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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
(Amendment No. 3)
J. Ray McDermott, S.A.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
P 64658 10 0
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(CUSIP Number)
McDermott International, Inc.
Attn: S. Wayne Murphy, Senior Vice President, General Counsel and Corporate
Secretary, 1450 Poydras Street, New Orleans, LA 70112 (504) 587-5300
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 7, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
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CUSIP NO. P 64658 10 0 13D PAGE 2 OF 7 PAGES
- ----------------------- -----------------
1 NAMES OF REPORTING PERSONS
I.R.S.IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
McDermott International, Inc.
I.R.S. Employer Identification No. 72-0593134
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)__ (b)__
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK, WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Republic of Panama
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
24,668,2971
8 SHARED VOTING POWER
9 SOLE DISPOSITIVE POWER
24,668,297
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,668,297
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
63.16%
14 TYPE OF REPORTING PERSON*
HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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/1/ In connection with the contribution by McDermott International, Inc.
("McDermott International") of its marine construction services business to the
Issuer in 1995, the Issuer issued to McDermott International 24,668,297 shares
of the Issuer's common stock and 3,200,000 shares of its Series A $2.25
Cumulative Convertible Preferred Stock. The Series A preferred stock is not
registered under the Securities Exchange Act of 1934, as amended. Each share of
Series A preferred stock has one vote per share, voting as a single class with
the holders of Issuer's common stock, on all matters that are voted on by
holders of shares of common stock. Each share of Series A preferred stock is,
in certain circumstances, convertible into 1.794 shares of the Issuer's common
stock.
Introduction
This Amendment No. 3 to the Schedule 13D is being filed by McDermott
International pursuant to Rule 13d-2 of the Exchange Act to amend the Schedule
13D originally filed by McDermott International on February 9, 1995 relating to
the common stock of J. Ray McDermott, S.A, as previously amended by Amendment
No. 1, filed on March 12, 1999, and Amendment No. 2, filed on April 22, 1999.
Page 3 of 7 Pages
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Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is amended and restated as follows:
Pursuant to the Agreement and Plan of Merger dated as of May 7, 1999,
between Issuer and McDermott International (the "Merger Agreement"),
McDermott International will acquire all shares of the Issuer not
already owned by McDermott International for $35.62 per share in cash
or an aggregate of approximately $513 million. See Item 4 below.
McDermott International expects that it will obtain funds to purchase
all of the publicly held shares of the Issuer from cash on hand and
from financing arrangements, which may include a new senior secured
term loan facility in the amount of $525,000,000 (the "Facility").
McDermott International has received a Commitment Letter and related
term sheet, dated May 7, 1999, from Citibank, N.A. ("Citibank") and
Salomon Smith Barney, Inc. ("Salomon Smith Barney") pursuant to which
Citibank has committed to provide McDermott International with the
Facility.
All borrowings under the Facility will mature no later than September
30, 1999. Under the Facility, Citibank will serve as administrative
agent for a syndicate of lenders to be arranged by Salomon Smith
Barney. Salomon Smith Barney will serve as the sole syndication
agent. All or a portion of the Facility may be syndicated prior to
the closing of the financing.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is amended and restated as follows:
On May 7, 1999, McDermott International and the Issuer executed the
Merger Agreement, pursuant to which McDermott International will
acquire all shares of the Issuer not already owned by McDermott
International for $35.62 per share in cash.
The Merger Agreement provides that McDermott International will make a
tender offer for all shares of the Issuer's common stock at $35.62 per
share in cash. Any such shares not purchased in the offer will be
acquired for the same price in cash in a second-step merger. The
tender offer will be subject to the condition that a
Page 4 of 7 Pages
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majority of the publicly held shares are validly tendered pursuant to
the offer, as well as other customary conditions.
The Issuer currently has approximately 39 million shares outstanding.
24.7 million shares (or 63% of the outstanding shares) are owned by
McDermott International, and the remaining 14.4 million are publicly
held.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is amended to include the following:
1. Joint Press Release dated May 7, 1999 of McDermott International,
Inc. and J. Ray McDermott, S.A.
2. Agreement and Plan of Merger dated as of May 7, 1999 between J.
Ray McDermott, S.A. and McDermott International, Inc.
3. Commitment Letter dated May 7, 1999 among McDermott
International, Inc., Citibank, N.A., and Salomon Smith Barney,
Inc.
Page 5 of 7 Pages
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
May 10, 1999 McDERMOTT INTERNATIONAL, INC
By: /s/ DANIEL R. GAUBERT
-------------------------------
Daniel R. Gaubert
Senior Vice President and Chief
Financial Officer
Page 6 of 7 Pages
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INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
1. Joint Press Release dated May 7, 1999 of McDermott International, Inc. and
J. Ray McDermott, S.A.
2. Agreement and Plan of Merger dated as of May 7, 1999 between J. Ray
McDermott, S.A. and McDermott International, Inc.
3. Commitment Letter dated May 7, 1999 among McDermott International, Inc.,
Citibank, N.A., and Salomon Smith Barney, Inc.
Page 7 of 7 Pages
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Exhibit 1
FOR IMMEDIATE RELEASE
NEW ORLEANS -- May 7, 1999 99-07
MCDERMOTT INTERNATIONAL, INC. TO ACQUIRE PUBLICLY HELD
SHARES OF J. RAY MCDERMOTT COMMON STOCK AT
$35.62 PER SHARE IN CASH
McDermott International, Inc., a Panama corporation (NYSE: MDR), and its
majority-owned subsidiary, J. Ray McDermott, S.A., a Panama corporation (NYSE:
JRM), today jointly announced that they have executed a definitive merger
agreement pursuant to which McDermott International will acquire all shares of
J. Ray McDermott not already owned by McDermott International for $35.62 per
share in cash or an aggregate of approximately $513 million.
The merger agreement provides that McDermott International will make a
tender offer for all shares of J. Ray McDermott common stock at $35.62 per share
in cash. Any such shares not purchased in the offer will be acquired for the
same price in cash in a second-step merger. The tender offer will be subject to
the condition that a majority of the publicly held shares are validly tendered
pursuant to the offer, as well as other customary conditions. McDermott has
obtained a commitment from Citibank, N.A., a member of Citigroup, for the
necessary financing under acceptable terms, subject to execution of a definitive
agreement and other conditions.
J. Ray McDermott currently has approximately 39.0 million shares
outstanding. Approximately 24.7 million shares (or 63% of the outstanding
shares) are owned by McDermott International, and approximately 14.4 million are
publicly held.
The merger agreement was approved by the Boards of Directors of J. Ray
McDermott and McDermott International following, in each case, the unanimous
recommendation of a committee of independent directors of each company. The
Finance Committee of McDermott international was advised by Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Davis Polk & Wardwell. The Independent
Committee of J. Ray McDermott was advised by Simmons & Company International and
Baker & Botts L.L.P.
"Recombining these two companies is an important step in our effort to
simplify our organization and prepare for future growth," said Roger Tetrault,
chairman of the Board of Directors and chief executive officer of both J. Ray
McDermott and McDermott International. Tetrault said the consolidated company
will continue to seek growth opportunities in all areas of
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operation, including oil services, power generation and its U.S. government
business.
"We are pleased that the Finance Committee of McDermott International and
the Independent Committee of J. Ray McDermott were able to reopen discussions
and reach an agreement that they feel is in the best interest of the
shareholders of both companies. We look forward to continuing to create value
for our shareholders and to provide superior products and services for our
customers," Tetrault said.
McDermott International, Inc. is a leading worldwide energy services
company. The company and its subsidiaries manufacture steam-generating
equipment, environmental equipment, and products for the U.S. government. They
also provide engineering and construction services for industrial, utility, and
hydrocarbon processing facilities, and to the offshore oil and natural gas
industry.
For additional information please contact:
Don Washington
McDermott International, Inc.
P. O. Box 61961
New Orleans, LA 70161-1961
(504) 587-4080
###
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Exhibit 2
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
May 7, 1999
between
J. RAY MCDERMOTT, S.A.
and
MCDERMOTT INTERNATIONAL, INC.
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TABLE OF CONTENTS
Page
----
ARTICLE 1 THE OFFER
Section 1.01. The Offer............................................ 1
Section 1.02. Company Action....................................... 2
Section 1.03. Directors............................................ 3
ARTICLE 2 THE MERGER
Section 2.01. The Merger........................................... 4
Section 2.02. Conversion of Shares................................. 5
Section 2.03. Surrender and Payment................................ 5
Section 2.04. Stock Options........................................ 6
Section 2.05. Restricted Shares and Performance Shares............. 7
Section 2.06. Board Approval....................................... 8
Section 2.07. Withholding Rights................................... 9
ARTICLE 3 THE SURVIVING CORPORATION
Section 3.01. Certificate of Incorporation......................... 9
Section 3.02. Bylaws............................................... 9
Section 3.03. Directors and Officers............................... 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Corporate Existence and Power....................... 10
Section 4.02. Corporate Authorization............................. 10
Section 4.03. Governmental Authorization.......................... 10
Section 4.04. Non-Contravention................................... 11
Section 4.05. Capitalization...................................... 11
Section 4.06. Subsidiaries........................................ 12
Section 4.07. SEC Filings......................................... 12
Section 4.08. Financial Statements................................ 13
Section 4.09. Disclosure Documents................................ 13
Section 4.10. Absence of Certain Changes.......................... 14
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Section 4.11. No Undisclosed Material Liabilities................. 16
Section 4.12. Compliance with Laws and Court Orders............... 16
Section 4.13. Litigation.......................................... 17
Section 4.14. Finders' Fees....................................... 17
Section 4.15. Opinion of Financial Advisor........................ 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.01. Corporate Existence and Power....................... 17
Section 5.02. Corporate Authorization............................. 18
Section 5.03. Governmental Authorization.......................... 18
Section 5.04. Non-Contravention................................... 18
Section 5.05. Disclosure Documents................................ 19
Section 5.06. Finders' Fees....................................... 19
Section 5.07. Financing........................................... 19
ARTICLE 6 COVENANTS OF THE COMPANY
Section 6.01. Conduct of the Company.............................. 20
Section 6.02. Stockholder Meeting; Proxy Material................. 20
Section 6.03. No Solicitation..................................... 21
ARTICLE 7 COVENANTS OF PARENT
Section 7.01. Certain Obligations of Parent....................... 22
Section 7.02. Voting of Shares.................................... 22
Section 7.03. Director and Officer Liability...................... 22
ARTICLE 8 COVENANTS OF PARENT AND THE COMPANY
Section 8.01. Best Efforts........................................ 24
Section 8.02. Certain Filings..................................... 24
Section 8.03. Public Announcements................................ 24
Section 8.04. Further Assurances.................................. 25
Section 8.05. Access to Information............................... 25
Section 8.06. Notices of Certain Events........................... 25
Section 8.07. Confidentiality..................................... 25
ii
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ARTICLE 9 CONDITIONS TO THE MERGER
Section 9.01. Conditions to Obligations of Each Party............. 26
ARTICLE 10 TERMINATION
Section 10.01. Termination........................................ 27
Section 10.02. Effect of Termination.............................. 28
ARTICLE 11 MISCELLANEOUS
Section 11.01. Notices............................................ 28
Section 11.02. Survival of Representations and Warranties......... 29
Section 11.03. Amendments; No Waivers............................. 29
Section 11.04. Expenses........................................... 30
Section 11.05. Successors and Assigns............................. 30
Section 11.06. Governing Law...................................... 30
Section 11.07. Jurisdiction....................................... 30
Section 11.08. WAIVER OF JURY TRIAL............................... 31
Section 11.09. Counterparts; Effectiveness........................ 31
Section 11.10. Entire Agreement................................... 31
Section 11.11. Captions........................................... 31
Section 11.12. Severability....................................... 31
Section 11.13. Specific Performance............................... 32
Section 11.14. Definitions and Usage.............................. 32
iii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 7, 1999 between J. Ray
McDermott, S.A., a corporation organized under the laws of the Republic of
Panama (the "COMPANY"), and McDermott International, Inc., a corporation
organized under the laws of the Republic of Panama ("PARENT").
The parties hereto agree as follows:
ARTICLE 1
The Offer
Section 1.1. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of the
terms of this Agreement, a wholly-owned subsidiary of Parent to be organized
under the laws of the Republic of Panama ("MERGER SUBSIDIARY") shall commence an
offer (the "OFFER") to purchase all of the outstanding shares of Common Stock
(other than shares beneficially owned by Parent) at a price of $35.62 per share
of Common Stock ("COMMON SHARE PRICE"), net to the seller in cash. The Offer
shall be subject to the condition that there shall be validly tendered in
accordance with the terms of the Offer, prior to the expiration date of the
Offer and not withdrawn, a number of shares of Common Stock that represents at
least a majority of the outstanding shares of Common Stock (other than shares
beneficially owned by Parent) (the "MINIMUM CONDITION") and to the other
conditions set forth in Annex I hereto. Merger Subsidiary expressly reserves
the right to waive any of the conditions to the Offer and to make any change in
the terms or conditions of the Offer, provided that no change may be made that,
without the prior written consent of the Company, waives the Minimum Condition,
changes the form of consideration to be paid, decreases the price per share of
Common Stock or the number of shares of Common Stock sought in the Offer or
imposes conditions to the Offer in addition to those set forth in Annex I.
"COMMON STOCK" means the common stock, par value $0.01 per share, of the
Company.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the Securities and Exchange Commission ("SEC")
a Tender Offer Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") with respect
to the Offer, which will contain the offer to purchase and form of the related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made, together
<PAGE>
with any supplements or amendments thereto, the "OFFER DOCUMENTS") and shall, as
and to the extent required by applicable federal securities laws, disseminate
the Offer Documents to the holders of Common Stock. Parent and the Company each
agrees promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect. Merger Subsidiary agrees to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the Offer Documents as so corrected to be disseminated to holders of Common
Stock, in each case as and to the extent required by applicable federal
securities laws.
Section 1.2. Company Action. (a) The Company hereby consents to the Offer
and represents that its Board of Directors, at a meeting duly called and held
has (i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company's stockholders (other than Parent), (ii) approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in accordance with the laws of the Republic of Panama ("PANAMA LAW") and
(iii) resolved (subject to Section 6.02(b)) to recommend acceptance of the Offer
and approval and adoption of this Agreement and the Merger by its stockholders.
The Company further represents that Simmons & Company International has
delivered to the Company's Board of Directors its opinion that the consideration
to be paid in the Offer and the Merger is fair to the holders of Common Stock
(other than Parent) from a financial point of view. The Company will promptly
furnish Parent with a list of its stockholders, mailing labels and any available
listing or computer file containing the names and addresses of all record
holders of Common Stock and lists of securities positions of Common Stock held
in stock depositories, in each case true and correct as of the most recent
practicable date, and will provide to Parent such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and Merger Subsidiary and each of their affiliates, associates,
employees, agents and advisors shall hold in confidence the information
contained in any such lists, labels, listings or files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated and if the Company so requests, shall deliver, and
shall use their reasonable efforts to cause their affiliates, associates,
employees, agents and advisors to deliver, to the Company all copies and any
extracts or summaries from such information then in their possession or control.
2
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(b) As soon as practicable after the time that the Offer is commenced,
the Company shall file with the SEC and disseminate to holders of shares of
Common Stock, in each case as and to the extent required by applicable federal
securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
shall reflect the recommendations of the Company's Board of Directors referred
to above. The Company and Parent each agree promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of shares of Common Stock, in
each case as and to the extent required by applicable federal securities laws.
Section 1.3. Directors. (a) Effective upon the acceptance for payment of
shares of Common Stock pursuant to the Offer, Parent shall be entitled to
designate the number of directors, rounded to the nearest whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors and (ii) the percentage that the
number of shares of Common Stock beneficially owned by Parent bears to the total
number of outstanding shares of Common Stock and the Company shall take all
action necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also use its best efforts to cause
individuals designated by Parent to constitute the number of members, rounded to
the nearest whole number, on (i) each committee of the Board of Directors of the
Company (other than the Independent Committee) and (ii) each board of directors
of each subsidiary of the Company (and each committee thereof) that represents
the same percentage as such individuals represent on the Board of Directors of
the Company.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the 1934 Act
and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section. Parent shall
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
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(c) During the term of this Agreement, Parent will, and will cause all
of its subsidiaries to, take all actions necessary to permit the Independent
Committee to continue in existence without diminution of its powers or duties
and its members to consist solely of the members thereof on the date hereof, or
any successors selected (with the written consent of a majority of the members
of the Independent Committee) by the Board of Directors of the Company who are
not otherwise employed by Parent or its affiliates. Any amendment, waiver or
extension of time by the Company hereunder, and any action taken by the Company
or its Board of Directors in connection therewith, shall require the concurrence
or consent of a majority of the members of the Independent Committee.
ARTICLE 2
The Merger
Section 2.1. The Merger. (a) Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Merger Subsidiary shall be
merged (the "MERGER") with and into the Company in accordance with Panama Law,
whereupon the separate existence of Merger Subsidiary shall cease, and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
the Company and Merger Subsidiary will file a certificate of merger, in a form
mutually acceptable to the Company and Parent and prepared and executed in
accordance with the relevant provisions of Panama Law (the "CERTIFICATE OF
MERGER"), with the Public Registry Office of the Republic of Panama and make all
other filings or recordings required in connection with the Merger. The Merger
shall become effective at such time (the "EFFECTIVE TIME") as the Company's
Certificate of Merger is recorded by the Public Registry Office of the Republic
of Panama.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Panama Law.
Section 2.2. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 2.02(b), each share of
Common Stock outstanding immediately prior to the Effective Time shall be
converted into the right to receive $35.62 in cash or any higher price paid for
each
4
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share of Common Stock pursuant to the Offer, without interest (the "MERGER
CONSIDERATION");
(b) each share of Common Stock and each share of Series A $2.25
Cumulative Convertible Preferred Stock, $.01 par value, of the Company held by
the Company as treasury stock or owned by Parent or any of its subsidiaries
immediately prior to the Effective Time shall be canceled and retired, and no
payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted (all such shares so converted shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation).
Section 2.3. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent reasonably acceptable to the Company (the
"EXCHANGE AGENT") for the purpose of exchanging certificates representing shares
of Common Stock (the "CERTIFICATES") for the Merger Consideration. Parent will
make available to the Exchange Agent, as needed, the Merger Consideration to be
paid in respect of the shares of Common Stock. Promptly after the Effective
Time, Parent will send, or will cause the Exchange Agent to send, to each holder
of shares of Common Stock at the Effective Time a letter of transmittal and
related instructions (which shall specify that the delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of shares of Common Stock that have been converted into
the right to receive the Merger Consideration will be entitled to receive, upon
surrender to the Exchange Agent of a Certificate, together with a properly
completed letter of transmittal if applicable, the Merger Consideration payable
for each share of Common Stock represented by such Certificate. Until so
surrendered, each such Certificate shall represent after the Effective Time for
all purposes only the right to receive such Merger Consideration, without
interest thereon.
(c) If any portion of the Merger Consideration is to be paid to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition to such payment that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered
5
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holder of such Certificate or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Common Stock. If, after the Effective Time, Certificates
are presented to the Surviving Corporation, they shall be canceled and exchanged
for the Merger Consideration provided for, and in accordance with the procedures
set forth, in this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of shares of Common Stock six months after the Effective Time shall be returned
to Parent, upon demand, and any such holder who has not exchanged them for the
Merger Consideration in accordance with this Section prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of such shares of Common Stock. Notwithstanding the foregoing, Parent
shall not be liable to any holder of shares of Common Stock for any amounts paid
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(f) If 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 Corporation,
the posting by such person of a bond, in such reasonable amount as the Surviving
Corporation 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, the Merger Consideration to be
paid in respect of the shares of Common Stock represented by such Certificate,
as contemplated by this Article.
Section 2.4. Stock Options. (a) The terms of each outstanding option to
purchase shares of Common Stock under any employee or director stock option or
compensation plan or arrangement of the Company (a "COMPANY STOCK OPTION"),
whether or not exercisable or vested, shall be adjusted as necessary so that, at
the Effective Time, each Company Stock Option outstanding immediately prior to
the Effective Time shall be deemed to constitute an option to purchase shares of
common stock, $1.00 par value, of Parent ("PARENT STOCK"), on the same terms and
conditions as were applicable under such Company Stock Option, except as set
forth below (each, as so adjusted, an "ADJUSTED OPTION"). Each Adjusted Option
shall be fully vested and shall entitle the holder to purchase a number of
shares of Parent Stock having an aggregate market value, as of the Effective
Time, equal to the aggregate market value of the shares of Common Stock
purchasable pursuant to the applicable Company Stock Option. The
6
<PAGE>
exercise price per share of Parent Stock under each Adjusted Option shall be
equal to (A) the aggregate exercise price for the shares of Common Stock
purchasable pursuant to the applicable Company Stock Option divided by (B)
the aggregate number of shares of Parent Stock deemed purchasable pursuant to
such Adjusted Stock Option. Notwithstanding the foregoing, any fractional
share of Parent Stock resulting from the foregoing adjustment of a Company Stock
Option shall be rounded down to the nearest whole share. For purposes of this
Section 2.04, the market value of a share of Parent Stock as of the Effective
Time shall be deemed to be the closing sale price of such share on the New York
Stock Exchange on the trading day immediately preceding the Effective Time.
The market value of a share of Common Stock as of the Effective Time shall be
deemed the Merger Consideration.
(b) Prior to the Effective Time, the Company shall (i) make any
amendments to the terms of such stock option or compensation plans or
arrangements that are necessary to give effect to the transactions contemplated
by this Section 2.04 and (ii) to the extent required, use its best efforts to
obtain any consents from holders of Company Stock Options. At the Effective
Time, except to the extent otherwise required by the existing stock option
agreements, all references to the Company in the stock option agreements
covering outstanding options to purchase Common Stock will be deemed to refer to
Parent. Parent will assume all the Company's obligations with respect to those
options as so amended and will, from and after the Effective Time, make
available for issuance on exercise of those options all shares of Parent Stock
covered thereby and maintain an effective registration statement under the
Securities Act of 1933 (the "1933 ACT") which covers those shares.
Section 2.5. Restricted Shares and Performance Shares. (a) As soon as
practicable after the date hereof, the Company shall provide each person who
holds restricted shares of Common Stock ("RESTRICTED SHARES") under the J. Ray
McDermott, S.A. Restated 1994 Executive Long-Term Incentive Compensation Plan
(the "1994 PLAN") or the J. Ray McDermott, S.A. Non-Employee Director Stock Plan
the opportunity to make an irrevocable election either to: (i) receive a cash
payment, as of the Effective Time, in respect of such Restricted Shares (whether
or not then vested); or (ii) receive a replacement award (a "REPLACEMENT
RESTRICTED AWARD"), as of the Effective Time, of Parent Stock having an
aggregate fair market value (as of the Effective Time) equal to the product of
(A) the number of Restricted Shares to which such Replacement Restricted Award
relates and (B) the Merger Consideration. Each Replacement Restricted Award
shall be issued on the same terms, and subject to identical restrictions, as
applied to the Restricted Shares to which such Replacement Restricted Award
relates (without taking into account any accelerated vesting as a result of the
Merger).
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(b) As soon as practicable after the date hereof, the Company shall
provide each person who holds performance restricted shares ("PERFORMANCE
SHARES") under the 1994 Plan the opportunity to make an irrevocable election
either to: (i) receive a cash payment, as of the Effective Time, in respect of
such Performance Shares in accordance with the terms of Section 12.1 of the 1994
Plan; or (ii) receive a replacement award (a "REPLACEMENT PERFORMANCE AWARD"),
as of the Effective Time, of performance shares denominated in shares of Parent
Stock and having the following terms. Each Replacement Performance Award shall
represent the notional grant of a number of shares of Parent Stock having an
aggregate fair market value, as of the Effective Time, equal to the product of
(A) the number of notional shares of Common Stock originally granted pursuant to
the Performance Shares to which such Replacement Restricted Award relates and
(B) the Merger Consideration. Each Replacement Restricted Award shall be
subject to a two-year vesting period upon terms identical to those that apply,
under the 1994 Plan, to Performance Shares as of the end of the initial two-year
measurement period.
(c) Prior to the Effective Time, the Company shall make any amendments
to the terms of such compensation plans or arrangements that are necessary to
give effect to the transactions contemplated by this Section 2.05. At the
Effective Time, except to the extent otherwise required by the existing
restricted stock and performance share agreements, all references to the Company
in the agreements covering Restricted Shares and Performance Shares will be
deemed to refer to Parent. Parent will assume all the Company's obligations
with respect to Restricted Shares and Performance Shares and will, from and
after the Effective Time, make available for issuance as necessary all shares of
Parent Stock covered by the Replacement Restricted Awards and Replacement
Performance Awards and maintain an effective registration statement under the
1933 Act which covers those shares.
(d) For purposes of this Section 2.05, the market value of a share of
Parent Stock as of the Effective Time shall be deemed to be the closing sale
price of such share on the New York Stock Exchange on the trading day
immediately preceding the Effective Time.
Section 2.6. Board Approval. Parent agrees that the Parent Board of
Directors or the 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 under the Exchange Act of 1934 (the "1934 ACT"), the
receipt pursuant to Sections 2.04 and 2.05 of Adjusted Options and Parent Stock
by officers and directors of the Company who will become officers or directors
of the Parent subject to Rule 16b-3.
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Section 2.7. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Common Stock or options or other rights in respect of
which the Surviving Corporation or Parent, as the case may be, made such
deduction and withholding.
ARTICLE 3
The Surviving Corporation
Section 3.1. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with its terms and applicable law, provided that, at the Effective
Time, such certificate of incorporation shall be amended to provide that the
name of the corporation shall be J. Ray McDermott, S.A.
Section 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with its terms, the certificate of incorporation of the Surviving
Corporation and applicable law.
Section 3.3. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 4
Representations and Warranties of the Company
Except as disclosed to Parent in writing prior to the date hereof, the
Company represents and warrants to Parent that:
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Section 4.1. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Republic of Panama and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for such matters as would not have,
individually or in the aggregate, a material adverse effect on the Company. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where the failure to be so qualified would not have,
individually or in the aggregate, a material adverse effect on the Company. The
Company has heretofore delivered to Parent true and complete copies of the
certificate of incorporation and bylaws of the Company as currently in effect.
Section 4.2. Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for the required approval of the Company's stockholders in
connection with the Merger, have been duly authorized by all necessary corporate
action on the part of the Company. The affirmative vote of (i) the holders of
two-thirds of the outstanding shares of the Series A $2.25 Cumulative
Convertible Preferred Stock, $.01 par value, of the Company ("PREFERRED STOCK"),
voting separately as a class and (ii) the holders of two-thirds of the
outstanding shares of Common Stock, voting separately as a class, are the only
votes of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. This Agreement constitutes a
valid and binding agreement of the Company.
Section 4.3. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic
or foreign, other than (i) the filing and recordation in the Public Registry
Office of the Republic of Panama of the Certificate of Merger, (ii) compliance
with any applicable requirements of the 1934 Act or any other securities laws
(whether state or foreign) or any applicable provisions of Panama Law (including
Executive Decree No. 18 of March 14, 1994 of the Republic of Panama), and (iii)
any actions or filings the absence of which would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the Company
or materially to impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 4.4. Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation of the
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transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 4.03, contravene, conflict with or result in a
violation or breach of any provision of any applicable law, rule, regulation,
judgment, injunction, order or decree, (iii) require any consent or other action
by any person under, constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company
and its subsidiaries or (iv) result in the creation or imposition of any Lien
on any asset of the Company or any of its subsidiaries except, in the case of
clauses (ii), (iii) and (iv), for such matters as would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect
on the Company or materially to impair the ability of the Company to
consummate the transactions contemplated by this Agreement. "LIEN" means,
with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, encumbrance or other adverse claim of any kind in respect of
such property or asset.
Section 4.5. Capitalization. (a) The authorized capital stock of the
Company consists of 60,000,000 shares of common stock, $.01 par value, and
10,000,000 shares of preferred stock, $.01 par value, of which 3,200,000 shares
are designated as Series A $2.25 Cumulative Convertible Preferred Stock. As of
March 31, 1999, there were outstanding (i) 39,060,814 shares of Common Stock and
employee and director options to purchase an aggregate of 839,471 shares of
Common Stock (of which options to purchase an aggregate of 405,934 shares of
Common Stock were exercisable) and (ii) 3,200,000 shares of Preferred Stock.
All outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable.
(b) Except as set forth in this Section 4.05 and for changes since March
31, 1999 resulting from the exercise of employee or director stock options or
the conversion of Preferred Stock outstanding on such date, there are no
outstanding (i) shares of capital stock or voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company or (iii) options or other
rights to acquire from the Company or other obligation of the Company to issue
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company. There are
no outstanding obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any of the securities referred to in
clauses (i), (ii) or (iii) above.
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Section 4.6. Subsidiaries. (a) Each significant subsidiary of the Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for such matters as would not
have, individually or in the aggregate, a material adverse effect on the
Company. Each such significant subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for such matters as would not have,
individually or in the aggregate, a material adverse effect on the Company. All
significant subsidiaries of the Company and their respective jurisdictions of
incorporation are identified in the Company's annual report on Form 10-K for the
fiscal year ended March 31, 1998 (the "COMPANY 10-K").
(b) Except as set forth in the Company SEC Documents filed prior to the
date hereof, all of the outstanding capital stock of, or other voting securities
or ownership interests in, each subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). There are no outstanding (i) securities of the Company or
any of its subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its subsidiaries, or other obligation of the Company or any of its subsidiaries
to issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any subsidiary of the
Company. There are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any of the securities
referred to in clauses (i) or (ii) above.
Section 4.7. SEC Filings. (a) The Company has delivered to Parent (i) the
Company's annual report on Form 10-K for its fiscal year ended March 31, 1998,
(ii) its quarterly reports on Form 10-Q for its fiscal quarters ended June 30,
1998, September 30, 1998 and December 31, 1998, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company held since March 31, 1998 and (iv) all of its other
reports, statements, schedules and registration statements filed with the SEC
pursuant to the 1933 Act or the 1934 Act, as the case may be, since March 31,
1998 (the documents referred to in this Section 4.07(a), collectively, the
"COMPANY SEC DOCUMENTS"). The Company's quarterly report on Form 10-Q
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for its fiscal quarter ended December 31, 1998 is referred to herein as the
"COMPANY 10-Q".
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act or the
1934 Act, as the case may be. Each Company SEC Document filed pursuant to the
1934 Act did not, as of its filing date, and each Company SEC Document filed
pursuant to the 1933 Act did not, as of the date it became effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.8. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements). For
purposes of this Agreement, "COMPANY BALANCE SHEET" means the consolidated
balance sheet of the Company and its consolidated subsidiaries as of December
31, 1998 as set forth in the Company 10-Q and "COMPANY BALANCE SHEET DATE" means
December 31, 1998.
Section 4.9. Disclosure Documents. (a) Each document required to be filed
by the Company with the SEC or required to be distributed or otherwise
disseminated by the Company to the Company's stockholders in connection with the
transactions contemplated by this Agreement (the "COMPANY DISCLOSURE
DOCUMENTS"), including, without limitation, the Schedule 14D-9, the proxy or
information statement of the Company (the "COMPANY PROXY STATEMENT"), if any, to
be filed with the SEC in connection with the Merger, and any amendments or
supplements thereto, when filed, distributed or disseminated, as applicable,
will comply as to form in all material respects with the applicable requirements
of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement and at the Effective
Time, and (ii) any Company Disclosure Document (other than the Company Proxy
Statement), at the time of the filing of such Company Disclosure Document or
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any supplement or amendment thereto and at the time of any distribution or
dissemination thereof, will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section will
not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished to the Company in writing by Parent
specifically for use therein.
(c) The information with respect to the Company or any of its
subsidiaries that the Company furnishes to Parent in writing specifically for
use in the Offer Documents, at the time of the filing thereof, at the time of
any distribution or dissemination thereof and at the time of the consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Section 4.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, (i) the business of the Company and its subsidiaries has been conducted
in the ordinary course consistent with past practices and (ii) except as
disclosed in the Company SEC Documents filed prior to the date hereof and except
for developments relating to matters described under Part 1, Item 3 (Legal
Proceedings) (other than the last paragraph thereof) of the Company 10-K, there
has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its subsidiaries, except
in the administration of its stock option plans consistent with past practice;
(c) any material amendment of any outstanding security of the Company or
any of its subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any material indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
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(e) any creation or other incurrence by the Company or any of its
subsidiaries of any Lien on any material asset other than in the ordinary course
of business consistent with past practices;
(f) any making of any material loan, advance or capital contributions
to or investment in any person other than loans, advances or capital
contributions to or investments in its wholly-owned subsidiaries in the ordinary
course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any of
its subsidiaries that would have, individually or in the aggregate, a material
adverse effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its subsidiaries of any contract or
other right, in either case, material to the Company and its subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(i) any material change in any method of accounting or accounting
principles or practice by the Company or any of its subsidiaries, except for any
such change required by reason of a concurrent change in GAAP or Regulation S-X
under the 1934 Act;
(j) any (i) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director or officer of the Company or any
of its significant subsidiaries, (ii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (iii)
entering into any employment, deferred compensation or other similar agreement
(or any amendment to any such existing agreement) with any director or officer
of the Company or any of its significant subsidiaries, (iv) establishment,
adoption or amendment (except as required by applicable law) of any collective
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit plan
or arrangement covering any director or officer of the Company or any of its
significant subsidiaries or (v) increase in compensation, bonus or other
benefits payable to any director or officer of the Company or any of its
significant subsidiaries, other than in the ordinary course of business
consistent with past practice; or
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(k) any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its subsidiaries,
which employees were not subject to a collective bargaining agreement at the
Company Balance Sheet Date, or any material lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees.
Section 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its subsidiaries required to
be disclosed on a consolidated balance sheet of the Company and its consolidated
subsidiaries prepared in accordance with GAAP, other than:
(a) liabilities or obligations disclosed or provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof or in connection with developments relating to matters
described under Part 1, Item 3 (Legal Proceedings) (other than the last
paragraph thereof) of the Company 10-K;
(b) liabilities or obligations incurred in the ordinary course of
business since the Company Balance Sheet Date;
(c) liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
Company; and
(d) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
Section 4.12. Compliance with Laws and Court Orders. Except as
disclosed in the Company SEC Documents filed prior to the date hereof, the
Company and each of its subsidiaries is and has been in compliance with all
applicable laws, rules, regulations, judgments, injunctions, orders or decrees,
except for such matters as would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company.
Section 4.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or, to the knowledge of the
Company, threatened against or affecting, the Company, any of its subsidiaries
or any of their respective properties before any court or arbitrator or before
or by any governmental body, agency or official, domestic or foreign, that would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Company.
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Section 4.14. Finders' Fees. Except for Simmons & Company International,
a copy of whose engagement agreement has been provided to Parent, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any of its subsidiaries
who might be entitled to any fee or commission from the Company or any of its
affiliates in connection with the transactions contemplated by this Agreement.
Section 4.15. Opinion of Financial Advisor. The Company has received the
opinion of Simmons & Company International, financial advisor to the Company, to
the effect that, as of the date of this Agreement, the consideration to be paid
in the Offer and the Merger is fair to the Company's stockholders (other than
Parent) from a financial point of view; it being understood and acknowledged by
Parent that such opinion has been rendered for the benefit of the Board of
Directors of the Company, and is not intended to, and may not, be relied upon by
Parent or its stockholders.
ARTICLE 5
Representations and Warranties of Parent
Except as disclosed to Company in writing prior to the date hereof, Parent
represents and warrants to the Company that:
Section 5.1. Corporate Existence and Power. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for such matters as would not have,
individually or in the aggregate, a material adverse effect on Parent. Parent is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not have, individually
or in the aggregate, a material adverse effect on Parent. Parent has heretofore
delivered to the Company true and complete copies of the certificate of
incorporation and bylaws of Parent as currently in effect.
Section 5.2. Corporate Authorization. (a) The execution, delivery and
performance by Parent of this Agreement and the consummation by Parent of the
transactions contemplated hereby are within the corporate powers of Parent and
have been duly authorized by all necessary corporate action on the part of
Parent. This Agreement constitutes a valid and binding agreement of each of
Parent.
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Section 5.3. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority, domestic or foreign, other than (i) the
filing and recordation in the Public Registry Office of the Republic of Panama
of the Certificate of Merger, (ii) compliance with any applicable requirements
of the 1934 Act or any other securities laws (whether state or foreign) or any
applicable provisions of Panama Law (including Executive Decree No. 18 of March
14, 1994 of the Republic of Panama), and (iii) any actions or filings the
absence of which would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on Parent or materially to impair the
ability of Parent and Merger Subsidiary to consummate the transactions
contemplated by this Agreement.
Section 5.4. Non-Contravention. The execution, delivery and performance
by Parent of this Agreement and the consummation by Parent of the transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the certificate of incorporation
or bylaws of Parent, (ii) assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with or result in a violation or breach of
any provision of any law, rule, regulation, judgment, injunction, order or
decree, (iii) require any consent or other action by any person under,
constitute a default under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the loss of any
benefit to which Parent or any of its subsidiaries is entitled under any
provision of any agreement or other instrument binding upon Parent or any of its
subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of the Parent and its subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of the Parent or any of its subsidiaries,
except, in the case of clauses (ii), (iii) and (iv), for such matters as would
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Parent or materially to impair the ability of Parent and
Merger Subsidiary to consummate the transactions contemplated by this Agreement.
Section 5.5. Disclosure Documents. (a) The information with respect to
Parent and any of its subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company
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Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary in writing by the Company specifically for use therein.
Section 5.6. Finders' Fees'. Except for Merrill Lynch, Pierce, Fenner &
Smith Incorporated, whose fee will be paid by Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of Parent who might be entitled to any fee or
commission from Parent or any of its affiliates in connection with the
transactions contemplated by this Agreement.
Section 5.7. Financing. At the expiration of the Offer, the Merger
Subsidiary will have available cash sufficient to consummate the Offer and the
Merger and to pay all expenses in connection with the transactions contemplated
hereby.
ARTICLE 6
Covenants of the Company
The Company agrees that:
Section 6.1. Conduct of the Company. From the date hereof until the
Effective Time, the Company and its subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use commercially
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and
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employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time, without the prior written consent of Parent:
(a) the Company will not adopt or propose any change to its certificate
of incorporation or bylaws;
(b) the Company will not, and will not permit any of its subsidiaries
to, merge or consolidate with any other person or acquire a material amount of
stock or assets of any other person;
(c) the Company will not, and will not permit any of its subsidiaries
to, sell, lease, license or otherwise dispose of any significant subsidiary or
any material amount of assets or property except (i) pursuant to existing
contracts or commitments and (ii) in the ordinary course consistent with past
practice;
(d) the Company will not, and will not permit any of its subsidiaries
to, take any action that would make any representation and warranty of the
Company hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time; and
(e) the Company will not, and will not permit any of its subsidiaries
to, agree or commit to do any of the foregoing.
Section 6.2. Stockholder Meeting; Proxy Material. (a) The Company shall
cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of this Agreement
and the Merger. In connection with such meeting, the Company will, if required
by law, (i) promptly prepare and file with the SEC, use its best efforts to have
cleared by the SEC and thereafter mail to its stockholders as promptly as
practicable the Company Proxy Statement and related proxy materials for such
meeting, (ii) use its commercially reasonable efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) otherwise comply with all legal requirements
applicable to such meeting.
(b) Except as provided in the next sentence, the Board of Directors of
the Company shall recommend the Offer and the approval and adoption of this
Agreement and the Merger by the Company's stockholders. The Independent
Committee of the Board of Directors of the Company (the "INDEPENDENT COMMITTEE")
shall be permitted to withdraw, or modify in a manner adverse to Parent, its
recommendation to its stockholders, but only if (i) the Company has complied
with the terms of Section 6.03, (ii) the Independent Committee
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determines in good faith (after consultation with independent legal counsel)
that failure to take such action would be reasonably likely to be inconsistent
with its fiduciary duties under applicable law and (iii) the Independent
Committee shall have delivered to Parent a prior written notice advising Parent
that it intends to take such action. Nothing contained in this Agreement shall
prevent the Board of Directors of the Company from complying with Rule 14e-2
under the 1934 Act with respect to any Acquisition Proposal. "ACQUISITION
PROPOSAL" means any offer or proposal for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or any of its subsidiaries or the acquisition of any substantial
equity interest in or substantial portion of the assets of the Company or any
of its subsidiaries, other than the transactions contemplated by this Agreement.
Section 6.3. No Solicitation. (a) From the date hereof until the
termination hereof, the Company will not, and will cause its subsidiaries and
the officers, directors, employees and other agents and advisors of the Company
and its subsidiaries not to, directly or indirectly, (i) take any action to
solicit, initiate or encourage the submission of any Acquisition Proposal or
(ii) disclose any nonpublic information relating to, or afford access to the
properties, books or records of, the Company or any of its subsidiaries to, or
engage in any discussions or negotiations with, any person who is considering
making or has made an Acquisition Proposal; provided that the Company may
furnish nonpublic information or afford access to properties, books and records
to any person who is considering making or has made an Acquisition Proposal and
may negotiate or otherwise engage in substantive discussions with any person who
has made an Acquisition Proposal if (w) the Company has complied with the
foregoing terms of this Section 6.03, (x) the Independent Committee determines
in good faith (after consultation with independent legal counsel) that failure
to take such action would be reasonably likely to be inconsistent with its
fiduciary duties under applicable law, (y) such person executes a
confidentiality agreement on terms no less favorable to the Company than those
contained in Section 8.07 and (z) the Company shall have delivered to Parent a
prior written notice advising Parent that it intends to take such action.
(b) The Company will notify Parent promptly (but in no event later than
24 hours) after receipt by the Company (or any of its advisors) of any
Acquisition Proposal or any request for nonpublic information relating to, or
access to the properties, books or records of, the Company or any of its
subsidiaries by any person who is considering making or has made an Acquisition
Proposal. The Company shall identify the person making, and the terms and
conditions of, any such Acquisition Proposal or request. The Company shall keep
Parent fully informed, on a current basis, of the status and details of any such
Acquisition Proposal or request. The Company shall, and shall cause its
subsidiaries and the
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officers, directors, employees and other agents and advisors of the Company
and its subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any persons conducted
prior to the date hereof with respect to any Acquisition Proposal.
ARTICLE 7
Covenants of Parent
Parent agrees that:
Section 7.1. Certain Obligations of Parent. Parent will take all action
necessary to cause Merger Subsidiary to be organized and to become a party to
this Agreement as promptly as practicable and to perform its obligations under
this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement. The Parent will not, and will cause its
subsidiaries not to, directly or indirectly, take any action to knowingly cause
the Company to violate its representations, warranties or covenants under this
Agreement;
Section 7.2. Voting of Shares. Parent agrees to vote all shares of Common
Stock and Preferred Stock beneficially owned by it in favor of adoption of this
Agreement and the Merger at the Company Stockholder Meeting.
Section 7.3. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) After the Effective Time, the Surviving Corporation shall indemnify
and hold harmless the present and former officers and directors of the Company
(each an "INDEMNIFIED PERSON") in respect of acts or omissions occurring at or
prior to the Effective Time to the extent required under Panama Law or provided
under the Company's certificate of incorporation and bylaws or any agreement any
Indemnified Person may have with the Company, in each case, as in effect on the
date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
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than those of such policy in effect on the date hereof, provided that, in
satisfying its obligation under this Section 7.03(b), the Surviving Corporation
shall not be obligated to pay premiums in excess of 200% of the amount per annum
the Company paid in its last full fiscal year, which amount Company has
disclosed to Parent prior to the date hereof.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of that consolidation or merger or
(ii) transfers all or substantially all its properties and assets to any person,
then and in each such case the Surviving Corporation will cause proper
provisions to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 7.03.
(d) The rights of each Indemnified Person under this Section 7.03 shall
be in addition to any rights such person may have under the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, under Panama
Law or under any agreement any Indemnified Person may have with the Company.
These rights shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person.
ARTICLE 8
Covenants of Parent and the Company
The parties hereto agree that:
Section 8.1. Best Efforts. Subject to the terms and conditions of this
Agreement, Company and Parent will use their best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
Section 8.2. Certain Filings. The Company and Parent shall cooperate with
one another (i) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (ii) in determining whether any action by or
in respect of, or filing with, any governmental body, agency, official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and
(iii) in taking such actions or making any such filings, furnishing information
required in
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connection therewith or with the Company Disclosure Documents or the
Offer Documents and seeking timely to obtain any such actions, consents,
approvals or waivers.
In connection with such cooperation, Parent and the Company will (i) 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 Offer or the Merger unless it consults with the other
party in advance and, to the extent permitted by such governmental authority,
gives representatives of the Independent Committee the opportunity to attend and
participate thereat and (ii) furnish the other party and representatives of the
Independent Committee with copies of all correspondence, filings and
communications 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 or the Offer or the Merger.
Section 8.3. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
Section 8.4. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
Section 8.5. Access to Information. From the date hereof until the
Effective Time and subject to the provisions of applicable law and Section 8.07,
the Company shall (i) give to Parent and its authorized representatives
reasonable access to the offices, properties, books and records of the Company
and such financial and other information as may reasonably be requested and (ii)
instruct its authorized representatives to cooperate with the other party in its
investigation. Any investigation pursuant to this Section 8.05 shall be
conducted in such manner as not to interfere unreasonably with the conduct of
the business of the other party. No information or knowledge obtained in any
investigation pursuant to this
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Section 8.05 shall affect or be deemed to modify any representation or warranty
made by any party hereunder.
Section 8.6. Notices of Certain Events. Each of the Company and Parent
shall promptly notify the other of:
(a) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 4.13 or that relate to the consummation of the transactions contemplated
by this Agreement.
Section 8.7. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of Parent and the Company will hold, and
will use its best efforts to cause its officers, directors, employees and other
agents or advisors to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the other party furnished to
it or its affiliates or any of their agents or advisors in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (iA previously known on a nonconfidential
basis by such party, (ii) in the public domain through no fault of such party or
(iii) later lawfully acquired by such party on a nonconfidential basis from
sources other than the other party, provided that each of Parent and the Company
may disclose such information to its officers, directors, employees and other
agents or advisors in connection with the transactions contemplated by this
Agreement so long as such party informs such persons of the confidential nature
of such information and directs them to treat it confidentially. Each of Parent
and the Company shall satisfy its obligation to hold any such information in
confidence if it exercises the same care with respect to such information as it
would take to preserve the confidentiality of its own similar information. If
this Agreement is terminated, each of Parent and the Company will, and will use
its best efforts to cause its officers, directors, employees and other agents
and advisors to, destroy or deliver to the other party, upon request, all
documents and other materials, and all copies thereof, that it or
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its affiliates or any of their agents or advisors obtained, or that were
obtained on their behalf, from the other party in connection with this Agreement
and that are subject to such confidence.
ARTICLE 9
Conditions to the Merger
Section 9.1. Conditions to Obligations of Each Party. The respective
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with Panama Law and applicable listing
requirements;
(b) Merger Subsidiary shall have purchased shares of Common Stock
pursuant to the Offer;
(c) no preliminary or permanent injunction or other order, decree or
ruling by any court or governmental body or regulatory authority in the United
States or the Republic of Panama which prevents consummation of the Merger or
the payment of the Merger Consideration shall have been issued and remain in
effect (each party agreeing to use its reasonable efforts to have any such
injunction, order, decree or ruling lifted); and
(d) no statute, rule or regulation of any government or governmental
agency in the United States or the Republic of Panama shall prevent the
consummation of the Merger or the payment of the Merger Consideration or make
the consummation of the Merger or the payment of the Merger Consideration
illegal.
ARTICLE 10
Termination
Section 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
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(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before July 31,
1999, provided that the right to terminate this Agreement pursuant to this
Section 10.01(b)(i) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Offer to be
consummated by such time; or
(ii) there shall be any law or regulation that makes acceptance
for payment of, and payment for, the shares of Common Stock pursuant to the
Offer or consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining Merger Subsidiary from accepting
for payment of, and paying for, the shares of Common Stock pursuant to the
Offer or Company or Parent from consummating the Merger and such judgment,
injunction, order or decree shall have become final and nonappealable;
provided, however, that the party seeking to terminate this Agreement
pursuant to this clause (ii) shall have used commercially reasonable best
efforts to remove any such judgment, injunction, order or decree; or
(c) by Parent, if prior to the acceptance for payment of shares of
Common Stock under the Offer, (i) the Board of Directors of the Company shall
have failed to recommend, or shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Offer or the Merger or
(iiA the Company shall have failed to perform in all material respects its
obligations hereunder.
The party desiring to terminate this Agreement pursuant to this Section
10.01 (other than pursuant to Section 10.01(a)) shall give notice of such
termination to the other party.
Section 10.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer, employee
or other agent or advisor of such party) to the other party hereto, provided
that, if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party or (ii) failure of
27
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either party to perform a covenant hereof, such party shall be fully liable
for any and all liabilities and damages incurred or suffered by the other party
as a result of such failure. The provisions of Sections 8.03, 8.06(c) and 8.07
and Article 11 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
Miscellaneous
Section 11.1. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Parent or Merger Subsidiary, to:
McDermott International Inc.
1450 Poydras Street
P.O. Box 61961 - 70112
New Orleans, LA 70161-1961
Attention: S. Wayne Murphy
Facsimile: (504) 587-6153
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Christopher Mayer
Fax: (212) 450-4800
if to the Company, to:
J. Ray McDermott, S.A
801 North Eldridge Street
Houston, Texas 77079
Attention: R.H. "Bobby" Rawle
Facsimile: (281) 870-5125
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with copies to:
c/o Wm. J. Johnson Associates
9545 Katy Freeway
Suite 470
Houston, Texas 77024
Attention: William J. Johnson
Facsimile: (713) 461-6195
Baker & Botts, L.L.P.
One Shell Plaza
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
Facsimile: (713) 229-1330
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on any business
day. Otherwise, any such notice, request or communication shall be deemed not
to have been received until the next succeeding business day.
Section 11.2. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein shall not survive
the Effective Time, except for the agreements set forth in Sections 7.03 and
8.07 and Article 11.
Section 11.3. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective, provided that, after the adoption of this
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 11.4. Expenses. (a) Except as otherwise provided in this Section,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
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(b) The Company agrees to pay Parent a fee in immediately available
funds equal to $10 million promptly, but in no event later than two business
days, after the termination of this Agreement by Parent pursuant to Section
10.01(c):
Section 11.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the prior written consent of each other party hereto, except that Parent
or Merger Subsidiary may transfer or assign, in whole or from time to time in
part, to one or more of their affiliates, the right to enter into the
transactions contemplated by this Agreement, but any such transfer or assignment
will not relieve Parent or Merger Subsidiary of its obligations hereunder.
Section 11.6. Governing Law. Except to the extent that Panama Law is
mandatorily applicable to this Agreement, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
regard to the conflicts of law rules of such state).
Section 11.7. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of New York or any New York state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 11.01 shall be deemed effective
service of process on such party.
Section 11.8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 11.9. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
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This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. Except as
provided in Section 7.03, no provision of this Agreement is intended to confer
any rights, benefits, remedies, obligations or liabilities hereunder upon any
person other than the parties hereto and their respective successors and
assigns.
Section 11.10. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 11.11. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 11.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
Section 11.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of New York or any New York state court,
in addition to any other remedy to which they are entitled at law or in equity.
Section 11.14. Definitions and Usage. (a) For purposes of this Agreement:
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by, or under common control with such person.
"MATERIAL ADVERSE EFFECT" means, with respect to any person means a
material adverse effect on the business, assets, financial condition or results
of operations of such person and its subsidiaries, taken as a whole, except any
such
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effect resulting from or arising in connection with (i) this Agreement or the
transactions contemplated hereby, (ii) changes in conditions affecting the
marine construction industries generally or (iii) changes in economic,
regulatory or political conditions generally.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"SIGNIFICANT SUBSIDIARY" means any subsidiary that constitutes a
"significant subsidiary" of any person within the meaning of Rule 1-02 of
Regulation S-X under the 1934 Act.
"SUBSIDIARY" means, with respect to any person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such person.
(b) A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(c) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
1933 Act.............................................. 2.04(b)
1934 Act.............................................. 2.05(d)
1994 Plan............................................. 2.05(a)
Acquisition Proposal.................................. 6.02(b)
Adjusted Option....................................... 2.04(a)
affiliate............................................. 11.14(a)
Certificate of Merger................................. 2.01(b)
Certificates.......................................... 2.03(a)
Common Share Price.................................... 1.01(a)
Common Stock.......................................... 1.01(a)
Company............................................... Recitals
Company 10-K.......................................... 4.06(a)
Company 10-Q.......................................... 4.07(a)
Company Balance Sheet................................. 4.08
Company Balance Sheet Date............................ 4.08
Company Disclosure Documents.......................... 4.09(a)
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TERM SECTION
- ---- -------
Company Proxy Statement............................... 4.09(a)
Company SEC Documents................................. 4.07(a)
Company Stockholder Meeting........................... 6.02(a)
Company Stock Option.................................. 2.04(a)
Effective Time........................................ 2.01(b)
Exchange Agent........................................ 2.03(a)
GAAP.................................................. 4.08
Indemnified Person.................................... 7.03(a)
Independent Committee................................. 6.02(b)
Lien.................................................. 4.04
material adverse effect............................... 11.14(a)
Merger................................................ 2.01(a)
Merger Consideration.................................. 2.02(a)
Merger Subsidiary..................................... 1.01(a)
Minimum Condition..................................... 1.01(a)
Offer................................................. 1.01(a)
Offer Documents....................................... 1.01(b)
Panama Law............................................ 1.02(a)
Parent................................................ Recitals
Parent Stock.......................................... 2.04(a)
Performance Shares.................................... 2.05(b)
person................................................ 11.14(a)
Preferred Stock....................................... 4.02(a)
Replacement Performance Award......................... 2.05(b)
Replacement Restricted Award.......................... 2.05(a)
Restricted Shares..................................... 2.05(a)
Schedule 14D-1........................................ 1.01(b)
Schedule 14D-9........................................ 1.02(b)
SEC................................................... 1.01(b)
significant subsidiary................................ 11.14(a)
subsidiary............................................ 11.14(a)
Surviving Corporation................................. 2.01(a)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
J. RAY MCDERMOTT, S.A.
By: /s/ R. H. Rawle
------------------------------------
Name: R. H. Rawle
Title: President and
Chief Operating Officer
MCDERMOTT INTERNATIONAL, INC.
By: /s/ Roger E. Tetrault
--------------------------------------
Name: Roger E. Tetrault
Title: Chairman and
Chief Executive Officer
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<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Merger Subsidiary shall not be
required to accept for payment or pay for any shares of Common Stock, and may,
subject to the terms of this Agreement, terminate the Offer, if (i) at the
expiration of the Offer, the Minimum Condition has not been satisfied or (ii) at
any time on or after May 7, 1999 and prior to the acceptance for payment of
shares of Common Stock, any of the following conditions exist:
(a) any injunction, judgment, order or decree of a court of competent
jurisdiction shall have been entered and not withdrawn or any law or regulation
shall exist that prohibits the consummation of the Offer or the Merger; or
(b) the Company shall have breached its representations and warranties
set forth in this Agreement or failed to perform any of its obligations,
covenants or agreements under this Agreement (other than any breaches or
failures to perform that, in the aggregate, do not have a material adverse
effect on the Company); or
(c) this Agreement shall have been terminated in accordance with its
terms.
Except for the Minimum Condition (which may be waived only with the consent
of the Company, Parent and Merger Subsidiary), the foregoing conditions are for
the sole benefit of Parent and Merger Subsidiary and may, subject to the terms
of this Agreement, be waived by Parent and Merger Subsidiary in whole or in part
at any time and from time to time in their discretion.
35
<PAGE>
EXHIBIT 3
Citibank, N.A.
399 Park Avenue
New York, NY 10022
May 7, 1999
McDermott International, Inc.
1450 Poydras Street
New Orleans, Louisiana 70112
Attention of Mr. Robert A. Jolliff
Treasurer
BRIDGE CREDIT FACILITY
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised us that, pursuant to a merger agreement to be entered into by
McDermott International, Inc., a Panamanian corporation (the "Borrower") and J.
Ray McDermott, S.A. ("JRMSA"), the Borrower intends to cause a newly organized
subsidiary of the Borrower (the "Acquisition Sub") to commence a tender offer
(the "Tender Offer") for the purchase of all the shares of common stock of JRMSA
not directly or indirectly owned by the Borrower (the "Shares"). The acceptance
of Shares tendered pursuant to the Tender Offer will be conditioned upon the
receipt of tenders representing at least a majority of the Shares. Following the
acceptance of Shares pursuant to the Tender Offer, the Borrower intends,
pursuant to a merger of JRMSA with the Acquisition Sub, to acquire the remaining
Shares at a per Share price equal to the price paid in the Tender Offer (the
"Merger"). Promptly after the Merger, the Borrower will cause JRMSA to pay a
cash dividend and/or make a loan to the Borrower in an aggregate amount that,
together with any cash of the Borrower available for such purpose, will be
sufficient to prepay all amounts outstanding under the Facility referred to
below (the "JRMSA Payment") and will apply the proceeds of the JRMSA Payment and
all such
<PAGE>
2
available cash to prepay all amounts outstanding under the Facility. The Tender
Offer, the Merger, the JRMSA Payment and the other transactions contemplated
hereby are collectively referred to herein as the "Transactions".
In connection with the Tender Offer and the other Transactions, you have advised
us that the Borrower desires to establish the credit facility described in the
Summary of Terms and Conditions attached hereto as Annex 1 (the "Facility"). You
have asked Citibank, N.A. ("Citibank") to act as administrative agent and to
provide you with a commitment for the entire amount of the Facility. You have
asked Salomon Smith Barney, Inc. ("SSB") to act as sole lead arranger, book
runner and syndication agent with respect to the Facility.
Citibank is pleased to inform you of its commitment to provide up to the entire
amount of the Facility. You hereby retain Citibank, and Citibank hereby agrees
to act, as sole administrative agent for the Facility. You hereby retain SSB,
and SSB hereby agrees to act, as sole lead arranger, book runner and syndication
agent for the Facility. The commitment and agreements of Citibank and SSB are
subject to the terms and conditions described in this letter and the attached
Annex I (collectively, the "Commitment Letter").
CONDITIONS PRECEDENT
- --------------------
The commitment and agreements of Citibank and SSB are subject to: (i) the
preparation, execution and delivery of mutually acceptable documentation,
including a credit agreement and related security documentation incorporating
substantially the terms and conditions outlined in this Commitment Letter; (ii)
the absence of a material adverse change in the business, condition (financial
or otherwise), operations, properties or prospects of the Borrower, as reflected
in its audited consolidated financial statements for the fiscal year ended March
31, 1999 (it being agreed that the establishment of a reserve for asbestos-
related liabilities that does not result in a violation of the minimum
consolidated tangible net worth covenant described in Annex I hereto will not in
and of itself constitute such a material adverse change); (iii) the accuracy of
all representations which you make to us and all information which you furnish
us and your compliance with the terms of this Commitment Letter; (iv) the
payment in full of all fees, expenses and other amounts payable hereunder; (v)
the closing of and initial funding under the Facility occurring on or prior to
July 31, 1999, and (vi) the other conditions set forth in Annex 1 hereto.
COMMITMENT TERMINATION
- ----------------------
The commitments and undertakings of Citibank and SSB set forth in this
Commitment
<PAGE>
3
Letter will terminate on July 31, 1999 unless the Facility closes on or before
such date. Prior to such date, this Commitment Letter may be terminated (i) by
the Borrower at any time at its option upon payment of any fees, expenses or
other amounts then payable hereunder or (ii) by Citibank and SSB if any event
occurs or information has become available which, in their reasonable judgment,
results or is reasonably likely to result in the failure to satisfy any
condition set forth in the preceding paragraph.
SYNDICATION
- -----------
Citibank reserves the right, prior to or after the closing and initial funding
under the Facility, to transfer portions of its commitment hereunder to one or
more other financial institutions arranged by SSB in consultation with the
Borrower that will become parties to and Lenders under the definitive credit
documentation (and upon the acceptance of a commitment from any such financial
institution, Citibank will be released from a like amount of its commitment
hereunder).
SSB will act as syndication agent with respect to the Facility and will manage
all aspects of the syndication in consultation with you, including the timing of
all offers to potential Lenders, the acceptance of commitments and the
determination of the amounts offered and the compensation provided.
You agree to take all such action as SSB may reasonably request to assist SSB in
forming a syndicate acceptable to SSB and you. Your assistance in forming such
syndicate shall include but not be limited to: (i) making senior management and
representatives of the Borrower and JRMSA available to participate in
information meetings with potential Lenders at such times and places as SSB may
reasonably request; (ii) using your best efforts to ensure that the syndication
efforts benefit from your lending relationships; and (iii) providing SSB with
all information reasonably deemed necessary by SSB to successfully complete the
syndication.
To ensure an orderly and effective syndication of the Facilities, you agree that
until SSB advises you that its syndication effort have been completed, you will
not, and will not permit any of your subsidiaries to, syndicate or issue,
attempt to syndicate or issue, announce or authorize the announcement of the
syndication or issuance of, or engage in discussions concerning the syndication
or issuance of, any debt facility or debt security (including any renewals
thereof) in the commercial bank market, except with the prior written consent of
SSB; provided, however, that the foregoing shall not limit your ability or that
of your subsidiaries to (i) issue commercial paper, (ii) use other short-term
debt programs currently in place, (iii) issue equity or public debt securities
or effect securitizations or (iv) amend existing bank credit agreements.
<PAGE>
4
It is agreed that Citibank will act as the sole administrative agent for the
Facility and that SSB will act as the exclusive syndication agent and that no
additional agents, co-agents or arrangers will be appointed, or other titles
conferred, without the consent of Citibank and SSB. You agree that no Lender
will receive any compensation of any kind for its participation in the Facility,
except as expressly provided for in the Fee Letter (as defined below) or in
Annex I.
FEES
- ----
The fees payable to Citibank and SSB are set forth in that certain letter
between you and us of even date herewith (the "Fee Letter"). The terms of the
Fee Letter are an integral part of the commitments and undertakings of Citibank
and SSB hereunder and constitute part of this Commitment Letter for all purposes
hereof. Each of the fees described in the Fee Letter shall be non-refundable
when paid.
INDEMNIFICATION
- ---------------
You agree to indemnify and hold harmless Citibank and SSB, each Lender and their
respective officers, directors, employees, agents, advisors, representatives,
affiliates, and controlling persons (each an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and disbursements of counsel), joint or
several, that may be incurred by or asserted against any Indemnified Party in
connection with this Commitment Letter or the transactions contemplated hereby
(including, without limitation, those arising out of or relating to any
investigation, litigation or proceeding or the preparation of any defense with
respect thereto, or any use made or proposed to be made of the proceeds of the
Facility), whether or not an Indemnified Party is a party thereto and whether or
not the transactions contemplated hereby are consummated, except to the extent
such claim, damage, loss, liability or expense is found in a final non-
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct. Your
obligation to the Indemnified Parties hereunder shall survive the expiration or
termination of this Commitment Letter.
You agree that no Indemnified Party shall have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Borrower or any of its security
holders for or in connection with the transactions contemplated hereby, except
to the extent such liability
<PAGE>
5
is found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's gross negligence or willful
misconduct or from a breach by such Indemnified Party of its obligations under
this Commitment Letter.
COSTS AND EXPENSES
- ------------------
In further consideration of the commitment and undertakings of Citibank and SSB
hereunder, and recognizing that in connection herewith that Citibank and SSB are
incurring substantial costs and expenses (including, without limitation, fees
and disbursements of counsel, due diligence, syndication, transportation,
computer, duplication, messenger, appraisal, audit, and insurance costs and
expenses), you hereby agree to pay, or reimburse Citibank and SSB on demand for,
all such reasonable costs and expenses (whether incurred before or after the
date hereof), regardless of whether any of the transactions contemplated hereby
are consummated. You also agree to pay all reasonable costs and expenses of
Citibank and SSB (including, without limitation, fees and disbursements of
counsel) incurred in connection with the enforcement of any of their rights and
remedies hereunder. Your obligation in respect of costs and expenses shall
survive the expiration or termination of this Commitment Letter.
CONFIDENTIALITY
- ---------------
By accepting delivery of this Commitment Letter, you agree that this Commitment
Letter is for your confidential use only and that neither its existence nor the
terms hereof will be disclosed by you to any person other than your officers,
directors, employees, accountants, attorneys and other advisors, and then only
on a "need to know" basis in connection with the transactions contemplated
hereby and on a confidential basis. Notwithstanding the foregoing, following
your acceptance of the provisions hereof and of the Fee Letter and your return
of executed counterparts of this Commitment Letter and the Fee Letter to us as
provided below, (i) you may make public disclosure of the terms and conditions
of this letter, with the exception of the terms and conditions of the Fee
Letter, and (ii) you may file a copy of this Commitment Letter (but not the Fee
Letter) in any public record in which it is required by law to be filed. The
parties hereto agree that the matters covered in the Fee Letter are intended by
the parties to be confidential, and the parties hereto agree that the contents
thereof shall not be disclosed to any person other than their respective
officers, directors, employees, accountants, attorneys, other advisors and
regulators, and then only on a confidential "need to know" basis in connection
with the transactions contemplated hereby. The parties also agree that they may
make such disclosures regarding the Fee Letter as they would be required to make
by law or requested to make by any regulator. Your obligations hereunder with
respect to confidentiality shall survive the expiration or termination of this
Commitment Letter.
<PAGE>
6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
- ----------------------------------------------
You represent and warrant that all information which has been or will hereafter
be made available to Citibank and SSB, any Lender or any potential Lender by you
or any of your representatives in connection with the transactions contemplated
hereby is and will be complete and correct in all material respects and does not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which such statements were or are
made. You agree to supplement such information from time to time so that the
representation and warranty contained in this paragraph remains correct.
In issuing their commitment and undertakings, Citibank and SSB are relying on
the accuracy of the information furnished to them by or on behalf of the
Borrower and its affiliates without independent verification thereof.
NO THIRD PARTY RELIANCE, ETC
- ----------------------------
The agreements of Citibank and SSB hereunder and of any Lender that issues a
commitment to provide financing under the Facility are made solely for the
benefit of the Borrower and may not be relied upon or enforced by any other
person. Please note that those matters that are not covered or made clear
herein or in Annex I are subject to mutual agreement of the parties. The terms
and conditions of this Commitment Letter and of the commitment and agreements of
Citibank and SSB hereunder may be modified only in writing.
You should be aware that Citibank and SSB or one or more of their affiliates may
be providing financing or other services to parties whose interests may conflict
with yours. Be assured, however, that consistent with our long-standing
policies to hold in confidence the affairs of our customers, neither Citibank or
SSB nor any of their affiliates will furnish confidential information obtained
from you to any of its other customers. By the same token, neither Citibank and
SSB nor any of their affiliates will make available to you confidential
information that it obtained or may obtain from any other customer.
<PAGE>
7
GOVERNING LAW
- -------------
This Commitment Letter shall be governed by, and construed in accordance with,
the laws of the State of New York (without regard to any conflict of law
provisions thereof). This Commitment Letter may be executed in any number of
counterparts. Delivery of an executed counterpart of this Commitment Letter by
telecopier shall be as effective as delivery of a manually executed counterpart.
WAIVER OF TRIAL BY JURY
- -----------------------
Each party hereto irrevocably waives all right to trial by jury in any action or
proceeding arising out of or relating to this Commitment Letter or the
transactions contemplated hereby.
Please indicate your acceptance of the provisions hereof by signing the enclosed
copy of this Commitment Letter and the attached Fee Letter and returning them to
Lydia G. Junek, in care of William T. Fox, 399 Park Avenue, New York, New York
10043 (fax: (212)-832-9857) at or before the earlier of 5:00 p.m. (New York City
time) on May 7, 1999, and the time at which the Tender Offer is publicly
announced, failing which the commitments and undertakings of Citibank and SSB
set forth above (if not so accepted prior thereto) will expire. If you elect to
deliver this Commitment Letter via fax, please arrange for the executed original
to follow by next-day courier. This Commitment Letter shall be binding upon
Citibank upon Citibank's execution hereof, notwithstanding that it shall not yet
have been executed by SSB.
Very truly yours,
SALOMON SMITH BARNEY, INC.,
By: __________________________
Name:
Title:
CITIBANK, N.A.,
By: __________________________
Name:
Title:
<PAGE>
8
ACCEPTED AND AGREED
this 7th day of May, 1999:
MCDERMOTT INTERNATIONAL, INC.,
By: __________________________
Name:
Title:
<PAGE>
ANNEX I
MCDERMOTT INTERNATIONAL, INC.
Senior Secured Credit Facility
Summary of Terms and Conditions
Borrower: McDermott International, Inc., a Panamanian
corporation (the "Borrower").
Transactions: Pursuant to a merger agreement to be entered into by
the Borrower and J. Ray McDermott, S.A. ("JRMSA"), the
Borrower intends to cause a newly organized subsidiary
of the Borrower (the "Acquisition Sub") to commence a
tender offer (the "Tender Offer") for the purchase of
all the shares of common stock of JRMSA not directly
or indirectly owned by the Borrower (the "Shares").
The acceptance of Shares tendered pursuant to the
Tender Offer will be conditioned upon the receipt of
tenders representing at least a majority of the
Shares. Following the acceptance of Shares pursuant to
the Tender Offer, the Borrower intends, pursuant to a
merger of JRMSA with the Acquisition Sub, to acquire
the remaining Shares at a per Share price equal to the
price paid in the Tender Offer (the "Merger").
Promptly after the Merger, the Borrower will cause
JRMSA to pay a cash dividend and/or make a loan to the
Borrower in an aggregate amount that, together with
any cash of the Borrower available for such purpose,
will be sufficient to prepay all amounts outstanding
under the Facility referred to below (the "JRMSA
Payment") and will apply the proceeds of the JRMSA
Payment and all such available cash to prepay all
amounts outstanding under the Facility. The Tender
Offer, the Merger, the JRMSA Payment and the other
transactions contemplated hereby are collectively
referred to herein as the "Transactions".
Facility: A senior secured term loan facility (the "Facility")
in the amount of $525,000,000.
Lead Arranger
and Book Runner: Salomon Smith Barney, Inc. ("SSB")
Administrative
Agent: Citibank, N.A. ("Citibank") will act as sole
Administrative Agent for a syndicate of lenders
(together with Citibank, the "Lenders") to be arranged
by SSB in consultation with the Borrower.
Other Agents: As agreed between the Borrower and SSB.
<PAGE>
2
Purpose: To provide funding for the acquisition of Shares
pursuant to the Tender Offer and the Merger.
Maturity: September 30, 1999.
Security: The Facility and any related hedging facility provided
by any Lender to the Borrower will be secured by a
first priority pledge of (i) all stock of JRMSA held
or acquired by the Borrower or any of its
subsidiaries, and (ii) any securities held or acquired
by the Borrower or any of its subsidiaries that are
convertible into stock of JRMSA (collectively, the
"Collateral").
Conditions
Precedent to
Initial Borrowing: Usual and customary for facilities and transactions of
this type, including evidence of authority; obtaining
of necessary approvals and consents; delivery of
satisfactory legal opinions; execution and delivery of
definitive credit and security documentation
satisfactory to the Administrative Agent; completion
of all filings and other actions necessary to perfect
security interests; absence of material adverse change
in the business, assets, operations, condition
(financial or otherwise) or prospects of the Borrower
and its subsidiaries (it being agreed that the
establishment of a reserve for asbestos-related
liabilities that does not result in a violation of the
minimum consolidated tangible net worth covenant
described below will not in and of itself constitute
such a material adverse change); absence of defaults,
prepayment events or creation of liens under debt
instruments or other agreements as a result of the
transactions contemplated hereby (subject to certain
de minimis exceptions to be agreed upon); absence of
certain material litigation; payment of fees and
expenses; and the following additional conditions:
1. The existing credit facility of JRMSA (the "JRMSA
Facility") shall have been amended in a manner
satisfactory to the Administrative Agent to permit
the Transactions, or arrangements satisfactory to
the Administrative Agent shall have been made for
the termination of the JRMSA Facility and the
repayment of all amounts outstanding thereunder.
2. Except as otherwise agreed by the Administrative
Agent, the terms
<PAGE>
3
of the Tender Offer (including, without
limitation, the per Share price to be offered
therein and the conditions to the Borrower's
obligations to purchase Shares) shall be those set
forth in the Merger Agreement in the form
heretofore delivered to the Administrative Agent.
3. The Administrative Agent shall be satisfied that
no legal, contractual or other impediment will
exist that could reasonably be expected to prevent
the completion of the Merger promptly following
the purchase of Shares pursuant to the Tender
Offer.
4. The Administrative Agent shall be satisfied that
JRMSA holds cash, cash equivalents and investments
in debt securities available for the payment of
the JRMSA Payment in an amount at least equal to
$525,000,000 and that no legal, contractual or
other impediment will exist that could reasonably
be expected to prevent the making of the JRMSA
Payment promptly following the Merger.
5. The conditions to the purchase of Shares pursuant
to the Tender Offer shall have been satisfied
without any amendment or waiver not consented to
by the Administrative Agent, and at least a
majority of the Shares shall have been or shall
simultaneously be accepted for purchase pursuant
to the Tender Offer on the terms set forth therein
and in accordance with applicable law.
6. The Borrower shall have delivered to the
Administrative Agent for each Lender a statement
on Federal Reserve Form U-1 demonstrating the
compliance of the loans made pursuant to the
Facility with Regulation U of the Board of
Governors of the Federal Reserve System.
<PAGE>
4
Conditions
Precedent to Each Delivery of a borrowing notice; accuracy of all
Borrowing: representations and warranties; and absence of
defaults at the time of, and after giving effect to,
borrowing.
Mandatory
Prepayments and
Commitment Upon consummation of the Merger, the commitments will
Reductions: terminate and the Borrower will cause JRMSA to make
the JRMSA Payment and apply the proceeds thereof to
prepay amounts outstanding under the Facility.
Voluntary
Commitment
Reductions/ Voluntary prepayments of borrowings under the
Prepayments: Facility, and voluntary reductions of the unutilized
portion of the Facility commitments, will be permitted
at any time, in whole or in part, in minimum principal
amounts of $10,000,000 or integral multiples of
$1,000,000 in excess thereof, without premium or
penalty, subject to reimbursement of the Lenders'
redeployment costs in the event of any prepayment
other than on the last day of an Interest Period.
Interest Rates and
Fees: See the pricing grid attached hereto.
Documentation: A credit agreement (the "Credit Agreement") and other
loan, and security documentation incorporating the
terms contained herein, other customary terms and
provisions and such other provisions as the
Administrative Agent may reasonably require in the
context of the transactions contemplated hereby.
Representations
and Warranties: Customary for facilities and transactions of this
type, including:
1. Organization; Powers
2. Authorization
3. Enforceability
4. Governmental approvals
<PAGE>
5
5. Financial statements
6. Absence of material adverse change since
December 31, 1998
7. Title to properties; Possession under leases
8. Subsidiaries
9. Litigation; Compliance with laws
10. Federal Reserve regulations
11. Investment Company Act; Public Utility Holding
Company Act
12. Use of proceeds
13. Tax returns
14. Disclosure
15. Employee benefit plans
16. Environmental and safety matters
17. Solvency
18. Absence of limitations on JRMSA Payments and
advances by subsidiaries
19. Year 2000 compliance
<PAGE>
6
Affirmative
Covenants: Usual for facilities and transactions of this type,
including but not limited to:
1. Existence; Business and properties
2. Insurance
3. Obligations and taxes
4. Financial statements, reports, etc.
5. Litigation and other notices
6. ERISA
7. Maintaining records; Access to properties and
inspections
8. Use of best efforts to complete the Merger
promptly following the Tender Offer
9. Making of JRMSA Payment promptly following Merger
Negative Covenants: Usual for facilities and transactions of this type,
including but not limited to prohibitions of or
limitations on:
1. Indebtedness
2. Liens
3. Sale and leaseback transactions
4. Investments, loans and advances
5. Mergers, consolidations, sales of assets and
acquisitions
6. Amendment of material agreements
7. Transactions with affiliates
8. Business of Borrower and subsidiaries
9. Dividends and other restricted payments, including
prohibitions of (i) dividends and distributions and
(ii) voluntary prepayments or purchases of
indebtedness
10. Direct or indirect limitations on
dividends, distributions and advances from
subsidiaries except for restrictions contained on
the date hereof in debt agreements of such
subsidiaries that do not restrict the JRMSA Payment
and restrictions in connection with non-recourse
project financings
Financial
Covenants: Minimum Consolidated Tangible Net Worth: No less
at any time than $250,000,000.
<PAGE>
7
Events of Default: Minimum Cash, Cash Equivalents and Investments in
Debt Securities of JRMSA: Minimum of $525,000,000
at all times.
Usual for facilities and transactions of this
type, including but not limited to:
1. Failure to pay
2. Breach of representations and warranties
3. Default under covenants (after grace periods to
be agreed upon in the case of certain
affirmative covenants)
4. Voluntary bankruptcy
5. Involuntary bankruptcy
6. Cross acceleration and cross default (including
certain mandatory prepayment or repurchase
events under other debt instruments)
7. Change of ownership or control
8. Unsatisfied material judgments
9. ERISA.
<PAGE>
8
Cost and Yield
Protection: Usual for facilities and transactions of this type,
including but not limited to compensation in respect
of redeployment costs, reserve requirements, taxes
(including gross-up provisions for changes in the law
regarding withholding and other taxes) and decreased
returns resulting from changes in U.S. or foreign
capital adequacy requirements, guidelines or policies
or their interpretation or application, and any other
yield and increased cost protection deemed necessary
by the Administrative Agent to provide customary
protection for U.S. and non-U.S. banks.
Assignments and
Participations: Lenders will be permitted to assign loans and
commitments with the prior written consent of the
Borrower (not to be unreasonably withheld).
Assignments will be in a minimum amount equal to the
lesser of (x)$5,000,000 and (y) 2.5% of the aggregate
amount of the Facility (or the remaining amount of a
Lender's commitment) and will not result in a Lender
holding commitments less than the lesser of (x)
$5,000,000 or (y) 2.5% of the aggregate amount of the
Facility. Assignments will be by novation, i.e.,
assignees will succeed to the rights and obligations
of the assignor Lenders. Assignments to any Lender or
affiliate thereof or any Federal Reserve Bank will be
permitted without consent. Participations will be
without restriction and participants will be entitled
to yield and increased cost protection to the same
extent as the participating Lender. Voting rights of
participants will be limited to changes in amounts,
rates, fees and maturity. Each assignment will be
subject to the payment by the Lenders party to such
assignment of a service fee to the Administrative
Agent.
Expenses and
Indemnification: All reasonable out-of-pocket expenses of Citibank and
SSB (and the Lenders for waivers, modifications,
enforcement costs and documentary taxes) associated
with (i) the arrangement and syndication of the
Facility and (ii) the preparation, execution and
delivery and enforcement of the Credit Agreement
(including reasonable fees, charges and disbursements
of counsel) are to be paid by the Borrower.
The Borrower will indemnify Citibank, SSB and the
Lenders against and hold them harmless from all costs,
expenses (including reasonable fees,
<PAGE>
9
charges and disbursements of counsel) and liabilities
resulting from any litigation or other proceedings
(regardless of whether Citibank, SSB or any Lender is
a party thereto), or from any investigation, related
to or arising out of the transactions contemplated
hereby, except to the extent such costs, expenses and
liabilities are determined by the final judgment of a
court to have resulted from the wilful misconduct or
gross negligence of the party seeking idemnification.
Counsel for Citibank
New York and SSB: Cravath, Swaine & Moore.
Governing Law:
<PAGE>
10
Commitment Fee: A commitment fee will accrue on the unused commitments
in respect of the Facility commencing on the date of
execution of definitive credit documentation (the
"Closing Date") and payable quarterly in arrears based
on the actual number of days elapsed over a 360-day
year. The rate at which the commitment fee will accrue
will be determined based on certain financial ratios
of the Borrower as set forth in the pricing grid
following this Annex.
Interest Rates: Interest will be payable on the outstanding loans
under the Facility at rates based upon Adjusted LIBOR
plus the Eurodollar Margin or ABR plus the Base Rate
Margin, as selected by the Borrower.
The Eurodollar Margin and the Base Rate Margin will be
determined based on certain financial ratios of the
Borrower as set forth in the pricing grid following
this Exhibit.
As used herein, (a) Adjusted LIBOR means the London
interbank offered rate for deposits in U.S. Dollars
adjusted for statutory reserves, and (b) Alternate
Base Rate, or ABR, means the higher of (i) Citibank's
Prime Rate and (ii) the Federal Funds Effective Rate
plus 1/2 of 1%.
Interest Periods: LIBOR Loans: At the Borrowers' option: 1, 2, 3 or 6
months.
Interest on LIBOR Loans will be payable at the end of
each interest period (but not less often than every
three months) and upon prepayment, if permitted, in
arrears on the basis of a 360-day year (calculated on
the basis of the actual number of days elapsed).
Interest on ABR Loans will be payable quarterly in
arrears, and upon prepayment, on the basis of a
365/366-day year when based on Citibank's Prime Rate
and upon a 360-day year when based upon the Federal
Funds Effective Rate (in each case calculated on the
basis of the actual number of days elapsed).
Notifications of
Borrowings: LIBOR Loans: 3 business days
ABR Loans: one business day
<PAGE>
MCDERMOTT INTERNATIONAL, INC.
Pricing Grid
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Standard & Poor's
Pricing Long-Term Unsecured Eurodollar Base Rate Commitment
Level Debt Ratings(1) Margin(2) Margin(2) Fee(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I BBB 100.0 0.0 25.0
- ---------------------------------------------------------------------------------------------------------------
II BBB- 125.0 25.0 30.0
- ---------------------------------------------------------------------------------------------------------------
III BB+ 162.5 62.5 35.0
- ---------------------------------------------------------------------------------------------------------------
IV BB 200.0 100.0 40.0
- ---------------------------------------------------------------------------------------------------------------
V BB- 250.0 150.0 50.0
- ---------------------------------------------------------------------------------------------------------------
VI Lower than BB- or 300.0 200.0 75.0
unrated
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the Borrower's senior unsecured long-term debt ratings.
(2) In basis points per annum.
