Benefit Plan; all material contributions required to be made as of
the date
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hereof to the Company Benefit Plans have been made or provided for; with respect
to the Company Benefit Plans or any "employee pension benefit plans," as defined
in Section 3(2) of ERISA, that are subject to Title IV of ERISA and have been
maintained or contributed to within six years prior to the Effective Time by the
Company, its Subsidiaries or any trade or business (whether or not incorporated)
which is under common control, or which is treated as a single employer, with
the Company or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of
the Code (an "ERISA Affiliate"), (i) neither the Company nor any of its
Subsidiaries has incurred any direct or indirect liability under Title IV of
ERISA in connection with any termination thereof or withdrawal therefrom; and
(ii) there does not exist any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, whether or not waived.
(c) Neither the Company nor any of its Subsidiaries nor any of its ERISA
Affiliates contributes to, or has an obligation to contribute to, and has not
within six years prior to the Effective Time contributed to, or had an
obligation to contribute to, a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, and the execution of, and performance of the
transactions contemplated by, this Agreement, other than Section 7.14(h), will
not (either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any benefit plan, policy, arrangement or agreement or
any trust or loan (in connection therewith) that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to fund
benefits with respect to any employee of the Company or any Subsidiary thereof.
(d) No Company Benefit Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of the Company or any Subsidiary of the Company for periods extending
beyond their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan" or
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
Section 5.12 Labor Matters. (a) As of the date of this Agreement, (i)
neither the Company nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement or similar contract, agreement or understanding
with a labor union or similar labor organization (A) covering any U.S. employees
or (B) covering, in any single instance, 10% or more of the employees of the
Company and its Subsidiaries taken as a whole, and (ii) to the Company's
knowledge, there are no organizational efforts with respect to the formation
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of a collective bargaining unit presently being made or threatened (x) involving
any U.S. employees or (y) involving, in any single instance, 10% or more of the
employees of the Company and its Subsidiaries taken as a whole.
(b) Except for such matters as do not and are not reasonably likely to have
a Company Material Adverse Effect, (i) neither the Company nor any Subsidiary of
the Company has received any written complaint of any unfair labor practice or
other unlawful employment practice or any written notice of any material
violation of any federal, state or local statutes, laws, ordinances, rules,
regulations, orders or directives with respect to the employment of individuals
by, or the employment practices of, the Company or any Subsidiary of the Company
or the work conditions or the terms and conditions of employment and wages and
hours of their respective businesses and (ii) there are no unfair labor practice
charges or other employee related complaints against the Company or any
Subsidiary of the Company pending or, to the knowledge of the Company
threatened, before any governmental authority by or concerning the employees
working in their respective businesses.
Section 5.13 Environmental Matters. (a) The Company and each Subsidiary of
the Company has been and is in compliance with all applicable final and binding
orders of any court, governmental authority or arbitration board or tribunal and
any applicable law, ordinance, rule, regulation or other legal requirement
(including common law) related to human health and the environment
("Environmental Laws") except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. There are no past or present facts, conditions or circumstances that
interfere with the conduct of any of their respective businesses in the manner
now conducted or which interfere with continued compliance with any
Environmental Law except for any non-compliance or interference that is not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) Except for such matters as do not and are not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect, no
judicial or administrative proceedings or governmental investigations are
pending or, to the knowledge of the Company, threatened against the Company or
its Subsidiaries that allege the violation of or seek to impose liability
pursuant to any Environmental Law, and there are no past or present facts,
conditions or circumstances at, on or arising out of, or otherwise associated
with, any current (or, to the knowledge of the Company or its Subsidiaries,
former) businesses, assets or properties of the Company or any Subsidiary of the
Company, including but not limited to on-site or off-site disposal, release or
spill of any material, substance or waste classified, characterized or otherwise
regulated as hazardous, toxic, pollutant,
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contaminant or words of similar meaning under Environmental Laws, including
petroleum or petroleum products or byproducts ("Hazardous Materials") which
violate Environmental Law or are reasonably likely to give rise to (i) costs,
expenses, liabilities or obligations for any cleanup, remediation, disposal or
corrective action under any Environmental Law, (ii) claims arising for personal
injury, property damage or damage to natural resources, or (iii) fines,
penalties or injunctive relief.
(c) Neither the Company nor any of its Subsidiaries has (i) received any
notice of noncompliance with, violation of, or liability or potential liability
under any Environmental Law or (ii) entered into any consent decree or order or
is subject to any order of any court or governmental authority or tribunal under
any Environmental Law or relating to the cleanup of any Hazardous Materials,
except for any such matters as do not and are not reasonably likely to have a
Company Material Adverse Effect.
Section 5.14 Intellectual Property. The Company and its Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights and proprietary information used or held
for use in connection with their respective businesses as currently being
conducted, except where the failure to own or possess such licenses and other
rights does not and is not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing that are reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. The conduct of the Company's and its Subsidiaries' respective businesses
as currently conducted does not conflict with any patents, patent rights,
licenses, trademarks, trademark rights, trade names, trade name rights or
copyrights of others that are reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect. There is no material infringement
of any proprietary right owned by or licensed by or to the Company or any of its
Subsidiaries that is reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 5.15 Decrees, Etc. Except for such matters as do not and are not
reasonably likely to have a Company Material Adverse Effect, (i) no order, writ,
fine, injunction, decree, judgment, award or determination of any court or
governmental authority has been issued or entered against the Company or any
Subsidiary of the Company that continues to be in effect that affects the
ownership or operation of any of their respective assets, and (ii) no criminal
order, writ, fine, injunction, decree, judgment or determination of any court or
governmental authority has been issued against the Company or any Subsidiary of
the Company.
Section 5.16 Insurance. (a) Except for such matters as do not and are not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect, the Company and its Subsidiaries maintain insurance coverage
with financially
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responsible insurance companies in such amounts and against such losses as are
customary in the international offshore drilling business prior to the date
hereof.
(b) Except for such matters as do not and are not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect, no
event relating specifically to the Company or its Subsidiaries (as opposed to
events affecting the drilling service industry in general) has occurred that is
reasonably likely, after the date of this Agreement, to result in an upward
adjustment in premiums under any insurance policies they maintain. Excluding
insurance policies that have expired and been replaced in the ordinary course of
business, no excess liability, hull or protection and indemnity insurance policy
has been canceled by the insurer within one year prior to the date hereof, and
to the Company's knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such insurance
policy of the Company or any Subsidiary of the Company during the period of one
year prior to the date hereof. Prior to the date hereof, no event has occurred,
including the failure by the Company or any Subsidiary of the Company to give
any notice or information or by giving any inaccurate or erroneous notice or
information, which materially limits or impairs the rights of the Company or any
Subsidiary of the Company under any such excess liability, hull or protection
and indemnity insurance policies.
Section 5.17 No Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Parent to pay any finder's fees, brokerage or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby, except that the
Company has retained Morgan Stanley & Co. Incorporated as its financial advisor,
the arrangements with which have been disclosed in writing to Parent prior to
the date hereof.
Section 5.18 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Morgan Stanley & Co. Incorporated to the
effect that, as of the date of this Agreement, the Common Stock Merger Ratio is
fair, from a financial point of view, to the holders of Company Common Stock.
Section 5.19 Parent Share Ownership. Neither the Company nor any of its
Subsidiaries owns any shares in the capital of Parent or any other securities
convertible into or otherwise exercisable to acquire shares in the capital of
Parent.
Section 5.20 Vote Required. The only votes of the holders of any class or
series of Company capital stock necessary to approve any transaction
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contemplated by this Agreement are (a) the affirmative vote in favor of the
adoption of this Agreement of the holders of at least a majority of the
outstanding shares of Company Common Stock and (b) the affirmative vote in favor
of amending the certificate of incorporation of the Company as set forth in
Exhibit A (the "Company Charter Amendment") of the holders of at least a
majority of the outstanding shares of Company Common Stock.
Section 5.21 Ownership of Drilling Rigs and Drillships. As of the date
hereof, the Company or a Subsidiary of the Company has good and marketable title
to the drilling rigs and drill ships listed in the Company's most recent annual
report on Form 10-K, in each case free and clear of all Liens except for (i)
defects or irregularities of title or encumbrances of a nature that do not
materially impair the ownership or operation of these assets and which have not
had and are not reasonably likely to have a Company Material Adverse Effect,
(ii) Liens that secure obligations not yet due and payable or, if such
obligations are due and have not been paid, Liens securing such obligations that
are being diligently contested in good faith and by appropriate proceedings (any
such contests involving an amount in excess of $10 million being described in
the Company Disclosure Letter), (iii) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith, (iv) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith, (v)
operators', vendors', suppliers of necessaries to the Company's drilling rigs,
carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or shipyard liens (during repair or upgrade periods) or other like
Liens arising by operation of law in the ordinary course of business or
statutory landlord's liens, each of which is in respect of obligations that have
not been outstanding more than 90 days (so long as no action has been taken to
file or enforce such Liens within said 90-day period) or which are being
contested in good faith and (vi) other Liens disclosed in the Company Disclosure
Letter (the Liens described in clauses (i), (ii), (iii), (iv), (v) and (vi),
collectively, "Company Permitted Liens"). No such asset is leased under an
operating lease from a lessor that, to the Company's knowledge, has incurred
non-recourse indebtedness to finance the acquisition or construction of such
asset.
Section 5.22 Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
fixed, accrued, contingent or otherwise, except liabilities and obligations that
(i) are disclosed in the Company Reports, (ii) are referred to in the Company
Disclosure Letter or (iii) do not and are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 5.23 Certain Contracts. (a) Section 5.23 of the Company Disclosure
Letter contains a list of all of the following contracts or agreements (other
than those set forth on an exhibit index in the Company Reports filed on or
prior to the date of this Agreement) to which the Company or any Subsidiary of
the Company is a party or by which any of them is bound as of the date of this
Agreement: (i) any non-competition agreement that purports to limit the manner
in which, or the localities in which, all or any portion of their respective
businesses
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is conducted, other than any such limitation that is not material to the Company
and its Subsidiaries, taken as a whole, (ii) any drilling rig construction or
conversion contract with respect to which the drilling rig has not been
delivered and paid for, (iii) any drilling contracts of one year or greater
remaining duration, (iv) any contract or agreement for the borrowing of money
with a borrowing capacity or outstanding indebtedness of $50 million or more or
(v) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) (all contracts or agreements of the types described
in clauses (i) through (v) being referred to herein as "Company Material
Contracts").
(b) As of the date of this Agreement, each Company Material Contract is, to
the knowledge of the Company, in full force and effect, and the Company and each
of its Subsidiaries have in all material respects performed all obligations
required to be performed by them to date under each Company Material Contract to
which it is a party, except where such failure to be binding or in full force
and effect or such failure to perform does not and is not reasonably likely to
create, individually or in the aggregate, a Company Material Adverse Effect.
Except for such matters as do not and are not reasonably likely to have a
Company Material Adverse Effect, neither the Company nor any of its Subsidiaries
(x) knows of, or has received written notice of, any breach of or violation or
default under (nor, to the knowledge of the Company, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under) any Company Material Contract or
(y) has received written notice of the desire of the other party or parties to
any such Company Material Contract to exercise any rights such party has to
cancel, terminate or repudiate such contract or exercise remedies thereunder.
Each Company Material Contract is enforceable by the Company or a Subsidiary of
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights and general principles of equity, except where such
unenforceability is not reasonably likely to create, individually or in the
aggregate, a Company Material Adverse Effect.
Section 5.24 Capital Expenditure Program. As of the date of this Agreement,
the Company Disclosure Letter accurately sets forth in all material respects,
for each of the Company's sustaining, life extension and newbuild capital
expenditure programs, the capital expenditures for all such programs that were
forecasted to be incurred in 2000 and 2001 on a monthly basis, as previously
provided to Parent. The construction in progress attributable to the newbuilds
and included in the consolidated balance sheet of the Company at June 30, 2000
included in the Company Reports (excluding capitalized interest on such
newbuilds) and the projected newbuild capital expenditures to be incurred in
2000 and 2001 equal the projected total construction costs to complete such
newbuilds, as at the time of such forecast.
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Section 5.25 Improper Payments. No bribes, kickbacks or other improper
payments have been made by the Company or any Subsidiary of the Company or agent
of any of them in connection with the conduct of their respective businesses or
the operation of their respective assets, and neither the Company, any
Subsidiary of the Company nor any agent of any of them has received any such
payments from vendors, suppliers or other persons, where any such payment made
or received is reasonably likely to have a Company Material Adverse Effect.
Section 5.26 Amendment to the Company Rights Agreement. The Company has
amended or taken other action under the Company Rights Agreement so that none of
the execution and delivery of this Agreement, the conversion of shares of
Company Common Stock into the right to receive shares of Parent Ordinary Shares
in accordance with Article 4 of this Agreement, the consummation of the Merger
or any other transaction contemplated hereby, will cause (i) the Company Rights
to become exercisable under the Company Rights Agreement, (ii) Parent or any of
its stockholders or Subsidiaries to be deemed an "Acquiring Person" (as defined
in the Company Rights Agreement), (iii) any such event to be a "Section
11(a)(ii) Event" or a "Section 13 Event" (as defined in the Company Rights
Agreement) or (iv) a "Stock Acquisition Date" or a "Distribution Date" (each as
defined in the Company Rights Agreement) to occur upon any such event, and so
that the Company Rights will expire immediately prior to the Effective Time. The
Company has delivered to Parent a true and complete copy of the Company Rights
Agreement, as amended to date.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF PARENT, SUB AND MERGER SUB
Except as set forth in the disclosure letter delivered to the Company by
Parent at or prior to the execution hereof (the "Parent Disclosure Letter"),
Parent, Sub and Merger Sub, jointly and severally, represent and warrant to the
Company that:
Section 6.1 Existence; Good Standing; Corporate Authority. Each of Parent,
Sub and Merger Sub is a corporation duly incorporated and validly existing under
the laws of its jurisdiction of incorporation. Parent is duly qualified to do
business and, to the extent such concept or similar concept exists in the
relevant jurisdiction, is in good standing under the laws of any jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary, except where
the failure to be so qualified does not and is not reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect (as defined
in Section 10.9). Parent has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now conducted.
The copies of Parent's memorandum of association and articles of association
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and the comparable charter and organizational documents of Sub and Merger Sub
previously made available to the Company are true and correct and contain all
amendments as of the date hereof.
Section 6.2 Authorization, Validity and Effect of Agreements. Each of
Parent, Sub and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and all other agreements and documents
contemplated hereby to which it is a party. The consummation by each of Parent,
Sub and Merger Sub of the transactions contemplated hereby, including the
issuance by Parent and delivery by Sub of Parent Ordinary Shares pursuant to the
Merger, have been duly authorized by all requisite corporate action on behalf of
Parent, other than the approvals referred to in Section 6.20. This Agreement
constitutes the valid and legally binding obligation of Parent and this
Agreement constitutes the valid and legally binding obligation of Sub and Merger
Sub, enforceable against Parent, Sub or Merger Sub, as applicable, in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. Parent has taken all action necessary to render the
restrictions set forth in Article XXVII of its articles of association
inapplicable to this Agreement and the transactions contemplated hereby.
Section 6.3 Capitalization. As of the date of this Agreement, the
authorized share capital of Parent consists of 300,000,000 Parent Ordinary
Shares and 50,000,000 undesignated shares, par value $0.10 per share, of Parent
("Parent Preference Shares"). As of August 17, 2000, there were 210,648,411
Parent Ordinary Shares issued, 4,456,805 Parent Ordinary Shares reserved for
issuance upon exercise of outstanding Parent options and no Parent Preference
Shares issued. All such issued Parent Ordinary Shares are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. The
Parent Ordinary Shares to be issued in connection with the Merger, when issued
in accordance with this Agreement, will be validly issued, fully paid,
nonassessable and free of preemptive rights. As of the date of this Agreement,
except as set forth in this Section 6.3, there are no outstanding shares or
shares of capital stock, and there are no options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which obligate Parent or any of its Subsidiaries to issue, transfer or sell any
shares or shares of capital stock or other voting securities of Parent or any of
its Subsidiaries. Parent has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter.
Section 6.4 Significant Subsidiaries. (a) Each of Parent's Significant
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and, to the extent such concept or similar concept exists in the
relevant jurisdiction, in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate or other entity power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
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or to be in good standing does not and is not reasonably likely to have a Parent
Material Adverse Effect. As of the date of this Agreement, all of the
outstanding shares of capital stock of, or other ownership interests in, each of
Parent's Significant Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and are owned, directly or indirectly, by Parent free
and clear of all Liens.
(b) Sub and Merger Sub. All of the outstanding capital stock of Merger Sub
is owned directly by Sub, all of the outstanding capital stock of Sub is owned
directly by Parent, and Merger Sub has been formed solely for the purpose of
engaging in the transactions contemplated hereby and, as of the Effective Time,
will have not engaged in any activities other than in connection with the
transactions contemplated by this Agreement. Immediately prior to the Effective
Time, Merger Sub will have 1,000,000 outstanding shares of its common stock, par
value $0.01 per share.
Section 6.5 Compliance with Laws; Permits. Except for such matters as,
individually or in the aggregate, do not or are not reasonably likely to have a
Parent Material Adverse Effect and except for matters arising under
Environmental Laws which are treated exclusively in Section 6.13:
(a) Neither Parent nor any Subsidiary of Parent is in violation of any
Applicable Laws relating to the ownership or operation of any of their
respective assets, and no claim is pending or, to the knowledge of Parent,
threatened with respect to any such matters. No condition exists that is not
disclosed in the Parent Disclosure Letter and which does or is reasonably likely
to constitute a violation of or deficiency under any Applicable Law relating to
the ownership or operation of the assets of Parent or any Subsidiary of Parent.
(b) Parent and each Subsidiary of Parent hold all permits, licenses,
certifications, variations, exemptions, orders, franchises and approvals of all
governmental or regulatory authorities necessary for the conduct of their
respective businesses (the "Parent Permits"). All Parent Permits are in full
force and effect and there exists no default thereunder or breach thereof, and
Parent has no notice or actual knowledge that such Parent Permits will not be
renewed in the ordinary course after the Effective Time. No governmental
authority has given, or to the knowledge of Parent threatened to give, any
action to terminate, cancel or reform any Parent Permit.
(c) Each drilling rig, drillship or other drilling unit owned by Parent or
a subsidiary of Parent which is subject to classification is in class according
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to the rules and regulations of the applicable classifying body and is duly and
lawfully documented under the laws of its flag jurisdiction.
(d) Parent and each Subsidiary of Parent possess all permits, licenses,
operating authorities, orders, exemptions, franchises, variances, consents,
approvals or other authorizations required for the present ownership and
operation of all its real property or leaseholds ("Parent Real Property") except
where the failure to possess any of the same does not and is not reasonably
likely to have a Parent Material Adverse Effect. There exists no material
default or breach with respect to, and no party or governmental authority has
taken or, to the knowledge of Parent, threatened to take, any action to
terminate, cancel or reform any such permit, license, operating authority,
order, exemption, franchise, variance, consent, approval or other authorization
pertaining to the Parent Real Property.
Section 6.6 No Conflict. (a) Neither the execution and delivery by Parent,
Sub and Merger Sub of this Agreement nor the consummation by Parent, Sub and
Merger Sub of the transactions contemplated hereby in accordance with the terms
hereof will (i) subject to the approvals referred to in Section 6.20, conflict
with or result in a breach of any provisions of the memorandum of association or
articles of association of Parent or the certificate of incorporation or bylaws
of Sub or Merger Sub; (ii) violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise to a
right of purchase under or accelerate the performance required by, or result in
the creation of any Lien upon any of the properties of Parent or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Parent or any of
its Subsidiaries under any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement, joint venture or other instrument or obligation to which
Parent or any of its Subsidiaries is a party, or by which Parent or any of its
Subsidiaries or any of their properties is bound or affected; or (iii) subject
to the filings and other matters referred to in Section 6.6(b), contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to Parent or
any of its Subsidiaries, except for such matters described in clause (ii) or
(iii) as do not and are not reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent, Sub or Merger Sub of this
Agreement nor the consummation by Parent, Sub or Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will
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require any consent, approval or authorization of, or filing or registration
with, any governmental or regulatory authority, other than the Regulatory
Filings and the filing of a listing application with the NYSE pursuant to
Section 7.9(a) and the filing of the resolutions relating to the matters
specified in Section 2.1 with the Registrar of Companies of the Cayman Islands,
except for any consent, approval or authorization the failure of which to obtain
and for any filing or registration the failure of which to make does not and is
not reasonably likely to have a Parent Material Adverse Effect.
Section 6.7 SEC Documents. Parent has filed with the SEC all documents
required to be so filed by it since January 1, 2000 pursuant to Sections 13(a),
14(a) and 15(d) of the Exchange Act, and has made available to the Company each
registration statement, report, proxy statement or information statement (other
than preliminary materials) it has so filed, each in the form (including
exhibits and any amendments thereto) filed with the SEC (collectively, the
"Parent Reports"). As of its respective date, each Parent Report (i) complied in
all material respects in accordance with the applicable requirements of the
Exchange Act and the rules and regulations thereunder and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
included in or incorporated by reference into the Parent Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of Parent and its Subsidiaries as of its date,
and each of the consolidated statements of operations, cash flows and equity
included in or incorporated by reference into the Parent Reports (including any
related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in equity, as the case may be, of
Parent and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to (x) such exceptions as may be permitted by Form
10-Q of the SEC and (y) normal year-end audit adjustments), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Except as and to
the extent set forth on the consolidated balance sheet of Parent and its
Subsidiaries included in the Parent Reports, including all notes thereto, as of
the date of such balance sheet, neither Parent nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of Parent or in the notes thereto prepared in
accordance with generally accepted accounting principles consistently applied,
other than liabilities or obligations which do not and are not reasonably likely
to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 6.8 Litigation. Except as described in the Parent Reports filed on
or prior to the date of this Agreement, there are no actions, suits or
proceedings pending against Parent or any of its Subsidiaries or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, at law or in
equity, before or by any U.S. federal, state or
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non-U.S. court, commission, board, bureau, agency or instrumentality, that are
reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Section 6.9 Absence of Certain Changes. From December 31, 1999 to the date
of this Agreement, there has not been (i) any event or occurrence that has had
or is reasonably likely to have a Parent Material Adverse Effect, (ii) any
material change by Parent or any of its Subsidiaries, when taken as a whole, in
any of its accounting methods, principles or practices or any of its tax
methods, practices or elections, (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any share capital of Parent or any
redemption, purchase or other acquisition of any of its securities, except
dividends on Parent Ordinary Shares at a rate of not more than $0.03 per share
per quarter or (iv) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, except in the ordinary
course of business.
Section 6.10 Taxes. (a) Each of Parent, its Subsidiaries and each
affiliated, consolidated, combined, unitary or similar group of which any such
corporation is or was a member has (i) duly filed (or there has been filed on
its behalf) on a timely basis with appropriate governmental authorities all
Returns required to be filed by or with respect to it on or prior to the date
hereof, except to the extent that any failure to file does not and is not
reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect, and (ii) duly paid, or deposited in full on a timely basis or
made adequate provision in accordance with generally accepted accounting
principles (or there has been paid or deposited or adequate provision has been
made on its behalf) for the payment of, all taxes required to be paid by it,
except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such taxes does not and is not reasonably likely to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Representations made in this Section 6.10 are made to the knowledge of Parent to
the extent that the representations relate to a corporation which was, but is
not currently, a part of Parent's or any Subsidiary's affiliated, consolidated,
combined unitary or similar group.
(b) (i) No audits or other administrative proceedings or court proceedings
are presently pending with regard to any taxes or Returns of Parent or any of
its Subsidiaries as to which any taxing authority has asserted in writing any
claim which, if adversely determined, is reasonably likely to have a Parent
Material Adverse Effect; (ii) no governmental authority is now asserting in
writing any deficiency or claim for taxes or any adjustment to taxes with
respect to which Parent or any of its Subsidiaries may be liable with respect to
income and other material taxes which have not been fully paid or finally
settled, which, if adversely determined, is reasonably likely to have a Parent
Material Adverse Effect; (iii) as of the date of this Agreement, neither Parent
nor any of its Subsidiaries has granted any requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any taxes with respect to any Returns of Parent or any of its
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Subsidiaries; (iv) to the knowledge of Parent, neither Parent nor any of its
Subsidiaries is a party to any closing agreement described in Section 7121 of
the Code or any predecessor provision thereof or any similar agreement under
state, local, or non-U.S. tax law; (v) to the knowledge of Parent, neither
Parent nor any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement; (vi) neither Parent nor any of its
Subsidiaries is a party to an agreement that provides for the payment of any
amount in connection with the Merger that would be reasonably likely to
constitute an "excess parachute payment" within the meaning of Section 280G of
the Code; (vii) to the knowledge of Parent, neither Parent nor any of its
Subsidiaries has made an election under Section 341(f) of the Code; (viii) to
the knowledge of Parent, neither Parent nor any of its Subsidiaries has any
liability for taxes under Treas. Reg. Section 1.1502-6 or any similar provision
of state, local, or non-U.S. tax law, except for taxes of the affiliated group
of which Parent is the common parent, within the meaning of Section 1504(a)(1)
of the Code or any similar provision of state, local, or non-U.S. tax law; and
(ix) to the knowledge of Parent, Parent has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
at any time within the past five years.
(c) Neither Parent nor any of the Parent Subsidiaries knows of any fact, or
has taken any action or has failed to take any action, that is reasonably likely
to (i) prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code or (ii) cause the Eligible Company Shareholders
who exchange Company Common Stock solely for Parent Ordinary Shares pursuant to
the Merger to recognize taxable gain with respect to the Merger pursuant to
Section 367(a) of the Code (except with respect to cash received in lieu of
fractional shares). Neither Parent nor any of its Subsidiaries has agreed to
pay, or will pay, directly or indirectly, any consideration for shares of stock
of the Company other than Parent voting shares and other than the cash in lieu
of fractional shares to be delivered by Sub as described in this Agreement.
Section 6.11 Employee Benefit Plans. (a) Section 6.11 of the Parent
Disclosure Letter contains a list of all Parent Benefit Plans. The term "Parent
Benefit Plans" means all material employee benefit plans and other material
benefit arrangements, including all "employee benefit plans" as defined in
Section 3(3) of ERISA, whether or not U.S.-based plans, and all other employee
benefit, bonus, incentive, deferred compensation, stock option (or other
equity-based), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans or
agreements, whether or not subject to ERISA or U.S.-based and whether written or
oral, sponsored, maintained or contributed to or required to be contributed to
by Parent or any of its Subsidiaries, to which Parent or any of its Subsidiaries
is a party or is required to provide benefits under applicable law or in which
any person who is currently, has been or, prior to the Effective Time, is
expected to become an employee of Parent is a
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participant. Parent will provide the Company, within 30 days after the date
hereof, with true and complete copies of the Parent Benefit Plans other than
those sponsored by Schlumberger Limited and its subsidiaries and, if applicable,
the most recent trust agreements, Forms 5500, summary plan descriptions, funding
statements, annual reports and actuarial reports, if applicable, for each such
plan.
(b) Except for such matters as, individually or in the aggregate, do not or
are not reasonably likely to have a Parent Material Adverse Effect: all
applicable reporting and disclosure requirements have been met with respect to
Parent Benefit Plans; there has been no "reportable event," as that term is
defined in Section 4043 of ERISA, with respect to Parent Benefit Plans subject
to Title IV of ERISA for which the 30-day reporting requirement has not been
waived; to the extent applicable, Parent Benefit Plans comply with the
requirements of ERISA and the Code or with the regulations of any applicable
jurisdiction, and any Parent Benefit Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS;
Parent Benefit Plans have been maintained and operated in accordance with their
terms, and, to Parent's knowledge, there are no breaches of fiduciary duty in
connection with Parent Benefit Plans; there are no pending, or to Parent's
knowledge, threatened claims against or otherwise involving any Parent Benefit
Plan, and no suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Parent Benefit Plan activities) has been
brought against or with respect to any such Parent Benefit Plan; all material
contributions required to be made as of the date hereof to Parent Benefit Plans
have been made or provided for; with respect to Parent Benefit Plans or any
"employee pension benefit plans," as defined in Section 3(2) of ERISA, that are
subject to Title IV of ERISA and have been maintained or contributed to within
six years prior to the Effective Time by Parent, its Subsidiaries or any of its
ERISA Affiliates, (i) neither Parent nor any of its Subsidiaries has incurred
any direct or indirect liability under Title IV of ERISA in connection with any
termination thereof or withdrawal therefrom; and (ii) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived.
(c) Neither Parent nor any of its Subsidiaries nor any of its ERISA
Affiliates contributes to, or has an obligation to contribute to, and has not
within six years prior to the Effective Time contributed to, or had an
obligation to contribute to, a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, and the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
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under any benefit plan, policy, arrangement or agreement or any trust or loan
(in connection therewith) that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any employee of Parent or any Subsidiary thereof.
(d) No Parent Benefit Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of Parent or any Subsidiary of Parent for periods extending beyond
their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan" or
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
Section 6.12 Labor Matters. (a) As of the date of this Agreement, (i)
neither Parent nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement or similar contract, agreement or understanding
with a labor union or similar labor organization (A) covering any U.S. employees
or (B) covering, in any single instance, 10% or more of the employees of Parent
and its Subsidiaries taken as a whole, and (ii) to Parent's knowledge, there are
no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened (x) involving any U.S.
employees or (y) involving, in any single instance, 10% or more of the employees
of Parent and its Subsidiaries taken as a whole.
(b) Except for such matters as do not and are not reasonably likely to have
a Parent Material Adverse Effect, (i) neither Parent nor any Subsidiary of
Parent has received any written complaint of any unfair labor practice or other
unlawful employment practice or any written notice of any material violation of
any federal, state or local statutes, laws, ordinances, rules, regulations,
orders or directives with respect to the employment of individuals by, or the
employment practices of, Parent or any Subsidiary of Parent or the work
conditions or the terms and conditions of employment and wages and hours of
their respective businesses and (ii) there are no unfair labor practice charges
or other employee related complaints against Parent or any Subsidiary of Parent
pending or, to the knowledge of Parent, threatened, before any governmental
authority by or concerning the employees working in their respective businesses.
Section 6.13 Environmental Matters. (a) Parent and each Subsidiary of
Parent has been and is in compliance with all Environmental Laws except for such
matters as do not and are not reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect. There are no past or present facts,
conditions or circumstances that interfere with the conduct of any of their
respective businesses in the manner now conducted or which interfere with
continued compliance with any Environmental Law, except for any non-compliance
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or interference that is not reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably likely to
have, individually or in the aggregate, a Parent Material Adverse Effect, no
judicial or administrative proceedings or governmental investigations are
pending or, to the knowledge of Parent, threatened against Parent or its
Subsidiaries that allege the violation of or seek to impose liability pursuant
to any Environmental Law, and there are no past or present facts, conditions or
circumstances at, on or arising out of, or otherwise associated with, any
current (or, to the knowledge of Parent or its Subsidiaries, former) businesses,
assets or properties of Parent or any Subsidiary of Parent, including but not
limited to on-site or off-site disposal, release or spill of any Hazardous
Materials which violate Environmental Law or are reasonably likely to give rise
to (i) costs, expenses, liabilities or obligations for any cleanup, remediation,
disposal or corrective action under any Environmental Law, (ii) claims arising
for personal injury, property damage or damage to natural resources, or (iii)
fines, penalties or injunctive relief.
(c) Neither Parent nor any of its Subsidiaries has (i) received any notice
of noncompliance with, violation of, or liability or potential liability under
any Environmental Law or (ii) entered into any consent decree or order or is
subject to any order of any court or governmental authority or tribunal under
any Environmental Law or relating to the cleanup of any Hazardous Materials,
except for any such matters as do not and are not reasonably likely to have a
Parent Material Adverse Effect.
Section 6.14 Intellectual Property. Parent and its Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights and proprietary information used or held
for use in connection with their respective businesses as currently being
conducted, except where the failure to own or possess such licenses and other
rights does not and is not reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing that are reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect. The conduct of Parent's and its Subsidiaries' respective businesses as
currently conducted does not conflict with any patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights or copyrights of
others that are reasonably likely to have, individually or in the aggregate, a
Parent Material Adverse Effect. There is no material infringement of any
proprietary right owned by or licensed by or to Parent or any of its
Subsidiaries that is reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
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Section 6.15 Decrees, Etc. Except for such matters as do not and are not
reasonably likely to have a Parent Material Adverse Effect (i) no order, writ,
fine, injunction, decree, judgment, award or determination of any court or
governmental authority has been issued or entered against Parent or any
Subsidiary of Parent that continues to be in effect that affects the ownership
or operation of any of their respective assets, and (ii) no criminal order,
writ, fine, injunction, decree, judgment or determination of any court or
governmental authority has been issued against Parent or any Subsidiary of
Parent.
Section 6.16 Insurance. (a) Except for such matters as do not and are not
reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect, Parent and its Subsidiaries maintain insurance coverage with
financially responsible insurance companies in such amounts and against such
losses as are customary in the international offshore drilling business prior to
the date hereof.
(b) Except for such matters as do not and are not reasonably likely to
have, individually or in the aggregate, a Parent Material Adverse Effect, no
event relating specifically to Parent or its Subsidiaries (as opposed to events
affecting the drilling service industry in general) has occurred that is
reasonably likely, after the date of this Agreement, to result in an upward
adjustment in premiums under any insurance policies they maintain. Excluding
insurance policies that have expired and been replaced in the ordinary course of
business, no excess liability, hull or protection and indemnity insurance policy
has been canceled by the insurer within one year prior to the date hereof, and
to Parent's knowledge, no threat in writing has been made to cancel (excluding
cancellation upon expiration or failure to renew) any insurance policy of Parent
or any Subsidiary of Parent during the period of one year prior to the date
hereof. Prior to the date hereof, no event has occurred, including the failure
by Parent or any Subsidiary of Parent to give any notice or information or by
giving any inaccurate or erroneous notice or information, which materially
limits or impairs the rights of Parent or any Subsidiary of Parent under any
such excess liability, hull or protection and indemnity insurance policies.
Section 6.17 No Brokers. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Parent to pay any finder's fees, brokerage or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby, except that Parent has
retained Goldman Sachs & Co. and Simmons & Company International as its
financial advisors, the arrangements with which have been disclosed in writing
to the Company prior to the date hereof.
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Section 6.18 Opinion of Financial Advisor. The Board of Directors of Parent
has received the opinion of each of Goldman Sachs & Co. and Simmons & Company
International to the effect that, as of the date of this Agreement, the Common
Stock Merger Ratio is fair to Parent from a financial point of view.
Section 6.19 Company Stock Ownership. Neither Parent nor any of its
Subsidiaries owns any shares of capital stock of the Company or any other
securities convertible into or otherwise exercisable to acquire capital stock of
the Company.
Section 6.20 Vote Required. The only votes of the holders of any class or
series of Parent share capital necessary to approve any transaction contemplated
by this Agreement are (a) the vote of the holders of Parent Ordinary Shares
required by the rules of the NYSE to approve the issuance of Parent Ordinary
Shares pursuant to the Merger and the amendment of Parent's Long-Term Incentive
Plan contemplated by Section 7.4, (b) the affirmative vote of at least a
majority of the votes represented by the holders of the issued Parent Ordinary
Shares present in person or by proxy at a meeting to be held in accordance with
Section 7.4 to approve the increase in authorized ordinary share capital
contemplated by this Agreement, and (c) the affirmative vote of at least
two-thirds of the votes represented by the holders of the issued Parent Ordinary
Shares present in person or by proxy at the meeting to be held in accordance
with Section 7.4 to approve the increase in the maximum number of members of the
Board of Directors of Parent contemplated by this Agreement.
Section 6.21 Ownership of Drilling Rigs and Drillships. As of the date
hereof, Parent or a Subsidiary of Parent has good and marketable title to the
drilling rigs and drill ships listed in Parent's most recent annual report on
Form 10-K, in each case free and clear of all Liens except for (i) defects or
irregularities of title or encumbrances of a nature that do not materially
impair the ownership or operation of these assets and which have not had and are
not reasonably likely to have a Parent Material Adverse Effect, (ii) Liens that
secure obligations not yet due and payable or, if such obligations are due and
have not been paid, Liens securing such obligations that are being diligently
contested in good faith and by appropriate proceedings (any such contests
involving an amount in excess of $10 million being described in the Parent
Disclosure Letter), (iii) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith, (iv)
Liens in connection with workmen's compensation, unemployment insurance or other
social security, old age pension or public liability obligations not yet due or
which are being contested in good faith, (v) operators', vendors', suppliers of
necessaries to the Company's drilling rigs, carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or shipyard
liens (during repair or upgrade periods) or other like Liens arising by
operation of law in the ordinary course of business or statutory landlord's
liens, each of which is in respect of obligations that have not been outstanding
more than 90 days (so long as no action has been taken to file or enforce such
Liens within said 90-day period) or which are being contested in good faith and
(vi) other Liens disclosed in the Parent Disclosure Letter (the Liens described
in clauses (i), (ii), (iii), (iv), (v) and (vi), collectively, "Parent Permitted
Liens"). No such
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asset is leased under an operating lease from a lessor that, to Parent's
knowledge, has incurred non-recourse indebtedness to finance the acquisition or
construction of such asset.
Section 6.22 Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
fixed, accrued, contingent or otherwise, except liabilities and obligations that
(i) are disclosed in the Parent Reports, (ii) are referred to in the Parent
Disclosure Letter or (iii) do not and are not reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 6.23 Certain Contracts. (a) Section 6.23 of the Parent Disclosure
Letter contains a list of all of the following contracts or agreements (other
than those set forth on an exhibit index in the Parent Reports filed on or prior
to the date of this Agreement) to which Parent or any Subsidiary of Parent is a
party or by which any of them is bound as of the date of this Agreement: (i) any
non-competition agreement that purports to limit the manner in which, or the
localities in which, all or any portion of their respective businesses is
conducted other than any such limitation that is not material to Parent and its
Subsidiaries, taken as a whole, (ii) any drilling rig construction or conversion
contract with respect to which the drilling rig has not been delivered and paid
for, (iii) any drilling contracts of one year or greater remaining duration,
(iv) any contract or agreement for the borrowing of money with a borrowing
capacity or outstanding indebtedness of $50 million or more or (v) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) (all contracts or agreements of the types described in clauses (i) through
(v) being referred to herein as "Parent Material Contracts").
(b) As of the date of this Agreement, each Parent Material Contract is, to
the knowledge of Parent, in full force and effect, and Parent and each of its
Subsidiaries have in all material respects performed all obligations required to
be performed by them to date under each Parent Material Contract to which it is
a party, except where such failure to be binding or in full force and effect or
such failure to perform does not and is not reasonably likely to create,
individually or in the aggregate, a Parent Material Adverse Effect. Except for
such matters as do not and are not reasonably likely to have a Parent Material
Adverse Effect, neither Parent nor any of its Subsidiaries (x) knows of, or has
received written notice of, any breach of or violation or default under (nor, to
the knowledge of Parent, does there exist any condition which with the passage
of time or the giving of notice or both would result in such a violation or
default under) any Parent Material Contract or (y) has received written notice
of the desire of the other party or parties to any such Parent Material Contract
to exercise any rights such party has to cancel, terminate or repudiate such
contract or exercise remedies thereunder. Each Parent Material Contract is
enforceable by Parent or a Subsidiary of Parent in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights
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and general principles of equity, except where such unenforceability is not
reasonably likely to create, individually or in the aggregate, a Company
Material Adverse Effect.
Section 6.24 Capital Expenditure Program. As of the date of this Agreement,
the Parent Disclosure Letter accurately sets forth in all material respects, for
each of Parent's sustaining, life extension and newbuild capital expenditure
programs, the capital expenditures for all such programs that were forecasted to
be incurred in 2000 and 2001 on a monthly basis, as previously provided to the
Company. The construction in progress attributable to the newbuilds and included
in the consolidated balance sheet of Parent at June 30, 2000 included in the
Parent Reports and the projected newbuild capital expenditures to be incurred in
2000 and 2001 equal the estimated book value of the rigs when complete, as at
the time of such forecast.
Section 6.25 Improper Payments. No bribes, kickbacks or other improper
payments have been made by Parent or any Subsidiary of Parent or agent of any of
them in connection with the conduct of their respective businesses or the
operation of their respective assets, and neither Parent, any Subsidiary of
Parent, nor any agent of any of them has received any such payments from
vendors, suppliers or other persons, where any such payment made or received is
reasonably likely to have a Parent Material Adverse Effect.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Company Business. Prior to the Effective Time,
except as set forth in the Company Disclosure Letter or as expressly
contemplated by any other provision of this Agreement or as required by
Applicable Laws (provided that the Company has provided Parent with advance
notice of the proposed action to the extent practicable), unless Parent has
consented in writing thereto, the Company:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(b) shall use its commercially reasonable best efforts, and shall cause
each of its Subsidiaries to use its commercially reasonable best efforts, to
preserve intact their business organizations and goodwill (except that any of
its Subsidiaries may be merged with or into, or be consolidated with any of its
Subsidiaries or may be liquidated into the Company or any of its Subsidiaries),
keep available the services of their respective officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them;
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(c) shall not amend its certificate of incorporation or bylaws;
(d) shall promptly notify Parent of any material change in its condition
(financial or otherwise) or business or any termination, cancellation,
repudiation or material breach of any Company Material Contract (or
communications indicating that the same may be contemplated) or any material
litigation or material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach in
any material respect of any representation or warranty contained herein;
(e) shall promptly deliver to Parent true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) shall not, (i) except pursuant to the exercise of options, warrants,
conversion rights and other contractual rights existing on the date hereof and
disclosed pursuant to this Agreement (including the Company Rights issued
pursuant to the Company Rights Agreement) or pursuant to the exercise of awards
granted after the date hereof and expressly permitted under this Agreement or in
connection with transactions permitted by Section 7.1(i) or pursuant to the
payment of dividends on shares of Company Redeemable Preferred Stock in amounts
required under the certificate of designation of the Company establishing the
Company Redeemable Preferred Stock, issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it existed on
the date hereof, (ii) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any shares of
its capital stock, except for (A) (1) awards of options to acquire up to 15,000
shares of Company Common Stock, per person, to newly hired employees or to
existing employees as the result of promotions, in each case other than officers
or directors of the Company (including former officers or directors) in the
ordinary course of business consistent with past practices as set forth in
Section 7.1(f) of the Company Disclosure Letter and (2) in the event the
Effective Time does not occur on or before February 28, 2001, awards of options
to employees other than officers and directors of the Company (including former
officers or directors), to acquire up to 15,000 shares of Company Common Stock
per employee, up to an aggregate of 500,000 shares of Company Common Stock for
all employees, provided in the case of both clause (1) and (2) that such awards
provide for exercisability in three equal annual installments beginning on each
anniversary of the date of grant of the option subject to continued employment
with the Company or
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its affiliates, with no right of acceleration of exercisability as a result of
the transactions contemplated by this Agreement, with no right to exercise more
than three months after termination of employment, with no right to have shares
withheld upon exercise, for tax purposes, in excess of the number of shares
needed to satisfy the minimum statutory withholding requirements for federal and
state tax withholding, and in all other respects are made in the ordinary course
of business consistent with past practices, and (B) the issuance of Company
Rights with permitted issuances of Company Common Stock, (iii) amend or
otherwise modify any option, warrant, conversion right or other right to acquire
any shares of its capital stock existing on the date hereof, (iv) with respect
to any of its former, present or future employees, increase any compensation or
benefits, or enter into, amend or extend (or permit the extension of) any
employment or consulting agreement, except in each case in the ordinary course
of business consistent with past practice, (v) with respect to any of its
former, present or future officers or directors, increase any compensation or
benefits or enter into, amend or extend (or permit the extension of) any
employment or consulting agreement, (vi) adopt any new employee benefit plan or
agreement (including any stock option, stock benefit or stock purchase plan) or
amend (except as required by law) any existing employee benefit plan in any
material respect, except for changes which are less favorable to participants in
such plans, (vii) except as approved by good faith action of the Board of
Directors of the Company after the Company has provided Parent with advance
written notice of the proposed action and consulted in advance with Parent
regarding such action, terminate any executive officer without cause or permit
circumstances to exist that would give any executive officer a right to
terminate employment if the termination would entitle such executive officer to
receive enhanced separation payments upon consummation of the Merger, or (viii)
permit any holder of an option to acquire Company Common Stock outstanding on
the date hereof to have shares withheld upon exercise, for tax purposes, in
excess of the number of shares needed to satisfy the minimum statutory
withholding requirements for federal and state tax withholding;
(g) except for the payment of dividends on shares of Company Redeemable
Preferred Stock in amounts required under the terms of the certificate of
designation of the Company establishing the Company Redeemable Preferred Stock,
shall not (i) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital stock or (ii)
redeem, purchase or otherwise acquire any shares of its capital stock or capital
stock of any of its Subsidiaries, or make any commitment for any such action;
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(h) shall not, and shall not permit any of its Subsidiaries to, sell, lease
or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material to the Company, individually or in the
aggregate, except for sales of surplus equipment or sales of other assets in the
ordinary course of business;
(i) shall not, and shall not permit any of its Subsidiaries to, except
pursuant to contractual commitments in effect on the date hereof and disclosed
in the Company Disclosure Letter, acquire or agree to acquire by merging or
consolidating with, or by purchasing an equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof, in each case (i) for an aggregate consideration for all such
acquisitions in excess of $10 million (excluding acquisitions approved in
writing by Parent) or (ii) where a filing under the HSR Act or any non-U.S.
competition, antitrust or premerger notification laws is required;
(j) shall not, except as may be required as a result of a change in
generally accepted accounting principles, change any of the material accounting
principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use reasonable
efforts to maintain with financially responsible insurance companies insurance
in such amounts and against such risks and losses as are customary for such
party;
(l) shall not, and shall not permit any of its Subsidiaries to, (i) make
or rescind any material election relating to taxes, including elections for any
and all joint ventures, partnerships, limited liability companies, working
interests or other investments where it has the capacity to make such binding
election, (ii) settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or (iii) change in any material respect any of its methods of
reporting any item for tax purposes from those employed in the preparation of
its tax returns for the most recent taxable year for which a return has been
filed, except as may be required by applicable law;
(m) shall not, and shall not permit any of its Subsidiaries to, (i) incur
any indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire any debt securities
of the Company or any of its Subsidiaries or guarantee any debt securities of
others, (ii) except in the ordinary course of business, enter into
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any material lease (whether such lease is an operating or capital lease) or
create any material mortgages, Liens, security interests or other encumbrances
on its property in connection with any indebtedness thereof (other than the
Company Permitted Liens) or (iii) make or commit to make aggregate capital
expenditures in excess of $3 million per month for each month from the date of
this Agreement to the Effective Time over the capital expenditures forecast
disclosed in the Company Disclosure Letter for such month, excluding capital
expenditures covered by insurance (A) for any partial loss not covered by loss
of hire insurance, not in excess of $5 million per occurrence or series of
related occurrences and (B) for any vessel for which the Company has bound loss
of hire insurance, provided, however, that capital expenditures in connection
with the total loss (actual or constructive) of any vessel shall require the
consent of Parent;
(n) except as provided in Section 7.20, shall not, and shall cause its
Subsidiaries not to, purchase or otherwise acquire any Parent Ordinary Shares,
Company Common Stock or Company Redeemable Preferred Stock;
(o) subject to Section 7.5, shall not take any action that is reasonably
likely to delay materially or adversely affect the ability of any of the parties
hereto to obtain any consent, authorization, order or approval of any
governmental commission, board or other regulatory body or the expiration of any
applicable waiting period required to consummate the transactions contemplated
by this Agreement;
(p) shall not (i) agree in writing or otherwise to take any of the
foregoing actions or (ii) permit any of its Subsidiaries to agree in writing or
otherwise to take any of the foregoing actions that refer to Subsidiaries; and
(q) unless in the good faith opinion of the Board of Directors of the
Company after consultation with its outside legal counsel the following would be
inconsistent with its fiduciary duties, (i) shall not terminate, amend, modify
or waive any provision of any agreement containing a standstill covenant to
which it is a party; and (ii) during such period shall enforce, to the fullest
extent permitted under applicable law, the provisions of such agreement,
including by obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court of the
United States of America or any state having jurisdiction.
Section 7.1A Conduct of Parent Business. Prior to the Effective Time,
except as set forth in the Parent Disclosure Letter or as expressly contemplated
by any other provision of this Agreement or as required by Applicable Laws
(provided that Parent has provided the Company with
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advance written notice of the proposed action to the extent practicable), unless
the Company has consented in writing thereto, Parent:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations in accordance with the primary business focus of Parent and its
Subsidiaries taken as a whole as of the date of this Agreement;
(b) shall use its commercially reasonable best efforts, and shall cause
each of its Subsidiaries to use its commercially reasonable best efforts, to
preserve intact their business organizations and goodwill, keep available the
services of their respective officers and employees and maintain satisfactory
relationships with those persons having business relationships with them;
(c) except in connection with transactions permitted under this Section
7.1A, shall not propose any shareholder resolution to amend its memorandum of
association or articles of association;
(d) shall promptly notify the Company of any material change in its
condition (financial or otherwise) or business or any termination, cancellation,
repudiation or material breach of any Parent Material Contract (or
communications indicating that the same may be contemplated) or any material
litigation or material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach in
any material respect of any representation or warranty contained herein;
(e) shall promptly deliver to the Company true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) shall not (i) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any of its shares or (ii) redeem,
purchase or otherwise acquire any of its shares or capital stock of any of its
Subsidiaries (other than from one of its Subsidiaries), or make any commitment
for any such action, except for the declaration and payment of regular,
quarterly dividends, consistent with past practice, not to exceed $0.03 per
Parent Ordinary Share per quarter;
(g) shall not, and shall not permit any of its Subsidiaries to, sell, lease
or otherwise dispose of all or substantially all of the assets of Parent and its
Subsidiaries, taken as a whole (including capital stock of Subsidiaries), except
for sales, leases or other dispositions between Parent and one of its
Subsidiaries or between or among its Subsidiaries;
(h) shall not, except as may be required as a result of a change in
generally accepted accounting principles, change any of the material accounting
principles or practices used by it;
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(i) shall, and shall cause any of its Subsidiaries to, use reasonable
efforts to maintain with financially responsible insurance companies insurance
in such amounts and against such risks and losses as are customary for such
party;
(j) except for acquisitions by one of Parent's Subsidiaries of Parent
Ordinary Shares from Parent or another Subsidiary of Parent, shall not, and
shall cause its Subsidiaries not to, purchase or otherwise acquire any Parent
Ordinary Shares or Company Common Stock;
(k) subject to Section 7.5, shall not take any action that is reasonably
likely to delay materially or adversely affect the ability of any of the parties
hereto to obtain any consent, authorization, order or approval of any
governmental commission, board or other regulatory body or the expiration of any
applicable waiting period required to consummate the transactions contemplated
by this Agreement;
(l) shall not (i) agree in writing or otherwise to take any of the
foregoing actions or (ii) permit any of its Subsidiaries to agree in writing or
otherwise to take any of the foregoing actions that refer to Subsidiaries; and
(m) except in connection with a transaction permitted by this Section 7.1A,
shall not terminate, amend, modify or waive any provision of any agreement with
a standstill covenant to which it is a party; and during such period shall
enforce, to the fullest extent permitted under applicable law, the provisions of
such agreement, including by obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States of America or any state having jurisdiction.
Section 7.2 No Solicitation by the Company. (a) The Company agrees that (i)
neither it nor any of its Subsidiaries shall, and it shall not authorize or
permit any of its officers, directors, employees, agents or representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to, and on becoming aware of it will
stop such person from continuing to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing nonpublic information), or take any
action designed to facilitate, directly or indirectly, any inquiry, proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
with respect to a tender or exchange offer, merger, consolidation, business
combination, purchase or similar transaction or series of transactions (other
than the transactions contemplated by this Agreement) involving, individually or
in the aggregate, 15% or more of the assets, net revenues or net income of the
Company and its Subsidiaries on a consolidated basis or 15% or more of any class
of capital stock of the Company (any such proposal, offer or transaction being
hereinafter referred to as a "Company Acquisition Proposal") or cooperate with
or assist, participate or engage in any discussions or negotiations concerning a
Company Acquisition Proposal; and (ii) it will immediately cease and cause to be
terminated any existing negotiations with any parties conducted heretofore with
respect to any of the foregoing; provided that nothing contained in this
Agreement shall prevent the Company or its Board
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of Directors from (A) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a Company Acquisition Proposal or (B) prior to the Cutoff
Date (as defined herein), providing information (pursuant to a confidentiality
and standstill agreement in reasonably customary form with terms at least as
favorable to the Company as the Confidentiality and Standstill Agreement dated
April 24, 2000, between Parent and the Company (the "Confidentiality and
Standstill Agreement") and which does not contain terms that prevent the Company
from complying with its obligations under this Section 7.2) to or engaging in
any negotiations or discussions with any person or entity who has made an
unsolicited bona fide written Company Acquisition Proposal with respect to all
the outstanding capital stock of the Company or all or substantially all the
assets of the Company that, in the good faith judgment of the Board of Directors
of the Company, taking into account the likelihood of financing, and based on
the advice of a financial advisor of recognized national reputation, a written
summary of which shall be promptly provided to Parent, is superior to the Merger
(a "Company Superior Proposal"), to the extent the Board of Directors of the
Company, after consultation with its outside legal counsel, determines that the
failure to do so would be inconsistent with its fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.2(a), if the
Company intends to participate in any such discussions or negotiations or
provide any such information to any such third party, the Company shall give
prompt prior oral and written notice to Parent of each such action. The Company
will immediately notify Parent orally and in writing of any such requests for
such information or the receipt of any Company Acquisition Proposal or any
inquiry with respect to or that could lead to a Company Acquisition Proposal,
including the identity of the person or group engaging in such discussions or
negotiations, requesting such information or making such Company Acquisition
Proposal, and the material terms and conditions of any Company Acquisition
Proposal. The Company will (i) keep Parent fully informed of the status and
details (including any changes or proposed changes to such status or details) on
a timely basis of any such requests, Company Acquisition Proposals or inquiries
and (ii) provide to Parent as soon as practicable after receipt or delivery
thereof with copies of all correspondence and other written material sent or
provided to the Company from any third party in connection with any Company
Acquisition Proposal or sent or provided by the Company to any third party in
connection with any Company Acquisition Proposal. Any written notice under this
Section 7.2 shall be given by facsimile with receipt confirmed or personal
delivery.
(c) Nothing in this Section 7.2 shall permit the Company to enter into any
agreement with respect to a Company Acquisition Proposal during the term of this
Agreement, it being agreed that during the term of this Agreement (except
pursuant to Section 9.3(c)), the Company shall not enter into any agreement with
any person that provides for, or in any way facilitates, a
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Company Acquisition Proposal, other than a confidentiality and standstill
agreement in reasonably customary form with terms at least as favorable to the
Company as the Confidentiality and Standstill Agreement and which does not
contain terms that prevent the Company from complying with its obligations under
this Section.
(d) For purposes hereof, the "Cutoff Date," when used with respect to the
Company, means the date the condition set forth in Section 8.1(a)(i) is
satisfied.
Section 7.3 No Solicitation by Parent. (a) Parent agrees that (i) neither
it nor any of its Subsidiaries shall, and it shall not authorize or permit any
of its officers, directors, employees, agents or representatives (including,
without limitation, any investment banker, attorney or accountant retained by it
or any of its Subsidiaries) to, and on becoming aware of it will stop such
person from continuing to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing nonpublic information), or take any
action designed to facilitate, directly or indirectly, any inquiry, proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a tender or exchange offer, merger, consolidation, business
combination, purchase or similar transaction or series of transactions (other
than the transactions contemplated by this Agreement) involving, individually or
in the aggregate, 15% or more of the assets, net revenues or net income of
Parent and its Subsidiaries on a consolidated basis or 15% or more of any class
of share capital of Parent (any such proposal, offer or transaction being
hereinafter referred to as a "Parent Acquisition Proposal") or cooperate with or
assist, participate or engage in any discussions or negotiations concerning a
Parent Acquisition Proposal; and (ii) it will immediately cease and cause to be
terminated any existing negotiations with any parties conducted heretofore with
respect to any of the foregoing; provided that nothing contained in this
Agreement shall prevent Parent or its Board of Directors from (A) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to a Parent
Acquisition Proposal or (B) prior to the Cutoff Date (as defined herein),
providing information (pursuant to a confidentiality and standstill agreement in
reasonably customary form with terms at least as favorable to Parent as the
Confidentiality and Standstill Agreement and which does not contain terms that
prevent Parent from complying with its obligations under this Section 7.3) to or
engaging in any negotiations or discussions with any person or entity who has
made an unsolicited bona fide written Parent Acquisition Proposal with respect
to all the outstanding Parent Ordinary Shares or all or substantially all the
assets of Parent that, in the good faith judgment of a committee composed solely
of the outside directors of Parent, taking into account the likelihood of
financing, and based on the advice of a financial advisor of recognized national
reputation, a written summary of which shall be promptly provided to the
Company, is superior to the Merger (a "Parent Superior Proposal"), to the extent
that committee of the Board of Directors of Parent, after consultation with its
outside legal counsel, determines that the failure to do so would be
inconsistent with its fiduciary obligations.
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(b) Prior to taking any action referred to in Section 7.3(a), if Parent
intends to participate in any such discussions or negotiations or provide any
such information to any such third party, Parent shall give prompt prior oral
and written notice to the Company of each such action. Parent will immediately
notify the Company orally and in writing of any such requests for such
information or the receipt of any Parent Acquisition Proposal or any inquiry
with respect to or that could lead to a Parent Acquisition Proposal, including
the identity of the person or group engaging in such discussions or
negotiations, requesting such information or making such Parent Acquisition
Proposal, and the material terms and conditions of any Parent Acquisition
Proposal. Parent will (i) keep the Company fully informed of the status and
details (including any changes or proposed changes to such status or details) on
a timely basis of any such requests, Parent Acquisition Proposals or inquiries
and (ii) provide to the Company as soon as practicable after receipt or delivery
thereof with copies of all correspondence and other written material sent or
provided to Parent from any third party in connection with any Parent
Acquisition Proposal or sent or provided by Parent to any third party in
connection with any Parent Acquisition Proposal. Any written notice under this
Section 7.3 shall be given by facsimile with receipt confirmed or personal
delivery.
(c) Nothing in this Section 7.3 shall permit Parent to enter into any
agreement with respect to a Parent Acquisition Proposal during the term of this
Agreement, it being agreed that during the term of this Agreement (except
pursuant to Section 9.4(c)), Parent shall not enter into any agreement with any
person that provides for, or in any way facilitates, a Parent Acquisition
Proposal, other than a confidentiality agreement in reasonably customary form
with terms at least as favorable to Parent as the Confidentiality and Standstill
Agreement.
(d) For purposes hereof, the "Cutoff Date," when used with respect to
Parent, means the date the condition set forth in Section 8.1(a)(ii) is
satisfied.
Section 7.4 Meetings of Stockholders. (a) Each of Parent and the Company
shall take all action necessary, in accordance with applicable law and its
memorandum of association and articles of association (Parent) or certificate of
incorporation and bylaws (the Company), to convene a meeting of its shareholders
as promptly as practicable to consider and vote upon (i) in the case of Parent,
the approval of the amendments to Parent's articles of association contemplated
hereby, the approval of the increase in the authorized share capital
contemplated herein, the issuance of Parent Ordinary Shares pursuant to the
Merger and, at the discretion of Parent, an amendment of its Long-Term Incentive
Plan to increase the number of Parent Ordinary Shares reserved for issuance
thereunder and (ii) in the case of the Company, the adoption
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of this Agreement and the Company Charter Amendment. Parent and the Company
shall coordinate and cooperate with respect to the timing of such meetings and
shall use their best efforts to hold such meetings on the same day.
Notwithstanding any other provision of this Agreement, unless this Agreement is
terminated in accordance with the terms hereof, the Company and Parent shall
each submit this Agreement to its stockholders and shareholders, respectively,
whether or not the Board of Directors of the Company or Parent, as the case may
be, withdraws, modifies or changes its recommendation and declaration regarding
the foregoing matters.
(b) Each of Parent and the Company, through its Board of Directors, shall
recommend approval of such matters and use its best efforts to solicit from its
shareholders proxies in favor of such matters; provided, however, that the Board
of Directors of Parent or the Board of Directors of the Company may at any time
prior to the Effective Time upon five business days' prior written notice to the
Company or Parent, respectively, withdraw, modify or change any recommendation
and declaration regarding such matters or recommend and declare advisable any
Company Superior Proposal or Parent Superior Proposal, as the case may be, if in
the good faith opinion of such Board of Directors after consultation with its
outside legal counsel the failure to so withdraw, modify or change its
recommendation and declaration or to so recommend and declare advisable any
Company Superior Proposal or Parent Superior Proposal, as the case may be, would
be inconsistent with its fiduciary obligations.
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc. (a) Subject
to the terms and conditions herein provided, the Company and Parent shall:
(i) make their respective required filings under the HSR Act and any
applicable non-U.S. competition, antitrust or premerger notification laws
("Non-U.S. Antitrust Laws") to be made pursuant to Section 8.1(b) (and shall
share equally all filing fees incident thereto), which filings shall be made
promptly, and which filings as required under the HSR Act and the antitrust,
trade and competition laws of Brazil shall be made in not more than 15 business
days from the date hereof, and thereafter shall promptly make any other required
submissions under the HSR Act or other such laws;
(ii) use their commercially reasonable best efforts to cooperate with
one another in (a) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states,
and non-U.S. jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the transactions contemplated
hereby; and (b) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations without causing a Parent Material
Adverse Effect or a Company Material Adverse Effect;
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(iii) promptly notify each other of any communication concerning this
Agreement or the transactions contemplated hereby to that party from any
governmental authority and permit the other party to review in advance any
proposed communication concerning this Agreement or the transactions
contemplated hereby to any governmental entity;
(iv) not agree to participate in any meeting or discussion with any
governmental authority in respect of any filings, investigation or other inquiry
concerning this Agreement or the transactions contemplated hereby unless it
consults with the other party in advance and, to the extent permitted by such
governmental authority, gives the other party the opportunity to attend and
participate thereat;
(v) furnish the other party with copies of all correspondence, filings
and communications (and memoranda setting forth the substance thereof) between
them and their affiliates and their respective representatives on the one hand,
and any government or regulatory authority or members or their respective staffs
on the other hand, with respect to this Agreement and the transactions
contemplated hereby; and
(vi) furnish the other party with such necessary information and
reasonable assistance as such other party and its affiliates may reasonably
request in connection with their preparation of necessary filings, registrations
or submissions of information to any governmental or regulatory authorities,
including, without limitation, any filings necessary or appropriate under the
provisions of the HSR Act or any applicable Non-U.S. Antitrust Laws.
(b) Without limiting Section 7.5(a), but subject to Sections 7.5(c), 7.5(d)
and 7.19, Parent and the Company shall:
(i) each use commercially reasonable best efforts to avoid the entry
of, or to have vacated, terminated or modified, any decree, order or judgment
that would restrain, prevent or delay the Closing; and
(ii) each use commercially reasonable best efforts to take any and all
steps necessary to obtain any consents or eliminate any impediments to the
Merger.
(c) At the request of Parent, the Company shall take all commercially
reasonable steps necessary to avoid or eliminate each and every impediment under
any of the HSR Act, Non-U.S. Antitrust Laws or other antitrust, competition or
premerger notification, trade regulation law, regulation or order ("Antitrust
Laws") that may be asserted by any governmental entity with respect to the
Merger so as to enable the Closing to occur as soon as reasonably possible,
including without limitation, proposing, negotiating, committing to and
effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of
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the Company or any of its Subsidiaries or otherwise take or commit to take any
action that limits its freedom of action with respect to, or its ability to
retain, any of the businesses or assets of the Company or its Subsidiaries, as
may be required in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order or other order in any suit or
proceeding relating to Antitrust Laws which would otherwise have the effect of
preventing or delaying the Closing, provided that any such action or commitment
may be conditioned upon the consummation of the Merger and the transactions
contemplated hereby. At the request of Parent, the Company shall agree to
divest, hold separate or otherwise take or commit to take any action that limits
its freedom of action with respect to, or its ability to retain, any of the
businesses, product lines or assets of the Company or any of its Subsidiaries,
provided that any such action may be conditioned upon the consummation of the
Merger and the transactions contemplated hereby. Notwithstanding anything to the
contrary contained in this Agreement, in connection with any filing or
submission required or action to be taken by Parent, the Company or any of their
respective Subsidiaries to consummate the Merger or other transactions
contemplated in this Agreement, the Company shall not, without Parent's prior
written consent, recommend, suggest or commit to any divestiture of assets or
businesses of the Company and its Subsidiaries. In the event that this Agreement
is terminated at any time prior to the Effective Time, Parent shall pay the
reasonable out-of-pocket expenses of the Company incurred in connection with its
compliance with this Section 7.5(c); provided that Parent shall not be so
obligated to pay such expenses for services rendered by advisers to the Company
unless such advisors are selected by Parent.
(d) Nothing in this Agreement shall require Parent to dispose of any of its
assets or to limit its freedom of action with respect to any of its businesses,
or to consent to any disposition of the Company's assets or limits on the
Company's freedom of action with respect to any of its businesses, whether prior
to or after the Effective Time, or to commit or agree to any of the foregoing,
to obtain any consents, approvals, permits or authorizations or to remove any
impediments to the Merger relating to Antitrust Laws or to avoid the entry of,
or to effect the dissolution of, any injunction, temporary restraining order or
other order in any suit or proceeding relating to Antitrust Laws, other than
dispositions, limitations or consents, commitments or agreements which in each
such case may be conditioned upon the consummation of the Merger and the
transactions contemplated hereby and which, in the reasonable judgment of
Parent, in each such case do not and are not reasonably likely to individually
or in the aggregate either (i) have a Parent Material Adverse Effect; (ii) have
a Company Material Adverse
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Effect; (iii) materially impair the benefits or advantages which Parent expects
to receive from the Merger and the transactions contemplated hereby; or (iv)
have a material adverse effect on Parent's business plan or business strategy
for the combined company.
(e) Parent and the Company intend that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. Parent and the
Company shall use commercially reasonable best efforts to cause the Merger to
qualify as a reorganization within the meaning of Section 368(a) of the Code,
and shall not take actions, cause actions to be taken, or fail to take actions
that (i) could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) could
reasonably be expected to cause the Eligible Company Shareholders who exchange
Company Common Stock solely for Parent Ordinary Shares pursuant to the Merger to
recognize taxable gain with respect to the Merger pursuant to Section 367(a) of
the Code (except with respect to cash received in lieu of fractional shares).
(f) Immediately prior to the Effective Time, the Company shall file with
the Secretary of State of Delaware the Company Charter Amendment. Parent shall
file with the Registrar of Companies of the Cayman Islands the resolutions
relating to the matters specified in Section 2.1.
Section 7.6 Inspection. From the date hereof to the Effective Time, each of
the Company and Parent shall allow all designated officers, attorneys,
accountants and other representatives of Parent or the Company, as the case may
be, access, at all reasonable times, upon reasonable notice, to the records and
files, correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs of Parent and the Company and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 7.6 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto shall make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. Each of Parent and the Company agrees that it shall not, and
shall cause its respective representatives not to, use any information obtained
pursuant to this Section 7.6 for any purpose unrelated to the consummation of
the transactions
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contemplated by this Agreement. All non-public information obtained pursuant to
this Section 7.6 shall be governed by the Confidentiality and Standstill
Agreement.
Section 7.7 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to
this Agreement or the transactions contemplated hereby and shall not issue any
such press releases or make any such public announcements prior to such
consultation and agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its best efforts to consult in good faith
with the other party before issuing any such press releases or making any such
public announcements.
Section 7.8 Registration Statement on Form S-4. (a) Each of Parent and the
Company shall cooperate and promptly prepare and Parent shall file with the SEC
as soon as practicable a Registration Statement on Form S-4 (the "Form S-4")
under the Securities Act, with respect to the Parent Ordinary Shares issuable in
the Merger, a portion of which Registration Statement shall also serve as the
joint proxy statement with respect to the meetings of the stockholders of Parent
and of the Company in connection with the transactions contemplated by this
Agreement (the "Proxy Statement/Prospectus"). The respective parties will cause
the Proxy Statement/Prospectus and the Form S-4 to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. Parent shall use
commercially reasonable best efforts, and the Company shall cooperate with
Parent, to have the Form S-4 declared effective by the SEC as promptly as
practicable. Parent shall use commercially reasonable best efforts to obtain,
prior to the effective date of the Form S-4, all necessary non-U.S., state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement and the parties shall share equally
all expenses incident thereto (including all SEC and other filing fees and all
printing and mailing expenses associated with the Form S-4 and the Proxy
Statement/Prospectus). Parent will advise the Company, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Ordinary Shares issuable in
connection with the Merger for offering or sale in any jurisdiction or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the Form
S-4 or comments thereon and responses thereto or requests by the SEC for
additional information. Each of the parties shall also promptly provide each
other party copies of all written correspondence received from the SEC and
summaries of all oral comments received from the SEC in connection with the
transactions contemplated by this Agreement. Each of the parties shall promptly
provide each other party with drafts of all correspondence intended to be sent
to the SEC in connection with the transactions contemplated by this Agreement
and allow each such party the opportunity to comment thereon prior to delivery
to the SEC.
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(b) Parent and the Company shall each use its best efforts to cause the
Proxy Statement/Prospectus to be mailed to its stockholders as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
(c) Each of Parent and the Company shall ensure that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of stockholders of Parent and the Company, or, in the
case of information provided by it for inclusion in the Form S-4 or any
amendment or supplement thereto, at the time it becomes effective, (i) will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and (ii)
will comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
Section 7.9 Listing Applications. (a) Parent shall promptly prepare and
submit to the NYSE a listing application covering the Parent Ordinary Shares
issuable in the Merger and shall use commercially reasonable best efforts to
obtain, prior to the Effective Time, approval for the listing of such Parent
Ordinary Shares, subject to official notice of issuance.
(b) The Company shall promptly prepare and submit to the NYSE, another
national securities exchange or the Nasdaq National Market System a listing
application covering the Company Redeemable Preferred Stock and shall use
commercially reasonable best efforts to obtain, prior to the record date for the
meeting of the stockholders of the Company to adopt this Agreement, approval for
the listing of the Company Redeemable Preferred Stock.
Section 7.10 Letters of Accountants. (a) The Company shall use commercially
reasonable best efforts to cause to be delivered to Parent "comfort" letters of
Arthur Andersen LLP, the Company's independent public accountants, dated the
effective date of the Form S-4 and the Closing Date, respectively, and addressed
to Parent with regard to certain financial information regarding the Company
included in the Form S-4, in form reasonably satisfactory to Parent and
customary in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(b) Parent shall use commercially reasonable best efforts to cause to be
delivered to the Company "comfort" letters of Ernst & Young LLP and
PricewaterhouseCoopers LLP, Parent's independent public accountants, dated the
effective date of the Form S-4 and the Closing Date, respectively, and addressed
to the Company, with regard to certain financial information regarding Parent
included in the Form S-4, in form reasonably satisfactory to
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the Company and customary in scope and substance for "comfort" letters delivered
by independent public accountants in connection with registration statements
similar to the Form S-4.
Section 7.11 Agreements of Rule 145 Affiliates. Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
identifying all persons who the Company believes, at the date of the meeting of
the Company's stockholders to consider and vote upon the adoption of this
Agreement, may be deemed to be "affiliates" of the Company, as that term is used
in paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule 145
Affiliates"). The Company shall use commercially reasonable best efforts to
cause each person who is identified as a Rule 145 Affiliate in such list to
deliver to Parent, at or prior to the Effective Time, a written agreement, in
the form of Exhibit B. Parent shall be entitled to place restrictive legends on
any Parent Ordinary Shares issued to such Rule 145 Affiliates pursuant to the
Merger.
Section 7.12 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
as expressly provided herein or as otherwise agreed in writing by the parties.
Notwithstanding any other provision of the Agreement, in no case will Parent
directly or indirectly use its own funds to pay any expenses arising in
connection with the Merger that are incurred by stockholders of the Company.
Section 7.13 Indemnification and Insurance. (a) From and after the
Effective Time, Parent and the Surviving Entity shall indemnify, defend and hold
harmless to the fullest extent permitted under applicable law each person who
is, or has been at any time prior to the Effective Time, an officer or director
of the Company (or any Subsidiary or division thereof) and each person who
served at the request of the Company as a director, officer, trustee or
fiduciary of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (individually, an "Indemnified Party"
and, collectively, the "Indemnified Parties") against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation arising out of or pertaining to acts
or omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), (i) Parent and the Surviving Entity shall pay, as incurred, the fees
and expenses of counsel selected by the Indemnified Party, which counsel shall
be reasonably acceptable to the Surviving Entity, in advance of the final
disposition of any such Action to the fullest extent permitted by applicable law
and, if required, upon receipt of any undertaking required by applicable law,
and (ii) Parent and the Surviving Entity will cooperate in the defense of any
such matter; provided, however, the Surviving Entity shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed), and provided further, that Parent and the
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Surviving Entity shall not be obligated pursuant to this Section 7.13 to pay the
fees and disbursements of more than one counsel for all Indemnified Parties in
any single Action, unless, in the good faith judgment of any of the Indemnified
Parties, there is or may be a conflict of interests between two or more of such
Indemnified Parties, in which case there may be separate counsel for each
similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, in the certificate of incorporation and bylaws of the Company and its
Subsidiaries with respect to matters occurring through the Effective Time, shall
survive the Merger.
(c) For a period of six years after the Effective Time, Parent and the
Surviving Entity shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are, or at any time prior to the
Effective Time, covered by the Company's existing officers' and directors'
liability insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance, provided that Parent and the
Surviving Entity shall not be required to pay annual premiums in excess of 150%
of the last annual premium paid by the Company prior to the date hereof (the
amount of which premium is set forth in the Company Disclosure Letter), but in
such case shall purchase as much coverage as reasonably practicable for such
amount.
(d) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under
applicable law or otherwise. The provisions of this Section 7.13 shall survive
the consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
(e) In the event Parent, the Surviving Entity or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Entity, as the case may be, shall assume the obligations set forth in
this Section 7.13.
Section 7.14 Employee Matters. (a) At the Effective Time, Parent will cause
the Surviving Entity and its Subsidiaries to continue the employment of all of
the employees of the Company and its Subsidiaries initially at the same salaries
and wages of such
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employees immediately prior to the Effective Time. Nothing in this Agreement
shall be considered a contract between Parent, the Surviving Entity, its
Subsidiaries and any employee or consideration for, or inducement with respect
to, any employee's continued employment and, without limitation, all such
employees are and will continue to be considered to be employees at will
pursuant to the applicable employment at will laws or doctrines, subject to any
express written agreement to the contrary with such employee, and the Surviving
Entity and its Subsidiaries will have the right, in their discretion and subject
to this Section 7.14, to alter the salaries, wages and terms of employment of
such employees at any time after the Effective Time.
(b) With respect to each employee of the Company and its Subsidiaries
("Affected Employee"), Parent shall cause the Surviving Entity to deem the
period of employment with the Company and its Subsidiaries to have been
employment and service with Parent for purposes of determining the Affected
Employee's eligibility to join and vesting (but not benefit accrual for any
purpose other than vacation pay and sick leave) under all employee benefit
plans, programs, policies or similar employment related arrangements of Parent
and its Subsidiaries in which the Affected Employee is eligible to participate.
Parent shall waive, and to the extent necessary to effect the terms hereof,
shall use its best efforts to cause the relevant insurance carriers and other
third parties to waive, any restrictions and limitations for medical conditions
existing as of the Effective Time of those Affected Employees and their
dependents who were covered immediately prior to the Effective Time under a
group health plan maintained by the Company, but only to the extent that such
medical condition would be covered by Parent's or the Surviving Entity's group
health plan if it were not a pre-existing condition and only to the extent that
such limitations would not have applied under the Company's group health plan
prior to the Effective Time. Further, Parent shall cause the Surviving Entity to
offer at the Effective Time to each Affected Employee coverage under a group
health plan (as defined in Section 5000(b)(1) of the Code) which credits such
Affected Employee towards the deductibles, coinsurance and maximum out-of-pocket
provisions imposed under such group health plan, for the year during which the
Effective Time (or such later date as the Affected Employees participate in such
group health plan) occurs, with any applicable expenses already incurred during
such year under the Company's group health plan.
(c) Parent agrees to cause the Surviving Entity to continue the Company
Severance Pay Benefit Plan (as amended and restated effective as of January 1,
1999 and attached to the Company Disclosure Letter, the "Severance Plan"), for
the benefit of any Affected Employee who would be eligible for severance
benefits under that plan due to an involuntary termination of employment within
nine months after the Effective Time; provided, that any
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Affected Employee who would otherwise have satisfied the eligibility
requirements for such severance benefits but whose employment is involuntarily
terminated during the period commencing nine months following the Effective Time
and ending twelve months following the Effective Time shall be treated as if
such Affected Employee was terminated within nine months after the Effective
Time if in the good faith determination of Parent such Affected Employee would
have been terminated within nine months following the Effective Time if the
integration of Parent's and the Company's operations in respect of such Affected
Employee had been completed at such earlier time. For purposes of the Severance
Plan, cause shall be determined consistent with the Company's Involuntary
Termination Policy as in effect on the date hereof ("Cause").
(d) Parent agrees that employees of the Company and its Subsidiaries
immediately prior to the Effective Time (the "Employees") will continue to be
provided through December 31, 2001 with benefits under employee benefit plans,
programs, policies or arrangements which in the aggregate are, in Parent's
discretion, either (i) not less favorable than those provided to the Employees
immediately prior to the Effective Time, or (ii) not less favorable than those
provided to similarly situated employees of Parent and its Subsidiaries, taking
into account for purposes of determining similarly situated employees such
factors as Parent reasonably deems relevant; provided, that employees who
retired from the Company and its Subsidiaries prior to the Effective Time shall
continue to be provided through December 31, 2001 with the retiree health and
life insurance benefits provided to such retirees immediately prior to the
Effective Time without adverse changes during such period.
(e) Notwithstanding anything in this Agreement to the contrary, the Company
shall be permitted to continue to accrue its annual bonuses for employees of the
Company and its Subsidiaries in respect of the Company's 2000 fiscal year (the
"Year 2000 Bonuses") consistent with the level of bonuses actually paid to
employees for the Company's 1999 fiscal year, subject to such discretionary
determinations as were made consistent with the practices of the Company for the
1999 fiscal year; provided, however, that the Company shall be permitted to
continue to accrue Year 2000 Bonuses for the individuals set forth in Section
7.14(e) of the Company Disclosure Letter in the amounts set forth therein. The
Company agrees to pay the bonuses to the individuals set forth in Section
7.14(e) of the Company Disclosure Letter, in the amount set forth therein, on or
before December 31, 2000. If the Year 2000 Bonuses have not been paid prior to
the Effective Time, Parent shall cause the Company to pay the Year 2000 Bonuses
in accordance with the
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foregoing. All determinations and allocations in respect of the Year 2000
Bonuses shall be made in accordance with the foregoing by Company management as
constituted prior to the Effective Time. In addition, if the Effective Time has
not occurred by March 31, 2001, the Company shall be permitted to accrue a
pro-rated bonus during the period from January 1, 2001 through the Effective
Time in respect of the Company's 2001 fiscal year in accordance with the
foregoing (the "Year 2001 Bonuses"). Parent shall cause the Company to pay the
Year 2001 Bonuses consistent with the practices of the Company for the 1999
fiscal year; provided, however, that the Year 2001 Bonuses for the individuals
set forth in Section 7.14(e) of the Company Disclosure Letter shall be a
pro-rated amount of their Year 2000 Bonuses, payable in cash, and any Year 2001
Bonuses due hereunder to such individuals shall be applied toward any pro-rata
bonus awards the individuals become entitled to receive under the terms of the
CIC Agreements for the 2001 fiscal year.
(f) Notwithstanding anything in this Agreement to the contrary, Parent and
the Company agree that Parent shall cause the Company to take all actions on its
part to amend each of the employment and change in control agreements for the
seven executive officers set forth in Section 7.14(f) of the Company Disclosure
Letter (the "CIC Agreements") immediately following the Effective Time, to
provide that the officer shall have the right, for a 30-day period commencing on
the first anniversary of the Effective Time, to voluntarily terminate employment
for any reason and such termination shall be deemed to be a "Qualifying
Termination" within the "Window Period" as defined in the CIC Agreements. Parent
acknowledges that, solely for purposes of the CIC Agreements, "Good Reason"
shall exist pursuant to the terms of the CIC Agreements if the officer is not
assigned, immediately following the Effective Time, to a position with Parent
with duties that are not materially inconsistent with the authorities, duties,
responsibilities and status (including offices, titles, and reporting
relationships) that the officer held with the Company immediately prior to the
Effective Time, or if there is a reduction or alteration in the nature or status
of the officer's authorities, duties, or responsibilities from those in effect
during the fiscal year immediately preceding the fiscal year in which the
Effective Time occurs. Notwithstanding and in addition to the foregoing, if
Parent has not notified the officer in writing by the date that is 30 days
immediately preceding the date on which the Effective Time occurs whether or not
such officer's employment is to be continued on terms that would not give rise
to Good Reason under the terms of the CIC Agreements and this Section 7.14(f),
then such officer shall be treated by Parent and the Company as if such officer
had incurred immediately following the Effective Time a Qualifying Termination
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within the Window Period under the CIC Agreement and the Company shall pay the
amounts described in Section 7.1(a) through (d) of the CIC Agreement to the
officer by the close of the day on which the Effective Time occurs, and all
other cash amounts payable under the terms of the CIC Agreements shall be paid
as soon as practicable but in no event later than 30 days following the
Effective Time; provided, however, that the foregoing provisions of this
sentence shall not apply if an event occurs after the date notice is given and
prior to the Effective Time that was unanticipated by Parent and is considered,
in the good faith determination of Parent's Chief Executive Officer or Board of
Directors, to materially change Parent's determination not to continue the
officer's employment on such terms, and Parent in fact promptly following such
event notifies the officer of its decision to continue and in fact continues the
officer's employment on terms that would not give rise to Good Reason under the
terms of the CIC Agreements and this Section 7.14(f). Parent further agrees that
the amounts payable to an executive officer whose employment terminates due to a
"Qualifying Termination" within the "Window Period" under the CIC Agreements (as
amended to reflect this Section 7.14(f)) shall be no less than the amounts set
forth in Section 7.14(f) of the Company Disclosure Letter. Parent and the
Company further agree that following the Effective Time none of such executive
officers shall be bound by any of the noncompetition provisions of the CIC
Agreements. Parent agrees that the CIC Agreements shall be binding upon, and
shall inure to the benefit of, any successor to the Company, and any such
successor shall be deemed substituted for all purposes as the "Company" under
the terms of the CIC Agreements.
(g) Except with respect to offers of employment to prospective new
employees in the ordinary course of business consistent with past practices and
other than statements that merely repeat or summarize the effects of this
Section 7.14, the Company agrees that it shall not make, and it shall not permit
its Subsidiaries to make, any representations or promises, oral or written, to
employees of the Company and its Subsidiaries concerning continued employment
following the Effective Time, or the terms and conditions of that employment,
except as requested by Parent under Section 7.14(i) or otherwise in writing with
the prior written consent of Parent.
(h) The Company will cause to vest and become exercisable effective 48
hours prior to the Effective Time (conditioned on the subsequent occurrence of
the Effective Time) all or any portion of the unvested Company Options and
restricted stock, other than those granted after the date hereof as permitted by
Section 7.1(f)(ii) that would not otherwise become vested and exercisable as a
result of the Merger.
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(i) To the extent allowed by Applicable Laws, prior to the Effective Time,
the Company shall take any action reasonably requested by Parent as part of
Parent's preparation for a prompt and efficient integration of Parent's and the
Company's operations following the Effective Time. To the extent allowed by
Applicable Law, in furtherance of such cooperation, the Company agrees to supply
Parent, in a prompt manner, with such information and documentation as the
officers of Parent deem relevant to the integration, and to use its commercially
reasonable best efforts to make its supervisory employees available, on a
reasonable basis, to discuss staffing and integration issues with Parent. The
actions requested of the Company pursuant to this Section 7.14(i) shall be at
reasonable times and on reasonable notice. Nothing in this Section 7.14(i) shall
require the Company to begin the implementation of the integration prior to the
Effective Time. Notwithstanding the foregoing, the Company shall not be deemed
to make any representation or warranty except as expressly set forth in this
Agreement and shall not be required to provide any information which it
reasonably believes it may not provide to Parent by reason of applicable law,
rules or regulations, which constitutes information protected by attorney/client
privilege, or which it is required to keep confidential by reason of contract or
agreement with third parties. The parties hereto shall make reasonable and
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. Each of Parent and the Company
agrees that it shall not, and shall cause its respective representatives not to,
use any information obtained pursuant to this Section 7.14(i) for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. All non-public information obtained pursuant to this Section 7.14(i)
shall be governed by the Confidentiality and Standstill Agreement.
Section 7.15 Rights Agreement. Except for actions contemplated by this
Agreement that are taken by the Company simultaneously with its entering into a
binding definitive agreement pursuant to Section 9.3(c), neither the Board of
Directors of the Company nor the Company shall take any other action to (a)
terminate the Company Rights Agreement, (b) redeem the Company Rights, (c) amend
the Company Rights Agreement in a manner adverse to Parent, or (d) cause any
person not to be or become an "Acquiring Person."
Section 7.16 Delivery of Parent Ordinary Shares. Prior to the Merger, Sub
shall purchase from Parent and Parent shall sell to Sub all or a portion of that
number of Parent Ordinary Shares which Sub is required to deliver pursuant to
Section 4.3(a). If Sub purchases fewer than all such shares from Parent, Parent
will otherwise provide to Sub the remaining required shares.
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Section 7.17 Consulting Agreements. As of the Effective Time, Parent shall
cause the Surviving Entity to execute and deliver to Mr. Paul B. Loyd, Jr. a
consulting agreement substantially in the form of Exhibit C, and the Company
shall use commercially reasonable efforts to cause Mr. Loyd to enter into such
consulting agreement.
Section 7.18 Assets in the Coastwise Trade. Prior to the Closing Date, the
Company and its Subsidiaries shall at the request of Parent (a) use their
commercially reasonable best efforts to sell, transfer, assign, contribute or
otherwise dispose of all their respective vessels involved in the coastwise
trade (within the meaning of that term as used in Section 2 of the Shipping Act,
1916, as amended (46 USC Section 808)) to such person or persons as designated
by Parent and as directed by and on such terms and conditions as specified by
Parent, provided that any such action may be conditioned upon the consummation
of the Merger and the transactions contemplated hereby, (b) cancel and refrain
from extending any agreement that would require the operation of vessels and
other assets involved in the coastwise trade after the Effective Time and (c)
take any action designed to facilitate the termination of the operation of
vessels involved in the coastwise trade and the Company's business related
thereto as of the Effective Time. The Company will provide reasonable
cooperation with Parent, Sub and their advisors retained in connection with the
matters described in this Section 7.18. The Company shall promptly take any
other reasonably requested actions in connection with this Section 7.18. The
Company shall not retain any advisors to the Company with respect to the
foregoing without the consent of Parent.
Section 7.19 Obtaining Investment Grade Rating. (a) As promptly as
practicable after the date of this Agreement, Parent and the Company shall
request that both Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Service ("S&P") rate the $400,000,000 11% Senior Secured Notes
due 2006 of RBF Finance Co., a Delaware corporation ("RBF Finance Co."), RBF
Finance Co.'s $400,000,000 11 3/8% Senior Secured Notes due 2009, the Company's
$200,000,000 12 1/2% Senior Notes due 2006, the Company's $100,000,000 9 1/8%
Senior Notes due 2003 and the Company's $300,000,000 9 1/2% Senior Notes due
2008 (collectively, the "Company High Yield Debt") "Investment Grade" or give
the Company High Yield Debt an "Investment Grade Rating" (as such terms are
defined in the applicable Company High Yield Debt indentures) at or prior to the
Effective Time. In connection with such request, each of the Company and Parent
shall use its commercially reasonable best efforts to cooperate promptly and
fully with all reasonable requests of the other, including without limitation,
attending and preparing for meetings and presentations, providing information
and making any related or required applications or filings and taking other
reasonable action as may be requested by Moody's and S&P with respect to
obtaining such rating. Actions reasonably requested by Moody's or S&P or by
Parent or the Company are those relating to the process of obtaining such rating
(and such actions are specifically not those related to the financial condition,
business or operations of Parent or the Company and their respective
Subsidiaries).
(b) If the Company High Yield Debt is not given an "Investment Grade
Rating" or rated "Investment Grade" (as such terms are defined in the applicable
Company High Yield Debt
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indentures) at the time when the conditions to Parent's obligations to effect
the Merger have otherwise been fulfilled, then Parent agrees that immediately
prior to the Effective Time it shall deliver a full senior unsecured
unconditional payment guarantee (the "Parent Guarantee") on terms reasonably
satisfactory to Parent of the principal of, interest and premium, if any, on the
Company High Yield Debt which shall become effective only upon the Effective
Time. Without limiting the generality of any other provisions hereof, Parent
shall have no obligation under this Agreement to provide financial assistance of
any type to the Company or in respect of the Company High Yield Debt, other than
with respect to its obligation to provide such Parent Guarantee.
Section 7.20 Agreement Regarding Company Redeemable Preferred Stock. (a) As
promptly as practicable after the date of filing of the Form S-4, the Company
shall file with the SEC either a post-effective amendment to its Registration
Statement on Form S-3 (Registration No. 333-39500) or another registration
statement on an appropriate form registering a number of shares of Company
Common Stock sufficient to complete the Public Offering (as defined below) (in
either case, the "Shelf Registration Statement"). The Company shall use
commercially reasonable best efforts, and Parent shall cooperate with the
Company, to have the Shelf Registration Statement declared effective by the SEC
prior to the vote of the Company's stockholders in respect of the Merger. The
Company shall advise Parent, promptly after it receives notice thereof, of the
time when the Shelf Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order or any
request by the SEC for amendment of the Shelf Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
The Company shall provide Parent with drafts of the Shelf Registration
Statement, any prospectus supplement, the underwriting agreement and all other
customary documentation in connection with the Public Offering reasonably in
advance of the anticipated date of use thereof.
(b) In the event that this Agreement shall have been adopted and the
Company Charter Amendment shall have been approved by the affirmative vote of
the holders of at least a majority of the outstanding shares of Company Common
Stock entitled to vote thereon and Parent and the Company are each satisfied
that the other conditions to effect the Merger have otherwise been fulfilled, as
promptly as practicable after receiving written notice from Parent directing it
to do so, the Company shall commence and consummate an underwritten public
offering of shares of Company Common Stock with aggregate net proceeds to the
Company of at least $105 million (but not greater than any amount specified by
Parent) pursuant to the Shelf Registration Statement (the "Public Offering").
The Company shall be deemed to be in compliance with its obligations under this
Section 7.20(b) during the time that its failure to commence and consummate the
Public Offering results only from the good faith inability of the Company to
commence or consummate the Public Offering with the price and terms established
by Parent. The Company shall promptly take any action in connection with the
Public Offering as Parent reasonably directs, including without limitation (x)
establishing the price to the public, the underwriting discount and the number
of shares of Company Common Stock to be sold pursuant to the Public Offering,
(y) selecting the commencement and pricing date for the Public Offering, and (z)
selection of any underwriter or
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group of underwriters for the Public Offering, and any agreement regarding any
fees or expenses in connection therewith. The Company shall place any proceeds
of the Public Offering in a separate account to be used for the purposes
specified in Section 7.20(c).
(c) Promptly upon closing of the Public Offering, the Company shall give
notice of redemption of shares of Company Redeemable Preferred Stock having an
aggregate liquidation preference of up to $105 million at a price in cash equal
to 113.875% of the liquidation preference thereof, plus accrued and unpaid
dividends, if any, to the redemption date with the net cash proceeds from the
Public Offering. The Company shall comply with all applicable terms of the
Company Redeemable Preferred Stock in connection with such redemption, and funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the redemption date) shall be irrevocably
deposited by the Company in trust for the equal and ratable benefit for the
holders of the shares to be redeemed (the "Irrevocable Deposit"). In making the
Irrevocable Deposit, the Company shall use only the funds placed in the separate
account described in the last sentence of Section 7.20(b).
(d) The Company may, in accordance with its previously announced intention,
cause to be repurchased shares of Company Redeemable Preferred Stock in price
and amount and on terms and conditions approved from time to time in writing by
Parent, by causing Unrestricted Subsidiaries (as defined in the Company High
Yield Debt indentures) to repurchase such stock with funds which such
Unrestricted Subsidiaries have on hand. No payment will be made to holders of
Company Redeemable Preferred Stock with funds received, directly or indirectly,
from Parent or any of its Subsidiaries. The parties acknowledge that, if the
Company's disposition program is successfully completed, it will have estimated
$150-200 million in unrestricted funds available for such repurchases, which
unrestricted funds represent cash in excess of the funds reasonably anticipated
to be necessary for such Unrestricted Subsidiaries' business needs. In no case
will Parent or any of its Subsidiaries make contributions to the Company or the
Unrestricted Subsidiaries to replenish funds used to redeem or repurchase
Company stock.
(e) Notwithstanding anything in this Agreement to the contrary (other than
Section 7.5(e)), Parent and each of its Subsidiaries shall be entitled to
acquire shares of Company Redeemable Preferred Stock by exchange for Parent
Ordinary Shares or other voting shares of Parent.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
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(a) (i) This Agreement shall have been adopted and the Company Charter
Amendment shall have been approved by the affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon; and
(ii) Each of the increase in the authorized ordinary share capital of
Parent and the issuance of Parent Ordinary Shares pursuant to the Merger shall
have been approved by the holders of issued Parent Ordinary Shares as and to the
extent required by Cayman Islands law, Parent's memorandum of association and
articles of association and the rules of the NYSE.
(b) (i) Any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, (ii) there shall not be
pending or threatened in writing any governmental claim, proceeding or action by
an agency of the government of the United States, of the United Kingdom or of
the European Union seeking to restrain, prohibit or rescind any transactions
contemplated by this Agreement as an actual or threatened violation of any
Antitrust Law, as applicable, or seeking to penalize a party for completing any
such transaction which in any of such cases is, in the reasonable judgment of
Parent, reasonably likely to have any of the effects described in Section
7.5(d)(i) through (iv), (iii) in the event of any review by the U.K. Office of
Fair Trading or, if applicable, the U.K. Secretary of State for Trade and
Industry, indications reasonably satisfactory to each of the Company and Parent
that the Merger will not be referred to the Competition Commission shall have
been received, (iv) any mandatory waiting period under any applicable Non-U.S.
Antitrust Laws (where the failure to observe such waiting period referred to in
this clause (iv) would, in the reasonable judgment of Parent, reasonably be
expected to have any of the effects described in Section 7.5(d)(i) through (iv))
shall have expired or been terminated and (v) there shall not have been a final
or preliminary administrative order denying approval of or prohibiting the
Merger issued by a governmental authority with jurisdiction to enforce
applicable Non-U.S. Antitrust Laws, which order is in the reasonable judgment of
Parent reasonably likely to have any of the effects described in Section
7.5(d)(i) through (iv).
(c) None of the parties hereto shall be subject to any decree, order or
injunction of a court of competent jurisdiction, U.S. or non-U.S., which
prohibits the consummation of the Merger; provided, however, that, prior to
invoking this condition, each party agrees to comply with Section 7.5, and with
respect to other matters not covered by Section 7.5, to use its commercially
reasonable best efforts to have any such decree, order or injunction lifted or
vacated; and no statute, rule or regulation shall have been
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enacted by any governmental authority which prohibits or makes unlawful the
consummation of the Merger.
(d) The Form S-4 shall have become effective and no stop order with respect
thereto shall be in effect.
(e) The Parent Ordinary Shares to be issued pursuant to the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(f) The Company Charter Amendment shall have been filed with the Secretary
of State of the State of Delaware and become effective.
Section 8.2 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Parent, Sub and Merger Sub shall have performed, in all material
respects, their covenants and agreements contained in this Agreement required to
be performed on or prior to the Closing Date, and the representations and
warranties of Parent, Sub and Merger Sub contained in this Agreement (i) that
are qualified as to materiality or Parent Material Adverse Effect shall be true
and correct in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date), and (ii) those not so qualified shall be true and
correct in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case as of such earlier date), except for such breaches of representations and
inaccuracies in warranties in this clause (ii) that do not and are not
reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect, and the Company shall have received a certificate of each of
Parent, Sub and Merger Sub, executed on its behalf by its President or one of
its Vice Presidents, dated the Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Cravath, Swaine & Moore,
counsel to the Company, in form and substance reasonably satisfactory to the
Company and dated the Closing Date to the effect that, for United States federal
income tax purposes, the Merger will qualify as a reorganization under Section
368(a) of the Code and no gain or loss will be recognized by the stockholders of
the Company who exchange Company Common Stock solely for Parent Ordinary Shares
pursuant to the Merger
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(except with respect to (i) cash received in lieu of fractional shares or (ii)
stockholders of the Company who are not Eligible Company Shareholders). In
rendering such opinion, such counsel shall be entitled to receive and rely upon
representations of officers of the Company, Parent, Sub and Merger Sub,
substantially in the form of Exhibit D, dated as of the Closing Date.
(c) At any time after the date of this Agreement, there shall not have been
any event or occurrence, or series of events or occurrences, that has had or is
reasonably likely to have, individually or in the aggregate with all other
events or occurrences since the date of this Agreement, a Parent Material
Adverse Effect.
Section 8.3 Conditions to Obligation of Parent, Sub and Merger Sub to
Effect the Merger. The obligations of Parent, Sub and Merger Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) The Company shall have performed, in all material respects, its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date, and the representations and warranties of the
Company contained in this Agreement (i) that are qualified as to materiality or
Company Material Adverse Effect shall be true and correct in all respects as of
the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier date), and
(ii) those not so qualified shall be true and correct in all respects as of the
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case as of such earlier date), except for
such breaches of representations and inaccuracies in warranties in this clause
(ii) that do not and are not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, and Parent shall have received a
certificate of the Company, executed on its behalf by its President or one of
its Vice Presidents, dated the Closing Date, certifying to such effect.
(b) Parent shall have received the opinion of Baker Botts L.L.P., counsel
to Parent, in form and substance reasonably satisfactory to Parent and dated the
Closing Date to the effect that, for United States federal income tax purposes,
the Merger will qualify as a reorganization under Section 368(a) of the Code and
no gain or loss will be recognized by the stockholders of the Company who
exchange Company Common Stock solely for Parent Ordinary Shares pursuant to the
Merger (except with respect to (i) cash received in lieu of fractional shares or
(ii) stockholders of the Company who are not Eligible Company Shareholders). In
rendering such opinion, such counsel shall be
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entitled to receive and rely upon representations of officers of the Company,
Parent, Sub and Merger Sub, substantially in the form of Exhibit E, dated as of
the Closing Date.
(c) At any time after the date of this Agreement, there shall not have been
any event or occurrence, or series of events or occurrences, that has had or is
reasonably likely to have, individually or in the aggregate with all other
events or occurrences since the date of this Agreement, a Company Material
Adverse Effect.
(d) The shares of Company Redeemable Preferred Stock shall have been listed
on the NYSE, another national securities exchange or the Nasdaq National Market
System prior to the record date for the meeting of the Company's stockholders to
adopt this Agreement.
(e) Parent shall have received from each Rule 145 Affiliate an agreement to
the effect set forth in Section 7.11.
(f) The closing of the Public Offering shall have occurred, the notice of
redemption contemplated by Section 7.20(c) shall have been duly given and the
Company shall have completed the Irrevocable Deposit; provided, that this
Section 8.3(f) shall expire as a condition to the obligations of Parent, Sub and
Merger Sub to effect the Merger if (i) the other conditions to the obligations
of each party to effect the Merger (other than those that are expected to be
fulfilled but can only be fulfilled on the Closing Date) have been fulfilled
(and Parent shall have received a written notice from the Company as to such
fulfillment) for a period of eight business days, (ii) the Company has complied
with its obligations under Section 7.20 and (iii) the Shelf Registration
Statement shall have become effective and no stop order shall be in effect
during such period of eight business days, provided that any such
noneffectiveness or stop order is not the result of any act or omission by
Parent, Parent's advisors or any underwriter selected by Parent.
(g) The Company High Yield Debt shall have been rated "Investment Grade" or
been given an "Investment Grade Rating" (as such terms are defined in the
applicable Company High Yield Debt indentures) by Moody's and S&P.
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ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by the mutual written consent of the
Company and Parent.
Section 9.2 Termination by Parent or the Company. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Parent or the Company if:
(a) the Merger shall not have been consummated by August 31, 2001;
provided, however, that the right to terminate this Agreement pursuant to this
clause (a) shall not be available to any party whose failure to perform or
observe in any material respect any of its obligations under this Agreement in
any manner shall have been the cause of, or resulted in, the failure of the
Merger to occur on or before such date;
(b) a meeting (including adjournments and postponements) of the Company's
stockholders for the purpose of obtaining the approvals required by Section
8.1(a)(i) shall have been held and such stockholder approvals shall not have
been obtained;
(c) a meeting (including adjournments and postponements) of Parent's
shareholders for the purpose of obtaining the approvals required by Section
8.1(a)(ii) shall have been held and such shareholder approvals shall not have
been obtained; or
(d) a U.S. federal, state or non-U.S. court of competent jurisdiction or
federal, state or non-U.S. governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this clause (d) shall
have complied with Section 7.5 and, with respect to other matters not covered by
Section 7.5, shall have used its commercially reasonable best efforts to remove
such injunction, order or decree.
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Section 9.3 Termination by the Company. This Agreement may be terminated at
any time prior to the Effective Time by action of the Board of Directors of the
Company, after consultation with its outside legal advisors, if
(a) (i) there has been a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement set forth in this Agreement or
if any representation or warranty of Parent or Merger Sub shall have become
untrue, in either case such that the conditions set forth in Section 8.2(a)
would not be satisfied and (ii) such breach is not curable, or, if curable, is
not cured within 30 days after written notice of such breach is given to Parent
by the Company; provided, however, that the right to terminate this Agreement
pursuant to Section 9.3(a) shall not be available to the Company if it, at such
time, is in breach of any representation, warranty, covenant or agreement set
forth in this Agreement such that the condition set forth in Section 8.3(a)
shall not be satisfied;
(b) the Board of Directors of Parent shall have withdrawn or materially
modified, in a manner adverse to the Company, its approval or recommendation of
the amendments to Parent's articles of association or the issuance of Parent
Ordinary Shares pursuant to the Merger or recommended a Parent Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of the Company has
received a Company Superior Proposal, (ii) in light of such Company Superior
Proposal the Board of Directors of the Company shall have determined in good
faith, (A) after consultation with its outside legal advisors, that proceeding
with the Merger would be inconsistent with its fiduciary obligations and (B)
that there is a substantial likelihood that the adoption by the Company's
stockholders of this Agreement will not be obtained by reason of the existence
of such Company Superior Proposal, (iii) the Company has complied in all
material respects with Section 7.2, (iv) the Company has previously paid the fee
due under Section 9.5(a), (v) the Board of Directors of the Company concurrently
approves, and the Company concurrently enters into, a binding definitive written
agreement providing for the implementation of such Company Superior Proposal and
(vi) Parent is not at such time entitled to terminate this Agreement pursuant to
Section 9.4(a); provided that the Company may not effect such termination
pursuant to this Section 9.3(c) unless and until (i) Parent receives at least
ten business days' prior written notice from the Company of its intention to
effect such termination pursuant to this Section 9.3(c); and (ii) during such
ten business day period, the Company shall, and shall cause its respective
financial and
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legal advisors to, consider any adjustment in the terms and conditions of this
Agreement that Parent may propose.
Section 9.4 Termination by Parent. This Agreement may be terminated at any
time prior to the Effective Time by action of the Board of Directors of Parent,
after consultation with its outside legal advisors, if:
(a) (i) there has been a breach by the Company of any representation,
warranty, covenant or agreement set forth in this Agreement or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 8.3(a) would not be satisfied
and (ii) such breach is not curable, or, if curable, is not cured within 30 days
after written notice of such breach is given by Parent to the Company; provided,
however, that the right to terminate this Agreement pursuant to Section 9.4(a)
shall not be available to Parent if it, at such time, is in breach of any
representation, warranty, covenant or agreement set forth in this Agreement such
that the conditions set forth in Section 8.2(a) shall not be satisfied; or
(b) the Board of Directors of the Company shall have withdrawn or
materially modified, in a manner adverse to Parent, its approval or
recommendation of the Merger or the Company Charter Amendment or recommended a
Company Acquisition Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of Parent has
received a Parent Superior Proposal, (ii) in light of such Parent Superior
Proposal the Board of Directors of Parent shall have determined in good faith,
(A) after consultation with its outside legal advisors, that proceeding with the
Merger would be inconsistent with its fiduciary obligations and (B) that there
is a substantial likelihood that the adoption by Parent's stockholders of this
Agreement will not be obtained by reason of the existence of such Parent
Superior Proposal, (iii) Parent has complied in all material respects with
Section 7.3, (iv) Parent has previously paid the fee due under Section 9.5(b),
(v) the Board of Directors of Parent concurrently approves, and Parent
concurrently enters into, a binding definitive written agreement providing for
the implementation of such Parent Superior Proposal and (vi) the Company is not
at such time entitled to terminate this Agreement pursuant to Section 9.3(a);
provided that Parent may not effect such termination pursuant to this Section
9.4(c) unless and until (i) the Company receives at least ten business days'
prior written notice from Parent of its intention to effect such termination
pursuant to this Section 9.4(c); and (ii) during such ten business day period,
Parent shall, and shall cause its
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respective financial and legal advisors to, consider any adjustment in the terms
and conditions of this Agreement that the Company may propose.
Section 9.5 Effect of Termination. (a) (i) If this Agreement is terminated:
(A) by the Company or Parent pursuant to Section 9.2(b) [failure to
obtain Company stockholder approval] after the public announcement of a Company
Acquisition Proposal, whether or not the Company Acquisition Proposal is still
pending or has been consummated; or
(B) by Parent pursuant to Section 9.4(b) [withdrawal of Company
recommendation to stockholders]; or
(C) by the Company pursuant to Section 9.3(c) [fiduciary out];
then the Company shall pay Parent a fee of $225 million at the time of such
termination in cash by wire transfer to an account designated by Parent.
(ii) If this Agreement is terminated by the Company pursuant to Section
9.3(c) and in accordance with the terms thereof, no fee additional to the fee
specified in Section 9.3(c) shall be payable by the Company to Parent.
(b) (i) If this Agreement is terminated:
(A) by the Company or Parent pursuant to Section 9.2(c) [failure to
obtain Parent shareholder approval] after the public announcement of a Parent
Acquisition Proposal, whether or not the Parent Acquisition Proposal is still
pending or has been consummated; or
(B) by the Company pursuant to Section 9.3(b) [withdrawal of Parent
recommendation to shareholders]; or
(C) by Parent pursuant to Section 9.4(c) [fiduciary out];
then Parent shall pay the Company a fee of $225 million at the time of such
termination in cash by wire transfer to an account designated by the Company.
(ii) If this Agreement is terminated by Parent pursuant to Section 9.4(c)
and in accordance with the terms thereof, no fee additional to the fee specified
in Section 9.4(c) shall be payable by Parent to the Company.
(c) If this Agreement is terminated by the Company or Parent pursuant to
Section 9.2(b) other than in circumstances covered by Section 9.5(a), then
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the Company shall pay Parent a fee of $10 million to reimburse it for its costs
and expenses incurred in connection with this transaction. If this Agreement is
terminated by the Company or Parent pursuant to Section 9.2(c), other than in
circumstances covered by Section 9.5(b), then Parent shall pay the Company a fee
of $10 million to reimburse it for its costs and expenses incurred in connection
with this transaction.
(d) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 9, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
9.5, Section 7.5(c) and Section 7.12 and except for the provisions of Sections
10.3, 10.4, 10.6, 10.8, 10.9, 10.11, 10.12 and 10.13, provided that nothing
herein shall relieve any party from any liability for any willful and material
breach by such party of any of its representations, warranties, covenants or
agreements set forth in this Agreement and all rights and remedies of such
nonbreaching party under this Agreement in the case of such a willful and
material breach, at law or in equity, shall be preserved.
Section 9.6 Extension; Waiver. At any time prior to the Effective Time,
each party may by action taken by its Board of Directors, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger;
provided, however, that the agreements contained in Article 4 and in Sections
3.3, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16, 7.17 and this Article 10 and the
agreements delivered pursuant to this Agreement shall survive the Merger. The
Confidentiality and Standstill Agreement shall survive any termination of this
Agreement, and the provisions of such Confidentiality and Standstill Agreement
shall apply to all information and material delivered by any party hereunder.
Section 10.2 Notices. Except as otherwise provided herein, any notice
required to be given hereunder shall be sufficient if in writing, and sent by
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facsimile transmission or by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
(a) if to the Company:
R & B Falcon Corporation
901 Threadneedle
Houston, Texas 77027
Attention: Wayne K. Hillin, Esq.
Facsimile: (281) 496-0285
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Richard Hall, Esq.
Facsimile: (212) 474-3700
(b) if to Parent, Sub or Merger Sub:
Transocean Sedco Forex Inc.
4 East Greenway Plaza
Houston, Texas 77046
Attention: Eric Brown, Esq.
Facsimile: (713) 232-7600
with a copy to:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: Gene J. Oshman, Esq.
Facsimile: (713) 229-1522
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
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any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 4, Section 7.13, 7.14(f) and 7.17 and except as provided in any
agreements delivered pursuant hereto (collectively, the "Third-Party
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third-Party
Provisions may be enforced by the beneficiaries thereof.
Section 10.4 Entire Agreement. This Agreement, the exhibits to this
Agreement, the Company Disclosure Letter, the Parent Disclosure Letter and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto, except that the Confidentiality and Standstill Agreement shall continue
in effect. No addition to or modification of any provision of this Agreement
shall be binding upon any party hereto unless made in writing and signed by all
parties hereto.
Section 10.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company or Parent, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws.
Section 10.7 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
Section 10.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretative effect whatsoever.
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Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the singular
number shall include the plural and vice versa, words denoting any gender shall
include all genders, and words denoting natural persons shall include
corporations and partnerships and vice versa.
(b) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the actual
knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to the Company or Parent shall
mean a material adverse effect or change on (a) the business, assets, conditions
(financial or otherwise) or operations of a party (including the Surviving
Entity when used with respect to the Company) and its Subsidiaries on a
consolidated basis, except for such changes or effects in general economic,
capital market, regulatory or political conditions or changes that affect
generally the drilling services industry or changes arising out of the
announcement of this Agreement, or (b) the ability of the party to consummate
the transactions contemplated by this Agreement or fulfill the conditions to
closing. "Company Material Adverse Effect" and "Parent Material Adverse Effect"
mean a Material Adverse Effect with respect to the Company and Parent,
respectively.
(d) The term "Subsidiary," when used with respect to any party, means any
corporation or other organization (including a limited liability company),
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization or any organization of which such party is a
general partner.
Section 10.10 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
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Section 10.11 Incorporation of Exhibits. The Company Disclosure Letter, the
Parent Disclosure Letter and all exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
Section 10.12 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 10.13 Enforcement of Agreement. (a) The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Delaware state court or any Federal court located
in the State of Delaware in the event any dispute arises out of this Agreement
or any of the transactions contemplated herein, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated herein in any
court other than any Delaware state court or any Federal court sitting in the
State of Delaware and (iv) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement or any of the transactions
contemplated herein.
(c) Parent designates and appoints The Corporation Trust Company and such
person's successors and assigns as its lawful agent in the United States of
America upon which may be served, and which may accept and acknowledge, for and
on behalf of Parent all process in any action, suit or proceedings that may be
brought against Parent in any of the courts referred to in this Section, and
agrees that such service of process, or the acceptance or acknowledgment thereof
by said agent, shall be valid, effective and binding in every respect.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
TRANSOCEAN SEDCO FOREX INC.
By: /s/ J. Michael Talbert
-----------------------------------
Name:
Title:
TRANSOCEAN HOLDINGS INC.
By: /s/ J. Michael Talbert
-----------------------------------
Name:
Title:
TSF DELAWARE INC.
By: /s/ J. Michael Talbert
-----------------------------------
Name:
Title:
R&B FALCON CORPORATION
By: /s/ Paul B. Loyd, Jr.
-----------------------------------
Name:
Title:
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EXHIBIT A
AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
OF
R&B FALCON CORPORATION
R&B FALCON CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY:
FIRST: Section 4 of the Certificate of Designations, Preferences and
Relative, Participating, Optional and Other Special Rights of Preferred Stock
and Qualifications, Limitations and Restrictions Thereof (the "Certificate of
Designations") in respect of the Company's 13-7/8 Senior Cumulative Redeemable
Preferred Stock (the "Preferred Stock") is amended by adding at the end of said
Section 4 the following:
Effective immediately prior to the effective time of the merger
contemplated by the Agreement and Plan of Merger among Transocean Sedco Forex
Inc., Transocean Holdings Inc., TSF Delaware Inc. and the Corporation dated as
of August 19, 2000, as it may be amended from time to time (the "Merger
Agreement"), the Preferred Stock shall have the following additional voting
rights (capitalized terms used herein without definition shall have the meanings
assigned thereto in the Merger Agreement):
The Preferred Stock shall be entitled to vote in the election of
directors and shall vote together with the Common Stock and any other class or
series of shares that generally votes together with the Common Stock as one
class in such election. Each share of Preferred Stock shall have 0.1787 votes
per share [the number (rounded to the nearest ten-thousandth) equal to the
quotient of (a) $1,000 divided by (b) the product of (1) the quotient of the
number of shares of Company Common Stock outstanding as of August 17, 2000
divided by the number of shares of common stock, par value $.01 per share, of
the Surviving Entity (as defined in the Merger Agreement) to be outstanding
immediately after the Effective Time multiplied by (2) the closing price of the
Parent Ordinary Shares on August 18, 2000 multiplied by (3) the Common Stock
Merger Ratio].
SECOND: The foregoing amendment to the Certificate of Designations was
duly adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
<PAGE> 86
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed in its name and on its behalf by its duly authorized officer and its
corporate seal to be affixed hereto on this ___ day of ______________, ______.
R&B FALCON CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 87
EXHIBIT B
_________, 2000
Transocean Sedco Forex Inc.
4 East Greenway Plaza
Houston, TX 77046
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of R&B Falcon Corporation, a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). I have been further advised that
pursuant to the terms of the Agreement and Plan of Merger dated as of August
___, 2000 (the "Merger Agreement") among Transocean Sedco Forex Inc., a Cayman
Islands exempted company ("Parent"), Transocean Holdings Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), TSF Delaware Inc.,
a Delaware corporation and a wholly owned subsidiary of Sub ("Merger Sub"), and
the Company, Merger Sub will be merged with and into the Company (the "Merger")
and that as a result of the Merger, I may receive Parent Ordinary Shares (as
defined in the Merger Agreement) in exchange for shares of Company Common Stock
(as defined in the Merger Agreement) owned by me.
I represent, warrant and covenant to Parent that in the event I receive
any Parent Ordinary Shares as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition of
such Parent Ordinary Shares in violation of the Act or the
Rules and Regulations.
(b) I have carefully read this letter and discussed its
requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of Parent Ordinary
Shares to the extent I believed necessary with my counsel or
counsel for the Company.
(c) I have been advised that the issuance of Parent Ordinary
Shares to me pursuant to the Merger will be registered with
the Commission under the Act on a Registration Statement on
Form S-4. However, I have also been advised that, since at the
time the Merger will be submitted for a vote of the
stockholders of the Company I may be deemed to have been an
affiliate of the Company for purposes of paragraphs (c) and
(d) of Rule 145 of the Rules and Regulations, I may not sell,
transfer or otherwise dispose of Parent Ordinary Shares issued
to me in the
<PAGE> 88
Merger within one year following the Merger if I am not at
such time an affiliate of Parent and later, if I am then an
affiliate of Parent, unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 of the Rules and
Regulations, or (iii) in the opinion of counsel reasonably
acceptable to Parent, such sale, transfer or other disposition
is otherwise exempt from registration under the Act.
(d) I understand that Parent is under no obligation to register
such sale, transfer or other disposition by me or on my behalf
under the Act or take any other action necessary in order to
make compliance with an exemption from such registration
available.
(e) I also understand that stop transfer instructions will be
given to Parent's transfer agents with respect to the Parent
Ordinary Shares and that there will be placed on the
certificate for the Parent Ordinary Shares issued to me in
connection with the Merger, or any substitutions therefor, a
legend substantially in the form set forth below:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies.
The securities may not be sold or otherwise
transferred except in compliance with the
requirements of said Rule 145 or pursuant to a
registration statement under said act or an exemption
from such registration."
It is understood and agreed that the legend set forth in paragraph (e)
above shall be removed by delivery of substitute certificates without such
legend (i) prior to the first anniversary of the Merger if I am not at such time
an affiliate of Parent, if the undersigned shall have delivered to Parent a copy
of a letter from the staff of the Commission, or an opinion of counsel
reasonably satisfactory to Parent in form and substance reasonably satisfactory
to Parent, to the effect that such legend is no longer required for purposes of
the Act or (ii) thereafter at the request of the undersigned if I am not at such
time an affiliate of Parent.
Execution of this letter should not be construed as an admission,
stipulation or acknowledgment by me that I am an "affiliate" of the Company as
described in the first paragraph hereof or considered as a waiver of any rights
that I may have to object to any claim that I am such an affiliate on or after
the date of this letter.
Very truly yours,
----------------------------------
Name:
<PAGE> 89
ACCEPTED AND AGREED THIS
____ DAY OF ____________, 2000.
TRANSOCEAN SEDCO FOREX INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 90
EXHIBIT C
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is made and entered into effective as of
the ____ day of _______________, by and between R&B Falcon Corporation, a
Delaware corporation ("Company"), and Paul B. Loyd, Jr., an individual
("Consultant").
WHEREAS, in connection with the transactions contemplated by that certain
Agreement and Plan of Merger, dated as of the date hereof, among Transocean
Sedco Forex Inc. ("Parent"), Transocean Holdings Inc., TSF Delaware Inc. and
Company (the "Merger Agreement"), Company will become an indirect wholly-owned
subsidiary of Parent; and
WHEREAS, in the event of the termination of Consultant's employment with Company
following the transactions contemplated by the Merger Agreement, Company and
Parent wish to have Consultant provide consulting services to the Company for
the period provided in this Agreement and Consultant wishes to provide services
to Company for such period, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, and intending to be legally bound hereby the parties agree as follows:
1. ENGAGEMENT. Company hereby retains Consultant to provide consulting services
with respect to strategies and policies, special projects, incentives, goals and
other matters related to the development and growth of Company. Such services
shall be as directed by the Chief Executive Officer of Company or other person
or persons as designated by the Chief Executive Officer from time to time.
Consultant shall be required to be generally available to Company to perform the
services and agrees to provide upon request a minimum of thirty hours of service
per month to Company at such times and places as may be reasonably requested by
Company and consistent with Consultant's other activities. Further, Consultant
agrees not to perform substantially similar services during the term hereof to
any other company which provides offshore contract drilling services; provided
that Consultant may request a waiver of such restriction on a case by case basis
and Company agrees not to unreasonably withhold, condition or delay such waiver.
2. TERM. The term of this Agreement shall commence on the effective date of
Consultant's termination of employment with Company at any time following the
Effective Time (as defined in the Merger Agreement) (the "Effective Date") and
continue in effect for a period of three (3) years thereafter; provided,
however, that in the event Consultant becomes a member of the Board of Directors
of Parent ("Parent Board"), the Agreement shall continue in effect only until
the second anniversary of the Effective Date; provided, further, that Consultant
may terminate this Agreement on thirty (30) days' advance written notice to
Company. Upon such an expiration or termination of this Agreement, neither party
shall have any further obligation towards the other in connection herewith
except as provided in Article 5(g).
1
<PAGE> 91
3. COMPENSATION. As compensation for the performance by Consultant of services
under this Agreement, Company agrees to pay to Consultant the following:
(a) an annual retainer fee of THREE HUNDRED THOUSAND DOLLARS
($300,000); provided, that if Consultant becomes a member of
the Parent Board, the annual retainer fee shall thereafter be
THREE HUNDRED SIXTY THOUSAND DOLLARS ($360,000) and Consultant
hereby waives any fees or other remuneration that would
otherwise be payable to Consultant for services as a member of
the Parent Board; and
(b) Company agrees to pay direct to the vendor or reimburse
Consultant, as the case may be, reasonable expenses incurred
by Consultant in connection with the performance of his
services under this Agreement. These expenditures and expenses
incurred by and on behalf of Consultant shall be in accordance
with those policies in effect for Company from time to time.
These expenses shall include but shall not be limited to:
(1) Transportation, meals and lodging, parking, tips or
any other expenses incurred in accordance with
Company's policies and procedures;
(2) Telephone, facsimile or other communication costs,
and
(3) Company's current per mile rate for Consultant's use
of his personal automobile on Company's business.
Consultant shall not be entitled to any other remuneration, benefit or
reimbursement in connection with this Agreement or the services performed
hereunder except as may otherwise be expressly set forth herein.
4. PAYMENTS.
(a) The annual retainer referred to in Article 3(a) above shall be paid in
monthly installments of TWENTY FIVE THOUSAND DOLLARS ($25,000) (or THIRTY
THOUSAND DOLLARS ($30,000) in the event Consultant becomes a member of the
Parent Board), payable on the last day of the calendar month for services
performed during the month.
(b) Expense statements shall be submitted by Consultant with reasonable
documentation in accordance with the policies of Company. Reimbursement shall be
paid within ten (10) business days of receipt of an expense statement by
Company.
(c) Consultant may request cash advances for special purposes such as trips
incurred at Company's request. Such cash advances shall be approved by Company's
designated person, and such amount shall be deducted from Consultant's first
expense statement submitted after such cash advance or any balance outstanding
shall be repaid with submittal of the expense statement.
5. GENERAL.
(a) Consultant agrees that the extent and character of the work to be done by
Consultant shall be subject to the general supervision, direction, control and
approval of Company's Chief
2
<PAGE> 92
Executive Officer to whom Consultant shall report and be responsible. In the
performance of the work and services hereunder, Consultant shall be deemed an
independent contractor and shall not be an employee of Company. Consultant shall
have no right to bind Company and shall limit the services to be provided
hereunder to those requested or directed to be performed in accordance with
Article 1.
(b) Consultant shall be responsible for the payment of all taxes or other
charges imposed by any governmental authority on his services and fees.
(c) Any suggestions, analyses, programs, products, materials conceived, prepared
or developed by Consultant during the term of this Agreement, whether alone or
jointly with others, which relate to the Company's core offshore drilling
business shall be Company's sole and exclusive property.
(d) All information obtained by Consultant or communicated to Consultant by
Company in the course of conduct of Consultant's work and services hereunder
shall be considered confidential and shall not be divulged by Consultant to any
person, firm or corporation other than Company's representative without
Company's prior written consent unless required to be disclosed by court order,
subpoena or other government process, in which case Consultant shall notify
Company promptly after learning of any such court order, subpoena or government
process. Company shall furnish any information necessary for Consultant to carry
out Consultant's duties.
(e) Consultant shall not assign or subcontract any of Consultant's obligations
hereunder without the prior written consent of Company; provided, that
Consultant shall be permitted to assign this Agreement to any entity that is
wholly-owned by Consultant. This Agreement shall inure to the benefit of and be
binding on the executors, administrators, personal representatives, permitted
assigns and successors of the respective parties.
(f) In acknowledgement of the fees and occasional transportation, meals and
lodgings being provided by Company to enable and assist Consultant in the
execution of his duties and in exchange for Company's agreement to release,
defend and indemnify Consultant from any and all claims, suits, actions,
damages, liabilities and expenses (including attorney fees and court costs)
(collectively, "Claims") for personal injury to the employees, officers,
directors and agents of Company and Company's clients, or damage to Company's
and Company's clients' property arising out of the services to be provided
hereunder, regardless of whether Consultant may be negligent or otherwise
legally at fault, Consultant agrees to release, defend and indemnify Company and
its clients and their respective employees, officers, directors and agents from
any Claims for personal injury to, or death of, Consultant or damage to or loss
of Consultant's property arising out of the services to be provided hereunder,
regardless of whether Company may be or may be alleged to be negligent or
otherwise legally at fault.
(g) The provisions of Article 5(c), (d) and (f) shall survive the expiration of
this Agreement.
6. MODIFICATION. No modification, amendment or waiver of any of the provisions
of this Agreement shall be effective unless made in writing with specific
reference to this Agreement and signed by each of the parties hereto.
3
<PAGE> 93
7. NOTICES. Any notices required or permitted hereunder shall be in writing and
shall be delivered in person or mailed certified or registered mail, return
receipt requested, properly addressed:
(a) If to Company:
R&B Falcon Corporation
Attn: Chief Executive Officer
(b) If to Consultant:
Paul B. Loyd, Jr.
------------------------------
------------------------------
Either party hereto may designate a different address by written notice given to
the other party in accordance herewith.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to its rules of
conflict of laws.
10. EFFECTIVENESS. Notwithstanding anything herein to the contrary, this
Agreement is conditioned upon the consummation of the Merger (as defined in the
Merger Agreement) and shall be void ab initio and of no force and effect upon
the termination of the Merger Agreement prior to the Effective Time.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed as of the day and year first above written.
--------------------------------
Paul B. Loyd, Jr.
R&B FALCON CORPORATION
By:
-----------------------------
Title:
--------------------------
4
<PAGE> 94
EXHIBIT D
TO THE MERGER AGREEMENT
[Letterhead of R&B Falcon Corporation]
[ ], 2000
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Baker Botts LLP
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to
Sections 8.2(b) and 8.3(c) of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of [ ], 2000, among TRANSOCEAN SEDCO FOREX INC, a company
organized under the laws of the Cayman Islands ("Parent"), TRANSOCEAN HOLDINGS
INC, a company organized under the laws of Delaware and a wholly owned
subsidiary of Parent ("Sub"), TSF DELAWARE INC., a company organized under the
laws of Delaware and a wholly owned subsidiary of Sub ("Merger Sub"), and R&B
FALCON CORPORATION, a company organized under the laws of Delaware (the
"Company"), pursuant to which Merger Sub will merge with and into the Company,
with the Company being the surviving entity (the "Merger"), and in connection
with the filing with the Securities and Exchange Commission (the "SEC") of the
registration statement on Form S-4 (the "Registration Statement"), which
includes the Joint Proxy Statement of Parent, Sub and the Company, each as
amended or supplemented through the date hereof, the undersigned certifies and
represents on behalf of the Company, after due inquiry and investigation, as
follows (any capitalized term used
<PAGE> 95
but not defined herein having the meaning given to such term in the Merger
Agreement):
1. The facts relating to the Merger as described in the Merger
Agreement, Registration Statement and the other documents described in the
Registration Statement are, insofar as such facts pertain to the Company, true,
correct and complete in all material respects. The Merger will be consummated in
accordance with the Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to which
each issued and outstanding share of the Company's common stock, par value $.01
per share, (the "Company Common Stock"), will be converted into fully paid and
nonassessable shares of common stock, par value $.01 per share, of Parent
("Parent Ordinary Shares"), is the result of arm's length bargaining.
3. In the Merger, shares of Company stock representing at least 80
percent of the total combined voting power of all classes of Company stock
entitled to vote and at least 80 percent of the total number of shares of all
other classes of Company stock will be exchanged solely for Parent voting stock.
For purposes of this representation, (i) shares of Company stock exchanged for
cash or other property furnished, directly or indirectly, by Parent, Sub or
Merger Sub and (ii) shares of Company stock, if any, issued pursuant to the
Public Offering, as described in Section 7.20 of the Merger Agreement, in each
case will be treated as outstanding Company stock on the Closing Date. Except
for the issuance of voting rights as described in paragraph 4, no shares or
other securities of the Company will be issued to the shareholders of the
Company pursuant to the Merger (although shares of the Company may be issued to
other persons pursuant to the Public Offering, as described in Section 7.20 of
the Merger Agreement). Following the Merger, the Company has no plan or
intention to issue additional shares of its stock that would result in Sub
failing to own after the Merger, directly or indirectly, at least 80 percent of
the total combined voting power of all classes of Company stock entitled to vote
and at least 80 percent of the total number of shares of all other classes of
Company stock. To the best knowledge of the management of the Company, Sub has
no plan or intention to, and Parent has no plan or intention to cause Sub to,
sell, transfer or dispose of any stock of the Company or to cause the Company to
issue additional shares of its stock that would in either case result in Sub
failing to own after the Merger, directly or indirectly, at least 80 percent of
the total combined voting power of all classes of Company stock entitled to vote
and at
<PAGE> 96
least 80 percent of the total number of shares of all other classes of Company
stock.
4. The 13.875% Cumulative Redeemable Preferred Stock of the
Company (the "Company Redeemable Preferred Stock") shall continue to be
outstanding in substantially identical form except for (i) the addition of
voting rights pursuant to the Company Preferred Stock Voting Right Charter
Amendment and (ii) Company Redeemable Preferred Stock redeemed by the Company or
repurchased by any of its subsidiaries pursuant to and in accordance with
Section 7.20 of the Merger Agreement.
5. If cash payments are made to holders of Company Common Stock in
lieu of fractional shares of Parent Ordinary Shares that would otherwise be
issued to such holders in the Merger, such payments will be made for the purpose
of saving Parent the expense and inconvenience of issuing and transferring
fractional shares of Parent Ordinary Shares, and will not represent separately
bargained for consideration. The total cash consideration that will be paid in
the Merger to holders of Company Common Stock in lieu of fractional shares of
Parent Ordinary Shares will not exceed one percent of the total consideration
that will be issued in the Merger to shareholders of Company in exchange for
their shares of Company Stock.
6. (i) Except pursuant to and in accordance with Section 7.20 of
the Merger Agreement, neither the Company nor any corporation related to the
Company (as defined in Treasury Regulation Section 1.368-1(e)) has acquired or
has any plan or intention to acquire any Company stock in contemplation of the
Merger, or otherwise as part of a plan of which the Merger is a part (including,
without limitation, in connection with the Public Offering).
(ii) The Company is not aware of any plan or intention on the part
of Parent or Sub to acquire or redeem any of the Parent stock issued in the
Merger, either directly or through any transaction, agreement or arrangement
with any other person. The Company has no plan or intention, nor is the Company
aware of any plan or intention on the part of any person related to Parent or
Sub (as defined in Treasury Regulation Section 1.368-1(e)), to acquire or redeem
any of the Parent stock issued in the Merger, either directly or through any
transaction, agreement or arrangement with any other person. For purposes of
this representation letter, a person is considered to own or acquire stock owned
or acquired (as the case may be) by a partnership in which such person is a
partner in proportion to such person's interest in the partnership.
<PAGE> 97
7. Except for deemed distributions, if any, made pursuant to and
in accordance with Section 7.20 of the Merger Agreement, the Company has not
made, and does not have any plan or intention to make, any distributions with
respect to any stock of the Company prior to, in contemplation of or otherwise
in connection with, the Merger (other than dividends made in the ordinary course
of business).
8. The Company is not aware of any present plan or intention on
the part of Sub to, or of any present plan or intention of Parent to cause Sub
to, following the Merger, liquidate the Company, merge the Company with or into
another corporation in which the Company is not the survivor, sell or otherwise
dispose of shares of the Company, cause the Company to distribute the proceeds
of any borrowings incurred by the Company or cause the Company or any of its
subsidiaries to sell, distribute or otherwise dispose of any of their assets,
except for (i) dispositions made in the ordinary course of business and
transfers permitted under Section 368(a)(2)(C) of the Code or Treasury
Regulation Section 1.368-1(d) or 1.368-2(k) and (ii) dispositions of assets of
the Company or its subsidiaries having a fair market value, individually or in
the aggregate, not in excess of 70% of the gross fair market value and 90% of
the net fair market value of the assets held by the Company immediately prior to
the Merger. For this purpose, assets used to pay reorganization expenses, to
repurchase Company Redeemable Preferred Stock, to pay dissenters or to make any
other redemption shall be treated as held immediately prior to the Merger.
9. Except as specifically provided in the Merger Agreement, the
Company and stockholders of the Company will pay their respective expenses, if
any, incurred in connection with the Merger. The Company has neither paid
(directly or indirectly) nor agreed to assume any expense or other liability,
whether fixed or contingent, incurred or to be incurred by any stockholders of
the Company in connection with or as part of the Merger or any related
transactions.
10. Except as otherwise specifically contemplated under the Merger
Agreement, immediately prior to the time of the Merger, the Company will not
have outstanding any warrants, options, convertible securities or any other type
of right pursuant to which any person could acquire Company stock.
Simultaneously with the Merger, all outstanding options and related stock
appreciation rights, if any, to purchase or acquire a share of Company stock
granted under employee incentive or benefits plans, programs or arrangements and
non-employee director plans presently maintained by the Company, together with
<PAGE> 98
all other outstanding awards granted under such plans, will be canceled or
converted into similar instruments of Parent. Immediately following the Merger,
the only classes of Company stock outstanding will be the Company Common Stock
held by Sub and the Company Redeemable Preferred Stock held by the historic
shareholders of the Company.
11. No assets of the Company have been sold, transferred or
otherwise disposed of which would prevent Sub from continuing the "historic
business" of Company or from using a significant portion of the "historic
business assets" of the Company in a business following the Merger (as such
terms are defined in Treasury Regulation Section 1.368-1(d)).
12. In connection with the Merger and related transactions, the
Company Common Stock will be converted solely into Parent voting stock (except
for cash paid in lieu of fractional shares of Parent Ordinary Shares). For
purposes of this representation, Company stock redeemed for cash or other
property furnished, directly or indirectly, by Parent or Sub will be considered
as acquired by Sub. In connection with the Merger and related transactions, no
liabilities of the Company or any of its subsidiaries or any holders of Company
stock will be assumed by Parent or Sub, nor, to the best knowledge of the
management of the Company, will any of the Company stock acquired by Sub in
connection with the Merger be subject to any liabilities.
13. The Company is not an investment Company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
14. The Company will not take, and, to the best knowledge of the
management of Company, there is no plan or intention by stockholders of Company
to take, any position on any Federal, state or local income or franchise tax
return, or take any other tax reporting position, that is inconsistent with the
treatment of the Merger as a reorganization within the meaning of Section 368(a)
of the Code and as a transaction qualifying for the exemption from gain
recognition pursuant to Section 367(a)(1) of the Code (assuming where applicable
the filing of valid gain recognition agreements by five-percent transferee
shareholders as defined in Treasury Regulation Section 1.367(a)-3(c)(5)(ii)),
unless otherwise required by a "determination" (as defined in Section 1313(a)(1)
of the Code) or by applicable state or local tax law (and then only to the
extent required by such applicable state or local tax law).
15. None of the compensation received by any stockholder-employee
or stockholder-independent contractor of the Company in respect of periods at or
prior to the Effective Time
<PAGE> 99
represents separate consideration for, or is allocable to, any of its Company
stock. None of the Parent shares that will be received by any
stockholder-employee or stockholder-independent contractor of the Company in the
Merger represents separately bargained for consideration which is allocable to
any employment agreement or arrangement. The compensation paid to any
stockholder-employee or stockholder-independent contractor will be for services
actually rendered and will be determined by bargaining at arm's length.
16. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
17. On the date of the Merger, the fair market value of the assets
of the Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which such assets are subject.
18. Any funds used by the Company's Unrestricted Subsidiaries to
repurchase any Company Redeemable Preferred Stock will represent funds in excess
of the funds reasonably anticipated to be necessary for such Unrestricted
Subsidiaries' business needs.
19. No warrants, options or similar interests in the Company were
issued or, to the knowledge of the management of the Company, acquired with the
principal purpose of avoiding the general rule contained in Section 367(a)(1) of
the Code.
20. The Company will comply with the reporting requirements set
forth in Treasury Regulation Section 1.367(a)-3(c)(6).
21. There will be no dissenters to the Merger.
22. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of the Company with respect to the Merger.
23. The Merger is being undertaken for purposes of enhancing the
business of the Company and for other good and valid business purposes of the
Company.
24. The undersigned is authorized to make all the representations
set forth herein on behalf of the Company.
<PAGE> 100
The undersigned acknowledges that (i) your opinion will be based
on the accuracy of the representations set forth herein and on the accuracy of
the representations and warranties and the satisfaction of the covenants and
obligations contained in the Merger Agreement and the various other documents
related thereto, and (ii) your opinion will be subject to certain limitations
and qualifications including that it may not be relied upon if any such
representations or warranties are not accurate or if any of such covenants or
obligations are not satisfied in all material respects.
The undersigned acknowledges that your opinion will not address
any tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinion.
Very truly yours,
[Company]
by
-----------------------------------------
Name:
Title:
<PAGE> 101
EXHIBIT E
TO THE MERGER AGREEMENT
[Letterhead of Transocean Sedco Forex Inc.]
[ ], 2000
Baker Botts LLP
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to
Sections 8.2(b) and 8.3(c) of the Merger Agreement and Plan of Merger (the
"Merger Agreement") dated as of [ ], 2000, among TRANSOCEAN SEDCO FOREX INC., a
company organized under the laws of the Cayman Islands ("Parent"), TRANSOCEAN
HOLDINGS INC., a company organized under the laws of Delaware and a wholly owned
subsidiary of Parent ("Sub"), TSF DELAWARE INC., a company organized under the
laws of Delaware and a wholly owned subsidiary of Sub ("Merger Sub"), and R&B
FALCON CORPORATION, a company organized under the laws of Delaware (the
"Company"), pursuant to which Merger Sub will merge with and into the Company,
with the Company being the surviving entity (the "Merger"), and in connection
with the filing with the Securities and Exchange Commission (the "SEC") of the
registration statement on Form S-4 (the "Registration Statement"), which
includes the Joint Proxy Statement of Parent, Sub and the Company, each as
amended or supplemented through the date hereof, the undersigned certifies and
represents on behalf of Parent, after due inquiry and investigation, as follows
(any capitalized term used but not
<PAGE> 102
defined herein having the meaning given to such term in the Merger Agreement):
1. The facts relating to the Merger as described in the Merger
Agreement, Registration Statement and the other documents described in the
Registration Statement are, insofar as such facts pertain to Parent, Sub and
Merger Sub, true, correct and complete in all material respects. The Merger will
be consummated in accordance with the Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to
which each issued and outstanding share of the Company's common stock, par value
$.01 per share, (the "Company Common Stock"), will be converted into fully paid
and nonassessable shares of common stock, par value $.01 per share of Parent
("Parent Ordinary Shares"), is the result of arm's length bargaining.
3. In the Merger, Sub will acquire at least 80 percent of the
total combined voting power of all classes of Company stock entitled to vote and
at least 80 percent of the total number of shares of all other classes of
Company stock, solely in exchange for Parent voting stock. For purposes of this
representation, (i) shares of Company stock exchanged for cash or other property
furnished, directly or indirectly, by Parent, Sub or Merger Sub and (ii) shares
of Company stock, if any, issued pursuant to the Public Offering, as described
in Section 7.20 of the Merger Agreement, in each case will be treated as
outstanding Company stock on the Closing Date. Sub has no present plan or
intention to, and Parent has no plan or intention to cause Sub to, sell,
transfer or dispose of any stock of the Company or to cause the Company to issue
additional shares of its stock that would in either case result in Sub failing
to own after the Merger, directly or indirectly, at least 80 percent of the
total combined voting power of all classes of Company stock entitled to vote and
at least 80 percent of the total number of shares of all other classes of
Company stock.
4. The 13.875% Cumulative Redeemable Preferred Stock of the
Company (the "Company Redeemable Preferred Stock") shall continue to be
outstanding in substantially identical form except for (i) the addition of
voting rights pursuant to the Company Preferred Stock Voting Right Charter
Amendment and (ii) Company Redeemable Preferred Stock redeemed by the Company or
repurchased by any of its subsidiaries pursuant to and in accordance with
Section 7.20 of the Merger Agreement.
5. If cash payments are made to holders of Company Common
Stock in lieu of fractional shares of Parent Ordinary
<PAGE> 103
Shares that would otherwise be issued to such holders in the Merger, such
payments will be made for the purpose of saving Parent the expense and
inconvenience of issuing and transferring fractional shares of Parent Ordinary
Shares, and will not represent separately bargained for consideration. The total
cash consideration that will be paid in the Merger to holders of Company Common
Stock in lieu of fractional shares of Parent Ordinary Shares will not exceed one
percent of the total consideration that will be issued in the Merger to
shareholders of Company in exchange for their shares of Company Stock.
6. Neither Parent nor Sub has a plan or intention to cause the
Company to redeem any Company Redeemable Preferred Stock after the Merger,
except that Parent intends to cause the Company to redeem those shares on their
mandatory redemption date, as required by their terms.
7. Neither Parent nor Sub has a plan or intention to acquire
or redeem any of the Parent stock issued in the Merger, either directly or
through any transaction, agreement or arrangement with any other person. To the
best knowledge of the managements of Parent and Sub, no person related to Parent
or Sub (as defined in Treasury Regulation Section 1.368-1(e)) has a plan or
intention to acquire or redeem any of the Parent stock issued in the Merger,
either directly or through any transaction, agreement or arrangement with any
other person. For purposes of this representation letter, a person is considered
to own or acquire stock owned or acquired (as the case may be) by a partnership
in which such person is a partner in proportion to such persons's interest in
the partnership.
8. Parent does not have any plan or intention to make any
distributions after, but in connection with, the Merger to holders of Parent
stock (other than dividends made in the ordinary course of business).
9. None of Parent, Sub, Merger Sub or any corporation related
to Parent, Sub or Merger Sub (as defined in Treasury Regulation Section
1.368-1(e)) has acquired or will, prior to the Effective Time, acquire
(including, without limitation, in connection with the Public Offering), or has
owned in the past five years, any Company stock, except that Parent owns [ ]
shares of Company Common Stock which it acquired in [ ] in an open market
purchase that was not in contemplation of, or otherwise part of a plan
including, the Merger. Prior to the vote described in Section 8.1(a)(1) of the
Merger Agreement, Parent will sell such shares for cash on the open market.
<PAGE> 104
10. Sub has no present plan or intention to, and Parent has no
present plan or intention to cause Sub to, following the Merger, liquidate the
Company, merge the Company with or into another corporation in which the Company
is not the survivor, sell or otherwise dispose of shares of the Company, cause
the Company to distribute the proceeds of any borrowings incurred by the Company
or cause the Company or any of its subsidiaries to sell, distribute or otherwise
dispose of any of their assets, except for (i) dispositions made in the ordinary
course of business and transfers permitted under Section 368(a)(2)(C) of the
Code or Treasury Regulation Section 1.368-1(d) or 1.368-2(k) and (ii)
dispositions of assets of the Company or its subsidiaries having a fair market
value, individually or in the aggregate, not in excess of 70% of the gross fair
market value and 90% of the net fair market value of the assets held by the
Company immediately prior to the Merger. For this purpose, assets used to pay
reorganization expenses, to repurchase Company Redeemable Preferred Stock, to
pay dissenters or to make any other redemption shall be treated as held
immediately prior to the Merger.
11. Parent and Sub will pay their respective expenses, if any,
incurred in connection with the Merger. Except as specifically provided in the
Merger Agreement, neither Parent nor Sub has paid (directly or indirectly) or
agreed to assume any expense or other liability, whether fixed or contingent, of
the Company or any of its subsidiaries or any holder of Company Stock.
12. In connection with the Merger and related transactions,
Company Common Stock will be converted solely into Parent voting stock (except
for cash paid in lieu of fractional shares of Parent Ordinary Shares). For
purposes of this representation, Company stock redeemed for cash or other
property furnished, directly or indirectly, by Parent or Sub will be considered
as exchanged for other than Parent voting stock. In connection with the Merger
and related transactions, no liabilities of the Company or any of its
subsidiaries or any of the holders of Company stock will be assumed by Parent or
Sub, nor, to the best knowledge of the managements of Parent or Sub, will any of
the Company stock acquired by Sub in connection with the Merger be subject to
any liabilities.
13. Following the Merger, Parent and Sub intend to cause the
Company to continue its "historic business" or to use a significant portion of
its "historic business assets" in a business (as such terms are defined in
Treasury Regulation Section 1.368-1(d)).
<PAGE> 105
14. Neither Parent nor Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
15. At the Effective Time, Parent will own all of the stock of
Sub, and Parent has no present plan or intention to sell, transfer or dispose of
the stock of Sub or to cause Sub to issue additional shares of its stock that
would result in Parent's failing to own at least 80 percent of the total
combined voting power of all classes of Sub stock entitled to vote and at least
80 percent of the total number of shares of all other classes of Sub stock.
16. Neither Parent nor Sub will take any position on any
Federal, state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code and as a
transaction qualifying for the exemption from gain recognition pursuant to
Section 367(a)(1) of the Code (assuming where applicable the filing of a valid
gain recognition agreement by five-percent transferee shareholders as defined in
Treasury Regulation Section 1.367(a)-3(c)(5)(ii)), unless otherwise required by
a "determination" (as defined in Section 1313(a)(1) of the Code) or by
applicable state or local tax law (and then only to the extent required by such
applicable state or local tax law).
17. None of the compensation received by any
stockholder-employee or stockholder-independent contractor of Company in respect
of periods after the Effective Time represents separate consideration for, or is
allocable to, any of its Company stock. None of the Parent stock that will be
received by any stockholder-employee or stockholder-independent contractor of
the Company in the Merger represents separately bargained-for consideration
which is allocable to any employment agreement or arrangement. The compensation
paid to any stockholder-employee or stockholder-independent contractor will be
for services actually rendered and will be determined by bargaining at arm's
length.
18. In no case will Parent or any of its Subsidiaries make any
contributions the Company or the Unrestricted Subsidiaries to replenish funds
used to repurchase Company Redeemable Preferred Stock.
19. Neither Parent nor any of its subsidiaries has agreed to
pay, or will pay, directly or indirectly, any consideration for shares of stock
of the Company other than the Parent voting shares, and the cash in lieu of
fractional shares to be delivered by Sub as described in this Agreement.
<PAGE> 106
20. Neither Parent nor Sub is under the jurisdiction of a
court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code.
21. Sub and Merger Sub are corporations newly formed for the
purpose of participating in the Merger, and at no time prior to the Merger have
they had assets or business operations.
22. In connection with the Merger, the Parent Ordinary Shares
received in the Merger by holders of Company stock in exchange for Company
Common Stock will not represent more than 50% of the total voting power or more
than 50% of the total value of all shares of Parent stock outstanding
immediately after the Merger.
23. No more than 50% of the total voting power and no more
than 50% of the total value of all shares of Parent outstanding immediately
after the Merger will be owned, in the aggregate and taking into account the
rules set forth in Treasury Regulation Section 1.367(a)-3(c)(4), by U.S. persons
that are either officers or directors of the Company or that are five-percent
shareholders of the Company (within the meaning of Treasury Regulation Section
1.367(a)-3(c)(5)(iii)).
24. No warrants, options or similar interests in Parent were
issued or, to the knowledge of the managements of Parent or Sub, acquired with
the principal purpose of avoiding the general rule contained in Section
367((a)(1) of the Code.
25. Parent will cause the Company to comply with the reporting
requirements set forth in Treasury Regulation Section 1.367(a)-3(c)(6).
26. Parent or one or more of its qualified subsidiaries or
qualified partnerships (as defined in Treasury Regulations Sections
1.367(a)-3(c)(5)(vii) or (viii)), has been engaged in the active conduct of a
trade or business (within the meaning of Treasury Regulation Section
1.367(a)-3(c)(3)) outside the United States (the "Parent Business") throughout
the 36-month period ending at the Effective Time. Parent has no plan or
intention to substantially dispose of or discontinue (including by way of
disposal) the active conduct of the Parent Business after the Merger.
27. At the Effective Time, the market capitalization of Parent
will be at least equal to the market capitalization of the Company, in each
case, taking into account the application of Treasury Regulation Section
1.367(a)-3(c)(3)(iii)(B).
<PAGE> 107
28. The Merger Agreement, the Registration Statement and the
other documents described in the Registration Statement represent the entire
understanding of Parent with respect to the Merger.
29. The Merger is being undertaken for purposes of enhancing
the business of Parent and for other good and valid business purposes of Parent.
30. The undersigned is authorized to make all the
representations set forth herein on behalf of Parent and Sub.
31. Parent believes that Parent will not be a passive foreign
investment company, as defined in Section 1297(a) of the Code (a "PFIC") for the
calendar year in which the Merger occurs and has no reason, on the basis of
facts presently known, to believe that Parent will become a PFIC for any
subsequent year.
32. Parent believes that it is not a controlled foreign
corporation, within the meaning of Section 957(a) of the Code.
The undersigned acknowledges that (i) your opinion will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) your opinion will be subject to
certain limitations and qualifications including that it may not be relied upon
if any such representations or warranties are not accurate or if any of such
covenants or obligations are not satisfied in all material respects.
<PAGE> 108
The undersigned acknowledges that your opinion will not
address any tax consequences of the Merger or any action taken in connection
therewith except as expressly set forth in such opinion.
Very truly yours,
[Parent]
by
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Name:
Title:
[Sub]
by
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Name:
Title:
