<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
PARKER DRILLING COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<C> <C>
DELAWARE 73-0618660
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
JAMES J. DAVIS
SENIOR VICE PRESIDENT - FINANCE AND
8 EAST THIRD STREET CHIEF FINANCIAL OFFICER
TULSA, OKLAHOMA 74103 8 EAST THIRD STREET
(918) 585-8221 TULSA, OKLAHOMA 74013
(Address, including zip code, and telephone (918) 585-8221
number, (Name, address, including zip code, and
including area code, of Registrant's principal telephone number,
executive offices) including area code, of agent for service)
Copies to:
T. MARK KELLY
C. MICHAEL HARRINGTON
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER CURTIS W. HUFF
1001 FANNIN STREET FULBRIGHT & JAWORSKI L.L.P.
HOUSTON, TEXAS 77002-6760 1301 MCKINNEY, SUITE 5100
(713) 758-2222 HOUSTON, TEXAS 77010-3095
(713) 758-2346 (FAX) (713) 651-5151
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=======================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE(2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible Subordinated Notes(3)... (4) (4) $143,750,000 $43,561
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 457(i) and (o) of the Rules and Regulations of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, the registration fee has been calculated solely on the basis of the
proposed maximum aggregate offering price of the Convertible Subordinated
Notes being registered hereby. No consideration is to be received upon
exercise of such Convertible Subordinated Notes.
(3) There is also registered hereunder such indeterminant number of shares of
Common Stock, $0.16 2/3 par value, of Parker Drilling Company as may be
issuable upon conversion of the Convertible Subordinated Notes being
registered hereby.
(4) Omitted pursuant to Rule 457(o).
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 3, 1997
, 1997
[PARKER DRILLING LOGO] $125,000,000
PARKER DRILLING COMPANY
% CONVERTIBLE SUBORDINATED NOTES DUE 2004
The % Convertible Subordinated Notes due 2004 (the "Notes") will be
convertible at the option of the holder into shares of common stock, par value
$.16 2/3 per share (the "Common Stock"), of Parker Drilling Company (the
"Company" or "Parker"), at any time at or prior to maturity, unless previously
redeemed or repurchased, at a conversion price (the "Conversion Price") of
$ per share (equivalent to a conversion rate of shares per
$1,000 principal amount of Notes), subject to adjustment in certain events.
Interest on the Notes is payable semi-annually on and of each
year, commencing on , 1998. On July , 1997, the closing sale price of
the Common Stock of the Company as reported on the New York Stock Exchange
Composite Tape (where it is traded under the symbol " PKD") was $ per
share.
The Notes will be redeemable, in whole or in part, at the option of the
Company, at any time on or after , 2000, at the redemption prices set
forth herein, plus accrued and unpaid interest to the date of redemption. The
Company will be required to offer to purchase the Notes upon a Change of Control
(as defined), at 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase.
The Notes will be unsecured general obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness (as defined)
of the Company, and are structurally subordinated to all liabilities (including
trade payables) of the Company's subsidiaries. The Indenture with respect to the
Notes will not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its subsidiaries. At May 31, 1997, the Company
would have had approximately $397.6 million of Senior Indebtedness, and the
Company's subsidiaries would have had approximately $49.3 million of
indebtedness, trade payables and other accrued liabilities (excluding guarantees
of Senior Indebtedness). See "Description of the Notes."
Application will be made to list the Notes on the New York Stock Exchange
upon official notice of issuance.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
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<S> <C> <C> <C>
Per Note............................. % % %
Total(4)............................. $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
(4) The Company has granted to the Underwriters an option exercisable within 30
days after the date of this Prospectus to purchase up to an additional
$18,750,000 aggregate principal amount of the Notes on the same terms as set
forth above, at the Price to the Public, less the Underwriting Discounts and
Commissions, solely for the purpose of covering over-allotments, if any. If
such option were exercised in full, the total Price to the Public, total
Underwriting Discounts and Commissions and total Proceeds to the Company
would be $ , $ and $ , respectively. See
"Underwriting."
The Notes are offered by the several Underwriters when, as and if delivered
to and accepted by them, subject to certain conditions, including their rights
to withdraw, cancel or reject orders in whole or in part. It is expected that
delivery of the Notes will be made in New York, New York on or about
, 1997, in book-entry form through the facilities of The Depository Trust
Company, against payment therefor in immediately available funds.
JOINT LEAD MANAGERS
DONALDSON, LUFKIN & JENRETTE JEFFERIES & COMPANY, INC.
SECURITIES CORPORATION
------------------
BEAR, STEARNS & CO. INC. PRUDENTIAL SECURITIES INCORPORATED
<PAGE> 3
[INSERT PHOTO HERE]
LEFT:
ONE OF THE RIGS TO BE ACQUIRED IN
THE HERCULES ACQUISITION, AN
INDEPENDENT LEG CANTELEVER
JACKUP, OPERATING IN THE GULF OF
MEXICO.
[INSERT PHOTO HERE]
LEFT:
THE COMPANY'S RENTAL TOOL
OPERATIONS SUPPLY DRILL PIPE,
DRILL COLLARS AND OTHER
SPECIALIZED EQUIPMENT UTILIZED IN
DRILLING AND PRODUCTION
APPLICATIONS, PRIMARILY IN THE
GULF OF MEXICO.
[INSERT PHOTO HERE]
RIGHT:
ONE OF THE COMPANY'S DEEP
DRILLING BARGE RIGS OPERATING IN
SOUTHERN LOUISIANA.
[INSERT PHOTO HERE]
RIGHT:
THE COMPANY OPERATES 22
HELICOPTER-TRANSPORTABLE LAND
RIGS IN REMOTE REGIONS AROUND THE
WORLD.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE NOTES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
NOTES, THE COMMON STOCK, OR BOTH, AND THE IMPOSITION OF A PENALTY BID, DURING
AND AFTER THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Securities and Exchange Commission
(the "Commission") by the Company pursuant to the Exchange Act, are incorporated
herein by reference and made a part of this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q and Form 10-Q/A for
the quarter ended November 30, 1996, its Quarterly Report on Form 10-Q for
the quarter ended February 28, 1997 and its Quarterly Report on Form 10-Q
for the quarter ended May 31, 1997;
(iii) the Company's Current Reports on Form 8-K filed September 19,
October 17 and November 25, 1996;
(iv) the Company's Current Reports on Form 8-K/A filed October 24,
1996 and January 6, 1997; and
(v) the Company's Current Report on Form 8-K filed July 3, 1997.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering (the "Offering") shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such document. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or suspended, to constitute a part of
this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, ON THE ORAL OR WRITTEN REQUEST OF ANY SUCH PERSON,
A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN OR TELEPHONE
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO PUBLIC RELATIONS DEPARTMENT,
PARKER DRILLING COMPANY, 8 EAST THIRD STREET, TULSA, OKLAHOMA 74103, TELEPHONE
(918) 585-8221.
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<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes thereto)
included elsewhere in this Prospectus or incorporated by reference herein.
Unless otherwise indicated, the pro forma information presented herein gives
effect to (i) the acquisition of Mallard Bay Drilling, Inc. ("Mallard") in
November 1996, (ii) the acquisition of Quail Tools, Inc. ("Quail") in November
1996, (iii) the November 1996 financings related to the Mallard and Quail
acquisitions, (iv) the pending acquisition of Hercules Offshore Corporation and
Hercules Rig Corp. (collectively, "Hercules"), and (v) the sale of the Notes
offered hereby (the "Offering") and the application of the estimated net
proceeds therefrom. Unless otherwise indicated, the information in this
Prospectus assumes the Underwriters' over-allotment option with respect to the
sale of the Notes will not be exercised. References to "Parker" or the "Company"
in this Prospectus include Parker Drilling Company and, unless the context
otherwise requires, its subsidiaries.
THE COMPANY
Parker is a leading worldwide provider of contract drilling and drilling
related services, operating in the shallow coastal waters or "transition zones"
of the Gulf of Mexico and Nigeria and in international and additional domestic
land oil and gas producing regions. The Company's growth strategy is focused on
higher margin and transition zone drilling and workover markets. Consistent with
this strategy, in November 1996, the Company acquired (i) Mallard, the
second-largest barge drilling and workover company in the transition zones of
the Gulf of Mexico (the "Mallard Acquisition"), and (ii) Quail, a leading
provider of specialized rental equipment for drilling and workover operations,
primarily in the Gulf of Mexico (the "Quail Acquisition"). In addition, the
Company has recently entered into agreements to acquire (i) the capital stock of
Hercules, a leading provider of contract drilling and workover services in the
shallow waters of the Gulf of Mexico (the "Hercules Acquisition"), and (ii) the
assets of Bolifor, S.A. ("Bolifor"), a leading provider of land contract
drilling services in Bolivia (the "Bolifor Acquisition").
With the closing of the pending acquisitions of Hercules and Bolifor,
Parker's rig fleet will consist of 34 barge drilling and workover rigs, eight
shallow water jackup rigs, seven offshore platform rigs and 75 land rigs. The
Company's barge and jackup rig fleet is dedicated to transition zone waters,
which are generally defined as extending from the coast to depths of up to 200
feet and include marshes and inland waterways. Parker's land rig fleet generally
consists of premium and specialized deep drilling rigs, with 62 of its 75 land
rigs capable of drilling to depths of 15,000 feet or greater. In addition, 22 of
the Company's land rigs are helicopter-transportable, thus establishing Parker
as the dominant operator in the heli-rig market. The diversity of the Company's
rig fleet, both in terms of geographic location and asset class, enables the
Company to provide a broad range of services and to take advantage of market
upturns, while reducing its exposure to downturns in any particular sector or
region.
The oilfield services industry has experienced a significant increase in
activity in the last two years as oil and gas companies have increased their
exploration and production budgets in response to increasing demand for oil and
gas, stronger oil and gas prices and reduced drilling costs due in large part to
improved technology. In the offshore drilling market, including transition
zones, rig dayrates and utilization levels are at a 15-year high with many
markets at or approaching full utilization. The land drilling industry, both in
the United States and internationally, has also shown a marked improvement in
dayrates and utilization driven by several factors, including stronger commodity
prices, rig attrition and consolidation of drilling contractors, especially in
the domestic market. Through its recent and pending acquisitions, the Company is
capitalizing on these improving conditions.
BUSINESS STRATEGY
The Company's objective is to continue to expand its position as a
worldwide provider of contract drilling and drilling related services in order
to achieve revenue and earnings growth. To accomplish this objective, the
Company's business strategy is to (i) expand and diversify the Company's market
position in transition zones worldwide; (ii) capitalize on the increased demand
for contract drilling services in the Company's core land
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drilling markets by upgrading its existing rigs with newer technology equipment
and by pursuing the purchase of additional rigs in international markets; and
(iii) expand and diversify its operations by pursuing additional acquisitions of
complementary assets and businesses.
RECENT AND PENDING TRANSACTIONS
The Company has entered into four significant transactions since November
1996 that have increased its size, diversified its operations, and established a
significant presence in certain high margin niche markets.
- Mallard Acquisition. In November 1996, the Company entered the barge
drilling and workover markets in the transition zones of the U.S. and
Nigeria through the acquisition of Mallard for approximately $337
million. The acquisition positioned the Company as the second-largest
drilling contractor and the largest workover contractor in the Gulf of
Mexico barge rig market. In addition, the acquisition provided the
Company with four international deep drilling barges located in the
transition zone of Nigeria, where it is the leading barge drilling
contractor.
- Quail Acquisition. In November 1996, the Company acquired Quail for
approximately $67 million. Quail is a leading provider of specialized
rental tools used in difficult drilling applications and in production
and workover operations in the Gulf of Mexico and the Gulf Coast region.
The Company's rental tools include a full line of drill pipe, drill
collars, tubing, blowout preventers, choke manifolds, casing scrapers,
and cement and junk mills. Management believes that its international
drilling operations will enable the Company to expand the rental tool
business internationally, as well as incorporate rental tool services as
part of integrated drilling or project management contracts.
- Hercules Acquisition. In May 1997, the Company entered into an agreement
to acquire Hercules, which owns a fleet of seven jackup rigs and four
self-erecting platform rigs, for $195 million. Hercules is the
second-largest jackup drilling and workover company in the transition
zones of the Gulf of Mexico. The Hercules Acquisition will further expand
and complement the Company's presence in the Gulf of Mexico shallow water
market and will provide opportunities to operate jackup rigs
internationally. Additionally, the Hercules fleet of four platform rigs
will augment the Company's existing platform rig business. Management
expects the Hercules Acquisition to close in the fourth quarter of
calendar 1997. The Hercules Acquisition will be partially funded from the
proceeds of the Offering. See "Hercules Acquisition," "Use of Proceeds"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
- Bolifor Acquisition. In June 1997, the Company entered into an agreement
to acquire substantially all of the assets of Bolifor for $25 million.
The assets of Bolifor primarily consist of 11 land rigs located in
Bolivia, Paraguay and Argentina. The Bolifor Acquisition positions the
Company to capitalize on the increased drilling activity expected to
occur as a result of the completion of the Sao Paolo gas pipeline.
Management expects the Bolifor Acquisition to close in July 1997 and be
funded with existing cash. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
RECENT OPERATING INFORMATION
The pro forma combined financial information presented in this Prospectus
is based on historical revenues and operating data of the Company, Mallard,
Quail and Hercules. The Company believes that such historical data is not
indicative of the operating performance expected to be achieved by the Company
in fiscal 1998 and future years, as such information does not reflect current
dayrates and utilization levels which are, in general, substantially above
historical levels. The following supplemental pro forma information with respect
to the operations of Mallard and Hercules, is based on current operating data,
and should be read in conjunction with the pro forma financial information
provided elsewhere herein. Further, the ability of the Company to maintain the
assumed utilization rates and dayrates is dependent upon future market
conditions and is subject to the risk factors described under "Risk Factors."
The Company believes that, based on
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information available to it, absent a material decline in the demand and prices
for oil and natural gas, the current market conditions should continue into
fiscal 1998.
Mallard. Within the Company's transition zone operations in both the Gulf
of Mexico and Nigeria, dayrates and utilization levels have increased
significantly in calendar 1997 relative to their average levels during calendar
1996. As a result of increasing demand for drilling services, the Company has
been able to introduce additional barge rigs into service in its transition zone
markets and additional platform rigs in the Gulf of Mexico. On an annualized pro
forma basis, assuming the Company's rigs available for service as of June 25,
1997 operated at the average utilization levels experienced in calendar 1996 at
average dayrates in effect as of June 25, 1997, the Mallard rigs would have
generated an incremental $50.1 million of revenue relative to the comparable pro
forma period in fiscal 1996.
Hercules. As a result of increasing demand for offshore drilling services
and tightening supply of jackup and platform rigs equipped to drill in such
waters, especially in the Gulf of Mexico, dayrates and utilization levels have
increased significantly in calendar 1997 relative to their average levels during
calendar 1996. On an annualized pro forma basis, assuming the Hercules rigs
available for service as of June 25, 1997 operated at the average utilization
levels experienced in calendar 1996 at average dayrates in effect as of June 25,
1997, the Hercules rigs would have generated an incremental $17.7 million of
revenue relative to the comparable pro forma period in fiscal 1996.
THE OFFERING
Securities Offered......... $125,000,000 aggregate principal amount of %
Convertible Subordinated Notes due 2004 (not
including $18,750,000 additional aggregate
principal amount of Notes subject to the
Underwriters' over-allotment option).
Maturity................... , 2004.
Interest Payment Dates..... and , commencing ,
1998.
Conversion Rights.......... The Notes will be convertible into shares of Common
Stock at any time prior to the close of business on
the second business day prior to maturity, unless
previously redeemed or repurchased, at the
conversion price of $ per share, subject
to adjustment under certain circumstances as
described herein. Accordingly, each $1,000
principal amount of Notes will be convertible into
shares of Common Stock, subject to
adjustment.
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after , 2000, at the redemption prices set
forth herein, plus accrued and unpaid interest to
the redemption date.
Change of Control.......... Upon a Change of Control, the Company will be
required to offer to purchase the Notes at 100% of
the principal amount thereof, plus accrued and
unpaid interest on the date of purchase.
Subordination.............. The Notes will be unsecured general obligations of
the Company, subordinated in right of payment to
all existing and future Senior Indebtedness of the
Company and will be structurally subordinated to
all liabilities (including trade payables) of the
Company's subsidiaries. At May 31, 1997, the
Company would have had aggregate Senior
Indebtedness of approximately $397.6 million and
the Company's subsidiaries would have had
approximately $49.3 million of indebtedness, trade
payables and other accrued liabilities (excluding
guarantees of Senior Indebtedness). See
"Capitalization." The Indenture will not restrict
the
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incurrence of Senior Indebtedness or other
indebtedness by the Company or any of its
subsidiaries.
Use of Proceeds............ To finance a portion of the consideration payable
in the Hercules Acquisition. In the event that the
Hercules Acquisition does not close, the proceeds
will be used for general corporate purposes,
including refurbishment or acquisition of
additional rigs. See "Use of Proceeds."
Listing.................... Application will be made to list the Notes on the
New York Stock Exchange (the "NYSE") upon official
notice of issuance.
Common Stock Listing....... The Common Stock is listed on the NYSE under the
symbol "PKD."
Risk Factors............... An investment in the Notes involves certain risks
that a potential investor should carefully evaluate
prior to making an investment in the Notes. See
"Risk Factors."
For a description of the terms of the Notes, see "Description of the
Notes." For a description of the Common Stock, see "Description of Capital
Stock."
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table presents for the periods indicated certain historical
and pro forma financial data for the Company. The following information should
be read together with Management's Discussion and Analysis of Financial
Condition and Results of Operations, the historical financial statements of
Parker, Mallard, Quail and Hercules, including the notes thereto, and the
Unaudited Pro Forma Combined Financial Statements, including the notes thereto,
included elsewhere or incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, NINE MONTHS ENDED MAY 31,
------------------------------------------ -------------------------------
PRO FORMA PRO FORMA
1994 1995 1996 1996(1) 1996 1997 1997(1)
-------- -------- -------- --------- -------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues...................... $152,424 $157,371 $156,652 $320,822 $115,637 $216,193 $289,593
Operating expenses:
Drilling, rental and other........ 121,295 118,060 112,766 223,231 81,023 138,096 186,079
Depreciation, depletion and
amortization.................... 23,246 23,745 23,061 57,142 17,339 32,874 46,002
General and administrative........ 17,018 17,063 19,428 19,428 15,194 14,055 14,055
Provision for reduction in
carrying value of certain
assets.......................... 19,718 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expenses...... 181,277 158,868 155,255 299,801 113,556 185,025 246,136
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)............. (28,853) (1,497) 1,397 21,021 2,081 31,168 43,457
Interest income (expense), net...... 1,150 1,184 1,507 (45,375) 924 (18,919) (32,458)
Other income (expense).............. 784 7,413 5,663 6,554 3,108 1,753 1,680
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes... (26,919) 7,100 8,567 (17,800) 6,113 14,002 12,679
Income tax expense.................. 1,887 3,184 4,514 6,877 3,565 5,290 5,420
-------- -------- -------- -------- -------- -------- --------
Net income (loss)................... $(28,806) $ 3,916 $ 4,053 $(24,677) $ 2,548 $ 8,712 $ 7,259
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per share (fully
diluted).......................... $ (.53) $ .07 $ .07 $ (.41) $ .05 $ .12 $ .10
======== ======== ======== ======== ======== ======== ========
Weighted average shares outstanding
(fully diluted)................... 54,247,664 55,332,541 57,466,183 60,522,783 56,219,680 69,779,690 70,597,023
========== ========== ========== ========== ========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA(2)........................... $ 14,111 $ 22,248 $ 24,458 $ 78,163 $ 19,420 $ 64,042 $ 89,459
Ratio of earnings to fixed
charges(3)........................ -- 81.7x 64.5x -- 71.3x 1.6x 1.4x
Capital expenditures:
Maintenance....................... 5,444 5,133 6,646 15,584 4,110 7,770 10,929
Other............................. 29,320 16,407 24,190 67,129 22,249 52,429 78,227
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1997
-----------------------
AS
ACTUAL ADJUSTED(4)
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and other short-term investments... $ 91,675 $ 16,672
Property, plant and equipment, net........................ 405,407 560,407
Total assets.............................................. 795,601 931,456
Total long-term debt, including current portion........... 397,649 522,649
Total stockholders' equity................................ 340,967 340,967
</TABLE>
- ---------------
(1) Pro forma information gives effect to the Offering and the use of net
proceeds therefrom and the acquisitions of Mallard, Quail and Hercules as if
these transactions had occurred on the first day of the period presented.
See "Unaudited Pro Forma Combined Financial Statements."
(2) EBITDA represents operating income (loss) before depreciation, depletion and
amortization and provision for reduction in carrying value of certain
assets. EBITDA is frequently used by securities analysts and is presented
hereby to provide additional information about the Company's operations.
EBITDA is not a measurement presented in accordance with generally accepted
accounting principles. EBITDA should not be considered in isolation or as a
substitute for net income, cash flow provided by operating activities or
other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(3) For purposes of these calculations, earnings consist of income (loss) before
income taxes plus interest expense and fixed charges consist of interest
expense. Earnings were not sufficient during 1994 and 1996 pro forma to
cover fixed charges. The deficiencies were $26.9 million and $17.8 million,
respectively.
(4) Gives effect to the sale of the Notes and the use of the estimated net
proceeds therefrom and the consummation of the Hercules Acquisition as if
these transactions had occurred on May 31, 1997. See "Use of Proceeds."
8
<PAGE> 10
RIG ACTIVITY DATA
The following table presents for the periods indicated certain rig activity
data for the Company, including Mallard, which was acquired on November 12,
1996, and for the rigs to be acquired in the Hercules Acquisition:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996 CURRENT(1)
------- ------- ------- ------- ------- ----------
(AVERAGE FOR PERIOD)
<S> <C> <C> <C> <C> <C> <C>
TRANSITION ZONE RIG DATA
Domestic barge deep drilling:
Rigs available for service(2)......... 7.0 7.0 7.0 7.0 7.0 8.0
Utilization rate of rigs available for
service(3).......................... 71% 83% 73% 75% 86% 100%
Dayrate............................... $ 8,713 $ 9,606 $13,537 $12,880 $13,793 $16,107
Cold stacked rigs(2).................. 1.0 1.0 1.0 2.0 3.0 3.0
Domestic barge intermediate drilling:
Rigs available for service(2)......... 3.7 5.0 5.0 5.0 5.0 4.0
Utilization rate of rigs available for
service(3).......................... 57% 77% 65% 74% 85% 100%
Dayrate............................... $ 7,015 $ 7,671 $10,432 $10,143 $10,381 $12,526
Cold stacked rigs(2).................. 0.0 0.0 0.0 0.0 0.0 0.0
Domestic barge workover and shallow
drilling:
Rigs available for service(2)......... 8.9 10.0 9.0 7.3 8.7 10.0
Utilization rate of rigs available for
service(3).......................... 66% 66% 48% 66% 71% 80%
Dayrate............................... $ 6,301 $ 6,742 $ 8,181 $ 8,066 $ 7,595 $ 9,418
Cold stacked rigs(2)(4)............... 8.9 12.0 13.0 12.6 6.3 5.0
International barge drilling:
Rigs available for service(2)......... 1.0 1.0 1.0 1.0 1.7 4.0
Utilization rate of rigs available for
service(3).......................... 100% 57% 46% 89% 89% 100%
Dayrate............................... $21,659 $22,049 $23,531 $25,141 $25,302 $26,280
Cold stacked rigs(2).................. 0.0 0.0 0.0 0.0 1.0 0.0
Jackup rigs(5):
Rigs available for service(2)......... 1.2 2.7 3.5 5.0 5.0 6.0
Utilization rate of rigs available for
service(3).......................... 84% 97% 76% 89% 97% 100%
Dayrate............................... $ 9,673 $16,071 $15,429 $14,692 $19,390 $23,286
Cold stacked rigs(2).................. 0.0 0.0 0.0 0.0 0.0 1.0
OTHER OFFSHORE RIG DATA
Platform rigs(6):
Rigs available for service(2)......... 5.0 5.0 4.5 4.0 3.2 3.0
Utilization rate of rigs available for
service(3).......................... 51% 82% 68% 50% 91% 100%
Dayrate............................... $ 5,886 $ 8,101 $ 9,379 $ 9,466 $12,226 $15,572
Rigs under lease to another
contractor(7)....................... 0.0 0.0 0.0 0.0 0.8 1.0
</TABLE>
<TABLE>
<CAPTION>
LAND RIG DATA
YEAR ENDED AUGUST 31,
-----------------------------------------------
1992 1993 1994 1995 1996 CURRENT(1)
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Utilization rate of international land
rigs(8)............................... 52% 40% 56% 54% 55% 74%
Utilization rate of domestic land
rigs(8)(9)............................ 40% 41% 45% 46% 56% 100%
</TABLE>
- ---------------
(1) As of June 25, 1997.
(2) The number of rigs is determined by calculating the number of days each rig
was in the fleet, e.g., a rig under contract or available for contract for
an entire year is 1.0 "rigs available for service" and a rig cold stacked
for one quarter is 0.25 "cold stacked rigs." "Rigs available for service"
includes rigs currently under contract or available for contract. "Cold
stacked rigs" includes all rigs that are stacked and would require
significant refurbishment before being placed into service. Rig No. 52,
which recently suffered a blowout, is also included as a cold stacked rig
under current information for domestic barge deep drilling.
(3) Rig utilization rates are based on a weighted average basis assuming 365
days availability for all rigs available for service. Rigs acquired or
disposed of have been treated as added to or removed from the rig fleet as
of the date of acquisition or disposal. Rigs that are in operation or fully
or partially staffed and on a revenue-producing standby status are
considered to be utilized. Rigs under contract that generate revenues during
moves between locations or during mobilization/demobilization are also
considered to be utilized.
(4) Mallard removed a total of six stacked barge workover rigs from its fleet
since the beginning of 1995 and refurbished and activated two such rigs
during this period.
9
<PAGE> 11
(5) Reflects information on the seven jackup rigs to be acquired by the Company
in the Hercules Acquisition, one of which is currently undergoing
refurbishment and is expected to be placed into service in September 1997,
but does not include one cold stacked jackup rig owned by the Company.
(6) Reflects the four platform rigs to be acquired by the Company in the
Hercules Acquisition. Does not include three of the Company's previously
cold stacked platform rigs, two of which have been refurbished and put in
service in January and April 1997 and are currently operating at dayrates of
$19,800 and $17,750, respectively, and one additional cold stacked platform
rig. Also does not include two platform rigs located offshore Peru that will
be sold under an agreement effective May 1997.
(7) One platform rig is under a two-year lease expiring in November 1998. The
lease has a two-year renewal option.
(8) Parker calculates its land rig utilization rates on a weighted average basis
assuming 365 days availability for all of its rigs. Rigs retired, disposed
of or reclassified as assets held for sale have been treated as removed from
the rig fleet as of the last day of each fiscal period, except as described
in footnote (9) below. Rigs that are in operation or fully or partially
staffed and on a revenue-producing standby status are considered to be
utilized. Rigs under contract that generate revenues during moves between
locations or during mobilization/demobilization are also considered to be
utilized.
(9) Domestic utilization for the fiscal years ended August 31, 1992, 1993, 1994
and 1995 has been adjusted to reflect the removal of 16 domestic mechanical
rigs in August 1994 and the sale of an additional 22 such rigs in August
1996. Including these 38 domestic rigs during such periods, historical
domestic utilization was as follows: 1992 -- 13%, 1993 -- 14%, 1994 -- 15%,
and 1995 -- 21%.
10
<PAGE> 12
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
statements, other than statements of historical facts, included in this
Prospectus that address activities, events or developments that the Company
expects, projects, believes or anticipates will or may occur in the future,
including such matters as future operating results of the Company's and
Hercules' rigs, future capital expenditures and investments in the acquisition
and refurbishment of rigs (including the amount and nature thereof), repayment
of debt, expansion and growth of operations and other such matters, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by management of the Company in light of its experience and
its perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including the risk factors discussed herein, general economic and business
conditions, prices of oil and gas, foreign exchange and currency fluctuations,
the business opportunities (or lack thereof) that may be presented to and
pursued by the Company, changes in laws or regulations and other factors, many
of which are beyond the control of the Company. Prospective investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in the forward-looking statements.
RISK FACTORS
Each investor should carefully examine this entire Prospectus and should
give particular attention to the risk factors set forth below.
INCREASED LEVERAGE
As of May 31, 1997, as adjusted for the sale of the Notes, the Company's
total long-term debt and stockholders' equity would have been $522.6 million and
$341.0 million, respectively. See "Capitalization." The Company's level of
indebtedness will have several important effects on its future operations,
including: (i) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of interest on its indebtedness and will not be
available for other purposes; and (ii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's business will continue to
generate cash flow at or above current levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt,
it may be required to refinance all or a portion of its existing debt, including
the Notes, or to obtain additional financing. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained. The Indenture will not restrict the incurrence of indebtedness by the
Company or its subsidiaries.
SUBORDINATION
The payment of principal of, and premium, if any, and interest on, the
Notes will be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness when due, whether outstanding at the date of the
Indenture or later incurred. By reason of such subordination, in the event of
the dissolution, insolvency or bankruptcy of the Company, holders of the Notes
may recover less, ratably, than holders of Senior Indebtedness and other general
creditors of the Company or may recover nothing. The terms and conditions of the
subordination provisions pertinent to the Notes are described in more detail in
"Description of the Notes -- Subordination."
The Notes also will be structurally subordinated to claims of creditors
(other than the Company) of the Company's subsidiaries, including trade
creditors, secured creditors, taxing authorities, creditors holding
11
<PAGE> 13
guarantees and tort claimants and claims of holders of any preferred stock of
such subsidiaries. In the event of a liquidation, reorganization or similar
proceeding relating to a subsidiary, these persons generally will have priority
as to the assets of such subsidiary over the claims and equity interest of the
Company and, thereby indirectly, holders of the indebtedness of the Company,
including the Notes.
LIMITATIONS ON REPURCHASE UPON A CHANGE OF CONTROL
In the event of a Change of Control (as defined herein), each holder of
Notes will have the right, at the holder's option, to require the Company to
repurchase all or a portion of such holder's Notes at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest to the
repurchase date. The Company's ability to repurchase the Notes upon a Change of
Control may be limited by the terms of the Company's Senior Indebtedness and the
subordination provisions of the Indenture. Under the covenants of the Company's
9 3/4% Senior Notes due 2006 (the "9 3/4% Senior Notes"), the Company currently
would be precluded from repurchasing the Notes upon a Change of Control.
Further, the ability of the Company to repurchase the Notes upon a Change of
Control will be dependent on the availability of sufficient funds and compliance
with applicable securities laws. Accordingly, there can be no assurance that the
Company will be able to repurchase the Notes upon a Change of Control. The term
"Change of Control" is limited to certain specified transactions and may not
include other events that might adversely affect the financial condition of the
Company or result in a downgrade of the credit rating of the Notes, nor would
the requirement that the Company offer to repurchase the Notes upon a Change of
Control necessarily afford holders of the Notes protection in the event of a
highly leveraged transaction, reorganization, merger or similar transaction
involving the Company. See "Description of the Notes -- Repurchase of Notes at
the Option of the Holder Upon a Change of Control."
FAILURE TO CLOSE THE HERCULES ACQUISITION
The closing of the Hercules Acquisition is subject to certain conditions,
including satisfaction of requirements under the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976 (the "HSR Act"), approval of the Malaysian Securities
Commission and Kuala Lumpur Stock Exchange, requisite approval of the
shareholders of Trenergy (Malaysia) BHD ("Trenergy") and receipt of necessary
financing by the Company. It is anticipated that the closing of the Offering
will occur prior to the satisfaction of all conditions to consummate the
Hercules Acquisition. No assurance can be given that the Hercules Acquisition
will be completed. If the closing of the Hercules Acquisition does not occur,
the Company intends to use the net proceeds of the Offering for general
corporate purposes, including the refurbishment or acquisition of additional
rigs. In addition, the Company, under certain circumstances, may be required to
pay to Trenergy a fee of $5 million if the closing does not occur due to the
fault or inability of the Company to perform its obligations. See "Hercules
Acquisition" and "Use of Proceeds."
INDUSTRY CONDITIONS
The Company's revenues and earnings are affected directly by the worldwide
level of oil and gas exploration and development activity. The level of such
activity is affected by many factors over which the Company has no control,
including, among others, the market prices of oil and gas, the volatility of
such prices, the levels of production by, and other activities of, the
Organization of Petroleum Exporting Countries and other oil and gas producers,
governmental regulation and trade restrictions, the level of worldwide economic
activity, political stability in major oil producing areas, the development of
alternate energy sources and the long-term effect of worldwide energy
conservation measures. There can be no assurance that current levels of
exploration and development activities of oil and gas companies will be
maintained or that demand for the Company's services will reflect the level of
such activities.
RISKS OF INTERNATIONAL OPERATIONS
A significant portion of Parker's operations is conducted in international
markets, including South America, the Asia Pacific region and West Africa.
International activities accounted for approximately 49% and 45% of the
Company's operating revenues on a pro forma basis for the year ended August 31,
1996 and for
12
<PAGE> 14
the nine months ended May 31, 1997, respectively, exclusive of the Bolifor
Acquisition. In addition to the risks inherent in the drilling business, the
Company's international operations are subject to certain political, economic
and other uncertainties, including, among others, risks of war and civil
disturbances, expropriation, nationalization, termination of existing contracts,
taxation policies, foreign exchange restrictions and fluctuations and other
risks arising out of foreign governmental sovereignty over certain areas in
which the Company conducts operations. Although the Company seeks to protect
against some of these risks through insurance, insurance is not available for
all types of risks or for all areas in which the Company operates. To the extent
insurance is available for a particular risk, there can be no assurance that
such insurance will be sufficient to cover all losses that could be incurred
with respect to a particular covered risk. Losses from these factors could be
material in those countries where the Company has a significant concentration of
assets.
The Company's Nigerian operations are subject to certain risks relating to
political instability in Nigeria and the possibility of the promulgation of
legislation or regulations by the United States that, if adopted, could restrict
the ability of the Company and some of its customers to engage in trade with and
invest in Nigeria. Since beginning operations in 1991, Mallard has not been
materially affected by political instability in Nigeria, but other rig
contractors have in recent years experienced work stoppages and delays relating
to civil unrest in Nigeria. If the United States were to adopt such legislation
or regulations or if such civil unrest were to reoccur, the Company could lose
an important source of income and could be required to redeploy its rigs out of
Nigeria. The costs of such redeployment might not be reimbursable, and such
costs, together with the lost revenues resulting from a termination of its
Nigerian operations, could have a material adverse effect on the Company.
Revenues and operating income attributable to the Company's Nigerian operations
on a pro forma basis for the year ended August 31, 1996 were $30.7 million and
$9.8 million, respectively, and for the nine months ended May 31, 1997 were
$22.8 million and $6.4 million, respectively.
OPERATING HAZARDS AND UNINSURED RISKS
The Company's drilling operations are subject to various hazards inherent
in the drilling of oil and gas wells, including blowouts, reservoir damage, loss
of well control, cratering, and oil and gas well fires. Such events can result
in personal injury or death, severe damage to or destruction of equipment and
facilities, suspension of operations, and substantial damage to surrounding
areas and the property of others. The Company's offshore operations also are
subject to hazards inherent in marine operations, such as capsizings,
groundings, collisions, damage from weather, sea damage or unsound location.
Generally, the Company obtains indemnification from its customers by contract
for certain of these risks. To the extent not transferred to customers by
contract, the Company seeks protection against such risks through insurance.
However, potential liabilities associated with oilfield casualties or losses
could arise in risk categories where no insurance has been purchased, where
claims exceed the applicable insurance coverage, or where indemnification is not
available or satisfied. The occurrence of events that are not fully insured or
the failure of a customer to meet its indemnification obligations could have a
material adverse effect on the Company. In addition, there can be no assurance
that insurance will be available or, even if available, that insurance premiums
or other costs will not rise sharply in the future.
INTEGRATION OF ACQUISITIONS
The Mallard Acquisition and the Quail Acquisition have required the Company
to integrate and manage businesses that are related to, but substantially
different from, Parker's historical land drilling business. In addition, the
Hercules Acquisition and the Bolifor Acquisition will require assimilation of
operations into the Company's existing businesses. No assurance can be given
that the Company will be successful in managing and incorporating the acquired
businesses into its existing operations or that such activities will not require
a disproportionate amount of management's attention. The Company's failure to
successfully incorporate the acquired businesses into its existing operations,
or the occurrence of unexpected costs or liabilities in the acquired businesses,
could have a material adverse effect on the Company.
13
<PAGE> 15
RISKS OF ACQUISITION STRATEGY
The Company's growth strategy includes the acquisition of other oilfield
services businesses. There can be no assurance, however, that the Company will
be able to continue to identify attractive acquisition opportunities, obtain
financing for acquisitions on satisfactory terms or successfully acquire
identified targets. Future acquisitions may require the Company to incur
additional indebtedness or issue capital stock to finance such acquisitions.
Depending on the Company's operating performance, the provisions of the
Company's bank credit facility or the terms of the 9 3/4% Senior Notes may limit
the ability of the Company to incur additional indebtedness, thereby restricting
funds available to finance future acquisitions. In addition, competition for
acquisition opportunities in the industry has escalated due to market
conditions. There can be no assurance that such competition for acquisitions
will not continue to increase, thereby increasing the cost to the Company of
making further acquisitions or causing such acquisitions to be prohibitively
expensive for the Company.
COMPETITION
The drilling market is competitive. Drilling contracts are generally
awarded on a competitive bid basis and, while an operator may consider factors
such as quality of service and type and location of equipment as well as the
ability to provide ancillary services, price and availability are significant
factors in determining which contractor is awarded a job. The Company believes
that the market for drilling contracts will continue to be competitive for the
foreseeable future. Certain of the Company's competitors have greater financial
resources than the Company, which may enable them to better withstand industry
downturns, to compete more effectively on the basis of price, to acquire
existing rigs or to build new rigs. There can be no assurance that the Company
will be able to compete successfully against its competitors in the future or
that such competition will not have a material adverse effect on the Company's
business, financial condition and results of operations.
CONCENTRATION OF CUSTOMER BASE
The Company's customer base is concentrated, with its two largest customers
accounting for approximately 19% and 18% of total revenues for fiscal year 1996
and 12% and 10% of total revenues for the nine months ended May 31, 1997. In
addition, the two largest customers of Quail accounted for approximately 31% and
23% of its total revenues for the year ended December 31, 1996, the three
largest customers of Mallard accounted for approximately 13%, 12% and 11% of its
total revenues, respectively, for the year ended December 31, 1996, and the two
largest customers of Hercules Offshore Corporation accounted for approximately
27% and 11% of total revenues for the year ended December 31, 1996. There can be
no assurance that these customers will continue to request the Company's
services or that the loss of such customers would not have a material adverse
effect on the Company's business, financial condition and results of operations.
RISK OF UPGRADE AND REFURBISHMENT PROJECTS
The Company's business strategy contemplates significant expenditures to
upgrade and refurbish certain of its rigs. These projects are subject to the
risks of delay or cost overruns inherent in large refurbishment projects,
including shortages of materials or skilled labor, unforeseen engineering
problems, work stoppages, weather interference, unanticipated cost increases,
nonavailability of necessary equipment and inability to obtain any of the
requisite permits or approvals. Any substantial delay in placing such rigs in
service could have an adverse effect on the operations of the Company.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous domestic and foreign
governmental regulations that may relate directly or indirectly to the contract
drilling industry, including environmental and safety matters. Some of the
Company's activities take place in or near ecologically sensitive areas, such as
wetlands, beaches and inland
14
<PAGE> 16
waterways. Numerous federal and state environmental laws regulate drilling
activities and impose liability for causing pollution in inland, coastal and
offshore waters. In addition, the regulations applicable to the Company's
operations include certain regulations that control the discharge of materials
into the environment or require remediation of contamination under certain
circumstances. For example, the Company may be liable for damages and costs
incurred in connection with oil spills for which it is legally responsible.
Certain environmental laws and regulations impose "strict liability," rendering
a person liable without regard to negligence or fault on the part of such
person. Such environmental laws and regulations may expose the Company to
liability for the conduct of, or conditions caused by, others, or for acts of
the Company that were in compliance with all applicable laws at the time such
acts were performed.
The Company has made and will continue to make expenditures to comply with
environmental and safety requirements. Because the requirements imposed by such
laws and regulations are subject to change, the Company is unable to predict the
ultimate cost of compliance with such requirements. The modification of existing
foreign or domestic laws or regulations or the adoption of new laws or
regulations curtailing exploratory or development drilling for oil and gas for
economic, political, environmental or other reasons could have a material
adverse effect on the Company by limiting drilling opportunities.
ABSENCE OF EXISTING MARKET FOR NOTES
The Notes will constitute a new issue of securities with no established
trading market. Application will be made to list the Notes on the New York Stock
Exchange upon official notice of issuance. The Company has been advised by the
Underwriters that, following completion of the offering of the Notes, they
currently intend to make a market in the Notes. However, the Underwriters are
not obligated to do so and any marketmaking activities may be discontinued at
any time without notice. In addition, such marketmaking activities will be
subject to the limits imposed by the Exchange Act. No assurance can be given
that an active trading market for the Notes will develop or, if such market
develops, as to the liquidity or sustainability of such market. If a trading
market does not develop or is not maintained, holders of the Notes may
experience difficulty in reselling the Notes or may be unable to sell them at
all. If a market for the Notes develops, any such market may be discontinued at
any time. If a public trading market develops for the Notes, future trading
prices of the Notes will depend on many factors, including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the Notes may trade at a discount from their principal amount.
HERCULES ACQUISITION
On May 9, 1997, the Company executed a definitive stock purchase agreement
(the "HOC Agreement") to acquire all of the outstanding capital stock of
Hercules Offshore Corporation, a Texas corporation ("HOC"), and a definitive
stock purchase agreement (the "HRC Agreement") to acquire all of the outstanding
capital stock of Hercules Rig Corp., a Texas corporation ("HRC") and an
affiliate of HOC (HOC and HRC being collectively referred to as "Hercules"), for
$145 million and $50 million, respectively. The purchase prices for the
acquisitions are subject to adjustment for certain debt assumed by the Company,
for capital expenditures incurred and for levels of working capital at closing.
Currently, Hercules owns four self-erecting platform rigs and seven shallow
water jackup rigs.
Under the terms of the HOC Agreement, Trenergy, the sole shareholder of
HOC, and the Company have agreed to indemnify the other in certain
circumstances. The closing of the HOC Agreement is subject to certain
conditions, including approval of the transaction under the HSR Act and by the
Malaysian Securities Commission and the Kuala Lumpur Stock Exchange, obtaining
of the requisite approval of the shareholders of Trenergy and obtaining of
necessary financing by the Company to complete the transaction. Under certain
circumstances, if Parker fails to consummate the transaction, including the
failure of the Company to obtain the requisite financing (unless the failure is
due to a major financial market collapse which significantly impairs the
Company's ability to raise financing prior to closing due to reasons other than
the Company's own financial standing), the Company will be obligated to pay
Trenergy $5 million. Trenergy also is obligated to
15
<PAGE> 17
pay the Company $5 million if it fails to close the transaction under certain
circumstances. The HOC Agreement is also terminable by either party if the
transaction fails to close by December 31, 1997.
The closings of the HOC Agreement and the HRC Agreement are further
conditioned on the closing of the other. The closing of the transaction is
expected to occur in the fourth quarter of calendar 1997. The Hercules
Acquisition will be partially funded from the net proceeds of the Offering. See
"Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are estimated to
be $ million after deducting the estimated fees and expenses of the Offering
(and assuming no exercise of the Underwriters' over-allotment option). The
Company intends to use the estimated net proceeds from the sale of the Notes to
pay a portion of the purchase price and expenses related to the Hercules
Acquisition. In the event that the Hercules Acquisition is not consummated, the
Company intends to use the estimated net proceeds for general corporate
purposes, including refurbishment and/or acquisition of additional rigs. Pending
application of the net proceeds as described above, the Company intends to
invest the net proceeds of the Offering in short-term interest-bearing
securities as permitted under the terms of the indenture for the 9 3/4% Senior
Notes.
16
<PAGE> 18
CAPITALIZATION
The following table sets forth as of May 31, 1997 the capitalization of the
Company on an actual basis and as adjusted to reflect (i) the issuance of the
Notes and (ii) the consummation of the Hercules Acquisition. This information
should be read in conjunction with, and is qualified by reference to, the
Consolidated Financial Statements of the Company and Hercules, including the
notes thereto, the Unaudited Pro Forma Combined Financial Statements and related
notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company" included elsewhere or incorporated by
reference in this Prospectus.
<TABLE>
<CAPTION>
AT MAY 31, 1997
------------------------
AS
ACTUAL ADJUSTED
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Senior Credit Facility, including current portion of
long-term debt(1)...................................... $ 95,000 $ 95,000
9 3/4% Senior Notes due 2006, less unamortized discount of
$2,225................................................. 297,775 297,775
% Convertible Subordinated Notes due 2004............... -- 125,000
Other long-term debt...................................... 4,874 4,874
-------- --------
Total long-term debt.............................. 397,649 522,649
-------- --------
Stockholders' equity:
Preferred Stock, $1.00 par value, 1,942,000 shares
authorized, no shares outstanding...................... -- --
Common Stock, $.16 2/3 par value, 120,000,000 shares
authorized, 76,668,155 shares outstanding(2)........... 12,778 12,778
Capital in excess of par value............................ 340,284 340,284
Retained earnings (accumulated deficit)................... (11,626) (11,626)
Other..................................................... (469) (469)
-------- --------
Total stockholders' equity........................ 340,967 340,967
-------- --------
Total capitalization........................................ $738,616 $863,616
======== ========
</TABLE>
- ---------------
(1) The Company has maximum availability of $45 million under the revolving
credit portion of the Company's Senior Credit Facility, subject to borrowing
base limitations. A portion of the Senior Credit Facility is being used to
support letters of credit, approximately $12 million of which are currently
outstanding. In addition, a portion of the Senior Credit Facility may be
used to finance a portion of the Hercules Acquisition.
(2) Does not include 4,068,000 shares of Common Stock issuable upon exercise of
outstanding stock options under the Company's stock option plans, of which
options exercisable for 1,000,000 shares have been issued subject to
stockholder approval at the Company's December 1997 Annual Meeting.
17
<PAGE> 19
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock trades on the NYSE under the symbol "PKD". The following
table sets forth the high and low sales prices per share of the Common Stock as
reported on the NYSE Composite Tape for the fiscal periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal year ended August 31, 1995:
First Quarter............................................. $ 6 1/4 $5
Second Quarter............................................ 5 1/8 4 3/8
Third Quarter............................................. 5 5/8 4 3/8
Fourth Quarter............................................ 5 5/8 4 5/8
Fiscal year ended August 31, 1996:
First Quarter............................................. 6 3/8 4 7/8
Second Quarter............................................ 6 1/2 5
Third Quarter............................................. 8 1/8 5 1/2
Fourth Quarter............................................ 7 3/8 5 1/4
Fiscal year ending August 31, 1997:
First Quarter............................................. 10 1/4 6 1/8
Second Quarter............................................ 11 7 7/8
Third Quarter............................................. 10 7 1/2
Fourth Quarter (through July 1, 1997)..................... 11 5/16 9 3/8
</TABLE>
On July 1, 1997, the closing sale price of the Common Stock as reported on
the NYSE Composite Tape was $11 1/4 per share.
No dividends have been paid on Common Stock since February 1987.
Restrictions contained in the Senior Credit Facility prohibit the payment of
cash dividends, and the indenture for the Company's 9 3/4% Senior Notes
restricts the payment of such dividends. The Company has no present intention to
pay dividends on its Common Stock in the foreseeable future.
18
<PAGE> 20
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial information is derived
from the historical financial statements of Parker, Mallard, Quail and Hercules,
incorporated by reference herein, and certain assumptions deemed appropriate by
the Company. The Unaudited Pro Forma Combined Statements of Operations for the
nine months ended May 31, 1997 and for the year ended August 31, 1996 reflect:
(i) the Mallard Acquisition, (ii) the Quail Acquisition, (iii) the Hercules
Acquisition, (iv) the acquisition by Mallard of two drilling barges from Noble
Drilling Corporation ("Noble") in August 1996, (v) the issuance of $300 million
of 9 3/4% Senior Notes and borrowings of $100 million under a term loan pursuant
to the Senior Credit Facility in November 1996, (vi) the issuance of $25 million
of convertible preferred stock in November 1996 and the subsequent conversion of
such stock into 3,056,600 shares of Common Stock in December 1996, and (vii) the
issuance of the Notes, in each case as if such transactions had occurred on
September 1, 1995. Such twelve months unaudited pro forma combined information
combines: (i) the audited operating results for Parker for the twelve months
ended August 31, 1996, (ii) the unaudited operating results of Mallard for the
twelve months ended September 30, 1996, (iii) the unaudited operating results of
Quail for the twelve months ended August 31, 1996, and (iv) the combined
operating results of Hercules for the twelve months ended September 30, 1996.
Such nine months unaudited pro forma combined information combines: (i) the
unaudited operating results for the Company for the nine months ended May 31,
1997, (ii) the unaudited operating results for Mallard and Quail for the period
from September 1, 1996 to November 12, 1996 (the date of acquisition by Parker),
and (iii) the combined unaudited operating results of Hercules for the nine
months ended April 30, 1997 which includes revenues and net income of
approximately $9.4 million and $685,000, respectively, for the two month period
ended September 30, 1996 which are also included in the unaudited pro forma
combined statement of operations for the year ended August 31, 1996. The
Hercules financial statements have been derived from the separate financial
statements of HOC and HRC incorporated herein by reference and are presented on
a combined basis with intercompany transactions between the entities eliminated.
The unaudited pro forma combined financial information should be read in
conjunction with the notes thereto and the historical financial statements of
Parker, Mallard, Quail and Hercules, including the notes thereto, incorporated
by reference herein. The unaudited pro forma combined financial statements
exclude any pro forma effect for the Bolifor Acquisition.
The pro forma adjustments giving effect to the various events described
above are based upon currently available information and upon certain
assumptions that management believes are reasonable. The historical operating
results of Mallard included in the Unaudited Pro Forma Combined Financial
Statements do not reflect any allocation of general corporate, accounting, tax,
legal and other administrative costs incurred by its former parent corporation.
The Company has not incurred any significant amount of additional general and
administrative expense in connection with the incorporation of Mallard's and
Quail's operations, and does not expect to incur any significant amount of such
expenses in connection with the incorporation of Hercules' operations. The
Mallard Acquisition and the Quail Acquisition have been, and the Hercules
Acquisition will be, accounted for by the Company under the purchase method of
accounting and the assets and liabilities of Mallard and Quail were, and the
assets and liabilities of Hercules will be, recorded at their estimated fair
market values at the date of acquisition.
The unaudited pro forma combined financial information does not purport to
be indicative of the results of operations that would actually have occurred if
the transactions described had occurred as presented in such statements or that
may be obtained in the future. In addition, future results may vary
significantly from the results reflected in such statements due to general
economic conditions, oil and gas commodity prices, the demand and prices for
contract drilling services and rental tools, increases in the number of rigs
available for service, the Company's ability to successfully integrate the
operations of Mallard, Quail and Hercules with its current business and several
other factors, many of which are beyond the Company's control. See "Risk
Factors -- Integration of Acquisitions."
19
<PAGE> 21
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------ PRO
PARKER MALLARD QUAIL HERCULES(1) ADJUSTMENTS FORMA
-------- ------- ------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Drilling........................... $145,160 $87,293 $ -- $43,800 $ 15,648 (e) $291,901
Rental............................. -- -- 17,429 -- -- 17,429
Other.............................. 11,492 -- -- -- -- 11,492
-------- ------- ------- ------- -------- --------
Total revenues............. 156,652 87,293 17,429 43,800 15,648 320,822
-------- ------- ------- ------- -------- --------
Operating expense:
Drilling........................... 100,942 51,392 -- 29,018 8,414 (e) 205,802
(153)(f)
16,189 (h)
Rental............................. -- -- 1,767 -- 3,838 (h) 5,605
Other.............................. 11,824 -- -- -- -- 11,824
Depreciation, depletion and
amortization.................... 23,061 11,833 2,789 3,799 10,196 (d) 57,142
5,464 (g)
General and administrative......... 19,428 11,694 3,838 4,495 (20,027)(h) 19,428
-------- ------- ------- ------- -------- --------
Total operating expenses... 155,255 74,919 8,394 37,312 23,921 299,801
-------- ------- ------- ------- -------- --------
Operating income..................... 1,397 12,374 9,035 6,488 (8,273) 21,021
-------- ------- ------- ------- -------- --------
Other income (expense):
Interest expense................... (135) (483) -- (1,555) (44,378)(i) (47,017)
(2,021)(l)
1,555 (j)
Interest income.................... 1,642 -- 165 -- (165)(k) 1,642
Other.............................. 5,663 312 999 -- (420)(k) 6,554
-------- ------- ------- ------- -------- --------
Total other income
(expense)................ 7,170 (171) 1,164 (1,555) (45,429) (38,821)
-------- ------- ------- ------- -------- --------
Income (loss) before income taxes.... 8,567 12,203 10,199 4,933 (53,702) (17,800)
-------- ------- ------- ------- -------- --------
Income tax expense (benefit)......... 4,514 4,899 -- 2,098 (5,416)(m) 6,877
782 (e)
-------- ------- ------- ------- -------- --------
Net income (loss).................... $ 4,053 $ 7,304 $10,199 $ 2,835 $(49,068) $(24,677)
-------- ------- ------- ------- -------- --------
Earnings per share, primary and fully
diluted............................ $ .07 $ (0.41)
======== ========
Weighted average shares outstanding
(fully diluted).................... 57,466,183 60,522,783
========== ==========
Other data:
EBITDA(2).......................... $ 24,458 $ 78,163
Ratio of earnings to fixed
charges(3)...................... 64.5x --(n)
</TABLE>
- ---------------
(1) Amounts represent the combined results of HOC and HRC for the twelve months
ended September 30, 1996. See Note (o) for summary capsular combining
statement of operations of HOC and HRC for the twelve months ended September
30, 1996.
(2) EBITDA represents operating income (loss) before depreciation, depletion and
amortization and provision for reduction in carrying value of certain
assets. EBITDA is frequently used by securities analysts and is presented
hereby to provide additional information about the Company's operations.
EBITDA is not a measurement presented in accordance with generally accepted
accounting principles. EBITDA should not be considered in isolation or as a
substitute for net income, cash flow provided by operating activities or
other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(3) For purposes of these calculations, earnings consist of income (loss) before
income taxes plus interest expense and fixed charges consist of interest
expense. Earnings were not sufficient to cover fixed charges for 1996 pro
forma by $17.8 million.
20
<PAGE> 22
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MAY 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
SEPT. 1-NOV. 12,
1996
AS REPORTED ---------------- PRO
PARKER(1) MALLARD QUAIL HERCULES(2) ADJUSTMENTS FORMA
----------- ------- ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Drilling............................ $ 196,472 $23,678 $ -- $44,335 $ -- $ 264,485
Rental.............................. 17,916 -- 5,387 -- -- 23,303
Other............................... 1,805 -- -- -- -- 1,805
---------- ------- ------ ------- -------- ----------
Total revenues.................. 216,193 23,678 5,387 44,335 -- 289,593
---------- ------- ------ ------- -------- ----------
Operating expense:
Drilling............................ 129,317 14,382 26,674 5,749 (h) 176,122
Rental.............................. 4,982 -- 439 -- 739 (h) 6,160
Other............................... 3,797 -- -- 3,797
Depreciation, depletion and
amortization...................... 32,874 2,695 505 4,901 4,179 (d) 46,002
848 (g)
General and administrative.......... 14,055 1,933 739 3,816 (6,488)(h) 14,055
---------- ------- ------ ------- -------- ----------
Total operating expenses........ 185,025 19,010 1,683 35,391 5,027 246,136
---------- ------- ------ ------- -------- ----------
Operating income...................... 31,168 4,668 3,704 8,944 (5,027) 43,457
---------- ------- ------ ------- -------- ----------
Other income (expense):
Interest expense.................... (22,037) (102) -- (1,991) (12,728)(i) (35,589)
(722)(l)
1,991 (j)
Interest income..................... 3,118 -- 962 -- (949)(k) 3,131
Other............................... 1,753 (78) 5 -- 1,680
---------- ------- ------ ------- -------- ----------
Total other income (expense).... (17,166) (180) 967 (1,991) (12,408) (30,778)
---------- ------- ------ ------- -------- ----------
Income before income taxes............ 14,002 4,488 4,671 6,953 (17,435) 12,679
---------- ------- ------ ------- -------- ----------
Income tax expense (benefit).......... 5,290 403 -- 3,134 (3,407)(m) 5,420
---------- ------- ------ ------- -------- ----------
Net income............................ $ 8,712 $ 4,085 $4,671 $ 3,819 $(14,028) $ 7,259
========== ======= ====== ======= ======== ==========
Earnings per share, primary and fully
diluted............................. $ 0.12 $ 0.10
========== ==========
Weighted average shares outstanding
(fully diluted)..................... 69,779,690 70,597,023
========== ==========
Other data:
EBITDA(3)........................... $ 64,042 $ 89,459
Ratio of earnings to fixed
charges(4)........................ 1.6x 1.4x(n)
</TABLE>
- ---------------
(1) Includes the operations of Malland and Quail from November 13, 1996 through
May 31, 1997.
(2) Reflects combined results of operations of HOC and HRC for the nine months
ended April 30, 1997 which includes combined revenues and net income of HOC
and HRC of approximately $9.4 million and $685,000 respectively for the
two-month period ended September 30, 1996 which amounts are also included in
the unaudited pro forma combined statements of operations for the twelve
months ended September 30, 1996. See Note (o) for the summary capsular
combining statement of operations of HOC and HRC for the nine months ended
April 30, 1997.
(3) EBITDA represents operating income (loss) before depreciation, depletion and
amortization and provision for reduction in carrying value of certain
assets. EBITDA is frequently used by securities analysts and is presented
hereby to provide additional information about the Company's operations.
EBITDA is not a measurement presented in accordance with generally accepted
accounting principles. EBITDA should not be considered in isolation or as a
substitute for net income, cash flow provided by operating activities or
other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(4) For purposes of these calculations, earnings consist of income (loss) before
income taxes plus interest expense and fixed charges consist of interest
expense.
21
<PAGE> 23
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL
---------------------- PRO
PARKER HERCULES(1) ADJUSTMENTS FORMA
-------- ----------- ----------- --------
AS OF AS OF
MAY 31, APRIL 30,
1997 1997
-------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 88,798 $ 1,227 $ 120,700 (a) $ 16,672
(195,500)(b)
1,447 (b)
Other short-term investments................. 2,877 2,877
Accounts and notes receivable................ 81,005 11,679 92,684
Rig materials and supplies................... 16,050 16,050
Other current assets......................... 14,161 978 (476)(b) 14,663
-------- -------- --------- --------
Total current assets................. 202,891 13,884 (73,829) 142,946
-------- -------- --------- --------
Property, plant and equipment:
Drilling equipment........................... 678,200 90,989 57,628(b,d) 826,817
Rental equipment............................. 24,446 24,446
Buildings, land and improvements............. 18,809 18,809
Other........................................ 22,084 203 22,287
Construction in progress..................... 34,398 6,180 40,578
-------- -------- --------- --------
777,937 97,372 57,628 932,937
Less accumulated depreciation, depletion and
amortization.............................. 372,530 6,087 (6,087)(d) 372,530
-------- -------- --------- --------
Net property, plant and equipment............ 405,407 91,285 63,715 560,407
-------- -------- --------- --------
Goodwill, net of accumulated amortization...... 143,454 16,817 18,750 (b) 179,021
-------- -------- --------- --------
Other noncurrent assets........................ 43,849 933 4,300 (a) 49,082
-------- -------- --------- --------
Total assets......................... $795,601 $122,919 $ 12,936 $931,456
======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............ $ 18,084 $ 4,707 $ (4,707)(b) $ 18,084
Accounts payable............................. 25,827 7,389 33,216
Accrued liabilities.......................... 15,428 3,466 18,894
Accrued income taxes......................... 5,850 5,850
-------- -------- --------- --------
Total current liabilities............ 65,189 15,562 (4,707) 76,044
-------- -------- --------- --------
Long-term debt................................. 379,565 33,606 125,000(a) 504,565
(33,606)(b)
Deferred income taxes.......................... 8,310 (8,310)(b)
Other long-term liabilities.................... 9,880 9,880
Preferred stock................................ 4,000 (4,000)(b)
Stockholders' equity:
Common stock................................. 12,778 18,035 (18,035)(b) 12,778
Capital in excess of par value............... 340,284 39,598 (39,598)(b) 340,284
Retained earnings (accumulated).............. (11,626) 3,808 (3,808)(b) (11,626)
Other........................................ (469) (469)
-------- -------- --------- --------
Total stockholders' equity........... 340,967 61,441 (61,441) 340,967
-------- -------- --------- --------
Total liabilities and stockholders'
equity............................. $795,601 $122,919 $ 12,936 $931,456
======== ======== ========= ========
</TABLE>
- ---------------
(1) Represents the combined balances of HOC and HRC as of April 30, 1997. See
note (c) for summary capsular combining balance sheet of HOC and HRC as of
April 30, 1997.
22
<PAGE> 24
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) To record the issuance of $125 million of the Notes, net of debt issuance
costs of $4.3 million.
(b) To reflect the Hercules Acquisition. The purchase price was allocated as
follows:
<TABLE>
<CAPTION>
PURCHASE PRICE HERCULES
-------------- --------
<S> <C>
Cash........................................................ $195,000
Fees and expenses........................................... 500
--------
Total............................................. $195,500
========
Purchase Price Allocation:
Increase in property and equipment........................ 63,715
Working capital adjustment per purchase agreement......... 1,447
Eliminate stockholders' equity............................ 61,441
Reverse assets/liabilities which are not a part of
acquisition:
Debt and capital lease obligations........................ 38,313
Redeemable preferred stock................................ 4,000
Intangible assets......................................... (16,817)
Deferred income taxes..................................... 7,834
Cost in excess of net assets acquired....................... 35,567
--------
$195,500
========
</TABLE>
(c) Following is the summary capsular combining balance sheets of HOC and HRC as
of April 30, 1997.
<TABLE>
<CAPTION>
HOC HRC ELIMINATIONS COMBINED
-------- -------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Current assets............................ $13,535 $ 349 $ -- $ 13,884
Noncurrent assets......................... 85,822 25,181 (1,968) 109,035
------- ------- ------- --------
Total assets.................... $99,357 $25,530 $(1,968) $122,919
======= ======= ======= ========
Current liabilities....................... $13,663 $ 1,899 $ -- $ 15,562
Noncurrent liabilities.................... 29,215 14,669 (1,968) 41,916
Preferred stock........................... 4,000 -- -- 4,000
Stockholders equity....................... 52,479 8,962 -- 61,441
------- ------- ------- --------
Total liabilities and
stockholders' equity.......... $99,357 $25,530 $(1,968) $122,919
======= ======= ======= ========
</TABLE>
The eliminations represent approximately $1,968,000 of HRC's note payable
to HOC as of April 30, 1997.
(d) To adjust depreciation expense on assets acquired using allocated purchase
price and to eliminate accumulated depreciation on Hercules assets.
Depreciation was calculated over 17 1/2 years for barge drilling rigs, 15
years on jackup rigs and seven years for tool rental equipment, using 5%
salvage on all equipment.
(e) To record the estimated results of operations for two barge rigs acquired by
Mallard from Noble on August 21, 1996. The two rigs are working under a
long-term contract in Nigeria at dayrates of $26,215 and $22,000,
respectively. Estimated historical results of operations were derived from
the contractual dayrates on the two rigs, estimated operating costs based on
a similar Mallard barge rig operating in Nigeria and the related Nigerian
taxes.
(f) Eliminate expenses associated with operations of Mallard not purchased.
(g) Amortization of excess cost over fair value of net assets acquired over 30
years.
23
<PAGE> 25
(h) Reclassify the general and administrative expenses of Mallard and Hercules
to drilling expense and of Quail to rental expense.
(i) To record interest expenses related to the $100 million term loan under the
Senior Credit Facility, assuming a rate of 7.94%, $300 million of principal
amount of 9 3/4% Senior Notes and $125 million of Notes at 5.75%.
(j) Eliminate interest expense on Hercules debt not assumed.
(k) Eliminate interest and investment income on Quail cash and investments not
acquired.
(l) Amortization of original issue discount and debt issuance costs over the
ten-year term of the 9 3/4% Senior Notes, the six-year term of the term loan
portion of the Senior Credit Facility and the seven-year term of the Notes.
(m) Eliminate U.S. federal income taxes allocated to Mallard by its former
parent and eliminate U.S. federal income taxes recorded by Hercules due to
the existence of the Company's net operating loss tax carryforwards.
(n) For the purposes of these calculations, earnings consist of income (loss)
before income taxes plus interest expense, and fixed charges consist of
interest expense. For the historical 12 months ended August 31, 1996, the
Company's pro forma earnings were inadequate to cover fixed charges by $17.8
million.
(o) Following is the summary capsular combining statements of operations of HOC
and HRC for the periods indicated:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------
HOC HRC ELIMINATIONS COMBINED
------- ------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues..................................... $43,800 $1,385 $(1,385) $43,800
Total operating expenses..................... 37,684 1,013 (1,385) 37,312
Other (income) expense....................... 1,316 239 -- 1,555
Income before income taxes................... 4,800 133 -- 4,933
Income tax expense........................... 2,098 -- 2,098
------- ------ ------- -------
Net income................................... $ 2,702 $ 133 $ -- $ 2,835
======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED APRIL 30, 1997
---------------------------------------------
HOC HRC ELIMINATIONS COMBINED
------- ------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues..................................... $44,335 $1,314 $(1,314) $44,335
Total operating expenses..................... 35,845 860 (1,314) 35,391
Other (income) expense....................... 1,438 553 -- 1,991
Income before income taxes................... 7,052 (99) -- 6,953
Income tax expenses.......................... 3,134 -- -- 3,134
------- ------ ------- -------
Net income (loss)............................ $ 3,918 $ (99) $ -- $ 3,819
======= ====== ======= =======
</TABLE>
Elimination entries represent the elimination of approximately $1,385,000
and $1,314,000 of HRC's billings to HOC for the twelve months ended
September 30, 1996 and for the nine months ended April 30, 1997,
respectively, for HOC's bareboat charter of HRC's drilling and workover
rigs.
24
<PAGE> 26
SELECTED CONSOLIDATED FINANCIAL DATA
The historical financial data presented in the table below as of and for
each of the years in the five-year period ended August 31, 1996 are derived from
the Consolidated Financial Statements of the Company audited by Coopers &
Lybrand L.L.P., independent accountants. The historical financial data presented
in the table below as of and for each of the nine-month periods ended May 31,
1996 and 1997 are derived from the Unaudited Consolidated Financial Statements
of the Company. In the opinion of management of the Company, such Unaudited
Consolidated Financial Statements include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the financial data
for such periods. The results for the nine months ended May 31, 1997 are not
necessarily indicative of the results to be achieved for the full year.
Except for the nine months ended May 31, 1997, the data presented below do
not reflect the effect of the acquisitions of Mallard and Quail (which were
completed November 12, 1996) and should be read in conjunction with the
Company's Consolidated Financial Statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere or incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED AUGUST 31, MAY 31,
------------------------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Drilling.................... $ 116,082 $ 96,719 $ 147,480 $ 153,075 $ 145,160 $ 112,266 $ 196,472
Rental...................... -- -- -- -- -- -- 17,916
Other....................... 7,250 4,082 4,944 4,296 11,492 3,371 1,805
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues.......... 123,332 100,801 152,424 157,371 156,652 115,637 216,193
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating Expenses:
Drilling.................... 74,196 69,237 114,732 113,132 100,942 76,987 129,317
Rental...................... -- -- -- -- -- -- 4,982
Other....................... 8,007 5,951 6,563 4,928 11,824 4,036 3,797
Depreciation, depletion and
amortization.............. 23,182 23,376 23,246 23,745 23,061 17,339 32,874
General and
administrative............ 15,753 14,617 17,018 17,063 19,428 15,194 14,055
Provision for reduction in
carrying value of certain
assets(1)................. 19,257 -- 19,718 -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses.............. 140,395 113,181 181,277 158,868 155,255 113,556 185,025
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss)....... (17,063) (12,380) (28,853) (1,497) 1,397 2,081 31,168
----------- ----------- ----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest income
(expense) -- net.......... 1,592 1,676 1,150 1,184 1,507 924 (18,919)
Minority interest........... 596 149 (135) (227) -- -- --
Other....................... 6,504 (469) 919 7,640 5,663 3,108 1,753
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total other income
(expense)............. 8,692 1,356 1,934 8,597 7,170 4,032 (17,166)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes....................... (8,371) (11,024) (26,919) 7,100 8,567 6,113 14,002
Income tax expense
(benefit)................... 2,795 (337) 1,887 3,184 4,514 3,565 5,290
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)....... $ (11,166) $ (10,687) $ (28,806) $ 3,916 $ 4,053 $ 2,548 $ 8,712
=========== =========== =========== =========== =========== =========== ===========
Earnings (loss) per share
(fully diluted)............. $ (.21) $ (.20) $ (.53) $ .07 $ .07 $ .05 $ .12
=========== =========== =========== =========== =========== =========== ===========
Weighted average shares
outstanding (fully
diluted).................... 52,115,038 53,082,078 54,247,664 55,332,541 57,466,183 56,219,680 69,779,690
=========== =========== =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA(2)..................... $ 25,376 $ 10,996 $ 14,111 $ 22,248 $ 24,458 $ 19,420 $ 64,042
Ratio of earnings to fixed
charges(3).................. -- -- -- 81.7x 64.5x 71.3x 1.6x
Capital expenditures:
Maintenance................. 4,036 3,552 5,444 5,133 6,646 4,110 7,770
Other....................... 23,931 15,165 29,320 16,407 24,190 22,249 52,429
BALANCE SHEET DATA (END OF
PERIOD):
Cash, cash equivalents and
other short-term
investments................. $ 37,319 $ 43,989 $ 14,471 $ 22,124 $ 77,985 $ 14,922 $ 91,675
Property, plant and equipment,
net......................... 145,750 139,325 127,178 122,258 124,177 124,203 405,407
Total assets.................. 245,869 236,342 209,348 216,959 275,959 221,376 795,601
Total long-term debt,
including current portion... 932 -- -- 2,037 3,378 1,752 397,649
Total stockholders' equity.... 210,181 207,679 180,583 186,920 244,048 192,831 340,967
</TABLE>
- ---------------
(1) In fiscal 1992, management evaluated Parker's assets and operations with the
intent of reducing future operating costs and disposing of non-performing
assets. Accordingly, Parker removed 14 rigs from its domestic fleet and two
rigs from its international fleet and recorded a $19.3 million provision for
reduction in carrying value of certain assets. In fiscal 1994, Parker
reorganized its domestic land drilling and manufacturing operations and made
the decision to dispose of certain drilling equipment inventories and other
properties. Accordingly, Parker removed 16 rigs from its domestic fleet and
recorded a $19.7 million provision for reduction in carrying value of
certain assets.
(2) EBITDA represents operating income (loss) before depreciation, depletion,
amortization and provision for reduction in carrying value of certain
assets. EBITDA is frequently used by securities analysts and is presented
here to provide additional information about the Company's operations.
EBITDA is not a measurement presented in accordance with generally accepted
accounting principles. EBITDA should not be considered in isolation or as a
substitute for net income, cash flow provided by operating activities or
other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(3) For purposes of these calculations, earnings consist of income (loss) before
income taxes plus interest expense and fixed charges consist of interest
expense. Earnings were not sufficient during 1992, 1993 and 1994 to cover
fixed charges. The deficiencies were: 1992 -- $8.4 million, 1993 -- $11.0
million and 1994 -- $26.9 million.
25
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OUTLOOK AND OVERVIEW
The Company's operations and future results have been altered significantly
by the acquisitions of Mallard and Quail in November 1996. As a result of the
Mallard Acquisition, the Company has become one of the primary barge drilling
contractors in the Gulf of Mexico and Nigeria, each of which were markets in
which Parker previously did not operate. As a result of the Quail Acquisition,
the Company expanded its operations into the rental tool market in the Gulf of
Mexico and the Gulf Coast region. The pending acquisitions of Hercules and
Bolifor are expected to further change the nature of the Company's operations
and its future results.
In addition to increasing the size and scope of the Company's operations,
the Hercules Acquisition will further increase the percentage of the Company's
revenue generated domestically. Parker generated approximately 73% of its
revenue from international sources in fiscal 1996 compared with 49% for the
Company on a pro forma basis for the same period.
The Company is currently expanding its business in several areas. The
Company has recently refurbished and upgraded two barge drilling rigs and two
platform rigs for additional drilling contracts in the Gulf of Mexico, and one
land rig which will be relocated from the United States to Pakistan. The Company
also owns two cold stacked barge rigs and a cold stacked platform rig for
operation in the Gulf of Mexico. The Company has recently received a letter of
intent from one of its present customers in Nigeria for a five-year drilling
contract in the transition zone of Nigeria, which will require the construction
of a new drilling barge at an estimated cost of $25 million. This contract is
subject to execution of a definitive agreement and certain other conditions. No
assurance can be given that the contract will be executed. Quail recently
entered into a contract with a major oil company to be its preferred provider of
rental tools to the onshore and offshore Texas markets. To service this market,
Quail has acquired property and inventories to commence operations at a new
facility in Victoria, Texas, during the latter part of fiscal 1997.
The Mallard and Quail Acquisitions were accounted for under the purchase
method of accounting. As a result, the assets and liabilities of Mallard and
Quail were recorded at their estimated fair values as of the date the
acquisitions were consummated. The purchase price in excess of the estimated
fair value of Mallard's and Quail's assets was recorded as goodwill and will be
amortized over a 30-year period. Accordingly, the Company's depreciation and
amortization will increase significantly in future periods. Accounting for the
Hercules Acquisition will be on a similar basis, although goodwill will not be
as significant a factor.
The financings related to the Mallard and Quail Acquisitions substantially
increased the Company's debt levels. At May 31, 1997, the Company had $397.6
million in total indebtedness, compared to $3.4 million of total indebtedness at
August 31, 1996. Upon the consummation of the Hercules Acquisition, the Company
anticipates total outstanding indebtedness of $522.6 million. The substantial
levels of debt will result in a higher level of interest expense and an
increased percentage of the Company's cash flows being used for debt service and
may limit the Company's ability to obtain additional financing for future
acquisitions and capital expenditures. See " -- Liquidity and Capital Resources"
and "Risk Factors -- Increased Leverage."
For the foregoing reasons, the acquisitions of Mallard, Quail and Hercules
will affect the comparability of the Company's historical results of operations
with results in future periods.
RESULTS OF OPERATIONS
Nine Months Ended May 31, 1997 Compared to Nine Months Ended May 31, 1996
The Company recorded net income of $8.7 million for the nine months ended
May 31, 1997, an increase of $6.2 million from the comparable period of fiscal
1996. The Company's results of operations were favorably impacted by the
acquisitions of Mallard and Quail.
26
<PAGE> 28
Total revenues of $216.2 million represent a $100.6 million increase from
the same period last year. The offshore drilling and tool rental businesses
accounted for $64.3 million and $17.9 million, respectively, of the increase in
revenues. Land drilling revenues increased $19.9 million from the same period
last year, of which $10.9 million was from United States operations and resulted
from additional rig utilization and improving dayrates. The remaining increase
was primarily due to $7.1 million of revenues generated from four Argentina land
rigs obtained in the Mallard Acquisition. The Company also realized increased
rig utilization in the Asia Pacific region, Colombia and Peru.
The increase in revenues from the Company's domestic land drilling
operations was due to a 50% increase in rig revenue days and improvements in
dayrates. All 14 of the Company's domestic rigs are currently under contract.
During the quarter, Rig No. 238 in Louisiana suffered extensive damage in a
blowout and has been removed from the rig fleet. Management anticipates that
insurance proceeds will approximate the book value of the lost equipment.
The demand for drilling services in the shallow water transition zones of
the Gulf Coast and Nigeria, and the rental demand for specialized drilling
equipment in the Gulf of Mexico and Gulf Coast markets, continued to strengthen
in the first nine months of fiscal 1997. The revenues generated by the offshore
drilling and tool rental operations generated $8.6 million more revenues in the
third quarter as compared to the second quarter of fiscal 1997.
The Company experienced approximately a 90% utilization rate on its
available barge rigs during the nine months ended May 31, 1997. During the third
fiscal quarter of 1997, the Company refurbished and placed into service two
barge drilling rigs and one platform rig. The addition of these rigs is expected
to benefit future periods. One of the Company's rigs (Rig No. 52) incurred
extensive damage when a well on which it was working suffered a blowout and fire
that also resulted in the loss of four lives. Management is currently
determining the amount of salvageable equipment and the amount of insurance
proceeds that the Company will receive. The loss of such rig will partially
offset the increased revenues anticipated from the refurbished rigs.
The Company's offshore drilling and tool rental operations generated a
combined $38.3 million profit margin (revenues less direct operating expenses)
during the first nine months of fiscal 1997. The third fiscal quarter profit
margin of $19.7 million, compared to the $15.1 million profit margin for the
second fiscal quarter, reflects a strengthening of the offshore drilling and
tool rental markets. Increased utilization and dayrates in the land drilling
business also generated an additional $6.5 million of profit margin in the first
nine months of fiscal 1997 as compared to the same period of fiscal 1996.
Increases in interest expense and depreciation, depletion and amortization
were attributable to the Mallard and Quail Acquisitions in the first quarter of
fiscal 1997. Ongoing general and administrative expenses throughout fiscal 1997
have been consistent with fiscal 1996, with the $1.1 million decrease resulting
primarily from one-time expenses in fiscal 1996 associated with personnel
reductions.
During the third fiscal quarter of 1997, the Company initiated plans to
move Partech, its rig manufacturing and service center, from Odessa, Texas to
New Iberia, Louisiana. In conjunction with the planned move, the Company
evaluated and wrote down to fair market value its properties and inventories in
Odessa, recording a $1.4 million expense in other operating expenses.
Interest income increased $2.1 million due to significantly higher cash
balances, partially resulting from a common stock offering completed in early
April 1997. A $1.4 million decrease in other income (expense) net resulted from
fewer gains on sale of assets. The $1.7 million increase in income tax expense
was due to higher foreign taxes resulting from improved international
operations, which was partially offset by a $1.3 million reversal in fiscal 1997
of an income tax accrual in a country where the Company terminated operations.
Year Ended August 31, 1996 Compared to Year Ended August 31, 1995
The Company recorded net income of $4.1 million in fiscal 1996 as compared
to net income of $3.9 million in fiscal 1995. An improvement in drilling margins
in fiscal 1996 was offset by reduced other income and by increased general and
administrative expense due primarily to severance costs.
27
<PAGE> 29
Drilling revenue decreased $7.9 million in fiscal 1996 due to the
termination in late fiscal 1995 of the Company's low-margin southern Argentina
operations, which had generated $13.0 million of revenue in fiscal 1995. The
Company's overall rig utilization rate increased from 52% in fiscal 1995 to 55%
in fiscal 1996. Excluded from the utilization percentages for both years are 22
domestic mechanical rigs sold in the fourth quarter of fiscal 1996.
South America drilling revenue decreased from $76.1 million in fiscal 1995
to $58.5 million in fiscal 1996, primarily due to the loss of revenue generated
in the terminated southern Argentina operations in fiscal 1995. In Colombia,
three rigs were refurbished in fiscal 1996 and resumed work under new contracts.
The Company had seven rigs under contract in Colombia and two rigs under
contract both in northern Argentina and in Peru as of September 30, 1996.
Operations in the Asia Pacific areas generated revenue of $47.9 million in
fiscal 1996, an increase of $2.9 million from fiscal 1995. The primary area of
increased revenue was Papua New Guinea where the Company experienced a 91% rig
utilization rate on its five rigs in fiscal 1996. Additionally, during the
second quarter of fiscal 1996 the Company began operating one rig under a
contract in Vietnam, a new market for the Company. Revenue decreased in New
Zealand, the Philippines and Pakistan because five rigs completed contracts in
fiscal 1996.
Revenues from operations in Africa, Russia and Kazakstan were approximately
$8.0 million in fiscal 1996 and fiscal 1995. Management believes these areas
have promise for significant expansion of operations; however, much of the
future expansion is contingent on the resolution of technical, logistical and
political issues in the former Soviet Union.
The Company's domestic operations generated $30.8 million of drilling
revenue in fiscal 1996 as compared to $23.7 million in fiscal 1995. The increase
in revenue was attributable to the Company's Alaska Rig No. 245 operating the
entire year in fiscal 1996 as compared to nine months in fiscal 1995 and a 10%
increase in utilization days for the rigs in the lower 48 states. The increase
in domestic drilling activity occurred primarily in the Tuscaloosa Trend in
Louisiana, where the Company deployed three rigs in fiscal 1996 and is currently
deploying another rig under a new contract.
During the fourth quarter of fiscal 1996, the Company sold 22 mechanical
rigs from its domestic rig fleet, leaving 15 SCR electric rigs and two
mechanical rigs. At the end of fiscal year 1996, the Company had 13 of its 17
domestic rigs under contract.
Although worldwide contract drilling revenue decreased $7.9 million in
fiscal 1996 as compared to fiscal 1995, the total drilling margin (drilling
revenue less drilling expense) increased $4.3 million over the same period. This
increase was attributable to increased utilization of rigs in Papua New Guinea,
improved contract margins in Colombia and the termination of the low-margin
southern Argentina operations.
Other revenue increased $7.2 million in fiscal 1996 due to the sale of a
rig by the Company's manufacturing subsidiary, Parker Technology, Inc.
("Partech(R)"). General and administrative expense increased $2.4 million in
fiscal 1996 principally due to nonrecurring severance costs associated with a
reduction in corporate personnel.
Other income (expense) decreased $2.0 million due to the reversal in fiscal
1995 of a prior year's foreign currency accrual of $1.5 million and reduced
gains on sales of assets in fiscal 1996. The increase in income tax expense was
attributable to increased international profits in fiscal 1996.
Year Ended August 31, 1995 Compared to Year Ended August 31, 1994
The fiscal 1995 net income of $3.9 million was an improvement of $32.7
million over the net loss of $28.8 million recorded in fiscal 1994. Excluding a
$19.7 million provision for reduction in carrying value of certain assets from
fiscal 1994's net loss, fiscal 1995's net income was an improvement of $13.0
million over fiscal 1994. The primary reasons for the improvement in fiscal 1995
were an increase in drilling margins of $7.2 million and an increase in other
income of $6.7 million.
28
<PAGE> 30
Drilling revenue increased $5.6 million to $153.1 million in fiscal 1995
from $147.5 million in fiscal 1994, even though international and domestic
operating days were nearly the same over each period. An increase in the
utilization of larger rigs in northern Argentina and Colombia more than offset
decreased utilization of smaller rigs in southern Argentina.
South America drilling revenue increased $23.4 million in fiscal 1995 when
compared with fiscal 1994. In Colombia, revenue increased $13.9 million due
primarily to revenue earned by one rig relocated from Indonesia during the year
and from a full year of operations by one rig that was added to the rig fleet in
fiscal 1994. In addition, several rigs which were either on a standby or stacked
status in fiscal 1994 operated all of fiscal 1995. In Argentina, drilling
revenue increased $12.6 million as two additional deep rigs, one relocated from
the Congo in fiscal 1994 and one relocated from Yemen in fiscal 1995, operated
much of the year. Additionally, one rig added to the rig fleet in fiscal 1994
operated all of fiscal 1995 and one rig leased by the Company commenced
operations in the fourth quarter of fiscal 1995. During fiscal 1995 and 1994, a
number of shallow depth capacity rigs (10,000 feet or less) operated in southern
Argentina, many of them operating on a meterage basis. Two of these rigs were
relocated to central Argentina as the Company focused its marketing efforts on
regions of the country where operations are generally conducted on a daywork
basis. At fiscal year-end, the remaining rigs in southern Argentina were on a
stacked status. Drilling revenue declined $4.8 million in Ecuador where two rigs
located in that country did not operate in fiscal 1995 and were retired from the
rig fleet at the end of the fiscal year.
Operations in the Asia Pacific region resulted in an increase in drilling
revenue of $1.5 million in fiscal 1995. Increased utilization in New Zealand and
revenue earned from a labor contract in China more than offset a decline in
revenue in Papua New Guinea and Indonesia due to lower utilization in those
countries.
International drilling revenue from operations in Africa, Russia and
Kazakstan declined $17.4 million in fiscal 1995. Utilization declined due to the
completion of contracts in Chad, the Congo, Russia and Yemen. The rigs that
operated in the Congo and Yemen in fiscal 1994 have both been redeployed to
Argentina. In Kazakstan, a reduction in revenue from a labor contract in that
country was partially offset by operations from one rig that has been relocated
from Russia.
Domestic drilling revenue declined $2.3 million due to fewer operating days
in the Rocky Mountain states and in Alaska.
Drilling margins (drilling revenue less drilling expense) increased $7.2
million in fiscal 1995 to $39.9 million compared to $32.7 million in fiscal
1994. Margins improved in the Company's South American operations, including
those in the countries of Colombia and Argentina. Margins were negatively
impacted in fiscal 1994 in Colombia due to increased operating expenses and
costs associated with the start-up of two rigs. In fiscal 1995, these two rigs
operated for the full year with improved margins when compared with the previous
fiscal year. In Argentina, margins also improved as two additional deep capacity
rigs began operating in the northern region of the country and two rigs operated
during the year in the country's middle region. In the Company's other operating
regions, both internationally and domestically, drilling margins as a percentage
of drilling revenue in fiscal 1995 remained relatively consistent with fiscal
1994.
Other income (expense) increased $6.7 million to $8.6 million in fiscal
1995 from $1.9 million in fiscal 1994. Gains of $6.4 million were recognized in
fiscal 1995 from the disposition of property, plant and equipment as the Company
continued its efforts to sell assets that were no longer a part of its marketing
strategy. In addition, the reversal of a prior year foreign currency accrual of
$1.5 million was recorded in fiscal 1995. Fiscal 1994 other income included $2.1
million from gains associated with the disposition of property, plant and
equipment, a $1.5 million gain from the reversal of a prior year foreign payroll
tax accrual and a $2.6 million charge for the settlement of certain litigation.
The $1.3 million increase in income tax expense was primarily attributable to
the reversal in 1994 of an accrued foreign tax.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments were $91.7 million at May 31, 1997, an
increase of $13.7 million from August 31, 1996. The Company received net
proceeds of $61.5 million from a common stock offering in
29
<PAGE> 31
April 1997. The Company incurred capital expenditures of $60.2 million for the
nine months ended May 31, 1997.
In November 1996, the Company acquired Mallard for $311.8 million in cash
and $25.0 million in convertible preferred stock (that converted into 3,056,600
shares of common stock in the second quarter of fiscal 1997) and Quail for $66.9
million in cash. The Company financed the acquisitions of Mallard and Quail
through the sale of $300 million principal amount of 9 3/4% Senior Notes and a
term loan of $100 million under the Senior Credit Facility.
The 9 3/4% Senior Notes, which were sold at a $2.4 million discount, have
an interest rate of 9 3/4% and will mature in 2006. The 9 3/4% Senior Notes are
guaranteed by the Company's principal subsidiaries. The $100 million term loan
was a part of a commitment from a syndicate of financial institutions to
establish a Senior Credit Facility, which consists of the term loan and a $45
million revolving credit facility. The term loan bears interest (7.94% at May
31, 1997) at the option of the Company, at prime to prime plus 0.50% or at 1.75%
to 2.25% above the one-, two-, three- and six-month reserve-adjusted LIBOR rate,
depending on the Company's Debt-to-Capital Ratio (as defined), and matures on
November 30, 2002. Installments of principal and interest are payable quarterly
in an amount that provides for the retirement of $10 million in fiscal 1997, $14
million in fiscal 1998, $12 million in each of fiscal 1999 through 2002, with a
final payment of $28 million due at maturity. The term loan has no prepayment
penalty, is guaranteed by the Company's principal subsidiaries and is secured by
substantially all of the assets of the Company and the assets and stock of such
subsidiaries.
The revolving credit facility is available for working capital requirements
and general corporate purposes. Availability under the revolving credit facility
is subject to certain borrowing base limitations based on 80% of eligible
accounts receivable. All advances to the Company under the revolving credit
facility bear interest, at the option of the Company, at prime to prime plus
0.50% or at 1.75% to 2.25% above the one-, two-, three- and six-month
reserve-adjusted LIBOR rate, depending on the percentage of the credit facility
utilized. The revolving credit facility is collateralized by a first lien on the
Company's accounts receivable. The revolving credit facility matures on December
31, 1998. At May 31, 1997, no amounts were outstanding under the revolving
credit facility.
Each of the 9 3/4% Senior Notes and the Senior Credit Facility contains
customary affirmative and negative covenants, including restrictions on
incurrence of debt and sales of assets. The Senior Credit Facility prohibits
payment of dividends and the indenture for the 9 3/4% Senior Notes restricts the
payment of dividends.
On May 9, 1997, the Company signed definitive agreements to acquire the
capital stock of Hercules for $195.0 million. Hercules owns seven jackup rigs
and three self-erecting platform rigs in the Gulf of Mexico and one additional
platform rig on lease to a firm in Brazil. The Hercules Acquisition is subject
to various conditions, including Malaysian regulatory approval and financing by
the Company. The Company anticipates the transaction will close in the fourth
quarter of calendar 1997. Management anticipates funding the acquisitions
through a combination of methods which may include existing cash, the net
proceeds of the Offering, borrowings under the Senior Credit Facility or a
possible new credit facility, and the issuance of additional equity securities
if necessary or desirable.
On June 6, 1997, the Company entered into an agreement to acquire
substantially all of the assets of Bolifor for $25 million. The assets of
Bolifor primarily consist of 11 land rigs located in Bolivia, Paraguay and
Argentina. Management expects the Bolifor Acquisition to close in July 1997 and
be funded with existing cash.
With the exception of the Hercules Acquisition, which is expected to be
funded as described above, management believes that the current level of cash
and short-term investments and cash generated from operations should be
sufficient to finance the Company's working capital needs, scheduled debt
service and expected capital expenditures during the remainder of fiscal 1997
and fiscal 1998. Should new opportunities requiring capital arise, the Company
may utilize the revolving portion of the Senior Credit Facility or may consider
seeking additional equity or long-term debt financing.
30
<PAGE> 32
RECENT ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No.
128"). SFAS No. 128, which is effective for periods ending after December 15,
1997, including interim periods, simplifies the standards for computing earnings
per share and replaces the presentation of primary earnings per share with a
presentation of basic earnings per share. Initial adoption of this standard is
not expected to have a material impact on the Company's financial position or
results of operations. Early adoption is not permitted.
31
<PAGE> 33
BUSINESS
GENERAL
Parker is a leading worldwide provider of contract drilling and drilling
related services, operating in the shallow coastal waters or transition zones of
the Gulf of Mexico and Nigeria and in international and additional domestic land
oil and gas producing regions. The Company's growth strategy is focused on
higher margin and transition zone drilling and workover markets. Consistent with
this strategy, in November 1996, the Company acquired (i) Mallard, the
second-largest barge drilling and workover company in the transition zones of
the Gulf of Mexico, and (ii) Quail, a leading provider of specialized rental
equipment for drilling and workover operations, primarily in the Gulf of Mexico.
In addition, the Company has recently entered into agreements to acquire (i) the
capital stock of Hercules, a leading provider of contract drilling and workover
services in the shallow waters of the Gulf of Mexico, and (ii) the assets of
Bolifor, a leading provider of land contract drilling services in Bolivia.
With the closing of the pending acquisitions of Hercules and Bolifor,
Parker's rig fleet will consist of 34 barge drilling and workover rigs, eight
shallow water jackup rigs, seven offshore platform rigs and 75 land rigs. The
Company's barge and jackup rig fleet is dedicated to transition zone waters,
which are generally defined as extending from the coast to depths of up to 200
feet and include marshes and inland waterways. Parker's land rig fleet generally
consists of premium and specialized deep drilling rigs, with 62 of its 75 land
rigs capable of drilling to depths of 15,000 feet or greater. In addition, 22 of
the Company's land rigs are helicopter-transportable, thus establishing Parker
as the dominant operator in the heli-rig market. The diversity of the Company's
rig fleet, both in terms of geographic location and asset class, enables the
Company to provide a broad range of services and to take advantage of market
upturns, while reducing its exposure to downturns in any particular sector or
region.
The oilfield services industry has experienced a significant increase in
activity in the last two years as oil and gas companies have increased their
exploration and production budgets in response to increasing demand for oil and
gas, stronger oil and gas prices and reduced drilling costs due in large part to
improved technology. In the offshore drilling market, including transition
zones, rig dayrates and utilization levels are at a 15-year high with many
markets at or approaching full utilization. The land drilling industry, both in
the United States and internationally, has also shown a marked improvement in
dayrates and utilization driven by several factors, including stronger commodity
prices, rig attrition and consolidation of drilling contractors, especially in
the domestic market. Through its recent and pending acquisitions, the Company is
capitalizing on these improving conditions.
TRANSITION ZONE OPERATIONS
The Company is a leading provider of contract drilling services in the
transition zones of the Gulf of Mexico and Nigeria. With the acquisition of
Hercules, the Company will further increase its presence in the Gulf of Mexico
transition zone market where barge and jackup rigs are the primary source of
drilling and workover services. Barge rigs are mobile drilling and workover
vessels that are submersible and are built to work in eight to 20 feet of water.
These rigs are towed by tug boats to the drill site with the derrick laid down.
The lower hull is then submerged by flooding until it rests on the sea floor.
The derrick is then raised and drilling and workover operations are conducted
with the barge in this position. The Hercules shallow water jackup rigs are
capable of drilling in waters from eight feet up to 215 feet deep.
Domestic Barge Drilling
The Company's principal domestic market for its barge drilling rigs is the
transition zones of the Gulf of Mexico, primarily in Louisiana and, to a lesser
extent, Alabama and Texas, where conventional jackup rigs are unable to operate.
This area historically has been the world's largest market for shallow water
barge drilling. Parker is the second largest operator of barge drilling rigs in
this market, with 15 drilling barges. Barge rigs are also employed inland in
lakes, bays, rivers and marshes.
The barge market in the transition zones of the Gulf of Mexico has
undergone significant attrition and consolidation in recent years, with the
number of drilling rigs declining from over 120 in the early 1980s to
32
<PAGE> 34
approximately 55 today, and the number of competitors decreasing over the same
period from more than 30 to only two significant contractors. Drilling and
workover activity has been increasing in the Gulf of Mexico transition zones,
spurred by (i) the increased use of 3-D seismic technology that has resulted in
the identification of previously undiscovered drilling prospects and (ii) the
settlement of a royalty dispute between the State of Louisiana and Texaco, the
region's largest leaseholder. It is estimated that Texaco holds approximately
45% of the shallow water leases in Louisiana. Pursuant to a settlement reached
in March 1994, Texaco agreed to invest approximately $150 million to drill in
Louisiana over a five-year period. Higher natural gas prices have also
significantly contributed to this increased drilling and workover activity. The
recent increase in drilling and workover activity in the Gulf of Mexico has
resulted in a significant increase in dayrates and utilization for the Company's
rigs. For the year ended December 31, 1996, the Company's marketable deep
drilling barge rigs averaged 86% utilization and an average dayrate of $13,793.
As of June 25, 1997, 100% of the Company's marketable deep drilling barge rigs
were in operation at an average dayrate of $16,107.
The Company believes that international markets, in which jackup rigs have
historically been utilized for transition zone drilling, will utilize an
increasing number of barge rigs over the next several years, primarily rigs
currently or formerly employed in the Gulf of Mexico transition zone market and
newly constructed rigs. Once a barge rig has been modified for international
service, it may not be feasible to return to service in the Gulf of Mexico
transition zone market because the modifications restrict the ability of the rig
to navigate inland waterways.
The following table sets forth, as of June 25, 1997, the Company's estimate
of the number of barge drilling rigs in the domestic market. The table does not
include rigs that are suitable principally for workover or shallow drilling.
<TABLE>
<CAPTION>
CONTRACTOR TOTAL ACTIVE
---------- ----- ------
<S> <C> <C>
Falcon Drilling Company, Inc. ("Falcon Drilling")........... 39 25
Parker...................................................... 15 12
Nabors Industries, Inc...................................... 1 1
-- --
Total............................................. 55 38
== ==
</TABLE>
33
<PAGE> 35
A schedule of the Company's deep and intermediate drilling barges located
in the Gulf of Mexico, as of June 25, 1997, is set forth below:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) STATUS(1)
---------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Deep Drilling:
Rig No. 50........................ 2,000 1993 25,000 Active
Rig No. 51........................ 2,000 1993 25,000 Active
Rig No. 52(2)..................... 2,000 1993 25,000 Shipyard
Rig No. 53........................ 1,600 1995 20,000 Active
Rig No. 54........................ 2,000 1995 30,000 Active
Rig No. 55........................ 2,000 1993 30,000 Active
Rig No. 56........................ 2,000 1992 30,000 Active
Rig No. 57........................ 1,500 1997 20,000 Active
Rig No. 58........................ 3,000 1982 30,000 Stacked
Rig No. 59........................ 3,000 1972 30,000 Stacked
Rig No. 60........................ 3,000 1980 30,000 Active
Intermediate Drilling:
Rig No. 8......................... 1,700 1995 15,000 Active
Rig No. 12........................ 1,200 1990 14,000 Active
Rig No. 17........................ 1,200 1993 13,000 Active
Rig No. 21........................ 1,200 1995 14,000 Active
</TABLE>
- ---------------
(1) "Active" denotes that the rig is currently under contract or available for
contract. "Stacked" denotes that the rig is currently cold stacked and would
need to be refurbished at a significant cost before being placed back into
service.
(2) On June 16, 1997, Rig No. 52 suffered extensive damage when a well on which
it was working suffered a blowout and fire. Management is currently
determining the amount of salvageable equipment and the amount of insurance
proceeds that the Company will receive. Accordingly, no determination of the
extent of losses can be made at the present time.
Given the improvement in barge drilling demand and dayrates, the Company
may contemplate refurbishing its cold stacked rigs.
Domestic Barge Workover and Shallow Drilling
The Company is the leading provider of domestic barge workover services in
the transition zone of the Gulf of Mexico. Parker's domestic barge workover and
shallow drilling business is based in the same geographical area as its barge
drilling business. The same factors that have affected the structure of the
barge drilling sector also have affected this sector, including considerable
consolidation of competitors and reduction of available rigs since the early
1980s. The Company was recently awarded a one-year extension to June 1998 of its
exclusive alliance to provide barge rig completion and workover services to
Texaco in the transition zone of the Gulf of Mexico.
The following table sets forth, as of June 25, 1997, the Company's estimate
of the number of barge units in the workover and shallow drilling sector:
<TABLE>
<CAPTION>
CONTRACTOR TOTAL ACTIVE
---------- ----- ------
<S> <C> <C>
Parker...................................................... 15 10
Falcon Drilling............................................. 9 9
Other contractors........................................... 5 2
-- --
Total..................................................... 29 21
== ==
</TABLE>
34
<PAGE> 36
A schedule of the Company's workover rigs, as of June 25, 1997, which
includes some rigs with shallow drilling capabilities, is set forth below:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) STATUS(1)
---------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Heavy Workover and Shallow Drilling:
Rig No. 5......................... 800 1991 -- Stacked
Rig No. 10........................ 800 1978 -- Stacked
Rig No. 15........................ 800 1991 -- Stacked
Rig No. 16........................ 800 1994 11,500 Active
Rig No. 18........................ 800 1993 11,500 Active
Rig No. 20........................ 800 1995 11,500 Active
Rig No. 23........................ 1,000 1993 13,000 Active
Rig No. 24........................ 1,000 1992 13,000 Active
Rig No. 25........................ 1,000 1993 13,000 Active
Rig No. 27........................ 800 1987 -- Stacked
Rig No. 28........................ 800 1987 -- Stacked
Workover and Other:
Rig No. 6......................... 700 1995 -- Active
Rig No. 7......................... 700 1995 -- Active
Rig No. 9......................... 650 1996 -- Active
Rig No. 26........................ 650 1996 -- Active
</TABLE>
- ---------------
(1) "Active" denotes that the rig is currently under contract or available for
contract. "Stacked" denotes that the rig is currently cold stacked and would
need to be refurbished at a significant cost before being placed back into
service.
International Barge Drilling
The Company has focused its international barge drilling efforts in the
transition zones of West Africa, where it is the leading provider of barge
drilling services in Nigeria, with four of the nine rigs in the market.
International markets are particularly attractive due to the availability of
long-term contracts and the opportunity to earn dayrates higher than domestic
rates. The Company believes that international markets, in which jackup rigs
have historically been utilized for offshore drilling, will utilize an
increasing number of barge rigs over the next several years and that these will
come primarily from rigs currently or formerly employed in the Gulf of Mexico
transition zones. The most promising international barge drilling markets are
currently located in the transition zones of Venezuela, Indonesia, Tunisia,
Mexico, the Caspian Sea and West Africa.
The Company is the largest barge rig operator in the transition zone of
Nigeria. The Company has operated in Nigeria since 1991 and currently operates
four barge rigs under long-term contracts at an average dayrate of $26,280. The
Company has recently received a letter of intent, subject to the execution of a
definitive agreement, from one of its present customers in Nigeria for a
five-year drilling contract in the transition zone of Nigeria, which will
require the construction of a new drilling barge at an estimated cost of $25
million. On July 1, 1997, the Company received notice from one of its customers
in Nigeria of its intention to terminate the contract covering Rig No. 72,
effective 30 days from the date of notice and subject to completion of the well.
Such customer reserved the option to continue the contract upon notice given
prior to the effective date of termination. If the customer does not ultimately
continue the contract, the Company will evaluate different options for
relocation of the rig.
35
<PAGE> 37
A schedule of the Company's drilling barges deployed to Nigeria, as of June
25, 1997, is set forth below:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) STATUS(1)
---------- ----------- -------- ---------
<S> <C> <C> <C> <C>
Deep Drilling:
Rig No. 71............................ 3,000 1994 30,000 Active
Rig No. 72............................ 3,000 1991 30,000 Active
Rig No. 73............................ 3,000 1991 30,000 Active
Rig No. 74............................ 3,000 1997 30,000 Active
</TABLE>
- ---------------
(1) "Active" denotes that the rig is currently under contract or available for
contract.
Jackup Rigs
Pursuant to the Hercules Acquisition, the Company will acquire seven
shallow water jackup rigs. As of June 25, 1997, the rigs were at 100% effective
utilization, with an average dayrate of $23,286. The Hercules jackup rigs are
mobile, self-elevating drilling platforms equipped with legs that can be lowered
to the ocean floor until a foundation is established to support the hull, which
contains the drilling equipment, jacking system, crew quarters, loading and
unloading facilities, storage areas for bulk and liquid materials, helicopter
landing deck and other related equipment. Five of the rigs are cantilever
design, a feature that permits the drilling platform to be extended out from the
hull, allowing drilling and workover operations to be performed over existing
platforms or structures. Jackup rigs with the cantilever feature historically
have achieved higher dayrates and utilization levels. The other two rigs are
slot-type design configured for the drilling operations to take place through a
keyway in the hull. These two rigs have the added capability of operating in
eight feet of water. Four of the seven jackup rigs are mat-supported rigs and
three are independent leg rigs. The Hercules rigs are capable of drilling to
maximum depths of 25,000 feet and in water depths of up to 215 feet.
The following table sets forth certain information, as of June 25, 1997,
with respect to the Parker and Hercules jackup rigs:
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM
WATER DRILLING
DEPTH DEPTH
DESIGN(1) (FEET) (FEET) STATUS(2)
------------------------------ ------- -------- -----------
<S> <C> <C> <C> <C>
Parker:
Rig No. 43......... Sun Contractors (IC) 55 -- Stacked
Hercules:
Rig No. 11(3)...... Bethlehem JU-200 (MC) 200 -- Active
Rig No. 14(4)...... Baker Marine Big Foot (IS) 85 20,000 Shipyard
Rig No. 15......... Baker Marine Big Foot III (IS) 100 20,000 Active
Rig No. 20......... Bethlehem JU-100 (MC) 110 25,000 Active
Rig No. 21......... Baker Marine BMC-125 (MC) 125 25,000 Active
Rig No. 22......... Le Tourneau Class 51 (MC) 173 18,000 Active
Rig No. 25......... Le Tourneau Class 150-44 (IC) 215 20,000 Active
</TABLE>
- ---------------
(1) IC -- independent leg, cantilevered; IS -- independent leg, slot;
MC -- mat-supported, cantilevered.
(2) "Active" denotes that the rig is currently under contract or available for
contract. "Stacked" denotes that the rig is currently cold stacked and would
need to be refurnished at a significant cost before placed back into
service.
(3) Workover rig.
(4) Currently undergoing refurbishment and expected to begin operations in
September 1997.
36
<PAGE> 38
OTHER OFFSHORE OPERATIONS
Platform Drilling
Following the Hercules Acquisition, the Company's fleet of platform rigs
will consist of seven modular self-erecting rigs. These platform rigs consist of
drilling equipment and machinery arranged in modular packages that are
transported to and self-erected on fixed offshore platforms owned by oil
companies. The Company believes that the modular self-erecting design of the
platform rigs provides a competitive advantage due to lower mobilization costs
and smaller "footprint." The Company intends to expand its presence in the
platform rig market through the refurbishment of its cold-stacked rig and
through the acquisition or construction of additional rigs.
The following table sets forth certain information, as of June 25, 1997,
with respect to the Parker and Hercules platform rigs:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) LOCATION STATUS(1)
---------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Parker:
Rig No. 41E............ 1,000 1997 12,500 Gulf of Mexico Active
Rig No. 42E............ 1,000 1996 12,500 Gulf of Mexico Active
Rig No. 47............. 750 1993 11,000 Gulf of Mexico Stacked
Hercules:
Rig No. 1.............. 1,000 1982 12,000 Brazil Active(2)
Rig No. 2.............. 1,000 1982 12,000 Gulf of Mexico Active
Rig No. 3.............. 1,000 1997 12,000 Gulf of Mexico Active
Rig No. 10............. 650 1989 10,000 Gulf of Mexico Active
</TABLE>
- ---------------
(1) "Active" denotes that the rig is currently under contract or available for
contract. "Stacked" denotes that the rig is currently cold stacked and would
need to be refurbished at a significant cost before being placed back into
service.
(2) Lessee has the option to extend the lease period for two years and may
purchase the rig for $4 million to $4.5 million depending on when the
purchase option is exercised.
37
<PAGE> 39
LAND OPERATIONS
General
The Company is a leading international provider of land contract drilling
services. The Company's land drilling operations specialize in the drilling of
deep and difficult wells and drilling in remote and harsh environments. Since
beginning operations in 1934, the Company has operated in 47 foreign countries
and throughout the United States, making it one of the most geographically
diverse land drilling contractors in the world.
The following table sets forth, as of June 25, 1997, the locations of the
Company's land rigs and their drilling depth ratings:
<TABLE>
<CAPTION>
DRILLING DEPTH RATING IN FEET
---------------------------------------------------
10,000
OR LESS 15,000 20,000 25,000 30,000 TOTAL
------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
International:
South America(1)............................... 6 10 11 3 4 34
Asia Pacific................................... 4 3 11 2 - 20
Africa and the Former Soviet Union............. 3 2 2 - - 7
-- -- -- -- -- --
Total International.................... 13 15 24 5 4 61
Domestic:
Gulf Coast..................................... - - 1 - 4 5
Rocky Mountains................................ - - 2 - 2 4
Mid-Continent.................................. - - 4 - - 4
Alaska......................................... - - - - 1 1
-- -- -- -- -- --
Total Domestic......................... - - 7 - 7 14
-- -- -- -- -- --
Total.................................. 13 15 31 5 11 75
== == == == == ==
</TABLE>
- ---------------
(1) Includes 11 rigs to be acquired in the Bolifor Acquisition, and excludes the
two platform rigs located offshore Peru that will be sold under an agreement
effective May 1997.
International Operations
The Company's international land drilling operations are focused primarily
in South America and the Asia Pacific region, where Parker specializes in
drilling that requires equipment specially designed to be transported by
helicopter or all-terrain vehicles into remote access areas such as jungle,
mountainside or desert locations. Management believes that Parker's 22
heli-rigs, with technologically advanced pumps and power generation systems that
are capable of drilling difficult wells in excess of 15,000 feet, have
established Parker as the dominant operator in the heli-rig market, with an
estimated 75% worldwide market share. Parker traditionally has been a pioneer in
frontier areas and is currently working for or has recently worked for operators
in China, Russia, Kazakstan and Vietnam.
In recent years, many major and independent oil companies have directed a
greater portion of their exploration budgets to foreign markets. This is
particularly true in South America and the Asia Pacific region, where the demand
for land rigs has increased significantly. Parker has benefitted from this trend
due to its long-standing presence in these markets and has been able to deploy
rigs under longer term contracts at higher dayrates and operating margins than
in its domestic operations. Management believes that the demand for drilling
services in international markets will continue to grow as demand for oil and
gas increases and countries dependent on oil and gas revenues seek to increase
their production. The Company intends to capitalize on its global presence and
substantial international experience to pursue growth opportunities in both
current and developing markets.
International markets differ from the domestic market in terms of
competition, nature of customers, equipment and experience requirements. The
majority of international drilling markets have the following
38
<PAGE> 40
characteristics: (i) a small number of competitors; (ii) customers who are
major, large independent or foreign national oil companies; (iii) drilling
programs in remote locations requiring drilling equipment with a large inventory
of spare parts and other ancillary equipment; and (iv) drilling of difficult
wells requiring considerable experience.
South America. Following the Bolifor Acquisition, the Company will have 34
rigs located in the South American drilling markets of Colombia, Argentina,
Paraguay, Peru and Bolivia. Parker's rigs have been upgraded to meet the demands
of deep, difficult drilling in these areas. Most of these rigs are currently
under contract to major or national oil companies at attractive dayrates. The
Company anticipates it will continue to relocate rigs to the South American
market to meet increased demand for drilling. The Bolifor Acquisition will give
Parker a leading presence as a drilling contractor in Bolivia.
Asia Pacific Region. The Company operates 13 of its fleet of 22 helicopter
transportable rigs in the Asia Pacific region due to the remoteness of the
mountainside and jungle drilling performed in this region. Parker entered the
Indonesian geothermal market in 1995. In 1996, Parker became the first land
drilling contractor to enter the Vietnam market subsequent to the liberalization
of Vietnam's trading policy and the lifting of restrictions on doing business
with Vietnam. Also in 1996, Parker formed an alliance with the national drilling
company in China, pursuant to which Parker is providing project management
assistance and rig supervisory personnel to western oil companies in conjunction
with Parker's Chinese partner. Parker has the longest presence of any foreign
drilling contractor in China, beginning with its first contract in 1980.
Africa and the Former Soviet Union. Seven of the Company's rigs are
currently located in the markets of Africa and the former Soviet Union. After
becoming the first western drilling contractor to enter the Russian drilling
market in 1991, expansion of Parker's business in this country has been hampered
by bureaucratic inefficiencies, constantly changing tax and other laws and
political issues that have retarded the investment of capital by major and large
independent oil companies in Russia. As a result, Parker has relocated three of
its drilling rigs and is in the process of relocating its remaining drilling rig
from Russia to Kazakstan. As anticipated, the recently announced agreement
regarding the pipeline to be built to accommodate incremental production from
the Tengiz field in Kazakstan has already increased exploration efforts in this
region. In addition to operating Parker's own rigs, Parker recently was awarded
a five-year alliance contract by the operator of the Tengiz field to operate and
maintain its rigs, including the provision of expatriate and local drilling
crews and management of its warehouse, drilling base and mobile equipment fleet.
Domestic Operations
In the United States, the Company operates land rigs in the Gulf Coast,
Rocky Mountain and Mid-Continent regions and the arctic region of Alaska.
Industry conditions in the United States land drilling market have recently
improved after having been depressed through most of the 1980s and early 1990s.
The improved market conditions have resulted in both increased rig utilization
and dayrates and shortages for certain types of rigs in certain markets. The
increased drilling activity has been reflected in a greater demand for rigs of
all depth capabilities, in particular deep drilling rigs such as those owned by
the Company. The recent market improvements have been a result of a combination
of a general consolidation trend in the industry, higher and more stable oil and
natural gas prices and improvements in exploration technology, in particular the
greater use of 3-D seismic data and horizontal drilling.
Of the Company's 14 rigs located in the United States, 13 are SCR electric,
six are equipped with top drive units and all are capable of drilling in excess
of 15,000 feet. Traditionally, Parker has differentiated itself from its
domestic competitors by specializing in the drilling of deep and difficult
wells.
Specialty Services
Helicopter Transportable Rigs. The Company specializes in difficult wells
and drilling in remote areas and harsh environments, primarily in international
locations. A significant factor contributing to Parker's success in obtaining
drilling contracts in remote areas is the use of rigs that are transportable by
air, land and water. These rigs have been specially designed and constructed by
Parker for quick assembly and disassembly under the proprietary designations
"Heli-Hoist(R)" rig, Transportable By Anything(R)("TBA(R)") rig and All-
39
<PAGE> 41
Terrain ("AT2000E(R)") rig. Management believes that Parker's 22 helicopter
transportable rigs comprise approximately 75% of the operational helicopter
transportable rigs worldwide. The Heli-Hoist(R), TBA(R) and AT2000E(R) rigs
allow Parker to perform drilling operations in remote and otherwise inaccessible
locations such as jungle areas, mountainous areas and offshore platforms.
Deep Drilling. During the U.S. drilling boom of the late 1970s and early
1980s, the Company developed its specialty of deep and difficult drilling,
primarily in the Anadarko Basin of Western Oklahoma and the Overthrust Region in
the Rocky Mountains. The majority of the expansion of Parker's domestic fleet
was built around this deep gas drilling. Parker's largest drilling rig is rated
in excess of 35,000 feet.
During the last several years, drilling activity has shifted from domestic
deep gas drilling to international deep oil and gas drilling. While
international deep drilling is generally in the range of 15,000 feet to 20,000
feet as opposed to the domestic deep drilling which often exceeds 20,000 feet,
Parker has benefitted in the international arena from the development of this
expertise, particularly in the deep drilling markets of the Cusiana and Cupiagua
fields of Colombia and in northern Argentina.
Arctic Drilling. The Company has been one of the pioneers in arctic
drilling conditions and continues to offer new technology to meet the demand for
increased drilling in an ecologically sensitive manner. Parker's most recent
development has been the introduction of a self-contained mobile drilling unit
capable of being moved in one unit by giant "crawlers" similar to the system
used to move rocket thrusters for the space program. The environmentally
sensitive rig also has a complete closed-loop mud system and cuttings processing
system that eliminate the need for mud pits.
Geothermal Drilling. The Company also has developed expertise in the area
of geothermal drilling. Geothermal operations involve drilling into a pocket of
geothermal energy, tapping the source of this energy in the form of steam, hot
water or hot rocks and converting this heat into usable forms of energy. The
market for geothermal drilling is expanding into several areas of the world,
including the Philippines, New Zealand and Indonesia, as various countries elect
to access this alternative form of energy.
RENTAL TOOLS
The Quail Acquisition provided the Company with a business that management
believes will enhance the capabilities of the Company's contract drilling
business and provide substantial revenues as a stand-alone business. Quail,
based in New Iberia, Louisiana, is a provider of premium rental tools used for
land and offshore oil and gas drilling and workover activities. Approximately
70% of Quail's equipment is utilized in offshore and coastal water operations.
Since its inception in 1978, Quail's principal customers have been major and
independent oil and gas exploration and production companies.
Quail rents specialized equipment utilized in difficult well drilling and
production and workover applications. Quail offers a full line of drill pipe,
drill collars, tubing, high- and low-pressure blowout preventers, choke
manifolds, casing scrapers and cement and junk mills. Quail has recently entered
into a contract with a major oil company to be its preferred provider of rental
tools to the land and offshore Texas markets and is opening a new rental tool
facility in Victoria, Texas, in order to service the increasing demand for tools
in that region. Approximately 60% of Quail's revenues are realized from rentals
for production and workover activities.
The rental tool industry is currently experiencing increasing demand due to
the trend toward outsourcing by oil companies of noncore equipment and services
and the significant increase in drilling activity in the Gulf of Mexico. In
recent years, major and independent oil companies have liquidated certain
ancillary drilling equipment in an effort to improve drilling efficiencies and
returns on drilling programs. In addition, drilling activity has increased
substantially in the Gulf of Mexico, causing an increase in dayrates for
drilling rigs and a further increase in the demand for rental tools. The Company
believes that Quail will benefit from such trends.
During the past three years, Quail has experienced significant growth in
revenue and earnings due in general to the growth trends in the oil and gas
industry and specifically to the increased production and drilling activity in
the Gulf of Mexico and the movement within the industry towards fewer or single
source vendors.
40
<PAGE> 42
Quail derives equipment rental revenue primarily from the daily rental charges
for its tools, pipe, and related equipment and to a lesser extent by charging
customers for ancillary parts and repairs, transportation of the rental items to
the customer's location, inspection of rental items as specified by the
customer, items its sub-rents from other rental tool companies, the disposal of
waste removed from the rental items after their use, and the cost of rental
items lost or damaged beyond repair. The operating costs associated with Quail's
rentals consist primarily of expenses associated with depreciation,
transportation, inspection, maintenance and repair, and related direct overhead.
COMPETITION
The contract drilling industry is a competitive and cyclical business
characterized by high capital and maintenance costs. See "Risk
Factors -- Competition."
Demand in the offshore drilling markets serviced by Mallard and Quail has
significantly improved from previous years. In the Gulf of Mexico barge drilling
and workover markets, Mallard competes primarily with Falcon Drilling. However,
a few small contractors remain, principally in the barge workover market.
Certain drilling jobs for which Mallard competes also can be performed by
shallow water jackup rigs.
The land drilling market is competitive. Drilling contracts are generally
awarded on a competitive bid basis and, while an operator may consider factors
such as quality of service and type and location of equipment as well as the
ability to provide ancillary services, price and availability of equipment are
significant factors in determining which contractor is awarded a job. In
international markets, experience in operating in certain environments and
customer alliances have also been factors in the selection of the Company in
certain cases, as well as the Company's patented drilling equipment for remote
drilling projects. The Company believes that the market for land drilling
contracts will continue to be competitive for the foreseeable future. Certain of
the Company's competitors have greater financial resources than the Company,
which may enable them to better withstand industry downturns, to compete more
effectively on the basis of price, to build new rigs or to acquire existing
rigs.
Management believes that Quail is one of the four leading rental tool
companies in the offshore Gulf of Mexico. Quail competes with a number of rental
tool companies in the Gulf of Mexico and in the Gulf Coast land markets, certain
of which are substantially larger than, and have greater financial resources
than, the Company.
CUSTOMERS AND DRILLING CONTRACTS
The Company believes it has developed an international reputation for
providing efficient, quality drilling services. A key for advancing the
Company's business is maintaining and developing relationships and strategic
alliances with customers. An increasing number of the Company's customers have
been seeking to establish exploration, development drilling and workover
programs based on partnering relationships or alliances with a limited number of
preferred drilling contractors. Such relationships or alliances can result in
longer term work and higher efficiencies that increase profitability for
drilling contractors at a lower overall well cost for oil companies. The Company
is currently a preferred contractor for operators in certain domestic and
international locations, which management believes is a result of the Company's
quality service and experience.
The Company's drilling rigs are generally operated under individual dayrate
contracts. Drilling contracts generally cover either the drilling of a specified
well or wells for a stated term. Historically, most domestic contracts have been
on a well-to-well basis while contracts in the international markets frequently
are offered on a term basis. Because the Company focuses on drilling deep and
difficult wells in both domestic and international markets, contracts typically
last longer than 90 days. Certain of Parker's contracts in Colombia have
three-year terms with early termination penalties. Mallard's contracts in
Nigeria have two- to three-year stated terms but provide no contractual
penalties for early termination.
The Company's drilling customer base consists of major, independent and
foreign national oil and gas companies. The Company's customer base is
concentrated, with its two largest customers accounting for
41
<PAGE> 43
approximately 19% and 18% of total revenues for fiscal year 1996 and 12% and 10%
of total revenues for the nine months ended May 31, 1997. In addition, the three
largest customers of Mallard accounted for approximately 13%, 12% and 11% of its
total revenues for the year ended December 31, 1996 and the two largest
customers of Quail accounted for approximately 31% and 23% of its total revenues
for the year ended December 31, 1996. There can be no assurance that these
customers will continue to request the Company's services or that the loss of
such customers would not have a material adverse effect on the Company's
business, financial condition and results of operations.
LEGAL PROCEEDINGS
A judgment in the amount of $4.9 million was entered against a subsidiary
of Parker by a judge of the First Civil Specialized Court in Maynas, Peru on May
10, 1996. The judgment was based on a $22 million claim by former employees of
Parker's subsidiary alleging that such subsidiary impaired their employment
opportunities with that subsidiary and other employers. The subsidiary of Parker
disputed the claim and appealed the decision based on a lack of evidence and
procedural and due process irregularities. On or about September 5, 1996, this
judgment was declared void by the Superior Court in Iquitos, Peru. On January
29, 1997, the Superior Court of Maynas issued a resolution declaring the
resolution originally admitting the complaint null and void on the grounds that
the signatures on the complaint do not correspond to the named plaintiffs. Upon
appeal to the Supreme Court, on May 8, 1997, the appeal was again declared
contrary to law. In a separate action, the plaintiffs submitted a new complaint
to the Special Civil Court which qualified the suit according to law. Based on
pleadings filed by the subsidiary, by Resolution No. 155, the Special Civil
Court has now declared the lawsuit contrary to law and terminated the current
process. The dismissal of the separate action has been appealed to the Superior
Court of Maynas. The Company does not believe that the case will have any
material adverse effect on its financial condition.
The Company is a party to certain other legal proceedings that have
resulted from the ordinary conduct of its business. In the opinion of the
Company's management, none of these proceedings is expected to have a material
adverse effect on the Company.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
The U.S. Gulf Coast market, and particularly the shallow water areas where
the Company's contract drilling service operations are concentrated, are
ecologically sensitive. As a result, environmental issues have led to higher
drilling costs, a more difficult and lengthy well permitting process and, in
general, have adversely affected decisions of the oil companies to drill in
these areas. U.S. laws and regulations applicable to the Company's operations
include those controlling the discharge of materials into the environment,
requiring removal and cleanup of materials that may harm the environment, or
otherwise relating to the protection of the environment. The Company, as an
operator of drilling rigs in navigable U.S. waters and certain offshore areas,
may be liable for damages and costs incurred in connection with oil spills for
which it is held responsible, subject to certain limitations. An oil spill in a
wetland or inland waterway could produce substantial damage to the environment,
including wildlife and ground water. Laws and regulations protecting the
environment have become more stringent in recent years, and may, in certain
circumstances, impose strict liability, rendering a person liable for
environmental damage without regard to negligence or fault on the part of such
person. Such laws and regulations may expose the Company to liability for the
conduct of or conditions caused by others, or for acts of the Company which were
in compliance with all applicable laws at the time such acts were performed. The
application of these requirements or the adoption of the new requirements could
have a material adverse effect on the Company.
The drilling of oil and gas wells is subject to various federal, state,
local and foreign laws, rules and regulations. The Company, as an owner or
operator of both onshore and offshore facilities operating in or near waters of
the United States, may be liable for the costs of removal and damages arising
out of a pollution incident to the extent set forth in the Federal Water
Pollution Control Act, as amended by the Oil Pollution Act of 1990 ("OPA") and
the Outer Continental Shelf Lands Act. In addition, the Company may also be
subject to applicable state law and other civil claims arising out of any such
incident. Certain of the Company's facilities are also subject to regulations of
the Environmental Protection Agency ("EPA") that
42
<PAGE> 44
require the preparation and implementation of spill prevention, control and
countermeasure plans relating to possible discharge of oil into navigable
waters. Other regulations of the EPA may require certain precautions in storing,
handling and transporting hazardous wastes. State statutory provisions relating
to oil and natural gas generally include requirements as to well spacing, waste
prevention, production limitations, pollution prevention and cleanup, obtaining
drilling and dredging permits and similar matters. The Company believes that it
is in substantial compliance with such laws, rules and regulations.
The OPA and regulations promulgated pursuant thereto impose a variety of
regulations on "responsible parties" related to the prevention of oil spills and
liability for damages resulting from such spills. A "responsible party" includes
the owner or operator of a facility or vessel, or the lessee or permittee of the
area in which an offshore facility is located. The OPA assigns liability to each
responsible party of oil removal costs and a variety of public and private
damages. While liability limits apply in some circumstances, a responsible party
for an Outer Continental Shelf facility must pay all spill removal costs
incurred by a federal, state or local government. The OPA establishes liability
limits (subject to indexing) for offshore drilling rigs. If functioning as an
offshore facility, the offshore drilling rigs are considered "tank vessels" for
spills of oil on or above the water surface, with liability limits of $1,200 per
gross ton or $10 million. To the extent damages and removal costs exceed this
amount, the offshore drilling rigs will be treated as an offshore facility and
the offshore lessee will be responsible up to higher liability limits for all
removal costs plus $75 million. A party cannot take advantage of liability
limits if the spill was caused by gross negligence or willful misconduct or
resulted from violation of a federal safety, construction or operating
regulation. If the party fails to report a spill or to cooperate fully in the
cleanup, liability limits likewise do not apply. Few defenses exist to the
liability imposed by the OPA. The OPA also imposes ongoing requirements on a
responsible party, including proof of financial responsibility (to cover at
least some costs in a potential spill) and preparation of an oil spill
contingency plan. Recently adopted amendments to the OPA reduced the amount of
financial responsibility required for "offshore facilities" from $150 million to
$35 million, but such amendments did not reduce the amount of financial
responsibility required for "tank vessels." Since the Company's offshore
drilling rigs are typically classified as tank vessels, the recent amendments to
the OPA are not expected to have a significant effect on the Company's
operations. A failure to comply with ongoing requirements or inadequate
cooperation in a spill may even subject a responsible party to civil or criminal
enforcement actions.
In addition, the Outer Continental Shelf Lands Act authorized regulations
relating to safety and environmental protection applicable to lessees and
permittees operating on the Outer Continental Shelf. Specific design and
operational standards may apply to Outer Continental Shelf vessels, rigs,
platforms, vehicles and structures. Violations of environmental-related lease
conditions or regulations issues pursuant to the Outer Continental Shelf Lands
Act can result in substantial civil and criminal penalties as well as potential
court injunctions curtailing operations and the cancellation of leases. Such
enforcement liabilities can result from either governmental or citizen
prosecution.
All of the Company's operating domestic barge drilling rigs have zero
discharge capabilities as required by law. In addition, in recognition of
environmental concerns regarding dredging of inland waters and permitting
requirements, the Company conducts minimal dredging operations and approximately
two-thirds of the Company's drilling contracts involve directional drilling,
which minimizes the need for dredging. However, the existence of such laws and
regulations has had and will continue to have a restrictive effect on the
Company and its customers.
The drilling industry is dependent on the demand for services from the oil
and gas exploration and development industry and, accordingly, is affected by
changes in laws relating to the energy business. The Company's business is
affected generally by political developments and by federal, state, local and
foreign laws and regulations that may relate directly to the oil and gas
industry. The adoption of laws and regulations, both domestic and foreign, that
curtail exploration and development drilling for oil and gas for economic,
environmental and other policy reasons may adversely affect the Company's
operations by limiting available drilling opportunities.
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<PAGE> 45
MANAGEMENT
The following table sets forth certain information regarding the directors
and executive officers of the Company as of June 25, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert L. Parker..................................... 73 Chairman of the Board of Directors
Robert L. Parker Jr.................................. 48 President and Chief Executive Officer
James W. Linn........................................ 51 Executive Vice President and Chief
Operating Officer
James J. Davis....................................... 50 Senior Vice President - Finance and Chief
Financial Officer
I. E. Hendrix, Jr.................................... 52 Vice President and Treasurer
Kenneth R. Hoit...................................... 59 Vice President, Planning and Accounting
Leslie D. Rosencutter................................ 41 Vice President, Administration and
Corporate Secretary
T. Bruce Blackman.................................... 45 Vice President, Asia Pacific Operations
Donald D. Goodson.................................... 42 Vice President, Latin America Operations
John R. Gass......................................... 45 Vice President, Frontier Areas
Thomas L. Wingerter.................................. 44 Vice President, North American Operations
Randy L. Ellis....................................... 45 Controller
Bernard Duroc-Danner................................. 43 Director
David L. Fist........................................ 65 Director
Earnest F. Gloyna.................................... 75 Director
R. Rudolph Reinfrank................................. 41 Director
</TABLE>
The following is a brief description of the background and principal
occupation of each director and executive officer:
Robert L. Parker, Chairman of the Board, has been a Director since 1954 and
served as President of the Company from 1954 until October 1977, when he was
elected Chairman and Chief Executive Officer. Since December 1991, he has
retained the position of Chairman. He serves on the board of directors of MAPCO
Inc., a diversified energy company; Clayton Williams Energy, Inc., a company
engaged in exploration and production of oil and natural gas; and BOK Financial
Corporation, a bank holding company organized under the laws of the State of
Oklahoma. Mr. Parker also serves on the board of directors of the American
Petroleum Institute and the National Petroleum Council. He is the father of
Robert L. Parker Jr.
Robert L. Parker Jr. has been a Director since 1973 and is President and
Chief Executive Officer. He joined the Company in 1973 and was elected President
and Chief Operating Officer in 1977 and Chief Executive Officer in December
1991. He was elected Vice President in 1973 and Executive Vice President in
1976. He currently serves on the board of directors of Alaska Air Group, Inc.,
the holding company for Alaska Airlines and Horizon Air Industries. He is the
son of Robert L. Parker.
James W. Linn has been a Director since 1986, is Executive Vice President
and Chief Operating Officer of the Company and has general charge of the
Company's business affairs and its officers. He joined the Company in 1973 in
the Company's international department. He then served in the Company's domestic
operations, being named northern U.S. district manager in 1976. Mr. Linn was
elected Vice President of U.S. and Canada operations in 1979, was promoted to
Senior Vice President in September 1981 and was elected to his present position
in December 1991.
James J. Davis serves as Senior Vice President-Finance and Chief Financial
Officer. He joined Parker in November 1991 as Vice President-Finance and Chief
Financial Officer and was promoted to his current position in December 1996.
From 1986 through 1991, Mr. Davis was vice president and treasurer of MAPCO
Inc., a diversified energy company with interests in natural gas liquids,
marketing and transportation, oil
44
<PAGE> 46
refining and retail motor fuel marketing. He serves as a member of the board of
directors of Dollar Rent A Car Finance Company.
I. E. Hendrix, Jr. is Vice President and Treasurer of the Company. He
joined Parker in 1976 as manager of the Company's treasury department and was
elected Treasurer in 1978. Mr. Hendrix was elected Vice President of the Company
in April 1983. He serves as a member of the board of directors of American
Performance Mutual Fund.
Kenneth R. Hoit serves as Vice President, Planning and Accounting of the
Company. He joined Parker in 1973. He served as financial analyst and manager of
budgets and analysis prior to being elected a Vice President in April 1983. In
June 1991, Mr. Hoit was given additional management responsibilities over
corporate accounting and information systems departments.
Leslie D. Rosencutter serves as Corporate Secretary and Vice President,
Administration. She has responsibility for the public relations and human
resources departments. She previously had served as Assistant Vice President,
Administration since 1987. Ms. Rosencutter joined Parker in 1974 as secretary to
the Controller and later was secretary to the Robert L. Parker Trust. She has
served as executive secretary and administrative assistant to the Chairman prior
to being elected an officer. She was elected Corporate Secretary in April 1996.
T. Bruce Blackman serves as Vice President, Asia Pacific Operations. He
joined the Company in 1977 and held management positions in Africa, Singapore
and Tulsa as international accounting manager. In 1983 he was the division
manager for the Indonesian operations. In 1989, he was promoted to contract
manager, Asia Pacific region. He was elected to his current position in January
1996.
Donald D. Goodson serves as Vice President, Latin America Operations. He
joined the Company in 1976 and held various accounting and finance positions
prior to being named contract manager for U.S. operations in 1981. In June 1989,
Mr. Goodson was named Indonesian division manager. In July 1993, he served as
contract manager for the Middle East, Africa and Colombia. In January 1996, he
was elected to his current position.
John R. Gass is Vice President, Frontier Areas. He joined the Company in
1977 and has served in various management positions in the Company's
international division. In 1985 he became the division manager of Africa and the
Middle East. In 1987 he directed the Company's mining operations in South
Africa. In 1989 he was promoted to international contract manager. In January
1996, he was appointed to his current position.
Thomas L. Wingerter serves as Vice President, North America Operations. He
joined Parker in 1979, and in 1983 he was named contracts manager for the Rocky
Mountain division. He was promoted to Rocky Mountain division manager in 1984, a
position he held until September 1991 when he was elected a Vice President.
Randy L. Ellis was elected Corporate Controller in June 1991. He joined
Parker in 1979 as general accounting supervisor and was named manager of general
accounting in May 1983.
Bernard J. Duroc-Danner has been a Director since November 1996. Mr.
Duroc-Danner has been President, Chief Executive Officer and a director of
Energy Ventures, Inc., the former parent company of Mallard, for more than the
past five years. EVI, Inc. is an international manufacturer and supplier of
oilfield equipment. Mr. Duroc-Danner is also a director of Dailey Petroleum
Services Corp., a provider of services and equipment to the oil and gas
industry.
David L. Fist, a Director since 1986, is a member of the law firm of
Rosenstein, Fist & Ringold, Tulsa, Oklahoma, having been associated with the
firm since 1955. He serves as a director of Peoples State Bank and Alliance
Business Investment Company, a federally licensed small business investment
company.
Earnest F. Gloyna has been a Director since 1978 and is presently a chaired
professor in Environmental Engineering at the University of Texas at Austin. He
served as dean, College of Engineering, from April 1970 to August 1987. He is
also a consultant in environmental engineering through Earnest F. Gloyna
Enterprises, and is president of Gloyna Properties, Inc. Dr. Gloyna serves as a
member of the board of trustees of
45
<PAGE> 47
Southwest Research Institute, a nonprofit research institute that does contract
research work for government and industry.
R. Rudolph Reinfrank has been a Director since 1993. Since January 1, 1997,
he has been Managing General Partner of Coldstream Capital LLC, Los Angeles,
California. From May 1993 to December 1996, Mr. Reinfrank was a managing
director of the Davis Companies, the holding company for the Marvin Davis
family. From January 1, 1988 through June 30, 1993, Mr. Reinfrank was executive
vice president of Shamrock Holdings, Inc., the holding company for the Roy E.
Disney family. From January 1990 through December 1992, Mr. Reinfrank also
served as managing director of Trefoil Investors, Inc. and Shamrock Capital
Advisors, Inc., the general partner and management services company
respectively, for Trefoil Capital Investors, L.P.
46
<PAGE> 48
DESCRIPTION OF THE NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture") to be dated as of the
Issue Date by and between the Company and Texas Commerce Bank National
Association, as trustee (the "Trustee"), a copy of which is filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The terms of
the Indenture are also governed by certain provisions contained in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following
summary of the Notes and the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by, reference to all of the
provisions of the Indenture, including the definitions therein of certain terms
which are not otherwise defined in this Prospectus and those terms made a part
of the Indenture by reference to the Trust Indenture Act as in effect on the
date of the Indenture. Capitalized terms used herein without definition have the
meanings ascribed to them in the Indenture. As used in this section "Description
of the Notes," the "Company" refers to Parker Drilling Company, exclusive of its
subsidiaries. Wherever particular provisions of the Indenture are referred to in
this summary, such provisions are incorporated by reference as part of the
statements made and such statements are qualified in their entirety by such
reference.
GENERAL
The Notes will be unsecured, subordinated, general obligations of the
Company, limited in aggregate principal amount to $125,000,000 ($143,750,000 if
the Underwriters' over-allotment option is exercised in full). The Notes will be
subordinated in right of payment to all Senior Indebtedness of the Company, as
described under "Subordination" below. The Notes will be issued only in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on , 2004. The Notes will bear interest at
the rate per annum stated on the cover page of this Prospectus from the date of
issuance or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on and of
each year, commencing , 1998 to the persons in whose names such
Notes are registered at the close of business on the or
immediately preceding such Interest Payment Date. Principal of,
premium, if any, and interest on, the Notes will be payable, the Notes will be
convertible and the Notes may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose,
which office or agency shall be maintained in the Borough of Manhattan, the City
of New York. Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
No service charge will be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Until
otherwise designated by the Company, the Company's office or agency will be the
corporate trust office of the Trustee presently located at One Main Place, 1201
Main Street, 18th Floor, Dallas, Texas 75202.
CONVERSION RIGHTS
The Holder of any Notes will have the right, at the Holder's option, to
convert any portion of the principal amount thereof that is an integral multiple
of $1,000 into shares of Common Stock, at any time prior to the close of
business on the second Business Day prior to the Stated Maturity of the Notes
(unless earlier redeemed or repurchased) at the Conversion Price set forth on
the cover page of this Prospectus (subject to adjustment as described below).
The right to convert a Note called for redemption or delivered for repurchase
will terminate at the close of business on the Business Day prior to the
Redemption Date or Repurchase Date for such Note, unless the Company
subsequently fails to pay the applicable Redemption Price or Repurchase Price,
as the case may be.
In the case of any Note that has been converted after any Record Date, but
on or before the next Interest Payment Date, interest the stated due date of
which is on such Interest Payment Date shall be payable on such Interest Payment
Date notwithstanding such conversion, and such interest shall be paid to the
Holder of such Notes who is a Holder on such Record Date. Any Note so converted
must be accompanied by payment
47
<PAGE> 49
to the Company of an amount equal to the interest payable on such Interest
Payment Date on the principal amount of Notes being surrendered for conversion
(unless such Note shall have been called for redemption, in which case no such
payment shall be required). In all cases, Holders as of the Record Date
immediately preceding , 2000 will receive the interest payment due on
, 2000, even if such Holder surrenders a Note for conversion after
such Record Date as a result of the Company's exercise of its right to redeem
the Notes on or after , 2000. No fractional shares will be issued upon
conversion but, in lieu thereof, an appropriate amount will be paid in cash by
the Company based on the market price of Common Stock (as determined in
accordance with the Indenture) at the close of business on the Date of
Conversion.
The Conversion Price will be subject to adjustment upon the occurrence of
certain events, including: (a) any payment of a dividend (or other distribution)
payable in Common Stock on any class of Capital Stock of the Company, (b) any
subdivision, combination or reclassification of Common Stock, (c) any issuance
to all holders of Common Stock of rights, options or warrants entitling them to
subscribe for or purchase Common Stock at less than the then current market
price (as determined in accordance with the Indenture) of Common Stock;
provided, however, that if such options or warrants are only exercisable upon
the occurrence of certain triggering events, then the Conversion Price will not
be adjusted until such triggering events occur, (d) any distribution to all
holders of Common Stock of evidences of indebtedness, shares of Capital Stock
other than Common Stock, cash or other assets (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to above and excluding regular dividends and distributions paid exclusively in
cash), (e) any distribution consisting exclusively of cash (excluding any cash
portion of distributions referred to in (d) above, or cash distributed upon a
merger or consolidation to which the second succeeding paragraph applies) to all
holders of Common Stock in an aggregate amount that, combined together with (i)
all other such all-cash distributions made within the then preceding 12 months
in respect of which no adjustment has been made and (ii) any cash and the fair
market value of other consideration paid or payable in respect of any tender
offer by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 15% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date of such distribution, and
(f) the completion of a tender or exchange offer made by the Company or any of
its Subsidiaries for Common Stock that involves an aggregate consideration that,
together with (i) any cash and the fair market value of other consideration
payable in a tender or exchange offer by the Company or any of its Subsidiaries
for Common Stock expiring within the 12 months preceding the expiration of such
tender or exchange offer in respect of which no adjustment has been made and
(ii) the aggregate amount of any such all-cash distributions referred to in (e)
above to all holders of Common Stock within the 12 months preceding the
expiration of such tender or exchange offer in respect of which no adjustments
have been made, exceeds 15% of the Company's market capitalization on the
expiration of such tender offer. No adjustment of the Conversion Price will be
required to be made until the cumulative adjustments amount to 1.0% or more of
the Conversion Price as last adjusted. The Company reserves the right to make
such reductions in the Conversion Price in addition to those required in the
foregoing provisions as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the recipients. In the event the Company elects to make
such a reduction in the Conversion Price, the Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder if and to the extent that such laws and regulations
are applicable in connection with the reduction of the Conversion Price.
In the event that the Company distributes rights or warrants (other than
those referred to in (c) in the preceding paragraph) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Holder of any Note surrendered for conversion will
be entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion (the "Conversion Shares"), a number of
rights or warrants to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of rights or warrants
of separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or
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<PAGE> 50
warrants, and (ii) if such conversion occurs after such Distribution Date, the
same number of rights or warrants to which a holder of the number of shares of
Common Stock into which such Note was convertible immediately prior to such
Distribution Date would have been entitled on such Distribution Date in
accordance with the terms and provisions of and applicable to the rights or
warrants. The Conversion Price of the Notes will not be subject to adjustment on
account of any declaration, distribution or exercise of such rights or warrants.
In case of any reclassification, consolidation or merger of the Company
with or into another person or any merger of another person with or into the
Company (with certain exceptions), or in case of any sale, transfer or
conveyance of all or substantially all of the assets of the Company (computed on
a consolidated basis), each Note then outstanding will, without the consent of
any Holder of Notes, become convertible only into the kind and amount of
securities, cash and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or conveyance by a holder of the number of
shares of Common Stock into which such Note was convertible immediately prior
thereto, after giving effect to any adjustment event, who failed to exercise any
rights of election and received per share the kind and amount received per share
by a plurality of non-electing shares.
SUBORDINATION
The Notes will be general, unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company. At May 31, 1997, as adjusted to give effect to the issuance and
sale of the Notes, the Company would have had approximately $397.6 million of
Senior Indebtedness outstanding. The Notes are structurally subordinated in
right of payment to all liabilities (including trade payables) of the Company's
subsidiaries. Such indebtedness will not constitute Senior Indebtedness unless
otherwise included within the definition of Senior Indebtedness. The Company's
subsidiaries had approximately $49.3 million of trade payables and accrued
liabilities outstanding at May 31, 1997, excluding guarantees of Senior
Indebtedness. The Indenture will not restrict the incurrence of Senior
Indebtedness or other Indebtedness by the Company or its subsidiaries.
The Indenture will provide that no payment may be made by the Company on
account of the principal of, premium, if any, and interest on the Notes, or to
acquire any of the Notes (including repurchase of Notes at the option of the
Holders) for cash or property (other than Junior Securities), or on account of
the redemption provisions of the Notes, (i) upon the maturity of any Senior
Indebtedness of the Company by lapse of time, acceleration (unless waived) or
otherwise, unless and until all principal of and premium, if any, and interest
on such Senior Indebtedness are first paid in full (or such payment is duly
provided for), or (ii) in the event of default in the payment of any principal
of and premium, if any, or interest on any Senior Indebtedness when it becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Payment Default"), unless and until such Payment
Default has been cured or waived or otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of such event of
default given to the Company and the Trustee by the holders of at least 25% in
the aggregate principal amount outstanding of such Senior Indebtedness or their
representative (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company on account
of the principal of, premium, if any, or interest on the Notes, or to acquire or
repurchase any of the Notes for cash or property, or on account of the
redemption provisions of the Notes, in any such case other than payments made
with Junior Securities of the Company. Notwithstanding the foregoing, unless (i)
the Senior Indebtedness in respect of which such event of default exists has
been declared due and payable in its entirety within 179 days after the Payment
Notice is delivered as set forth above (the "Payment Blockage Period"), and (ii)
such declaration has not been rescinded or waived, at the end of the Payment
Blockage Period, the Company shall be required to pay all sums not paid to the
Holders of the Notes during the Payment Blockage Period due to the foregoing
prohibitions and to resume all other payments as and when due on the Notes. Any
number of Payment Notices may be given; provided, however, that (i) not more
than one Payment Notice shall be given within a
49
<PAGE> 51
period of any 360 consecutive days, and (ii) no event of default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or a similar proceeding or
upon assignment for the benefit of creditors or any marshaling of assets or
liabilities, (i) the holders of all Senior Indebtedness will first be entitled
to receive payment in full (or have such payment duly provided for) before the
Holders are entitled to receive any payment on account of the principal of,
premium, if any, or interest on, the Notes (other than Junior Securities) and
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the subordination provisions
contained in the Indenture, will be paid by the liquidating trustee or agent or
other person making such a payment or distribution directly to the holders of
Senior Indebtedness or their representative to the extent necessary to make
payment in full of all such Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness, and shall be paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of the Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness held or
represented by each, for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay or to provide for the payment
of all such Senior Indebtedness in full after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of and premium, if any, and interest on the Notes as and when the
same shall become due and payable. The subordination provisions of the Indenture
and the Notes will not prevent the occurrence of any Default or Event of Default
under the Indenture or limit the rights of the Trustee or any Holder, subject to
the three preceding paragraphs, to pursue any other rights or remedies with
respect to the Notes.
The Company conducts certain of its operations through its subsidiaries.
Accordingly, the Company's ability to meet its cash obligations is dependent
upon the ability of its subsidiaries to make cash distributions to the Company.
The ability of its subsidiaries to make distributions to the Company is and will
continue to be restricted by, among other limitations, applicable provisions of
the laws of national and state governments and contractual provisions. The
Indenture will not limit the ability of the Company's subsidiaries to incur such
restrictions in the future. The right of the Company to participate in the
assets of any subsidiary (and thus the ability of Holders of the Notes to
benefit indirectly from such assets) is generally subject to the prior claims of
creditors, including trade creditors, of that subsidiary, except to the extent
that the Company is recognized as a creditor of such subsidiary, in which case
the Company's claims would still be subject to any security interest of other
creditors of such subsidiary. The Notes, therefore, will be structurally
subordinated to creditors, including trade creditors, of subsidiaries of the
Company with respect to the assets of the subsidiaries against which such
creditors have a more direct claim. The indebtedness of the Company's
subsidiaries, however, will not be considered Senior Indebtedness unless
otherwise included within the definition of Senior Indebtedness.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company
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<PAGE> 52
or any of its subsidiaries or a marshaling of assets or liabilities of the
Company and its subsidiaries, Holders of the Notes may receive ratably less than
other creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes will not be subject to redemption prior to , 2000. On
and after such date, the Notes will be redeemable at the option of the Company,
in whole or in part, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the 12-month period
commencing of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000........................................................ %
2001........................................................ %
2002........................................................ %
2003 and thereafter......................................... %
</TABLE>
In each case (subject to the right of Holders to receive interest due on an
Interest Payment Date that is on or prior to such Redemption Date) together with
accrued and unpaid interest, if any, to the Redemption Date.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption, to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. The notice of redemption must state
the Redemption Date, the Redemption Price and the amount of accrued interest to
be paid. Any notice that relates to a Note to be redeemed in part only must
state the portion of the principal amount to be redeemed and must state that on
and after the Redemption Date, upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion thereof will be issued. On
and after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control (as
defined below) has occurred, each Holder of Notes will have the right, at such
Holder's option, pursuant to an irrevocable and unconditional offer by the
Company (the "Repurchase Offer"), to require the Company to repurchase all or
any part of such Holder's Notes (provided that the principal amount of such
Notes must be $1,000 or an integral multiple thereof) on the date (the
"Repurchase Date") that is no later than 45 Business Days after the occurrence
of such Change of Control at a cash price (the "Repurchase Price") equal to 100%
of the principal amount thereof, together with accrued and unpaid interest to
the Repurchase Date. The Repurchase Offer must be made within 25 Business Days
following a Change of Control and must remain open for 20 Business Days
following its commencement (the "Repurchase Offer Period"). Upon expiration of
the Repurchase Offer Period, the Company must purchase all Notes tendered in
response to the Repurchase Offer. If required by applicable law, the Repurchase
Date and the Repurchase Offer Period may be extended as so required; however, if
so extended, it shall nevertheless constitute an Event of Default if the
Repurchase Date does not occur within 60 Business Days of the Change of Control.
The Indenture will provide that a "Change of Control" occurs upon any of
the following events: (i) upon any merger or consolidation of the Company with
or into any person or any sale, transfer or other disposition, whether direct or
indirect, of all or substantially all of the assets of the Company, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction, any
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"person" or "group" is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee or surviving entity, (ii) when any "person" or
"group" is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate normally entitled to vote in
the election of directors of the Company, (iii) when, during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company (together
with any new directors whose election by such Board or whose nomination for
election by the stockholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office, (iv) a sale, transfer or other
disposition, whether directly or indirectly, by the Company of all or
substantially all of its assets, on a consolidated basis, or (v) the pro rata
distribution by the Company to its stockholders of substantially all of its
assets.
For purposes of this definition of "Change of Control," (i) the terms
"person" and "group" shall have the meaning used for purposes of Rules 13d-3 and
13d-5 of the Exchange Act as in effect on the Issue Date, whether or not
applicable; and (ii) the term "beneficial owner" shall have the meaning used in
Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Issue Date,
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time or upon the occurrence of certain events.
The phrase "all or substantially all" of the assets of the Company is
likely to be interpreted by reference to applicable state law at the relevant
time, and will be dependent on the facts and circumstances existing at such
time. As a result, there may be a degree of uncertainty in ascertaining whether
a sale, transfer or other disposition is of "all or substantially all" of the
assets of the Company.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest) of all Notes so tendered and (iii)
deliver to the Trustee Notes so accepted, together with an Officers' Certificate
listing the Notes or portions thereof being purchased by the Company. The Paying
Agent will promptly mail to the Holders of Notes so accepted payment in an
amount equal to the Repurchase Price (plus accrued and unpaid interest), and the
Trustee will promptly authenticate and mail or deliver to such Holders a new
Note or Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Repurchase Offer on or as soon as practicable after the
Repurchase Date.
The Company's ability to repurchase the Notes upon a Change of Control may
be limited by the terms of the Senior Indebtedness and the subordination
provisions of the Indenture. Under the covenants of the Company's 9 3/4% Senior
Notes and the Senior Credit Facility, the Company currently would be precluded
from repurchasing the Notes upon a Change of Control. Further, the ability of
the Company to repurchase the Notes upon a Change of Control will be dependent
on the availability of sufficient funds and compliance with applicable
securities laws. Accordingly, there can be no assurance that the Company will be
able to repurchase the Notes upon a Change of Control.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company, and thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between the Company and the Underwriters.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that may
adversely affect Holders, if such transaction does not constitute a Change of
Control, as set forth above. In addition, the Company may not have sufficient
financial resources available to fulfill its obligation to repurchase the Notes
upon a Change of Control or to repurchase other debt securities of the Company
or its subsidiaries providing similar rights to the Holders thereof.
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To the extent applicable, the Company will comply with Section 14 of the
Exchange Act and the provisions of Regulation 14E and any other tender offer
rules under the Exchange Act and any other securities laws, rules and
regulations that may then be applicable to any offer by the Company to purchase
the Notes at the option of Holders upon a Change of Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that the Company may not, directly or
indirectly, consolidate with or merge with or into another person or sell,
lease, convey or transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another person or group of affiliated persons, unless (i)
either (a) in the case of a merger or consolidation, the Company is the
surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; and (iii) the resulting,
surviving or transferee entity immediately thereafter has a Consolidated Net
Worth no less than that of the Company immediately prior thereto.
Upon any consolidation or merger or any sale, lease, conveyance or transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, the successor corporation formed by such consolidation or into which
the Company is merged or to which such sale, lease, conveyance or transfer is
made, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture with the same effect as if such
successor corporation had been named therein as the Company, and the Company
will be released from its obligations under the Indenture and the Notes, except
as to any obligations that arise from or as a result of such transaction.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the Commission, annual and quarterly consolidated
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission if the Company was
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the Commission and, in each case, together with a management's
discussion and analysis of results of operations and financial condition as such
would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when due and
payable and the continuance of any such failure for 30 days, (ii) the failure by
the Company to pay all or any part of the principal of or premium, if any, on
the Notes when and as the same become due and payable at maturity, redemption,
by acceleration or otherwise, including, without limitation, pursuant to any
Repurchase Offer, (iii) the failure of the Company to perform any conversion of
Notes required under the Indenture and the continuance of any such failure for
30 days, (iv) the failure by the Company to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 60 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding, (v) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Subsidiaries,
(vi) a default in the payment of principal, premium or interest when due that
extends beyond any stated period of grace applicable thereto or an acceleration
for any other reason of the maturity of any Indebtedness of the Company or any
of its Significant Subsidiaries with an aggregate principal amount in excess of
$7.5 million, and (vii) final unsatisfied judgments not covered by insurance
aggregating in excess of $10.0 million, at any one time
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rendered against the Company or any of its Significant Subsidiaries and not
stayed, bonded or discharged within 60 days. The Indenture will provide that if
a Default occurs and is continuing, the Trustee must, within 90 days after the
occurrence of such default, give to the Holders notice of such default.
The Indenture will provide that if an Event of Default occurs and is
continuing (other than an Event of Default specified in clause (v) above), then
in every such case, unless the principal of all of the Notes shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Notes then outstanding, by notice in
writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal and accrued interest thereon
to be due and payable immediately. If an Event of Default specified in clause
(v) above occurs, all principal and accrued interest thereon will be immediately
due and payable on all outstanding Notes without any declaration or other act on
the part of the Trustee or the Holders. The Holders of no less than a majority
in aggregate principal amount of Notes then outstanding generally are authorized
to rescind such acceleration if all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on, the Notes that
have become due solely by such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of, premium, if any, or interest on any Note not yet
cured, or a default with respect to any covenant or provision that cannot be
modified or amended without the consent of the Holder of each outstanding Note
affected. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
of the Holders, unless such Holders have offered to the Trustee reasonable
security or indemnity. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Company and the
Trustee to enter into a supplemental indenture for certain limited purposes
without the consent of the Holders. With the consent of the Holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company and the Trustee will be permitted to amend or
supplement the Indenture or any supplemental indenture or modify the rights of
the Holders; provided, however, that no such modification may, without the
consent of each Holder affected thereby: (i) change the Stated Maturity of any
Note or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment or the conversion of any
Note on or after the due date thereof (including in the case of redemption, on
or after the Redemption Date), or reduce the Repurchase Price, or alter the
change of control repurchase provisions or redemption provisions in a manner
adverse to the Holders, (ii) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture, (iii)
adversely affect the right of such Holder to convert Notes, or (iv) modify any
of the waiver provisions, except to increase any required percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Note affected
thereby.
CONCERNING THE TRUSTEE
Texas Commerce Bank National Association will be the Trustee under the
Indenture. A successor Trustee may be appointed in accordance with the terms of
the Indenture.
The Indenture will contain certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions;
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however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of no less than a majority in aggregate principal amount of the
then outstanding Notes will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture will provide that in case an Event
of Default has occurred and is continuing, the Trustee will be required, in the
exercise of its power, to use the degree of care and skill of a prudent man in
the conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security or indemnity satisfactory to it against any cost, liability
or expense.
Texas Commerce Bank National Association is also the trustee under the
indenture for the 9 3/4% Senior Notes.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture will provide that no past, present or future stockholder,
employee, partner, officer or director, as such, of the Company or any successor
corporation or any subsidiary of the Company shall have any personal liability
in respect of the obligations of the Company under the Indenture or the Notes by
reason of his, her or its status as such stockholder, employee, partner, officer
or director.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Notes selected for redemption. The Company is not
required to transfer or exchange any Notes for a period of 15 days before a
mailing of a notice of redemption or a Repurchase Offer.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form
of one or more registered Notes in global form (the "Global Notes"). Each Global
Note will be deposited on the Issue Date with, or on behalf of, The Depository
Trust Company (the "Depositary") and registered in the name of Cede & Co., as
nominee of the Depositary.
The Company has been advised that the Depositary is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with it. The Depositary also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations ("Direct Participants"). The Depositary is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depository Trust Company system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Commission.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Underwriters with an interest in the
Global Notes and (ii) ownership of the Notes evidenced by the Global Notes will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depositary (with respect to the interests of
Participants), the Direct Participants and the Indirect Participants. The laws
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of some states require that certain persons take physical delivery in definitive
form of securities that they own and that security interests in negotiable
instruments can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer Notes evidenced by the Global
Notes will be limited to such extent.
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by a Global Note for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes (as defined below), and will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by a Global Note to pledge such interest to
persons or entities that do not participate in the Depositary's system, or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest
on, any Note represented by a Global Note registered in the name of the
Depositary or its nominee on the applicable record will be payable by the
Trustee to or at the direction of the Depositary or its nominee in its capacity
as the registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes (including principal, premium, if
any, or interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Notes as
shown on the records of the Depositary. Payments by the Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practice and will be the sole responsibility of the Participants or
the Indirect Participants.
Certificated Notes. If (i) the Company notifies the Trustee in writing that
the Depositary is no longer willing or able to act as a depositary and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in definitive form ("Certificated Notes") under the
Indenture, then, upon surrender by the Depositary of the Global Notes,
Certificated Notes will be issued to each person that the Depositary identifies
as the beneficial owner of the Notes represented by Global Notes. In addition,
subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Notes in the form of Certificated Notes. Upon any such issuance, the Trustee
is required to register such Certificated Notes in the name of such person or
persons (or the nominee of any thereof), and cause the same to be delivered
thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant in identifying the beneficial owners of the Notes,
and the Company and the Trustee may conclusively rely on, and shall be protected
in relying on, instructions from the Depositary for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Notes to be issued).
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable. The Company will have no responsibility for the
performance by the Depositary or its Participants of their respective
obligations as described hereunder or under the rules and procedures governing
their respective operations.
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SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes
represented by the Global Notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available funds to the
accounts specified by the Depositary. With respect to Notes represented by
Certificated Notes, the Company will make all payments of interest by mailing a
check to the Holders thereof at each such Holder's registered address. The Notes
represented by the Global Notes will trade in the Depositary's Same-Day Funds
Settlement System until maturity, or until such Notes are issued in certificated
form, and secondary market trading activity in such Notes will therefore be
required by the Depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Notes.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in Houston, Texas or New York,
New York are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Consolidated Net Worth" of any person or any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity
attributable to preferred stock) and its consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
consolidated stockholders' equity), (a) the amount of any such stockholders'
equity attributable to Disqualified Capital Stock or treasury stock of such
person and its consolidated Subsidiaries and (b) all upward revaluations and
other write-ups in the book value of any asset of such person or a consolidated
Subsidiary of such person subsequent to the Issue Date.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any person, Capital Stock of such person that, by its terms or by the
terms of any security into which it is convertible, exercisable or exchangeable,
is, or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Notes and (b) with respect to any Subsidiary of such
person (including with respect to any Subsidiary of the Company), any Capital
Stock other than any common stock with no preference, privileges, or redemption
or repayment provisions.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except such as would constitute trade payables to trade creditors in the
ordinary course of business, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a Capitalized Lease Obligation (as defined in the Indenture), or (vi)
evidenced by a letter of credit or a reimbursement obligation of such person
with respect to any letter of credit; (b) all net obligations of such person
under Interest Swap and Hedging Obligations (as defined in the Indenture); (c)
all liabilities of others of the kind described in the preceding clause (a) or
(b) that such person has guaranteed or that is otherwise its legal liability and
all obligations to purchase, redeem or acquire any Capital Stock; and (d) any
and all deferrals, renewals, extensions, refinancings and refundings (whether
direct or indirect) of any liability of the kind described in any of the
preceding clauses (a), (b) and (c), or this clause (d), whether or not between
or among the same parties.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
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"Junior Securities" of any person means any Qualified Capital Stock and any
Indebtedness of such person that is subordinated in right of payment to the
Notes and has no scheduled installment of principal due, by redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of the Notes.
"Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"Senior Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior in right of payment to the Notes or to
other Indebtedness which is pari passu with, or subordinated to, the Notes;
provided, however, that in no event shall Senior Indebtedness include (a)
Indebtedness of the Company owed or owing to any Subsidiary of the Company or
any officer, director or employee of the Company or any Subsidiary of the
Company, except in respect of deferred compensation in an amount not to exceed
$1,000,000 at any one time, (b) Indebtedness to trade creditors or (c) any
liability for taxes owed or owing by the Company.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.
"Stated Maturity" when used with respect to any Note means ,
2004.
"Subsidiary" with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
person, by such person and one or more Subsidiaries of such person or by one or
more Subsidiaries of such person, (ii) a partnership in which such person or a
Subsidiary of such person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such person a majority of the
partnership interests, or (iii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material Federal income tax
considerations for original purchasers of the Notes from the Underwriters and is
based on the Company's review and analysis of the Federal income tax law now in
effect, which is subject to change, possibly retroactively. This summary does
not discuss all aspects of Federal income taxation that may be relevant to
particular holders of Notes in light of their individual investment
circumstances or to certain types of investors subject to special tax rules
(e.g., financial institutions, insurance companies, tax-exempt organizations,
and foreign taxpayers), nor does it discuss any aspects of state, local or
foreign tax law consequences. This summary assumes that investors will hold
their Notes as "capital assets" (generally, property held for investment) under
the Internal Revenue Code of 1986, as amended. Prospective purchasers are urged
to consult their tax advisors regarding the specific Federal, state, local, and
foreign income and other tax consequences of purchasing, holding, converting,
and disposing of the Notes.
SALE OR EXCHANGE
A holder will recognize capital gain or loss upon the sale or other
disposition of a Note in an amount equal to the difference between the amount
realized from such disposition and such holder's tax basis in the Note. Such
gain or loss will be long-term if the Note has been held for more than one year.
CONVERSION
A holder's conversion of a Note into Common Stock is generally not a
taxable event (except with respect to cash received in lieu of a fractional
share). The holder's tax basis in the Common Stock received on conversion of a
Note will be the same as the holder's tax basis in the Note at the time of
conversion (exclusive
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of any tax basis allocable to a fractional share), and the holding period for
the Common Stock received on conversion will include the holding period of the
Note converted.
CONSTRUCTIVE DIVIDEND
If at any time the Company makes a distribution of property to shareholders
that would be taxable to such shareholders as a dividend for Federal income tax
purposes and, in accordance with the antidilution provisions of the Notes, the
Conversion Price of the Notes is decreased, the amount of such decrease may be
deemed to be the payment of a taxable dividend to holders. For example, a
decrease in the Conversion Price in the event of distributions of evidence of
indebtedness or assets of the Company will generally result in deemed dividend
treatment to holders, but generally a decrease in the event of stock dividends
or the distribution of rights to subscribe for shares will not. See "Description
of the Notes -- Conversion Rights."
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<PAGE> 61
DESCRIPTION OF CAPITAL STOCK
The Company has 121,942,000 authorized shares of stock, consisting of (a)
120,000,000 shares of Common Stock, having a par value of $0.16 2/3 per share,
and (b) 1,942,000 shares of Preferred Stock, having a par value of $1.00 per
share. The summary description of the capital stock of the Company contained
herein is necessarily general and reference should be made in each case to the
Company's Restated Certificate of Incorporation (the "Company's Charter"), and
By-Laws, which are exhibits to the Registration Statement of which this
Prospectus is a part.
COMMON STOCK
As of May 31, 1997, there were 76,668,155 shares of Common Stock
outstanding. All of such outstanding shares of Common Stock are, and the shares
of Common Stock issuable upon conversion of the Notes offered hereby will be
upon issuance, fully paid and nonassessable. Each share of Common Stock has an
equal and ratable right to receive dividends when, as and if declared by the
Board of Directors of the Company out of assets legally available therefor and
subject to the dividend obligations of the Company to the holders of any
Preferred Stock then outstanding. The Company is subject to certain restrictions
on the payment of dividends on, and the repurchase or redemption of, the Common
Stock under the provisions of the Senior Credit Facility and the indenture for
the Senior Notes. See "Price Range of Common Stock and Dividends."
In the event of a liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to share equally and ratably in the
assets available for distribution after payment of all liabilities, and subject
to any prior rights of any holders of Preferred Stock that at the time may be
outstanding.
The holders of Common Stock have no preemptive, subscription, conversion or
redemption rights, and are not subject to further calls or assessments by the
Company. There are no sinking fund provisions applicable to the Common Stock.
Each share of Common Stock is entitled to one vote in the election of directors
and on all other matters submitted to a vote of stockholders. Holders of Common
Stock have no right to cumulate their votes in the election of directors.
PREFERRED STOCK
As of the date of this Prospectus, there are no shares of Preferred Stock
outstanding. Preferred Stock may be issued from time to time in one or more
series, and the Board of Directors, without further approval of the
stockholders, is authorized to fix the designations, dividends rates, conversion
rights, redemption rights, liquidation price, and sinking fund rights. It is not
possible to state the actual effect of the authorization and issuance of a new
series of Preferred Stock upon the rights of holders of the Common Stock unless
and until the Board of Directors determines the attributes of such new series of
Preferred Stock and the specific rights of its holders. Such effects might
include, however, (i) restrictions on dividends on Common Stock if dividends on
such new series of Preferred Stock have not been paid; (ii) dilution of the
voting power of Common Stock to the extent that such new series of Preferred
Stock has voting rights, or to the extent that any such new series of Preferred
Stock is convertible into Common Stock; (iii) dilution of the equity interest of
Common Stock; and (iv) limitation on the right of holders of Common Stock to
share in the Company's assets upon liquidation until satisfaction of any
liquidation preference attributable to such new series of Preferred Stock. While
the ability of the Company to issue Preferred Stock provides flexibility in
connection with possible acquisitions and other corporate purposes, its issuance
could be used to impede an attempt by a third party to acquire a majority of the
outstanding voting stock of the Company.
POSSIBLE ANTI-TAKEOVER PROVISIONS
The Company's Charter contains certain provisions that might be
characterized as anti-takeover provisions. Such provisions may render more
difficult certain possible takeover proposals to acquire control of the Company
and make removal of management of the Company more difficult.
The Company's Charter provides for the Board of Directors to be divided
into three classes of directors serving staggered three-year terms, with each
class as nearly equal in number as possible. Directors of the
60
<PAGE> 62
Company may only be removed for cause and only by the affirmative vote of a
majority of the then outstanding shares of stock entitled to vote on the matter.
Any stockholder wishing to submit a nomination to the Board of Directors must
follow certain procedures outlined in the Company's By-Laws. In addition, the
By-Laws require written application by the holders of 75% of the Company's
outstanding voting stock to call a special stockholders' meeting.
Certain outstanding contracts binding on the Company with respect to
certain employees may render more difficult the removal of management or
attempts to acquire control of the Company.
As described above, the Company's Charter authorizes a class of
undesignated Preferred Stock consisting of 1,942,000 shares. Preferred Stock may
be issued from time to time in one or more series, and the Board of Directors,
without further approval of the stockholders, is authorized to fix the rights,
preferences, privileges and restrictions applicable to each series of Preferred
Stock. One possible result of authorizing the Board of Directors to determine
such rights, preferences, privileges and restrictions is to eliminate delays
associated with a stockholder vote on specific issuance. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company.
The Company is incorporated under the laws of State of Delaware. Section
203 of the Delaware General Corporation Law prevents an "interested stockholder"
(defined as a stockholder owning 15 percent or more of a corporation's voting
stock) from engaging in a business combination with such corporation for a
period of three years from the date such stockholder became an interested
stockholder unless (a) the corporation's board of directors had earlier approved
either the business combination or the transaction by which the stockholder
became an interested stockholder, or (b) upon attaining that status, the
interested stockholder had acquired at least 85 percent of the corporations's
voting stock (not counting shares owned by persons who are directors and also
officers), or (c) the business combination is later approved by the board of
directors and authorized by a vote of two-thirds of the stockholders (not
including the shares held by the interested stockholder). Since the Company has
not amended its Restated Certificate of Incorporation or By-Laws to exclude the
application of Section 203, such section does apply to the Company and thus may
inhibit an interested stockholder's ability to engage in a business combination
with the Company.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Norwest Bank
Minnesota, N.A.
61
<PAGE> 63
UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement (the
"Underwriting Agreement"), the Underwriters named below (the "Underwriters")
have severally agreed to purchase from the Company the respective principal
amount of Notes set forth opposite their names below, at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discounts and commissions:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
- ------------ ------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation......... $
Jefferies & Company, Inc....................................
Bear, Stearns & Co. Inc.....................................
Prudential Securities Incorporated..........................
------------
Total............................................. $125,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the Notes offered hereby are
subject to approval of certain legal matters by counsel and to certain other
conditions. If any of the Notes are purchased by the Underwriters pursuant to
the Underwriting Agreement, all such Notes (other than those covered by the
over-allotment option described below) must be purchased. The Underwriters
initially propose to offer the Notes in part directly to the public at the
initial public offering price set forth on the cover page of this Prospectus and
in part to certain dealers (who may include the Underwriters) at such price,
less a concession not in excess of % of the principal amount of the Notes.
The Underwriters may allow, and such dealers may re-allow to certain other
dealers, a concession not in excess of % of the principal amount of the
Notes. After the initial offering of the Notes, the public offering price and
other selling terms may be changed by the Underwriters. The Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Company has granted to the Underwriters an option to purchase up to an
additional $18,750,000 aggregate principal amount of the Notes, at the initial
public offering price less underwriting discounts and commissions, solely to
cover over-allotments. Such option may be exercised at any time until 30 days
after the date of this Prospectus. To the extent that the Underwriters exercise
such option, each of the Underwriters will be committed, subject to certain
conditions, to purchase an amount of Notes proportionate to such Underwriter's
initial commitment as indicated in the preceding table.
The Notes will constitute a new issue of securities with no established
trading market. Application will be made to list the Notes on the New York Stock
Exchange upon official notice of issuance. The Underwriters currently intend to
make a market in the Notes; however, the Underwriters are not obligated to do so
and any market-making activities may be discontinued at any time without notice.
Therefore, no assurance can be given that an active trading market for the Notes
will develop or, if such market develops, as to the liquidity or sustainability
of such market. See "Risk Factors -- Absence of Existing Market for Notes."
Other than in the United States, no action has been taken by the Company or
the Underwriters that would permit a public offering of the Notes in any
jurisdiction where action for that purpose is required. The Notes offered hereby
may not be offered or sold, directly or indirectly, nor may this Prospectus or
any other offering material or advertisements in connection with the offer and
sale of the Notes be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons into whose possession this Prospectus
comes are advised to inform themselves about and to observe any restrictions
relating to the Offering of the Notes and the distribution of this Prospectus.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the Notes offered hereby in any jurisdiction in which such
an offer or a solicitation is unlawful.
62
<PAGE> 64
In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the Notes
and the Common Stock. Specifically, the Underwriters may over-allot the
Offering, creating a syndicate short position. The Underwriters may bid for and
purchase Notes in the open market to cover such syndicate short position or to
stabilize the price of the Notes. These activities may stabilize or maintain the
market price of the Notes and the Common Stock above independent market levels.
The Underwriters are not required to engage in these activities, and may end
either of these activities at any time.
The Company, and its directors and executive officers, have each agreed
that, subject to certain exceptions, during the period beginning on the date of
this Prospectus and continuing to and including the 90th day after such date,
they will not, directly offer, sell, contract to sell or otherwise dispose of
any shares of Common Stock, any securities convertible into or exercisable or
exchangeable for shares of Common Stock or any rights to acquire shares of
Common Stock without the written consent of Donaldson, Lufkin & Jenrette
Securities Corporation and Jefferies & Company, Inc.
Jefferies & Company, Inc. ("Jefferies") has provided investment banking and
financial advisory services to the Company in the past, including acting as lead
managing underwriter in the Company's July 1996 and April 1997 offerings of
Common Stock and placement agent in the Company's offering of Senior Notes in
November 1996 and rendering a fairness opinion to the Company's Board of
Directors in connection with the Mallard Acquisition. In each case, Jefferies
received usual and customary fees. Jefferies is providing financial advisory
services to Hercules in connection with the Hercules Acquisition, for which
Jefferies will receive usual and customary fees. Prudential Securities
Incorporated ("Prudential") acted as co-manager in the Company's July 1996 and
April 1997 offerings of Common Stock and received usual and customary fees.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Vinson &
Elkins L.L.P., Houston, Texas. Certain legal matters relating to the sale of the
Notes will be passed upon for the Underwriters by Fulbright & Jaworski L.L.P.,
Houston, Texas.
EXPERTS
The consolidated balance sheets as of August 31, 1996 and 1995, and the
consolidated statements of operations, redeemable preferred stock and
stockholders' equity, and cash flows for each of the three years in the period
ended August 31, 1996, included herein and incorporated by reference in this
Prospectus, have been included herein and incorporated by reference in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the periods ended November 30,
1996 and 1995, February 28, 1997 and 1996 and May 31, 1997 and 1996,
incorporated by reference in this Prospectus, the independent accountants have
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report included in the Company's quarterly report on Form 10-Q's for the
quarters ended November 30, 1996, February 28, 1997 and May 31, 1997, included
herein and incorporated by reference, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their report on the unaudited interim financial information because
that report is not a "report" or a "part" of the Registration Statement prepared
or certified by the accountants within the meaning of Sections 7 and 11 of the
Act.
The combined balance sheets of Mallard Bay Drilling Division of EVI as of
December 31, 1995 and 1994 and the combined statement of income, equity
investments and cash flows for each of the three years in the period ended
December 31, 1995, incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are
63
<PAGE> 65
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The balance sheets of Quail Tools, Inc. as of December 31, 1995 and 1994
and the related statements of earnings and retained earnings and cash flows for
each of the years in the three-year period ended December 31, 1995, incorporated
by reference in this Prospectus, have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, as stated in their report incorporated
by reference, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to the adoption in 1994 of
the method of accounting for certain investments in debt and equity securities
prescribed by Statement of Financial Accounting Standards No. 115.
The balance sheet of Hercules Offshore Corporation as of December 31, 1996
and the related statement of income, shareholder's equity and cash flow of the
Predecessor Company for the four months ended April 30, 1996 and the statement
of income, shareholder's equity and cash flow of the Company for the eight
months ended December 31, 1996, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, which report is included herein in reliance upon the authority of
Arthur Andersen LLP as experts in accounting and auditing.
The financial statements of the Predecessor Company to Hercules Offshore
Corporation incorporated in this prospectus by reference to the Form 8-K for the
two year periods ended December 31, 1995, have been so incorporated in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The balance sheets of Hercules Rig Corp. as of December 31, 1995 and 1996
and the related statements of income, shareholder's equity and cash flows for
the period from inception, April 6, 1994 through December 31, 1994, and for each
of the two years in the period ended December 31, 1996 have been audited by
Arthur Andersen LLP, independent public accountants as indicated in their report
with respect thereto which report is included herein in reliance upon the
authority of Arthur Andersen LLP as experts in accounting and auditing.
With respect to the unaudited interim financial information of Hercules
Offshore Corporation and for Hercules Rig Corp. for the four months ended April
30, 1997, Arthur Andersen LLP has applied limited procedures in accordance with
professional standards for a review of that information. However, their separate
report thereon states that they did not audit and they do not express an opinion
on that interim financial information. Accordingly, the degree of reliance on
their report on that information should be restricted in light of the limited
nature of the review procedures applied. In addition, the accountants are not
subject to the liability provisions of Section 11 of the Securities Act of 1933
for their report on the unaudited interim financial information because that
report is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the Act.
64
<PAGE> 66
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy and information
statements and other information with the Commission. Such reports, proxy and
information statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission, at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. In addition,
reports, proxy statements and other information concerning the Company can be
inspected at the New York Stock Exchange, 20 Broad Street, New York, New York
10005, on which exchange the Common Stock is listed.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act.
This Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement for
further information with respect to the Company and the securities offered
hereby. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission are not necessarily complete, and in each instance reference
is made to the copy of such document so filed. Each such statement is qualified
in its entirety by such reference.
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<PAGE> 67
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Incorporation of Certain Documents by
Reference............................. 3
Prospectus Summary...................... 4
Disclosure Regarding Forward-Looking
Statements............................ 11
Risk Factors............................ 11
Hercules Acquisition.................... 15
Use of Proceeds......................... 17
Capitalization.......................... 17
Price Range of Common Stock and
Dividends............................. 18
Unaudited Pro Forma Combined Financial
Statements............................ 19
Selected Consolidated Financial Data.... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 26
Business................................ 32
Management.............................. 44
Description of the Notes................ 47
Certain Federal Income Tax Consequences.. 58
Description of Capital Stock............ 60
Underwriting............................ 62
Legal Matters........................... 63
Experts................................. 63
Available Information................... 65
</TABLE>
================================================================================
================================================================================
$125,000,000
[PARKER DRILLING LOGO]
PARKER DRILLING
COMPANY
% CONVERTIBLE SUBORDINATED
NOTES DUE 2004
---------------------
PROSPECTUS
---------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
BEAR, STEARNS & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
, 1997
================================================================================
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Company in
connection with the issuance and distribution of the Notes registered hereby,
other than underwriting discounts and commissions. All the amounts shown are
estimates, except the registration and NASD filing fees.
<TABLE>
<S> <C>
Registration fee............................................ $ 43,561
NASD filing fee............................................. 14,875
Fees and expenses of accountants............................ 150,000
Fees and expenses of legal counsel of the Company........... 100,000
Rating agency fees.......................................... 80,000
Printing and engraving expenses............................. 100,000
Blue Sky fees and expenses (including counsel).............. 10,000
Trustee fees and expenses................................... 10,000
Miscellaneous............................................... 41,564
--------
Total............................................. $550,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-Laws provide that each person who was or is made a party
to, or is involved in, any action, suit or proceeding by reason of the fact that
he or she was a director or officer of the Company (or was serving at the
request of the Company as a director, officer, employee or agent for another
entity) will be indemnified and held harmless by the Company, to the full extent
authorized by the Delaware General Corporation Law.
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her if he or she acted in good faith and in a manner he or
she reasonably believed to be in the best interests of the corporation, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation
unless a court finds that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper.
The Company's Restated Certificate of Incorporation provides that to the
fullest extent permitted by Delaware General Corporation Law as the same exists
or may hereafter be amended, a director of the Company shall not be liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director. The Delaware General Corporation Law permits Delaware
corporations to include in their certificates of incorporation a provision
eliminating or limiting director liability for monetary damages arising from
breaches of their fiduciary duty. The only limitations imposed under the statute
are that the provision may not eliminate or limit a director's liability for (i)
breaches of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or involving intentional
misconduct or known violations of law, (iii) the payment of unlawful dividends
or unlawful stock purchases or redemptions, or (iv) transactions in which the
director received an improper personal benefit.
II-1
<PAGE> 69
The Company is insured against liabilities which it may incur by reason of
its indemnification of officers and directors in accordance with its By-Laws. In
addition, directors and officers are insured, at the Company's expense, against
certain liabilities which might arise out of their employment and are not
subject to indemnification under the By-Laws.
The foregoing summaries are necessarily subject to the complete text of the
statute, Restated Certificate of Incorporation, By-Laws and agreements referred
to above and are qualified in their entirety by reference thereto.
II-2
<PAGE> 70
ITEM 16. EXHIBITS.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act or the Exchange Act as indicated
in parentheses:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
----------- --------
<C> <S>
*1.1 -- Form of Underwriting Agreement
2.1 -- Stock Purchase Agreement dated May 9, 1997 by and among
the Company, Parker Drilling Offshore Company and
Trenergy (Malaysia) BHD. (incorporated by reference to
Exhibit 10(n) to the Company's Quarterly Report on Form
10-Q for the three months ended May 31, 1997)
2.2 -- Stock Purchase Agreement dated May 9, 1997 by and among
the Company, Parker Drilling Offshore Company and Rashid
& Lee Nominees SDN BHD. (incorporated by reference to
Exhibit 10(o) to the Company's Quarterly Report on Form
10-Q for the three months ended May 31, 1997)
4.1 -- Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to Amendment
No. 1 to the Company's S-3 Registration Statement No.
333-22987)
4.2 -- Certificate of Retirement of the Company (incorporated by
reference to Exhibit 4.2 to Amendment No. 1 to the
Company's S-3 Registration Statement No. 333-22987)
4.3 -- Certificate of Amendment of Restated Certificate of
Incorporation dated December 18, 1996 (incorporated by
reference to Exhibit 4.3 to the Company's S-3
Registration Statement No. 333-22987)
4.4 -- By-Laws of the Company (incorporated by reference to
Exhibit 3(b) to Annual Report on Form 10-K for the year
ended August 31, 1992, as amended by Form 8 dated
February 18, 1993)
4.5 -- Indenture dated as of November 12, 1996 among the
Company, as issuer, certain Subsidiary Guarantors (as
defined therein) and Texas Commerce Bank National
Association, as trustee (incorporated by reference to
Exhibit 4.3 to the Company's S-4 Registration Statement
No. 333-19317)
4.6 -- Term Loan Agreement dated as of November 8, 1996 between
the Company and ING (U.S.) Capital Corporation
(incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q/A for the three
months ended November 30, 1996)
4.7 -- Form of Indenture between the Company and Texas Commerce
Bank National Association, as Trustee
5.1 -- Opinion of Vinson & Elkins L.L.P.
*12.1 -- Calculation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Arthur Andersen LLP
23.4 -- Consent of Arthur Andersen LLP
23.5 -- Consent of KPMG Peat Marwick LLP
23.6 -- Consent of Price Waterhouse LLP
23.7 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1)
24.1 -- Powers of Attorney
25.1 -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of Texas Commerce Bank
National Association
</TABLE>
- ------------
* To be filed by amendment.
II-3
<PAGE> 71
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefits plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to any charter provision, by-law, contract, arrangement,
statute, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such labilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tulsa, State of Oklahoma, on the 2nd day of July,
1997.
PARKER DRILLING COMPANY
By /s/ ROBERT L. PARKER JR.
-----------------------------------
Robert L. Parker Jr.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 2, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
(i) Principal executive officer:
/s/ ROBERT L. PARKER JR. President, Chief Executive Officer and
- ----------------------------------------------------- Director
Robert L. Parker Jr.
(ii) Principal financial and accounting officer:
/s/ JAMES J. DAVIS Senior Vice President -- Finance and Chief
- ----------------------------------------------------- Financial Officer
James J. Davis
(iii) Directors:
*
- -----------------------------------------------------
Robert L. Parker
- -----------------------------------------------------
James W. Linn
*
- -----------------------------------------------------
Bernard Duroc-Danner
*
- -----------------------------------------------------
David L. Fist
- -----------------------------------------------------
Earnest F. Gloyna
*
- -----------------------------------------------------
R. Rudolph Reinfrank
*By: /s/ JAMES J. DAVIS
------------------------------------------------
(James J. Davis,
Attorney-in-Fact)
</TABLE>
II-5
<PAGE> 73
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
*1.1 -- Form of Underwriting Agreement
2.1 -- Stock Purchase Agreement dated May 9, 1997 by and among
the Company, Parker Drilling Offshore Company and
Trenergy (Malaysia) BHD. (incorporated by reference to
Exhibit 10(n) to the Company's Quarterly Report on Form
10-Q for the three months ended May 31, 1997)
2.2 -- Stock Purchase Agreement dated May 9, 1997 by and among
the Company, Parker Drilling Offshore Company and Rashid
& Lee Nominees SDN. BHD. (incorporated by reference to
Exhibit 10(o) to the Company's Quarterly Report on Form
10-Q for the three months ended May 31, 1997)
4.1 -- Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to Amendment
No. 1 to the Company's S-3 Registration Statement No.
333-22987)
4.2 -- Certificate of Retirement of the Company (incorporated by
reference to Exhibit 4.2 to Amendment No. 1 to the
Company's S-3 Registration Statement No. 333-22987)
4.3 -- Certificate of Amendment of Restated Certificate of
Incorporation dated December 18, 1996 (incorporated by
reference to Exhibit 4.3 to the Company's S-3
Registration Statement No. 333-22987)
4.4 -- By-Laws of the Company (incorporated by reference to
Exhibit 3(b) to Annual Report on Form 10-K for the year
ended August 31, 1992, as amended by Form 8 dated
February 18, 1993)
4.5 -- Indenture dated as of November 12, 1996 among the
Company, as issuer, certain Subsidiary Guarantors (as
defined therein) and Texas Commerce Bank National
Association, as trustee (incorporated by reference to
Exhibit 4.3 to the Company's S-4 Registration Statement
No. 333-19317)
4.6 -- Term Loan Agreement dated as of November 8, 1996 between
the Company and ING (U.S.) Capital Corporation
(incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q/A for the three
months ended November 30, 1996)
4.7 -- Form of Indenture between the Company and Texas Commerce
Bank National Association, as Trustee
5.1 -- Opinion of Vinson & Elkins L.L.P.
*12.1 -- Calculation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Arthur Andersen LLP
23.4 -- Consent of Arthur Andersen LLP
23.5 -- Consent of KPMG Peat Marwick LLP
23.6 -- Consent of Price Waterhouse LLP
23.7 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1)
24.1 -- Powers of Attorney
25.1 -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of Texas Commerce Bank
National Association
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 4.7
PARKER DRILLING COMPANY,
Issuer,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Trustee
INDENTURE
Dated as of _____________, 1997
____% Convertible Subordinated Notes due 2004
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Incorporation by Reference of TIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.3. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.1. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2. Execution and Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4. Paying Agent to Hold Assets in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7. Replacement Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.8. Outstanding Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.9. Treasury Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3. Selection of Securities to Be Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.4. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.6. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.7. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.1. Payment of Principal and Interest on Securities. . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.3. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.4. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.5. [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.6. Compliance Certificate; Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.7. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.8. [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.9. Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.1. Limitation on Merger, Sale or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.2. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . 27
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . . . . . . 28
SECTION 6.4. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.5. Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . . . . . . . . . . 29
SECTION 6.6. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.7. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . . . 31
SECTION 6.9. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.11. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.12. Waiver of Past Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.14. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.1. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.2. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.3. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.4. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.5. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.6. Reports by Trustee to Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.7. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.8. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.9. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.1. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.2. Repayment to the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . 40
SECTION 9.1. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent of Holders. . . . . . . . . . . . 41
SECTION 9.3. Compliance with TIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.4. Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.5. Notation on or Exchange of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.6. Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL . . . . . . . . . . . . . . . 44
SECTION 10.1. Repurchase of Securities at Option of the Holder Upon a Change of Control . . . . . . . . . . 44
ARTICLE XI
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.1. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2. No Payment on Securities in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.3. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.4. Securityholders to Be Subrogated to Rights of Holders of Senior Indebtedness . . . . . . . . . 49
SECTION 11.5. Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.6. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . . . 50
SECTION 11.7. Application by Trustee of Assets Deposited with It . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.8. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.9. Securityholders Authorize Trustee to Effectuate Subordination of Securities . . . . . . . . . 51
SECTION 11.10. Right of Trustee to Hold Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.11. Article XI Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness . . . . . . . . . . . . . . . 52
ARTICLE XII
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
SECTION 12.1. Conversion Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.2. Exercise of Conversion Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.3. Fractional Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.4. Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.5. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.6. Continuation of Conversion Privilege in Case of Reclassification, Change, Merger,
Consolidation or Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.7. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.8. Taxes on Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.9. Company to Provide Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.10. Disclaimer of Responsibility for Certain Matters. . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.11. Return of Funds Deposited for Redemption of Converted Securities. . . . . . . . . . . . . . 62
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.1. TIA Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.3. Communications by Holders with Other Holders. . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 13.4. Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . 64
SECTION 13.5. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar. . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.7. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.9. No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.10. No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 13.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 13.15. Qualification of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
-iv-
<PAGE> 6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- -------
<S> <C> <C>
310 (a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a) (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8;
7.10;
14.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
14.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6;
13.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2;
7.2;
14.4
(c) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
14.4
(c) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
7.6;
14.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
</TABLE>
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<PAGE> 7
<TABLE>
<S> <C> <C>
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8;
6.11;
7.1(b) (c)
(e)6.14
316 (a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a) (1) (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a) (1) (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12;
6.7
317 (a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
</TABLE>
_________________
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
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<PAGE> 8
INDENTURE, dated as of _______________, 1997, between PARKER DRILLING
COMPANY, a Delaware corporation (the "Company"), and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
______% Convertible Subordinated Notes due 2004:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 6.2.
"Affiliate" means (i) any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company, (ii) any spouse, immediate family member, or other relative who
has the same principal residence of any person described in clause (i) above,
and (iii) any trust in which any person described in clause (i) or (ii) above
has a beneficial interest. For purposes of this definition, the term "control"
means the power to direct the management and policies of a person, directly or
through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
Federal, state or foreign law for the relief of debtors.
"beneficial owner" for purposes of the definition of Change of
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act (as in effect on the Issue Date), whether or not applicable,
except that a "person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time or upon the
occurrence of certain events.
"Board of Directors" means, with respect to any person, the
Board of Directors of such person or any committee of the Board of Directors of
such person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such person.
<PAGE> 9
"Board Resolution" means, with respect to any person, a duly
adopted resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in Houston, Texas or
New York, New York are authorized or obligated by law or executive order to
close.
"Capitalized Lease Obligation" means rental obligations under
a lease that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than convertible or
exchangeable Indebtedness), warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"Cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Change of Control" occurs upon the occurrence of any of the
following events: (i) upon any merger or consolidation of the Company with or
into any person or any sale, transfer or other disposition, whether direct or
indirect, of all or substantially all of the assets of the Company, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction, any "person" or "group"
(as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable) is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferee or surviving entity, (ii) when any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total
voting power in the aggregate normally entitled to vote in the election of
directors of the Company, (iii) when, during any period of 12 consecutive
months after the Issue Date, individuals who at the beginning of any such
12-month period constituted the Board of Directors of the Company (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of the Company was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office, (iv) a sale, transfer or
other disposition, whether directly or indirectly, by the Company of all or
substantially all of its assets, on a consolidated basis, or (v) the pro rata
distribution by the Company to its stockholders of substantially all of its
assets.
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<PAGE> 10
For purposes of this definition, the terms "person" and "group" shall
have the meanings used for purposes of Rules 13d-3 and 13d-5 of the Exchange
Act as in effect on the Issue Date, whether or not applicable.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's common stock, par value
$.16 2/3 per share, or as such stock may be reconstituted from time to time.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture, and thereafter means
such successor.
"Consolidated Net Worth" of any person at any date means the
aggregate consolidated stockholders' equity of such person (plus amounts of
equity attributable to preferred stock) and its consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in
calculating such consolidated stockholders' equity), (a) the amount of any such
stockholders' equity attributable to Disqualified Capital Stock or treasury
stock of such person and its consolidated Subsidiaries and (b) all upward
revaluations and other write-ups in the book value of any asset of such person
or a consolidated Subsidiary of such person subsequent to the Issue Date.
"conversion agent" shall have the meaning specified in Section 2.3.
"Conversion Price" shall have the meaning specified in Section 12.5.
"Conversion Shares" shall have the meaning specified in
Section 12.5.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in
Section 12.2.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in
Section 2.12.
"Definitive Securities" means Securities that are in the form
of Security attached hereto as Exhibit A that do not include the information
called for by footnotes 1 and 2 thereof.
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<PAGE> 11
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means (a) except as set forth in
(b), with respect to any person, Capital Stock of such person that, by its
terms or by the terms
of any security into which it is convertible, exercisable or exchangeable, is,
or upon the happening of an event or the passage of time would be, required to
be redeemed or repurchased (including at the option of the holder thereof) by
such person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Securities and (b) with respect to any Subsidiary of
such person (including with respect to any Subsidiary of the Company), any
Capital Stock other than any common stock with no preference, privileges, or
redemption or repayment provisions.
"Distribution Date" shall have the meaning specified in
Section 12.5.
"DTC" shall have the meaning specified in Section 2.3.
"Event of Default" shall have the meaning specified in Section
6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section
12.5.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
("FASB") or in such other statements by such other entity as approved by a
significant segment of the accounting profession which are in effect in the
United States; provided, however, that for purposes of determining compliance
with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles which are in effect as of the date of determination.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
of the form of Security attached hereto as Exhibit A.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
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<PAGE> 12
"Indebtedness" of any person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of any such person,
(i) in respect of borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar instruments, (iii)
representing the balance deferred and unpaid of the purchase price of any
property or services, except such as would constitute trade payables to trade
creditors in the ordinary course of business, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) for the
payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced
by a letter of credit or a reimbursement obligation of such person with respect
to any letter of credit; (b) all net obligations of such person under Interest
Swap and Hedging Obligations; (c) all liabilities of others of the kind
described in the preceding clause (a) or (b) that such person has guaranteed or
that is otherwise its legal liability and all obligations to purchase, redeem
or acquire any Capital Stock; and (d) any and all deferrals, renewals,
extensions, refinancings, refundings (whether direct or indirect) of any
liability of the kind described in any of the preceding clauses (a), (b) or
(c), or this clause (d), whether or not between or among the same parties.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of
any person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional
amount in exchange for periodic payments made by such person calculated by
applying a fixed or floating rate of interest on the same notional amount.
"Issue Date" means the date of first issuance of the
Securities under this Indenture.
"Junior Security" of any person means any Qualified Capital
Stock and any Indebtedness of such person that is subordinated in right of
payment to the Securities and has no scheduled installment of principal due, by
redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Securities.
"Last Sale Price" shall have the meaning specified in Section
12.3.
-5-
<PAGE> 13
"Legal Holiday" shall have the meaning specified in Section
13.7.
"Lien" means any mortgage, lien, pledge, charge, security
interest or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).
"non-electing share" shall have the meaning specified in
Section 12.6.
"Notice of Default" shall have the meaning specified in
Section 6.1(3).
"Offer" shall have the meaning specified in Section 12.5.
"Officer" means, with respect to the Company, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 13.4
and 13.5.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee and which complies with the
requirements of Sections 13.4 and 13.5.
"Paying Agent" shall have the meaning specified in Section
2.3.
"Payment Blockage Period" shall have the meaning specified in
Section 11.2.
"Payment Default" shall have the meaning specified in Section
11.2.
"Payment Notice" shall have the meaning specified in Section
11.2.
"Person" or "person" means any corporation, individual,
limited liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
-6-
<PAGE> 14
"property" means any right or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Purchased Shares" shall have the meaning specified in Section
12.5.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article III
of this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the form of Security.
"Registrar" shall have the meaning specified in Section 2.3.
"Repurchase Date" shall have the meaning specified in Section
10.1.
"Repurchase Offer" shall have the meaning specified in Section
10.1.
"Repurchase Offer Period" shall have the meaning specified in
Section 10.1.
"Repurchase Price" shall have the meaning specified in Section
10.1.
"Repurchase Put Date" shall have the meaning specified in
Section 10.1.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the _____% Convertible
Subordinated Notes due 2004, as supplemented from time to time in accordance
with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity thereto.
-7-
<PAGE> 15
"Senior Indebtedness" means any Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company, unless
the instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior, in right of payment, to the Securities
or to other Indebtedness which is pari passu with, or subordinated to, the
Securities; provided, however, that in no event shall Senior Indebtedness
include (a) Indebtedness of the Company owed or owing to any Subsidiary of the
Company or any officer, director or employee of the Company or any Subsidiary
of the Company except in respect of deferred compensation in an amount not to
exceed $1,000,000 at any one time, (b) Indebtedness to trade creditors or (c)
any liability for taxes owed or owing by the Company.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Company within the meaning of Rule 1.02(w) of
Regulation S-X promulgated by the SEC as in effect on the date of this
Indenture.
"Special Record Date" for payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security,
means ___________________, 2004.
"Subsidiary" with respect to any person, means (i) a
corporation a majority of whose Capital Stock with voting power normally
entitled to vote in the election of directors is at the time, directly or
indirectly, owned by such person, by such person and one or more Subsidiaries
of such person or by one or more Subsidiaries of such person, (ii) a
partnership in which such person or a Subsidiary of such person is, at the
time, a general partner and owns alone or together with one or more
Subsidiaries of such person a majority of the partnership interests, or (iii)
any other person (other than a corporation) in which such person, one or more
Subsidiaries of such person, or such person and one or more Subsidiaries of
such person, directly or indirectly, at the date of determination thereof has
at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the New
York Stock Exchange.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
-8-
<PAGE> 16
"Trust Officer" means any officer within the corporate trust
division (or any successor group) of the Trustee or any other officer of the
Trustee customarily performing functions similar to those performed by the
Persons who at that time shall be such officers, and also means, with respect
to a particular corporate trust matter, any other officer of the Trustee to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Underwriters" means Donaldson, Lufkin & Jenrette Securities
Corporation, Jefferies & Company, Inc., Bear, Stearns & Co. Inc. and Prudential
Securities Incorporated.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated _______________, 1997, by and between the Company and the
Underwriters, as such agreement may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
SECTION 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture securityholder" means a Holder or a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
-9-
<PAGE> 17
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words
in the plural include the singular;
(5) provisions apply to successive events and
transactions;
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(7) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage. The Company
shall approve the form of the Securities and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not contained
in the form of Security attached as Exhibit A hereto shall be delivered in
writing to the Trustee. Each Security shall be dated the date of its
authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.2. Execution and Authentication.
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<PAGE> 18
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Securities for original issue in
the aggregate principal amount of up to $143,750,000 upon a written order of
the Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated and the date on
which the Securities are to be authenticated. The aggregate principal amount
of Securities outstanding at any time may not exceed $143,750,000, except as
provided in Section 2.7; provided, however, that Securities in excess of
$125,000,000 shall not be issued other than pursuant to the over-allotment
option granted by the Company to the Underwriters as provided in the
Underwriting Agreement. Upon the written order of the Company in the form of
an Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar"), where Securities may be
presented for conversion ("conversion agent"), where Securities may be
presented for payment ("Paying Agent") and where notices and demands to or upon
the Company in respect of the Securities may be served. The Company or any
Affiliate thereof may act as Registrar or Paying Agent. The Registrar shall
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<PAGE> 19
keep a register of the Securities and of their transfer and exchange. If the
Company or any Affiliate thereof acts as Paying Agent, it shall segregate and
hold a separate trust fund for the benefit of the Holders all money held by it
as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to
the Company or any such Affiliate, the Trustee shall act as Paying Agent. The
Company may have one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. The
Company hereby initially appoints the Trustee as Registrar, conversion agent
and Paying Agent, and the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, conversion agent or
Paying Agent, the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.4. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of or premium, if any, or interest on the Securities (whether such
assets have been distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate such assets and hold them as a separate
trust fund for the benefit of the Holders or the Trustee. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent (if other than the Company or an Affiliate of
the Company) shall have no further liability for such assets.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the
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Registrar, the Company shall furnish to the Trustee on or before the third
Business Day preceding each Interest Payment Date and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee reasonably may require of the names and addresses of Holders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar or a co-Registrar with a
request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of other authorized
denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
(b) Restrictions on Transfer of a Definitive Security for
a Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with
written instructions directing the Trustee to make, or to direct the Securities
Custodian to make, an endorsement on the Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the Global
Security, then the Trustee shall cancel such Definitive Security and cause, or
direct the Securities Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Securities
Custodian, the aggregate principal amount of Securities represented by the
Global Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall issue and the Trustee shall authenticate a new
Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.
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(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive Security.
(i) Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for
the Depositary from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Global Security and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest in a
Global Security only, and if such beneficial interest is being
transferred to the Person designated by the Depositary as being the
beneficial owner, a certification (which may be submitted by
facsimile) from such Person to that effect, then the Trustee or the
Securities Custodian, at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate
principal amount of the Global Security to be reduced and, following
such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate, the
Trustee will authenticate and deliver to the transferee a Definitive
Security.
(ii) Definitive Securities issued in exchange for
a beneficial interest in a Global Security pursuant to this Section
2.6(d) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive Securities to the
persons in whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Securities notifies
the Company and the Company notifies the Trustee in writing that the
Depositary is no longer willing or able to continue as Depositary for
the Global Securities and a successor Depositary for the Global
Securities is not appointed by the Company within 90 days after
delivery of such notice; or
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(ii) the Company, in its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of
Definitive Securities under this Indenture;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive
Securities, will authenticate and deliver Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Cancellation and/or Adjustment of Global Security.
At such time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or cancelled, such
Global Security shall be returned to or retained and cancelled by the Trustee.
At any time prior to such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, redeemed, repurchased or
cancelled, the principal amount of Securities represented by such Global
Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(h) Obligations with respect to Transfers and Exchanges
of Definitive Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Definitive Securities and Global Securities at the
Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other
than any such transfer taxes, assessments, or similar governmental
charge payable upon exchanges or transfers pursuant to Section 2.2
(fourth paragraph), 2.10, 3.7, 9.5, or 10.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of (a) any Definitive
Security selected for redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Definitive Security
being redeemed in part, or (b) any Security for a period beginning 15
days before the mailing of a notice of an offer to repurchase pursuant
to Article X hereof or the mailing of a notice of redemption of
Securities pursuant to Article III hereof and ending at the close of
business on the day of such mailing.
SECTION 2.7. Replacement Securities.
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If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory
to the Trustee, to the Trustee to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge such
Holder for its reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the beneficial interests in a Global Security
effected by the Trustee hereunder and those described in this Section 2.8 as
not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as provided
in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.7.
If on a Redemption Date the Paying Agent (other than the Company or an
Affiliate of the Company) holds Cash sufficient to pay all of the principal and
interest due on the Securities payable on that date in accordance with Section
3.6 hereof and payment of the Securities called for redemption is not otherwise
prohibited pursuant to Article XI hereof or otherwise, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.9. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or an Affiliate of the Company shall
be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, amendment,
supplement, waiver or consent, only Securities that the Trustee knows are so
owned shall be disregarded.
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SECTION 2.10. Temporary Securities.
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities but may
have variations that the Company reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities in
exchange for temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as permanent Securities authenticated and delivered hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.7, the Company may not issue new Securities to replace
Securities that have been paid or delivered to the Trustee for cancellation.
No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section 2.11, except as expressly
permitted in the form of Securities and as permitted by this Indenture.
SECTION 2.12. Defaulted Interest.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Security (or one or more predecessor Securities) is registered
at the close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called
"Defaulted Interest") shall forthwith cease to be payable to the registered
holder on the relevant Record Date, and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any
Defaulted Interest to the persons in whose names the Securities (or
their respective predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest
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proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of Cash equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such Cash when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as provided
in this clause (1). Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security register not less
than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names the Securities (or their
respective predecessor Securities) are registered on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with Paragraph 5 of the Securities and
this Article III. The Company will not have the right to redeem any Securities
prior to ____________, 2000. At any time on or after ____________, 2000, upon
no less than 30 nor more than 60 days' notice to
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each Holder of Notes, the Company will have the right to redeem all or any part
of the Securities at the Redemption Prices specified in Paragraph 5 therein
under the caption "Redemption," in each case (subject to the right of Holders,
as provided in Section 3.5, to receive interest due on an Interest Payment Date
that is on or prior to such Redemption Date) together with accrued and unpaid
interest, if any, to the Redemption Date.
SECTION 3.2. Notices to Trustee.
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed and whether it wants the
Trustee to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days before the Redemption Date (unless a shorter
notice shall be satisfactory to the Trustee). Any such notice may be cancelled
at any time prior to notice of such redemption being mailed to any Holder and
shall thereby be void and of no effect.
SECTION 3.3. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed on
a pro rata basis, by lot or by such other method as the Trustee shall determine
to be fair and appropriate and in such manner as complies with any applicable
depositary, legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.4. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to the Trustee and
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each Holder whose Securities are to be redeemed. At the Company's written
request to the Trustee not less than 75 days prior to the Redemption Date, in
the case of a partial redemption, and not less than 45 days prior to the
Redemption Date in the case of a total redemption (unless a shorter notice
shall be satisfactory to the Trustee), the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date, and that the Securities
called for redemption may not be converted after the Business Day
prior to the Redemption Date;
(2) the Redemption Price, plus the amount of
accrued and unpaid interest, if any, to be paid upon such redemption;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such
notice to collect the Redemption Price;
(5) that, unless (a) the Company defaults in its
obligation to deposit Cash with the Paying Agent in accordance with
Section 3.6 hereof or (b) such redemption payment is prohibited
pursuant to Article XI hereof or otherwise, interest on Securities
called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is
to receive payment of the Redemption Price, plus accrued and unpaid
interest, if any, to the Redemption Date, upon surrender to the Paying
Agent of the Securities called for redemption and to be redeemed;
(6) if any Security is being redeemed in part,
the portion of the principal amount, equal to $1,000 or any integral
multiple thereof, of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security
or Securities in aggregate principal amount equal to the unredeemed
portion thereof will be issued;
(7) if less than all the Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of
such Securities to be redeemed and the aggregate principal amount of
Securities to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be
redeemed; and
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(9) that the notice is being sent pursuant to
this Section 3.4 and pursuant to the redemption provisions of
Paragraph 5 of the Securities.
If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions.
SECTION 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, plus accrued and unpaid interest, if any, to the
Redemption Date. Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price, plus
accrued and unpaid interest, if any, to the Redemption Date; provided that if
the Redemption Date is after a Record Date and on or prior to the corresponding
Interest Payment Date, the accrued interest to the Redemption Date, if any,
shall be payable to the Holder of the redeemed Securities registered on such
Record Date; and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.6. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company or an Affiliate thereof is acting as Paying
Agent, segregate and hold in trust as provided in Section 2.3) Cash sufficient
to pay the Redemption Price of, plus accrued and unpaid interest on, all
Securities to be redeemed on such Redemption Date (other than Securities or
portions thereof called for redemption on that date that have been delivered by
the Company to the Trustee for cancellation). The Paying Agent shall promptly
return to the Company any Cash so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prohibited under Article XI or otherwise, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment.
Notwithstanding anything herein to the contrary, if any Security surrendered
for redemption in the manner provided in the Securities shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal,
in each case at the rate and in the manner provided in Section 4.1 hereof and
in the Security.
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SECTION 3.7. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge to the Holder, a new Security or Securities
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Principal and Interest on Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. An installment of
principal of or interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds for the benefit of the Holders, on or before
10:00 a.m. New York City time on that date, Cash deposited and designated for
and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer
or exchange and for conversion and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
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agency. The Company hereby initially designates the corporate trust office of
the Trustee in Dallas, Texas, as such office.
SECTION 4.3. Corporate Existence.
Subject to Article V, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and corporate franchises of
the Company; provided, however, that the Company shall not be required to
preserve any right or franchise if (a) the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.4. Payment of Taxes.
Except with respect to immaterial items, the Company shall, and shall
cause each of its Significant Subsidiaries to, pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or any of its Significant Subsidiaries or any of their respective properties
and assets; provided, however, that neither the Company nor any Significant
Subsidiary shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment or charge whose amount, applicability or
validity is being contested in good faith by appropriate proceedings or if the
failure to effect such payment or discharge is not adverse in any material
respect to the Holders.
SECTION 4.5. [Intentionally omitted.]
SECTION 4.6. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120
days after the end of its fiscal year an Officers' Certificate complying with
Section 314(a)(4) of the TIA and stating that a review of its activities and
the activities of its Significant Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, whether or not the signer knows of any failure by the
Company to comply with any conditions or covenants in this Indenture and, if
such signer does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
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(b) The Company shall, so long as any of the Securities
are outstanding, deliver to the Trustee, promptly upon becoming aware of any
Default, Event of Default or fact which would prohibit the making of any
payment to or by the Trustee in respect of the Securities, an Officers'
Certificate specifying such Default, Event of Default or fact and what action
the Company is taking or proposes to take with respect thereto. The Trustee
shall not be deemed to have knowledge of any Default, any Event of Default or
any such fact unless one of its Trust Officers receives notice thereof from the
Company or any of the Holders.
SECTION 4.7. Reports.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have
been included in reports filed with the SEC if the Company was subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC and, in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required.
SECTION 4.8. [Intentionally omitted.]
SECTION 4.9. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury law
or other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or premium or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation.
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(a) The Company shall not, directly or indirectly,
consolidate with or merge with or into another Person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless (i) either (a) in the
case of a merger or consolidation, the Company is the surviving entity or (b)
the resulting, surviving or transferee entity is a corporation organized under
the laws of the United States, any state thereof or the District of Columbia
and expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Securities and the Indenture; (ii) no Default or
Event of Default shall exist or shall occur immediately before or after giving
effect on a pro forma basis to such transaction; (iii) the resulting, surviving
or transferee entity immediately thereafter has a Consolidated Net Worth no
less than that of the Company immediately prior thereto; and (iv) the Company
has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and, if a
supplemental indenture is required, such supplemental indenture comply with the
Indenture and that all conditions precedent relating to such transactions have
been satisfied.
(b) For purposes of clause (a) of this Section 5.1, the
sale, lease, conveyance, assignment or transfer of all or substantially all of
the properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the sale, lease,
conveyance, assignment or transfer of all or substantially all of the
properties and assets of the Company.
SECTION 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any sale, lease, conveyance or
transfer of all or substantially all of the assets of the Company in accordance
with the foregoing, the successor corporation formed by such consolidation or
into which the Company is merged or to which such sale, lease, conveyance or
transfer is made, shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture with the same effect
as if such successor corporation had been named therein as the Company, and
when a successor corporation duly assumes all of the obligations of the Company
pursuant here to and pursuant to the Securities, the predecessor shall be
released from such obligations (except with respect to any obligations that
arise from or as a result of such transaction).
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
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"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(1) failure by the Company to pay any installment
of interest on the Securities as and when due and payable, or failure
by the Company to perform any conversion of the Securities required
under this Indenture, and the continuance of such failure for a period
of 30 days, whether or not such payment or conversion is prohibited by
Article XI;
(2) failure by the Company to pay all or any part
of the principal of or premium, if any, on the Securities when and as
the same become due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation, default in
the payment of the Repurchase Price on the Repurchase Date in
accordance with Article X, whether or not such payment is prohibited
by Article XI;
(3) failure by the Company to observe or perform
any covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any covenant or
agreement which is specifically dealt with elsewhere in this Section
6.1), and continuance of such failure for a period of 60 days after
there has been given, by registered or certified mail, to the Company
by the Trustee, or to the Company and the Trustee by Holders of at
least 25% in aggregate principal amount of the then outstanding
Securities, a written notice specifying such default or breach,
requesting it to be remedied and stating that such notice is a "Notice
of Default" hereunder;
(4) a default under Indebtedness of the Company
or any of its Significant Subsidiaries with an aggregate principal
amount in excess of $7,500,000 (a) resulting from the failure to pay
principal, premium or interest when due that extends beyond any stated
period of grace applicable thereto or (b) as a result of which the
maturity of such Indebtedness has been accelerated prior to its stated
maturity;
(5) a decree, judgment, or order by a court of
competent jurisdiction shall have been entered adjudging the Company
or any of its Significant Subsidiaries as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Company or any of its Significant Subsidiaries under any Bankruptcy
Law; or a decree or order of a court of competent jurisdiction over
the appointment of a Custodian of the Company, any of its Significant
Subsidiaries, or of the property of any such Person, or for the
winding up or liquidation of the
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affairs of any such Person, shall have been entered and in each case
such decree, judgment or order remains unstayed and in effect for 60
consecutive days;
(6) the Company or any of its Significant
Subsidiaries shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking
reorganization under any bankruptcy or similar law or similar statute,
or shall consent to the filing of any such petition, or shall consent
to the appointment of a Custodian of it or any of its assets or
property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fail generally to pay its debts as
they become due, or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
(7) final unsatisfied judgments not covered by
insurance (including self-insurance), or the issuance of any warrant
of attachment against any portion of the property or assets of the
Company or any of its Significant Subsidiaries, aggregating in excess
of $10,000,000 at any one time shall have been rendered against the
Company or any of its Subsidiaries and not have been stayed, bonded or
discharged for a period (during which execution shall not be
effectively stayed) of 60 days (or, in the case of any such final
judgment which provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable payment date
provided therein).
Notwithstanding the 60 day period and notice requirement contained in
Section 6.1(3) above, with respect to a default under Article X the 60 day
period referred to in Section 6.1(3) shall be deemed to have begun as of the
date the Change of Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 10.1 and the Trustee or
Holders of at least 25% in aggregate principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(3)
to the Company and, if applicable, the Trustee; provided, however, that if the
breach or default is a result of a default in the payment when due of the
Repurchase Price on the Repurchase Date, such Event of Default shall be deemed,
for purposes of this Section 6.1, to arise no later than on the Repurchase
Payment Date.
If a Default occurs and is continuing, the Trustee shall, within 90
days after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 6.1(5) or (6) relating to the Company or any of its Significant
Subsidiaries) occurs and is continuing,
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then, and in every such case, unless the principal of all of the Securities
shall have already become due and payable, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of then outstanding Securities,
by a notice in writing to the Company (and to the Trustee if given by Holders)
(an "Acceleration Notice") , may declare all of the principal of the Securities
(or the Repurchase Price if the Event of Default includes failure to pay the
Repurchase Price, determined as set forth below), including in each case
accrued interest thereon, to be due and payable immediately. If an Event of
Default specified in Section 6.1(5) or (6) relating to the Company or any
Significant Subsidiary occurs, all principal and accrued interest thereon will
be immediately due and payable on all outstanding Securities without any
declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of no less
than a majority in aggregate principal amount of then outstanding Securities,
by written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the
Trustee Cash sufficient to pay
(A) all overdue interest on all
Securities,
(B) the principal of (and premium,
if any, applicable to) any Securities which would then be due
otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of
such interest is lawful, interest upon overdue interest at the
rate borne by the Securities,
(D) all sums paid or advanced by
the Trustee hereunder and the compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the
non-payment of the principal of and premium, if any, and interest on
Securities that have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.12,
including, if applicable, any Event of Default relating to the
covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with
notice or lapse of time or
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both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security affected thereby, unless all such affected Holders agree,
in writing, to waive such Event of Default or other event. No such waiver
shall cure or waive any subsequent Default or Event of Default or impair any
right consequent thereon.
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium or interest specified in clause (1) or (2) of Section 6.1
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal, premium (if any), interest
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and
expenses of collection, including reasonable compensation to, and expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered,
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by intervention in such proceeding or otherwise to take any and all actions
under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such judicial
proceeding; and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust in favor of the Holders, and any recovery
of judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6.6. Priorities.
Any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any) or interest, upon presentation of the
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Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the holders of Senior Indebtedness to the extent provided
in Article XI;
THIRD: To the Holders in payment of the amounts then due and unpaid
for principal of and premium (if any) and interest on the Securities in respect
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium (if any) and interest, respectively; and
FOURTH: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
SECTION 6.7. Limitation on Suits.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate
principal amount of then outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities to be incurred or reasonably probable to be incurred
in compliance with such request;
(D) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
any such proceeding; and
(E) no direction inconsistent with such written
request has been given to the Trustee during such 60 day period by the
Holders of a majority in aggregate principal amount of then
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority
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or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders.
SECTION 6.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium (if any) and interest on such
Security when due (including, in the case of redemption, the Redemption Price
on the applicable Redemption Date, and in the case of the Repurchase Price, on
the applicable Repurchase Date) and to institute suit for the enforcement of
any such payment after such respective dates, and such rights shall not be
impaired without the consent of such Holder.
SECTION 6.9. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 6.11. Control by Holders.
The Holder or Holders of no less than a majority in aggregate
principal amount of then outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, provided, that
(1) such direction shall not be in
conflict with any rule of law or with this Indenture,
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(2) the Trustee shall not determine that
the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction, and
(3) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.12. Waiver of Past Default.
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding Securities may, on
behalf of all Holders, prior to the declaration of acceleration of the maturity
of the Securities, waive any past default hereunder and its consequences,
except a default
(A) in the payment of the principal of
or premium (if any) or interest on any Security not yet cured as
specified in clauses (1) and (2) of Section 6.1, or
(B) in respect of a covenant or
provision hereof which, under Article IX, cannot be modified or
amended without the consent of the Holder of each outstanding Security
affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising there from.
SECTION 6.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.13 shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in aggregate principal amount of then outstanding Securities, or to
any suit instituted by any Holder for enforcement of the payment of principal
of or premium (if any) or interest on any Security on or after the respective
Stated Maturity of such Security (including, in the case of redemption, on or
after the Redemption Date).
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SECTION 6.14. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 7.1. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of a Default or an
Event of Default:
(1) The Trustee need perform only those
duties as are specifically set forth in this Indenture and no
others, and no covenants or obligations shall be implied in or
read into this Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the
effect of paragraph (b) of this Section 7.1.
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(2) The Trustee shall not be liable for
any error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with
respect to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant to
Section 6.11.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or at the request, order or direction
of the Holders or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of
this Section 7.1.
(f) The Trustee shall not be liable for interest on any
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may consult with counsel and may require an Officers' Certificate or an Opinion
of Counsel, which shall conform to Sections 13.4 and 13.5. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
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(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order,
bond, debenture, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article IV hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of
Default except (i) any Event of Default occurring pursuant to Sections 6.1(1)
or 6.1(2) or 5.1, or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any of
its Subsidiaries, or their respective Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice
of the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case
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of a Default or an Event of Default in payment of principal of or premium (if
any) or interest on any Security (including the payment of the Repurchase Price
on the Repurchase Date and the payment of the Redemption Price on the
Redemption Date), the Trustee may withhold the notice if and so long as a Trust
Officer in good faith determines that withholding the notice is in the interest
of the Securityholders.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each July 1 beginning with July 1, 1998, the
Trustee shall, if required by law, mail to each Securityholder as their names
and addresses appear on the Company's register of Securities, a brief report
dated as of such July 1 that complies with TIA Section 313(a) with respect to
any of the following events which may have occurred within the previous twelve
months (but if no such event has occurred within such period no report need be
transmitted):
(1) any change to its eligibility and
its qualifications under TIA Section 310;
(2) the creation of or any material
change to a relationship specified in paragraphs (1) through (10) of TIA
Section 310(b);
(3) the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) which remain unpaid on the
date of such report, and for the reimbursement of which it claims or may claim
a lien or charge, prior to that of the Securities, on any property or funds
held or collected by it as Trustee, except that the Trustee shall not be
required (but may elect) to report such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
security outstanding on the date of such report;
(4) the amount, interest rate and
maturity date of all other indebtedness owing by the Company (or by any other
obligor on the Securities) to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as
collateral security there for, except an indebtedness based upon a creditor
relationship arising in any manner described in paragraphs (2), (3), (4) or (6)
of TIA Section 311(b);
(5) any change to the property and
funds, if any, physically in the possession of the Trustee (as such) on the
date of such report;
(6) any change to any release, or
release and substitution, of property subject to the lien of the Indenture (and
the consideration therefor, if any) which has not been previously reported;
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(7) any additional issue of Securities
which the Trustee has not previously reported; and
(8) any action taken by the Trustee in
the performance of its duties hereunder which it has not previously reported
and which in its opinion materially affects the Securities, except action in
respect of a default, notice of which has been or is to be withheld by the
Trustee in accordance with an Indenture provision authorized by TIA Section
315(b).
(b) The Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the Company's register
of Securities, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection 7.6(a) hereof (or if no such report
has yet been so transmitted, since the date of execution of this instrument)
for the reimbursement of which it claims or may claim a lien or charge, prior
to that of the Securities, on property or funds held or collected by it as
Trustee and which it has not previously reported pursuant to this Subsection,
except that the Trustee shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time aggregate 10% or less of
the principal amount of the Securities outstanding at such time, such report to
be transmitted within 90 days of such time.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange upon which the Securities are listed, with the SEC and with the
Company. The Company will promptly notify the Trustee when the Securities are
listed on any stock exchange. The Trustee also shall comply with TIA Sections
313(b) and 313(c).
SECTION 7.7. Compensation and Indemnity.
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on its part, arising out of or in connection with the administration of
this trust and its rights or duties hereunder including the reasonable costs
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and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall provide reasonable cooperation at the Company's expense
in the defense. The Trustee may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel; provided, however, that
the Company will not be required to pay such fees and expenses if it assumes
the Trustee's defense and there is no conflict of interest between the Company
and the Trustee in connection with such defense. The Company need not pay for
any settlement made without its written consent. The Company need not
reimburse any expense or indemnify against any loss or liability to the extent
incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in aggregate principal amount of then
outstanding Securities may remove the Trustee by so notifying the Company and
the Trustee in writing and may appoint a successor trustee with the Company's
consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a Custodian takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holder or Holders of a majority in aggregate principal amount of then
outstanding Securities may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in
Section 7.7 have been paid, the retiring Trustee shall transfer all property
held by it as trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holder or Holders of at least 10% in aggregate principal amount of then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee. Such successor Trustee
shall mail notice of its succession to the Company.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus
of at least (i) $100,000,000 or (ii) at least $2,500,000 and shall be a
subsidiary of a bank holding company that shall have a combined capital and
surplus of at least $100,000,000, in each case as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA
Section 310(b).
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1. Satisfaction and Discharge of Indenture.
The Company may terminate its obligations under this Indenture
(subject to the provisions of this Article VIII) when it shall have delivered
to the Trustee for cancellation all Securities theretofore authenticated (other
than any Securities which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Article II hereof) and the
following conditions shall be satisfied:
(1) The Company has paid all sums payable under
the Indenture; and
(2) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel in the United
States, each stating that all conditions precedent have been complied with as
contemplated by this Section 8.1.
SECTION 8.2. Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal, premium, if any, or interest has become due and payable shall
be paid to the Company on its request or (if then held by the Company or an
Affiliate thereof) shall be discharged from such trust; and the Holder of such
Security shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company or such Affiliate as trustee thereof, shall
thereupon cease.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
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Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or
to make any other provisions with respect to matters or questions arising under
this Indenture which shall not be inconsistent with the provisions of this
Indenture, provided that such change does not adversely affect the rights of
any Holder;
(2) to create additional covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company or to make any other change that does not adversely affect the
rights of any Holder;
(3) to provide for collateral for or guarantors of the
Securities;
(4) to evidence the succession of another Person to the
Company and the assumption by any such successor of the obligations of the
Company herein and in the Securities in accordance with Article V; or
(5) to comply with the TIA.
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with
Consent of Holders.
Subject to Section 6.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by Board
Resolutions, and the Trustee may amend or supplement this Indenture or the
Securities or enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or the Securities or of modifying in
any manner the rights of the Holders under this Indenture or the Securities.
Subject to Section 6.8 and the last sentence of this paragraph, the Holder or
Holders of not less than a majority in aggregate principal amount of then
outstanding Securities may, in writing, waive compliance by the Company with
any provision of this Indenture or the Securities. Notwithstanding any of the
above, however, no such amendment, supplemental indenture or waiver shall,
without the consent of the Holder of each outstanding Security affected
thereby:
(1) change the Stated Maturity of any Security or reduce
the principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or
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the coin or currency in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement
of any such payment or the conversion of any Security on or after the due date
thereof (including, in the case of redemption, on or after the Redemption
Date), or reduce the Repurchase Price, or alter the Repurchase Offer or
redemption provisions in a manner adverse to the Holders;
(2) reduce the percentage in aggregate principal amount
of the outstanding Securities, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in the Indenture;
(3) modify any of the provisions of Article XII hereof in
a manner adverse to such Holder or otherwise adversely affect the right of such
Holder to convert Securities; or
(4) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment,
supplement or waiver.
SECTION 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
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Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the Person designated by the Company as the Person to whom consents
should be sent if such revocation is received by the Company or such Person
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities
have consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (4) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, however, that any
such waiver shall not impair or affect the right of any Holder to receive
payment of principal of and premium (if any) and interest on a Security, on or
after the respective dates set for such amounts to become due and payable
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates.
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
Any failure to make the appropriate notation or to issue a new Security shall
not affect the validity of such amendment, supplement or waiver.
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SECTION 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, however, that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
SECTION 10.1. Repurchase of Securities at Option of the Holder Upon a
Change of Control.
(a) In the event that a Change of Control occurs,
each Holder shall have the right, at such Holder's option, subject to the terms
and conditions of this Indenture, to require the Company to repurchase all or
any part of such Holder's Securities (provided that the principal amount of
such Securities must be $1,000 or an integral multiple thereof) on the date
(the "Repurchase Date") that is no later than 45 Business Days after the
occurrence of such Change of Control, at a cash price (the "Repurchase Price")
equal to 100% of the principal amount thereof, together with accrued and unpaid
interest to the Repurchase Date.
(b) In the event that, pursuant to this Section
10.1, the Company shall be required to commence an irrevocable and
unconditional offer to purchase Securities (a "Repurchase Offer"), the Company
shall follow the procedures set forth in this Section 10.1 as follows:
(1) the Repurchase Offer shall commence within 25
Business Days following a Change of Control;
(2) the Repurchase Offer shall remain open for 20
Business Days following its commencement, except to the extent that a
longer period is required by applicable law, but in any case not more
than 60 Business Days following the Change of Control (the "Repurchase
Offer Period");
(3) upon the expiration of a Repurchase Offer,
the Company shall purchase all Securities tendered in response to the
Repurchase Offer;
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(4) if the Repurchase Date is on or after a
Record Date and on or before the related Interest Payment Date, any
accrued interest will be paid to the Person in whose name a Security
is registered at the close of business on such Record Date, and no
additional interest will be payable to Securityholders who tender
Securities pursuant to the Repurchase Offer;
(5) the Company shall provide the Trustee with
notice of the Repurchase Offer at least 5 Business Days before the
commencement of any Repurchase Offer; and
(6) on or before the commencement of any
Repurchase Offer, the Company or the Trustee (upon the request and at
the expense of the Company) shall send, by first-class mail, a notice
to each of the Securityholders, which (to the extent consistent with
this Indenture) shall govern the terms of the Repurchase Offer and
shall state:
(i) that the Repurchase Offer is being
made pursuant to such notice and this Section 10.1 and that
all Securities, or portions thereof, tendered will be accepted
for payment;
(ii) the Repurchase Price (including the
amount of accrued and unpaid interest, if any), the Repurchase
Date and the Repurchase Put Date;
(iii) that any Security, or portion
thereof, not tendered or accepted for payment will continue to
accrue interest, if any;
(iv) that, unless the Company defaults in
depositing Cash with the Paying Agent in accordance with the
last paragraph of this clause (b) or such payment is prevented
pursuant to Article XI, any Security, or portion thereof,
accepted for payment pursuant to the Repurchase Offer shall
cease to accrue interest after the Repurchase Date;
(v) that Holders electing to have a
Security, or portion thereof, purchased pursuant to a
Repurchase Offer will be required to surrender the Security,
with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be
the Company or any Affiliate of the Company) at the address
specified in the notice prior to the close of business on the
earlier of (a) the third Business Day prior to the Repurchase
Date and (b) the third Business Day following the expiration
of the Repurchase Offer (such earlier date being the
"Repurchase Put Date");
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(vi) that Holders will be entitled to
withdraw their election, in whole or in part, if the Paying
Agent (which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be
the Company or any Affiliate of the Company) receives, up to
the close of business on the Repurchase Put Date, a telegram,
telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Securities the
Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events
resulting in such Change of Control.
If any of the Securities subject to a Repurchase Offer is in the form
of a Global Security, then the Company shall modify such notice to the extent
necessary to accord with the procedures of the Depositary applicable thereto.
Any such Repurchase Offer shall comply with all applicable provisions
of Federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture which conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the
Repurchase Offer on or before the Repurchase Put Date, (ii) deposit with the
Paying Agent Cash sufficient to pay the Repurchase Price (together with accrued
and unpaid interest, if any) of all Securities or portions thereof so tendered
and (iii) deliver to the Trustee Securities so accepted together with an
Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to Holders of
Securities so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest, if any), and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security or
Securities equal in principal amount to any unpurchased portion of the
Securities surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
ARTICLE XI
SUBORDINATION
SECTION 11.1. Securities Subordinated to Senior Indebtedness.
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The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Article X) is subordinated, to the extent and in the
manner provided in this Article XI, to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
created, incurred, assumed or guaranteed, and that these subordination
provisions are for the benefit of the holders of Senior Indebtedness.
This Article XI shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the
holders of Senior Indebtedness, and such holders are made obligees hereunder
and any one or more of them may enforce such provisions.
SECTION 11.2. No Payment on Securities in Certain Circumstances.
(a) No payment may be made by the Company on account of
the principal of or premium, if any, or interest on the Securities, or to
acquire any of the Securities (including repurchases of Securities at the
option of the Holder) for cash or property (other than Junior Securities), or
on account of the redemption provisions of the Securities, (i) upon the
maturity of any Senior Indebtedness of the Company by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of
and premium, if any, and interest on such Senior Indebtedness are first paid in
full (or such payment is duly provided for), or (ii) in the event of default in
the payment of any principal of or premium, if any, or interest on any Senior
Indebtedness when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (a "Payment Default"),
unless and until such Payment Default has been cured or waived or otherwise has
ceased to exist.
(b) Upon (i) the happening of an event of default (other
than a Payment Default) that permits the holders of Senior Indebtedness or
their representative immediately to accelerate its maturity and (ii) written
notice of such event of default given to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount outstanding of such
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived or otherwise has
ceased to exist, no payment (by set off or otherwise) may be made by or on
behalf of the Company on account of the principal of or premium, if any, or
interest on the Securities, or to acquire or repurchase any of the Securities
for cash or property, or on account of the redemption provisions of the
Securities, in any such case other than payments made with Junior Securities of
the Company. Notwithstanding the foregoing, unless (i) the Senior Indebtedness
in respect of which such event of default exists has been declared due and
payable in its entirety within 179 days after the Payment Notice is delivered
as set forth above (the "Payment Blockage Period"), and (ii) such declaration
has not been rescinded or
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waived, at the end of the Payment Blockage Period, the Company shall be
required to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Any number of Payment
Notices may be given; provided, however, that (i) not more than one Payment
Notice shall be given within a period of any 360 consecutive days and (ii) no
event of default that existed upon the date of such Payment Notice or the
commencement of such Payment Blockage Period (whether or not such event of
default is on the same issue of Senior Indebtedness) shall be made the basis
for the commencement of any other Payment Blockage Period.
(c) In the event that, notwithstanding the foregoing
provisions of this Section 11.2, any payment or distribution of assets of the
Company (other than Junior Securities) shall be received by the Trustee or the
Holders at a time when such payment or distribution is prohibited by the
provisions of this Section 11.2, then such payment or distribution (subject to
the provisions of Section 11.7) shall be received and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of the holders of
Senior Indebtedness, and shall be paid or delivered by the Trustee or such
Holders or such Paying Agent, as the case may be, to the holders of Senior
Indebtedness remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on account
of the Senior Indebtedness held or represented by each, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay or to provide for the payment of all such Senior Indebtedness in full after
giving effect to any concurrent payment and distribution to the holders of such
Senior Indebtedness.
SECTION 11.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or a similar proceeding or
upon assignment for the benefit of creditors or any marshalling of assets or
liabilities:
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payments in full (or have such payment duly provided for)
before the Holders are entitled to receive any payment on account of the
principal of and premium, if any, and interest on with respect to the
Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities (other than
Junior Securities) to which the Holders or the Trustee on behalf of the Holders
would be entitled (by setoff or otherwise), except for the provisions of this
Article XI, shall be paid by the liquidating trustee or agent
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or other Person making such a payment or distribution directly to the holders
of Senior Indebtedness or their representative to the extent necessary to make
payment in full of all such Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than Junior Securities), shall
be received by the Trustee or the Holders or any Paying Agent (or, if the
Company or any Affiliate of the Company is acting as its own Paying Agent,
money for any such payment or distribution shall be segregated or held in
trust) on account of the principal of or interest on the Securities before all
Senior Indebtedness is paid in full, such payment or distribution (subject to
the provisions of Section 11.7) shall be received and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of the holders of such
Senior Indebtedness, or their respective representative, ratably according to
the respective amounts of such Senior Indebtedness held or represented by each,
to the extent necessary to make payment as provided herein of all such Senior
Indebtedness remaining unpaid after giving effect to all concurrent payments
and distributions and all provisions therefor to or for the holders of such
Senior Indebtedness, but only to the extent that as to any holder of such
Senior Indebtedness, as promptly as practical following notice from the Trustee
to the holders of such Senior Indebtedness that such prohibited payment has
been received by the Trustee, Holder(s) or Paying Agent (or has been segregated
as provided above), such holder (or a representative therefor) notifies the
Trustee of the amounts then due and owing on such Senior Indebtedness, if any,
held by such holder and only the amounts specified in such notices to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 11.4. Securityholders to Be Subrogated to Rights of Holders
of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness as provided
herein, the Holders of Securities shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of
this Article XI, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article XI are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XI shall have been
applied, pursuant to the
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provisions of this Article XI, to the payment of amounts payable under Senior
Indebtedness, then the Holders shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders
of Senior Indebtedness in excess of the amount sufficient to pay all amounts
payable under or in respect of such Senior Indebtedness in full.
SECTION 11.5. Obligations of the Company Unconditional.
Nothing contained in this Article XI or elsewhere in this Indenture or
in the Securities is intended to or shall impair as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XI, of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article XI or elsewhere in
this Indenture or in the Securities, upon any distribution of assets of the
Company referred to in this Article XI, the Trustee, subject to the provisions
of Sections 7.1 and 7.2, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other Indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XI so long as such court has
been apprised of the provisions of, or the order, decree or certificate makes
reference to, the provisions of this Article XI. Nothing in this Section 11.5
shall apply to the claims of, or payments to, the Trustee under or pursuant to
Section 7.7.
SECTION 11.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.1
and 7.2, shall be entitled in all respects conclusively to assume that no such
fact exists.
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SECTION 11.7. Application by Trustee of Assets Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be
subject to the subordination provisions of this Article XI. Otherwise, any
deposit of assets with the Trustee or any Paying Agent (whether or not in
trust) for the payment of principal of or interest on any Securities shall be
subject to the provisions of Sections 11.1, 11.2, 11.3 and 11.4; provided that,
if prior to one Business Day preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or interest on any
Security) the Trustee or such Paying Agent shall not have received with respect
to such assets the written notice provided for in Section 11.6, then the
Trustee or such Paying Agent shall have full power and authority to receive
such assets and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by it on or after such date.
SECTION 11.8. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination provisions contained in this Article XI shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. The holders of Senior Indebtedness may extend,
renew, modify or amend the terms of the Senior Indebtedness or any security
therefor and release, sell or exchange such security and otherwise deal freely
with the Company, all without affecting the liabilities and obligations of the
parties to this Indenture or the Holders.
SECTION 11.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained
in this Article XI and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors of
the Company), the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the
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expiration of the time to file such claim or claims, then the holders of the
Senior Indebtedness or their representative are or is hereby authorized to have
the right to file and are or is hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Securities. Nothing herein contained
shall be deemed to authorize the Trustee or the holders of Senior Indebtedness
or their representative to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Securityholder in any
such proceeding.
SECTION 11.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article XI in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 11.11. Article XI Not to Prevent Events of Default.
The failure to make a payment on account of principal of and premium,
if any, and interest on the Securities by reason of any provision of this
Article XI shall not be construed as preventing the occurrence of a Default or
an Event of Default under Section 6.1 or in any way prevent the Holders from
exercising any right hereunder other than the right to receive payment on the
Securities.
SECTION 11.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company
or any other Person, cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article XI or
otherwise. Nothing in this Section 11.12 shall affect the obligation of any
other such Person to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their representative.
ARTICLE XII
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege.
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Subject to and upon compliance with the provisions of this Article
XII, at the option of the Holder thereof, any Security may at any time be
converted, in whole, or in part in multiples of $1,000 principal amount, into
fully paid and non-assessable shares of Common Stock issuable upon conversion
of the Securities, at the Conversion Price in effect at the Date of Conversion,
until and including, but not after the close of business on the second Business
Day prior to Stated Maturity, or unless such Security or some portion thereof
shall have been called for redemption or delivered for repurchase prior to such
date and no default is made in making due provision for the payment of the
Redemption Price or Repurchase Price in accordance with the terms of this
Indenture, in which case, with respect to such Security or portion thereof as
has been so called for redemption or delivered for repurchase, such Security or
portion thereof may be so converted until and including, but not after, the
close of business on the Business Day prior to the Redemption Date or
Repurchase Date, as applicable, for such Security, unless the Company
subsequently fails to pay the applicable Redemption Price or Repurchase Price,
as the case may be.
SECTION 12.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security to the Company at any
time during usual business hours at its office or agency maintained for the
purpose as provided in this Indenture, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security,
that the Holder elects to convert such Security or a stated portion thereof
constituting a multiple of $1,000 principal amount, and, if such Security is
surrendered for conversion during the period between the close of business on
any Record Date and the opening of business on the next following Interest
Payment Date and has not been called for redemption on a Redemption Date which
occurs within such period, accompanied also by payment to the Company of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of the Security being surrendered for conversion,
notwithstanding such conversion. The Holder of any Security at the close of
business on a Record Date will be entitled to receive the interest payable on
such Security on the corresponding Interest Payment Date notwithstanding the
conversion thereof after such Record Date. The interest payment with respect
to a Note called for redemption on a date during the period from the close of
business on or after any Record Date to the close of business on the Business
Day following the corresponding Interest Payment Date will be payable on the
corresponding Interest Payment Date to the registered Holder at the close of
business on that Record Date (notwithstanding the conversion of such Note
before the corresponding Interest Payment Date) and a Holder who elects to
convert need not include funds equal to the interest paid. Such notice of
conversion shall also state the name or names (with address) in which the
certificate or certificates for shares of Common Stock shall be issued if other
than that of the Holder. Securities surrendered for conversion shall (if
reasonably required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by, the Holder or his attorney duly
authorized in writing. As
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promptly as practicable after the receipt of such notice and the surrender of
such Security as aforesaid, the Company shall, subject to the provisions of
Section 12.8 hereof, issue and deliver at such office or agency to such Holder,
or on his written order, a certificate or certificates for the number of full
shares of Common Stock issuable on such conversion of Securities in accordance
with the provisions of this Article XII and Cash, as provided in Section 12.3
hereof, in respect of any fraction of a share of Common Stock otherwise
issuable upon such conversion. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date (herein called
the "Date of Conversion") on which such Security shall have been surrendered as
aforesaid, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on the Date of Conversion the holder or holders
of record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall cause the person or persons in whose name or names the certificate
or certificates for such shares are to be issued to be deemed to have become
the recordholder or holders thereof for all purposes at the opening of business
on the next succeeding day on which such stock transfer books are open but such
conversion shall nevertheless be at the Conversion Price in effect at the close
of business on the date when such Security shall have been so surrendered with
the conversion notice. In the case of conversion of a portion, but less than
all, of a Security, the Company shall as promptly as practicable execute, and
the Trustee shall authenticate and deliver to the Holder thereof, at the
expense of the Company, a Security or Securities in the aggregate principal
amount of the unconverted portion of the Security surrendered. Except as
otherwise expressly provided in this Indenture, no payment or adjustment shall
be made for interest accrued on any Security (or portion thereof) converted or
for dividends or distributions on any Common Stock issued upon conversion of
any Security.
SECTION 12.3. Fractional Interests.
No fractions of shares or scrip representing fractions of shares shall
be issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered. If
any fraction of a share of Common Stock would, except for the foregoing
provisions of this Section 12.3, be issuable on the conversion of any Security
or Securities, the Company shall make payment in lieu thereof in an amount of
Cash equal to the value of such fraction computed on the basis of the last sale
price of the Common Stock as reported on the New York Stock Exchange (or if not
listed for trading thereon, then on the principal national securities exchange
on which the Common Stock is listed
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or admitted to trading) at the close of business on the Date of Conversion or
if no such sale takes place on such day, the last sale price for such day shall
be the average of the closing bid and asked prices regular way on the New York
Stock Exchange (or if not listed for trading thereon, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading)
for such day (any such last sale price being hereinafter referred to as the
"Last Sale Price"). If on such Trading Day the Common Stock is not quoted by
any such organization, the fair value of such Common Stock on such day, as
reasonably determined in good faith by the Board of Directors of the Company,
shall be used.
SECTION 12.4. Conversion Price.
The Conversion Price per share of Common Stock issuable upon
conversion of the Securities shall initially be $_____ (or $_____ in principal
amount of Securities for each such share of Common Stock).
SECTION 12.5. Adjustment of Conversion Price.
The Conversion Price (herein called the "Conversion Price") shall be
subject to adjustment from time to time as follows:
(a) In case the Company shall (1) make or pay a dividend
(or other distribution) in shares of Common Stock on any class of Capital Stock
of the Company, (2) subdivide its outstanding shares of Common Stock into a
greater number of shares or (3) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Security thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock that he would have owned immediately following
such action had such Security been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately, except as provided in subsection (h) below, after the record date
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination.
(b) In case the Company shall issue rights, options or
warrants to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the then current
market price per share of the Common Stock (as determined pursuant to
subsection (f) below) on the record date mentioned below, the Conversion Price
shall be adjusted to a price, computed to the nearest cent, so that the same
shall equal the price determined by multiplying:
(i) the Conversion Price in effect immediately
prior to the date of issuance of such rights or warrants by a
fraction, of which
(ii) the numerator shall be (A) the number of
shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants, immediately prior to such
issuance, plus (B) the number of shares which the aggregate
offering price of the total number of shares so offered for
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subscription or purchase would purchase at such current market
price (determined by multiplying such total number of shares
by the exercise price of such rights, options or warrants and
dividing the product so obtained by such current market
price), and of which
(iii) the denominator shall be (A) the number of
shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants, immediately prior to such
issuance, plus (B) the number of additional shares of Common
Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided
in subsection (h) below, after the record date for the determination of holders
entitled to receive such rights, options or warrants; provided, however, that
if any such rights, options or warrants issued by the Company as described in
this subsection (b) are only exercisable upon the occurrence of certain
triggering events relating to control and provided for in shareholder rights
plans, then the Conversion Price will not be adjusted as provided in this
subsection (b) until such triggering events occur.
(c) In case the Company or any Subsidiary of the Company
shall distribute to all holders of Common Stock, evidences of indebtedness,
shares of Capital Stock other than Common Stock, cash or other assets
(including securities, but other than (x) regular dividends or distributions
paid exclusively in cash or (y) any dividend or distribution for which an
adjustment is required to be made in accordance with subsection (a) or (b)
above), then in each such case the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to the date of such distribution by a fraction of
which the numerator shall be the then current market price per share of the
Common Stock (determined as provided in subsection (f) below) on the record
date mentioned below less the then fair market value (as reasonably determined
in good faith by the Board of Directors of the Company) of the portion of the
assets so distributed applicable to one share of Common Stock, and of which the
denominator shall be such current market price per share of the Common Stock.
Such adjustment shall become effective immediately, except as provided in
subsection (h) below, after the record date for the determination of
stockholders entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the fair market value of the assets, evidences of
indebtedness or other securities so distributed applicable to one share of
Common Stock equals or exceeds such current market price per share of Common
Stock, or such current market price exceeds such fair market value by less than
$0.10 per share, the Conversion Price shall not be adjusted pursuant to this
subsection (c) and, to the extent applicable, the provisions of subsection (k)
shall apply to such distribution.
(d) In case the Company or any Subsidiary of the Company
shall make any distribution consisting exclusively of cash (excluding any cash
portion of distributions for which an adjustment is required to be made in
accordance with (c) above, or cash
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distributed upon a merger or consolidation to which Section 12.6 applies) to
all holders of Common Stock in an aggregate amount that, combined together with
(i) all other such all-cash distributions made within the then preceding 12
months in respect of which no adjustment has been made and (ii) any cash and
the fair market value of other consideration paid or payable in respect of any
tender offer by the Company or any of its Subsidiaries for Common Stock
concluded within the preceding 12 months in respect of which no adjustment has
been made, exceeds 15% of the Company's market capitalization (defined as being
the product of the then current market price of the Common Stock (determined as
provided in subsection (f) below) times the number of shares of Common Stock
then outstanding) on the record date of such distribution, then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the numerator
shall be the then current market price per share of the Common Stock on such
record date less the amount of the cash so distributed applicable to one share
of Common Stock, and of which the denominator shall be such current market
price per share of the Common Stock. Such adjustment shall become effective
immediately, except as provided in subsection (h) below, after the record date
for the determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the cash so distributed
applicable to one share of Common Stock equals or exceeds such current market
price per share of Common Stock, or such current market price exceeds such
amount of cash by less than $0.10 per share, the Conversion Price shall not be
adjusted pursuant to this subsection (d), and, to the extent applicable, the
provisions of subsection (k) shall apply to such distribution.
(e) In case there shall be completed a tender or exchange
offer made by the Company or any Subsidiary of the Company for all or any
portion of the Common Stock (any such tender or exchange offer being referred
to as an "Offer") that involves an aggregate consideration having a fair market
value as of the expiration of such Offer (the "Expiration Time") that, together
with (i) any cash and the fair market value of any other consideration payable
in respect of any other Offer, as of the expiration of such other Offer,
expiring within the 12 months preceding the expiration of such Offer and in
respect for which no Conversion Price adjustment pursuant to this subsection
(e) has been made and (ii) the aggregate amount of any all-cash distributions
referred to in subsection (d) of this Section 12.5 to all holders of Common
Stock within the 12 months preceding the expiration of such Offer for which no
Conversion Price adjustment pursuant to such subsection (d) has been made,
exceeds 15% of the product of the then current market price per share
(determined as provided in subsection (f) below) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the
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Expiration Time, the Conversion Price shall be reduced by multiplying such
Conversion Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be (i) the product of the then current
market price per share (determined as provided in subsection (f) below) of the
Common Stock on the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time minus (ii)
the fair market value of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the Offer)
of all shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted being referred to as the "Purchased Shares") and the
denominator shall be the product of (i) such current market price per share on
the Expiration Time times (ii) such number of outstanding shares on the
Expiration Time less the number of Purchased Shares, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time.
For purposes of this subsection (e), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
(f) For the purpose of any computation under subsections
(b), (c), (d) and (e) above, the current market price per share of Common Stock
on any date shall be deemed to be the average of the Last Sale Prices of a
share of Common Stock for the five consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before, and ending not later
than, the earlier of the date in question and the date before the "ex date,"
with respect to the issuance, distribution or Offer requiring such computation.
If on any such Trading Day the Common Stock is not quoted by any organization
referred to in the definition of Last Sale Price in Section 12.3 hereof, the
fair value of the Common Stock on such day, as reasonably determined in good
faith by the Board of Directors of the Company, shall be used. For purposes of
this paragraph, the term "ex date," when used with respect to any issuance,
distribution or payments with respect to an Offer, means the first date on
which the Common Stock trades regular way on the New York Stock Exchange (or if
not listed or admitted to trading thereon, then on the principal national
securities exchange on which the Common Stock is listed or admitted to trading)
without the right to receive such issuance, distribution or Offer.
(g) In addition the foregoing adjustments in subsections
(a), (b), (c), (d) and (e) above, the Company will be permitted to make such
reductions in the Conversion Price as it considers to be advisable in order
that any event treated for Federal income tax purposes as a dividend of stock
or stock rights will not be taxable to the holders of the shares of Common
Stock.
In the event the Company elects to make such a reduction in the
Conversion Price, the Company will comply with the requirements of Rule 14e-1
of the Exchange Act and any other Federal and state laws and regulations
thereunder if and to the extent that such laws and regulations are applicable
in connection with the reduction of the Conversion Price of the Notes;
provided, however, that any provisions of this Indenture which conflict with
such laws shall be deemed to be superseded by the provisions of such laws.
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(h) In any case in which this Section 12.5 shall require
that an adjustment (including by reason of the last sentence of subsection (a)
or (c) above) be made immediately following a record date, the Company may
elect to defer the effectiveness of such adjustment (but in no event until a
date later than the effective time of the event giving rise to such
adjustment), in which case the Company shall, with respect to any Security
converted after such record date and on and before such adjustment shall have
become effective (i) defer paying any Cash payment pursuant to Section 12.3
hereof or issuing to the Holder of such Security the number of shares of Common
Stock and other Capital Stock of the Company (or other assets or securities)
issuable upon such conversion in excess of the number of shares of Common Stock
and other Capital Stock of the Company issuable thereupon only on the basis of
the Conversion Price prior to adjustment, and (ii) not later than five Business
Days after such adjustment shall have become effective, pay to such Holder the
appropriate Cash payment pursuant to Section 12.3 hereof and issue to such
Holder the additional shares of Common Stock and other Capital Stock of the
Company (or other assets or securities) issuable on such conversion.
(i) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1.0% of the Conversion Price; provided, however, that any adjustments
which by reason of this subsection (i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article XII shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly (i) file with the Trustee and each
conversion agent an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment, and (ii) mail or cause to be mailed a
notice of such adjustment to each holder of Securities at his address as the
same appears on the registry books of the Company.
(k) In the event that the Company distributes rights
(including rights to distributions referred to by paragraphs (c) and (d) of
this Section 12.5 to the extent this paragraph (k) applies thereto) or warrants
(other than those referred to in subsection (b) above) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Company shall make proper provision so that the
Holder of any Note surrendered for conversion will be entitled to receive upon
such conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of rights or warrants to be
determined as follows: (i) if such conversion occurs on or prior to the date
for the distribution to the holders of rights or warrants of separate
certificates evidencing such rights or warrants (the "Distribution Date"), the
same number of rights or warrants to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at the time
of such
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conversion in accordance with the terms and provisions of and applicable to the
rights or warrants, and (ii) if such conversion occurs after such Distribution
Date, the same number of rights or warrants to which a holder of the number of
shares of Common Stock into which the principal amount of such Note so
converted was convertible immediately prior to such Distribution Date would
have been entitled on such Distribution Date in accordance with the terms and
provisions of and applicable to the rights or warrants.
SECTION 12.6. Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation or Sale of Assets.
If any of the following shall occur, namely: (a) any reclassification
or change of outstanding shares of Common Stock issuable upon conversion of the
Securities (other than a change in par value, or from par value to no par
value, or from no par value, to par value, or as a result of a subdivision or
combination), (b) any consolidation or merger of the Company with or into any
other Person, or the merger of any other Person with or into the Company (other
than a merger which does not result in any reclassification, change,
conversion, exchange or cancellation of outstanding shares of Common Stock) or
(c) any sale, transfer or conveyance of all or substantially all of the assets
of the Company (computed on a consolidated basis), then the Company, or such
successor or purchasing entity, as the case may be, shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the
right to convert such Security only into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by a holder of the number of shares of Common Stock issuable upon conversion of
such Security immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or conveyance assuming such holder of
Common Stock of the Company failed to exercise his rights of an election, if
any, as to the kind or amount of securities, cash and other property receivable
upon such reclassification, change, consolidation, merger, sale, transfer or
conveyance (provided that if the kind or amount of securities, cash, and other
property receivable upon such reclassification, change, consolidation, merger,
sale, transfer or conveyance is not the same for each share of Common Stock of
the Company held immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or conveyance in respect of which such
rights of election shall not have been exercised ("non-electing share"), then
for the purpose of this Section 12.6 the kind and amount of securities, cash
and other property receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article XII. If, in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
shares of Common Stock includes shares of stock or
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other securities and property (including cash) of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
merger, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Securities as the Board of
Directors of the Company shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section 12.6 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be
mailed to each Holder of Securities at his address as the same appears on the
registry books of the Company.
Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Holders of
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Article VIII hereof, may accept as conclusive evidence of the correctness of
any such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee
prior to the execution of any such supplemental indenture) with respect
thereto.
SECTION 12.7. Notice of Certain Events.
In case:
(a) the Company shall declare a dividend (or any other
distribution) payable to the holders of Common Stock (other than cash
dividends);
(b) the Company shall authorize the granting to all of
the holders of Common Stock of rights, warrants or options to subscribe for or
purchase any shares of stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or
change of the Common Stock (including a subdivision or combination of its
outstanding shares of Common Stock), or any consolidation or merger to which
the Company is a party and for which approval of any stockholders of the
Company is required under the laws of the state of incorporation of the
Company, or the sale or conveyance of all or substantially all the property or
business of the Company;
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or
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(e) the Company or any of its Subsidiaries shall complete
an Offer;
then, the Company shall cause to be filed at the office or agency maintained
for the purpose of conversion of the Securities as provided in Section 4.2
hereof, and shall cause to be mailed to each Holder of Securities, at his
address as it shall appear on the registry books of the Company, at least 20
days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating the date on which (1) a record is expected to be taken for the
purpose of such dividend, distribution, rights, warrants or options or Offer,
or if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights, warrants
or options or to participate in such Offer are to be determined, or (2) such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up is expected to become effective and the date, if any
is to be fixed, as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or
winding-up.
SECTION 12.8. Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant thereto; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any
such tax or has established, to the satisfaction of the Company, that such tax
has been paid. The Company extends no protection with respect to any other
taxes imposed in connection with conversion of Securities.
SECTION 12.9. Company to Provide Stock.
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Securities from time to time as such Securities are presented for
conversion; provided, however, that nothing contained herein shall be construed
to preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchased shares of Common Stock
which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of
conversion of Securities hereunder require registration with or approval of any
governmental authority
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under any Federal or state law before such shares may be validly issued or
delivered upon conversion, then the Company covenants that it will in good
faith and as expeditiously as possible use its best efforts to secure such
registration or approval, as the case may be; provided, however, that nothing
in this Section 12.9 shall be deemed to limit in any way the obligations of the
Company provided in this Article XII.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Company and free of preemptive rights.
SECTION 12.10. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor any agent of the Trustee shall at any time be
under any duty or responsibility to any Holder of Securities to determine
whether any facts exist which may require any adjustment of the Conversion
Price, or with respect to the Officers' Certificate referred to in Section 12.5
hereof, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any agent of the Trustee shall be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property (including cash), which may at any time be issued or
delivered upon the conversion of any Security; and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Neither the
Trustee nor any agent of the Trustee shall be responsible for any failure of
the Company to issue, register the transfer of or deliver any shares of Common
Stock or stock certificates or other securities or property (including cash)
upon the surrender of any Security for the purpose of conversion or, subject to
Article VII hereof, to comply with any of the covenants of the Company
contained in this Article XII.
SECTION 12.11. Return of Funds Deposited for Redemption of Converted
Securities.
Any funds which at any time shall have been deposited by the Company
or on its behalf with the Trustee or any other Paying Agent for the purpose of
paying the principal of and interest on any of the Securities and which shall
not be required for such purposes because of the conversion of such Securities,
as provided in this Article XII, shall after such conversion be repaid to the
Company by the Trustee or such other Paying Agent.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 13.2. Notices.
Any notices or other communications to the Company or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Parker Drilling Company
8 East Third Street
Tulsa, Oklahoma 74013
Attention: Chief Financial Officer
Telecopy: (918) 631-1253
if to the Trustee:
For payment, registration of transfer, exchange, conversion
and tender of Notes:
By hand:
-------
Texas Commerce Bank National Association
One Main Place
1201 Main Street, 18th Floor
Dallas, Texas 75202
Telephone: (214) 871-9393 or (800) 275-2048
Attention: Registered Bond Events
By mail:
-------
Texas Commerce Bank National Association
P. O. Box 2320
Dallas, Texas 75221-2320
Attention: Registered Bond Events
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<PAGE> 73
For all other communications relating to the Notes:
Texas Commerce Bank National Association
600 Travis Street, 8th Floor
Houston, Texas 77002
Telephone: (713) 216-4648
Telecopy No.: (713) 216-7757
Attention: Global Trust Services
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged,
if telecopied; and five Business Days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312 (c).
SECTION 13.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
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<PAGE> 74
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 13.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may rely on
an Officers' Certificate or certificates of public officials.
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.7. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in Houston, Texas or New York, New York are authorized or
obligated by law or executive order to close. If a payment date is a Legal
Holiday at such place, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 13.8. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
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<PAGE> 75
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR
ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
SECTION 13.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
No direct or indirect partner, employee, stockholder, director or
officer, as such, past, present or future of the Company or any successor
corporation or any Subsidiary or any of the Company's other Affiliates, shall
have any personal liability in respect of the obligations of the Company under
the Securities or this Indenture by reason of his, her or its status as such
partner, stockholder, employee, director or officer. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 13.11. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 13.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
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<PAGE> 76
SECTION 13.13. Severability.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 13.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.15. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA and shall pay
all reasonable costs and expenses (including reasonable attorneys' fees for the
Company and the Trustee) incurred in connection therewith, including, but not
limited to, reasonable costs and expenses of qualification of the Indenture and
the Securities and printing this Indenture and the Securities. The Trustee
shall be entitled to receive from the Company any such Officers' Certificates,
Opinions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the TIA.
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<PAGE> 77
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
PARKER DRILLING COMPANY,
a Delaware corporation
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
a national banking association,
as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 78
Exhibit A
[FORM OF SECURITY]
PARKER DRILLING COMPANY
____% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
No. CUSIP No. ________________
$ ______________
Parker Drilling Company, a Delaware corporation (hereinafter
called the "Company") which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________ or registered assigns, the principal sum of ____________ Dollars,
on ___________________, 2004.
Interest Payment Dates: _________________ and _____________;
commencing __________________, 1998.
Record Dates: __________________ and ______________________.
Reference is made to the further provisions of this Security
set forth below, which will, for all purposes, have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed under its corporate seal.
PARKER DRILLING COMPANY,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Attest: ___________________________________
Secretary
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<PAGE> 79
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Securities described in the within-mentioned
Indenture.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
a national banking association,
as Trustee
By:
----------------------------------
Authorized Signatory
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<PAGE> 80
PARKER DRILLING COMPANY
___% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.(1)
1. Interest.
Parker Drilling Company, a Delaware corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of ___% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of ___% per annum compounded semi-annually.
The Company will pay interest semi-annually on ________________
_____________________ and _____________________ of each year (each, an
"Interest Payment Date"), commencing _________________________, 1998. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid on the Securities, from
_________________________, 1997. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except
Defaulted Interest) to the persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a
____________________
(1) This paragraph should only be added if the Security is issued in global
form.
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<PAGE> 81
Paying Agent to collect principal payments. Any such interest not so
punctually paid, and Defaulted Interest relating thereto, may be paid to the
persons who are registered Holders at the close of business on a Special Record
Date for the payment of such Defaulted Interest, as more fully provided in the
Indenture referred to below. The Company shall pay principal and interest in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for payment of public and private debts ("U.S. Legal
Tender"). The Securities will be payable as to principal, premium and interest
at the office or agency of the Company maintained for such purpose in the
Borough of Manhattan, the City and State of New York, or at the option of the
Company, payment of interest may be made by check mailed to the Holders at
their addresses set forth in the registry of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect
to principal of and premium, if any, and interest on Global Securities.
3. Paying Agent and Registrar.
Initially, Texas Commerce Bank National Association (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of _______________________, 1997 (the "Indenture"), between the Company and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$125,000,000 ($143,750,000 if the Underwriters' over-allotment option is
exercised in full).
5. Redemption.
The Securities will not be subject to redemption prior to
________________________, 2000. On or after ______________________, 2000, upon
not less than 30 nor more than 60 days notice to each Holder of Notes, the
Securities will be redeemable for cash at the option of the Company, in whole
or in part, at the Redemption Price (expressed as a percentage of principal
amount) set forth below with respect to the indicated Redemption Date, in each
case (subject to the right of Holders, as provided in Section 3.5 of the
Indenture, to receive interest on an Interest Payment Date that is on or prior
to such Redemption Date) together with any accrued but unpaid interest to the
Redemption Date.
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<PAGE> 82
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning Redemption Price
-------------------------- ----------------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
Any such redemption will comply with Article III of the Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at
least 30 days and not more than 60 days prior to the Redemption Date to the
Holder of each Security to be redeemed at such Holder's last address as then
shown upon the registry books of the Registrar. Securities may be redeemed in
part in multiples of $1,000 only.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date and payment of the Securities called for redemption is not prohibited
under Article XI of the Indenture, the Securities called for redemption will
cease to bear interest and the only right of the Holders of such Securities
will be to receive payment of the Redemption Price, plus any accrued and unpaid
interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of, or exchange Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
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<PAGE> 83
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money
back to the Company at its written request. After that, all liability of the
Trustee and such Paying Agent(s) with respect to such money shall cease and the
Holder of such Security shall thereafter look only to the Company for payment
of such money.
10. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, or make any other change that does
not adversely affect the rights of any Holder of a Security.
11. Conversion Rights.
Subject to the provisions of the Indenture, the Holders have
the right to convert the principal amount of the Securities into fully paid and
nonassessable shares of Common Stock of the Company at the initial Conversion
Price per share of Common Stock of $______ (or $______ in principal amount of
Securities for each such share of Common Stock), or at the adjusted Conversion
Price then in effect, if adjustment has been made as provided in the Indenture,
upon surrender of the Security to the Company, together with a fully executed
notice in substantially the form attached hereto and, if required by the
Indenture, an amount equal to accrued interest payable on such Security.
12. Subordination.
Payment of principal of and premium, if any, and interest on
the Securities is subordinated, in the manner and to the extent set forth in
the Indenture, to the prior payment in full of all Senior Indebtedness.
13. Repurchase at Option of Holder Upon a Change of Control.
If there is a Change of Control, the Company shall be required
to offer to purchase on the Repurchase Date all outstanding Securities at a
purchase price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Repurchase Date. Holders of Securities will
receive a Repurchase Offer from the Company prior to any related Repurchase
Date and may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
14. Successors.
-6-
<PAGE> 84
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations (except with respect to any obligations that
arise from or as a result of such transaction).
15. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event
of Default (except a Default in payment of principal or interest), if it
determines that withholding notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates or any subsidiary of the Company's
Affiliates, and may otherwise deal with the Company or its Affiliates as if it
were not the Trustee.
17. No Recourse Against Others.
No director or indirect partner, employee, stockholder or
officer, as such, past, present or future, of the Company or any successor
corporation or any Subsidiary or any of the Company's Affiliates shall have any
personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his, her or its status as such
partner, stockholder, director, officer or employee. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
18. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
19. Abbreviations and Defined Terms.
-7-
<PAGE> 85
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP
numbers to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
-9-
<PAGE> 86
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Article X of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Article X of the Indenture, state the
amount you want to be purchased: $
---------------
Date: Signature:
---------------------------- --------------------------------
(Sign exactly as your
name appears on the other
side of this Security)
-10-
<PAGE> 87
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2/
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Principal Amount of Principal Amount of following such Trustee or Securities
Date of this Global Security this Global Security decrease (or increase) Custodian
Exchange
=============================================================================================================================
</TABLE>
____________________
(2) This schedule should only be added if the Security is issued in global
form.
-11-
<PAGE> 88
[FORM OF] ASSIGNMENT
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee.)
________________________________________________________________________________
(Please insert Social Security or other identifying number of assignee.)
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: ____________________________ Signed: _____________________________
________________________________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee. *
_________________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature acceptable to the Trustee).
-12-
<PAGE> 89
FORM OF CONVERSION NOTICE
To: Parker Drilling Company
_____% Convertible Subordinated Notes due 2004
The undersigned owner of this Security hereby:
(i) irrevocably exercises the option to convert this Security, or the portion
hereof below designated, for shares of Common Stock of Parker Drilling Company
in accordance with the terms of the Indenture referred to in this Security and
(ii) directs that such shares of Common Stock deliverable upon the conversion,
together with any check in payment for fractional shares and any Security(ies)
representing any unconverted principal amount hereof, be issued and delivered
to the registered holder hereof unless a different name has been indicated
below. If shares are to be delivered registered in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account
of interest accompanies this Security.
Dated ____________________
________________________________________
Signature
Fill in for registration of shares if to be delivered, and of
Securities if to be issued, otherwise than to and in the name of the registered
holder.
________________________________________
Social Security or other
Taxpayer Identifying Number
___________________________________________
(Name)
___________________________________________
(Street Address)
___________________________________________
(City, State and Zip Code)
(Please print name and address)
Principal amount to be converted: (if
less than all)
$_______________________________________
Signature Guarantee. *
_________________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature acceptable to the Trustee).
-13-
<PAGE> 1
EXHIBIT 5.1
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
July 2, 1997
Parker Drilling Company
8 East Third Street
Tulsa, Oklahoma 74103
Ladies and Gentlemen:
We have acted as counsel for Parker Drilling Company, a Delaware
corporation (the "Company"), with respect to certain legal matters in connection
with the registration by the Company under the Securities Act of 1933, as
amended (the "Securities Act"), of the offer and sale by the Company of up to
$143,750,000 aggregate principal amount of its Convertible Subordinated Notes
due 2004 (the "Notes") pursuant to an indenture (the "Indenture") between the
Company and Texas Commerce Bank National Association, as Trustee. In connection
therewith, we, as your counsel, have examined such certificates, instruments and
documents and reviewed such questions of law as we have considered necessary or
appropriate for the purposes of this opinion.
Based on the foregoing, we are of the opinion that:
(1) the Notes proposed to be sold by the Company pursuant to an
underwriting agreement between the Company and the underwriters named
therein (the "Underwriting Agreement"), have been duly authorized for
issuance and, when (a) the Form S-3 Registration Statement relating to the
Notes (the "Registration Statement") shall have become effective under the
Securities Act and the Indenture shall have been qualified under the Trust
Indenture Act of 1939, as amended, (b) the Indenture shall have been duly
executed and delivered, (c) the Notes shall have been duly executed,
authenticated and delivered in accordance with the terms of the Indenture,
and (d) the Company shall have received the purchase price for the Notes in
accordance with the terms set forth in the Underwriting Agreement, the
Notes will constitute valid and legally binding obligations of the Company;
and
(2) the shares of Common Stock of the Company initially issuable upon
conversion of the Notes have been duly authorized for issuance and, when so
issued upon conversion of the Notes in accordance with the terms of the
Indenture, will be validly issued, fully paid and nonassessable shares of
Common Stock of the Company.
The foregoing opinion is limited to the laws of the United States of
America and to the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus forming a
part of the Registration Statement under the caption "Legal Matters." In giving
this consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act and the rules and
regulations thereunder.
Very truly yours,
VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 (File No. ) of our report dated October 14, 1996, on our
audits of the financial statements and financial statement schedule of Parker
Drilling Company. We also consent to the reference to our firm under the caption
"Independent Public Accountants."
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
July 2, 1997
<PAGE> 1
EXHIBIT 23.2
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Parker Drilling Company
Registration on Form S-3
We are aware that our reports dated January 13, 1997, April 14, 19976 and
June 27, 1997 on our reviews of interim financial information of Parker Drilling
Company for the period ended November 30, 1996 and 1995, February 28, 1997 and
1996, and May 31, 1997 and 1996 and included in the Company's quarterly reports
on Form 10-Q for the quarters then ended are incorporated by reference in this
registration statement. Pursuant to Rule 436(c) under the Securities Act of
1933, these reports should not be considered part of the registration statement
prepared or certified by us within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 to be filed on or about July 2, 1997 of our reports
dated June 27, 1997 on the financial statements of the Predecessor Company for
the four months ended April 30, 1996, of Hercules Offshore Corporation as of and
for the eight months ended December 31, 1996 and of Hercules Rig Corp. as of
December 31, 1996 and 1995, and for the period from inception, April 6, 1994,
through December 31, 1994, and for each of the two year periods ended December
31, 1996, and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
July 2, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-3 (File No. 333- ) of our report dated October
7, 1996 on the combined financial statements of the Mallard Bay Drilling
division of Energy Ventures, Inc. as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995, and to all references
to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
July 2, 1997
<PAGE> 1
EXHIBIT 23.5
The Board of Directors
Parker Drilling Company:
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Parker Drilling Company (No. 333- ) of our report dated
September 27, 1996, with respect to the balance sheets of Quail Tools, Inc. as
of December 31, 1995 and 1994, and the related statements of earnings and
retained earnings, and cash flows for each of the years in the three-year period
ended December 31, 1995, which report appears in the Form 8-K/A of Parker
Drilling Company dated January 6, 1997. Our report refers to the adoption in
1994 of the method of accounting for certain investments in debt and equity
securities prescribed by Statement of Financial Accounting Standards No. 115.
We also consent to the reference to our firm under the heading "Experts" in
the prospectus.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
June 30, 1997
<PAGE> 1
EXHIBIT NO. 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
September 11, 1996 appearing in Form 8-K for the year ended December 31, 1995.
We also consent to the references to us under the headings "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
July 2, 1997
<PAGE> 1
EXHIBIT 24.1
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or officer of
Parker Drilling Company, a Delaware corporation, does hereby make, constitute
and appoint ROBERT L. PARKER JR. and JAMES J. DAVIS, and each of them acting
individually, his true and lawful attorney with power to act without the other
and with full power of substitution, to execute, deliver and file with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), for and on his behalf, and in his name and in his capacity or
capacities as aforesaid, (i) a Registration Statement on Form S-3 with respect
to an offering of Convertible Subordinated Notes of Parker Drilling Company,
(ii) a second Registration Statement on Form S-3 with respect to additional
Convertible Subordinated Notes pursuant to Rule 462 under the Act and (iii) any
and all amendments thereto or other documents in support thereof or supplemental
thereto, hereby granting to said attorneys and each of them full power and
authority to do and perform each and every act and thing whatsoever as said
attorney or attorneys may deem necessary or advisable to carry out fully the
intent of the foregoing as the undersigned might or could do personally or in
the capacity or capacities as aforesaid, hereby ratifying and confirming all
acts and things which said attorney or attorneys may do or cause to be done by
virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 2nd day
of July, 1997.
/s/ ROBERT L. PARKER
------------------------------------
Robert L. Parker
/s/ ROBERT L. PARKER JR.
------------------------------------
Robert L. Parker Jr.
------------------------------------
James W. Linn
/s/ BERNARD DUROC-DANNER
------------------------------------
Bernard Duroc-Danner
/s/ DAVID L. FIST
------------------------------------
David L. Fist
------------------------------------
Earnest F. Gloyna
/s/ R. RUDOLPH REINFRANK
------------------------------------
R. Rudolph Reinfrank
/s/ JAMES J. DAVIS
------------------------------------
James J. Davis
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
74-0800980
(I.R.S. Employer Identification Number)
712 MAIN STREET, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR
HOUSTON, TEXAS 77002 (713) 216-2448
(Name, address and telephone number of agent for service)
PARKER DRILLING COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 73-0618660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8 EAST THIRD STREET, TULSA, OKLAHOMA 74103
(Address of principal executive offices) (Zip code)
__% CONVERTIBLE SUBORDINATED NOTES DUE 2004
(Title of indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
The obligor is not an affiliate of the trustee. (See Note on
Page 7.)
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE.
<TABLE>
<CAPTION>
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
-------------- ------------------
<S> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER
WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY
OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING
INFORMATION:
(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH
OTHER INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
1
<PAGE> 3
ITEM 4. (CONTINUED)
(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS
FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING
OF SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE
TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A
STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS
COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER
INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
OBLIGOR OR UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF
THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR
REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY
EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH
CONNECTION.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND
EXECUTIVE OFFICER OF THE OBLIGOR.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
------------- -------------- ------------ -----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response to Item
13.
2
<PAGE> 4
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR
THEIR OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
-------------- -------------- ------------ ----------------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE
OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN
DEFAULT BY THE TRUSTEE.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
WHETHER THE BENEFICIALLY OR PERCENT OF
SECURITIES HELD AS COLLATERAL CLASS
ARE VOTING SECURITY FOR REPRESENTED BY
OR NONVOTING OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS SECURITIES DEFAULT IN COL. C
-------------- ---------- -------- ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
3
<PAGE> 5
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF
SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
-------------- ----------- ------------------ ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
-------------- ----------- ------------------ ----------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
4
<PAGE> 6
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A
PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR
SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
-------------- ----------- ------------------ ---------
<S> <C> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS
INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
<TABLE>
<CAPTION>
COL. A COL. B COL. C
NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
------------ ----------- --------
<S> <C> <C>
</TABLE>
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO
THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There is not, nor has there been, a default with respect to the
securities under this indenture. (See Note on Page 7.)
5
<PAGE> 7
ITEM 13. (CONTINUED)
(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH
ANY SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There has not been a default under any such indenture or series. (See
Note on Page 7.)
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.
Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.
ITEM 15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN
TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO
BE QUALIFIED UNDER THE ACT.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
o 1. A copy of the articles of association of the trustee now
in effect.
** 2. A copy of the certificate of authority of the trustee to
commence business.
* 3. A copy of the certificate of authorization of the
trustee to exercise corporate trust powers issued by the Board
of Governors of the Federal Reserve System under date of
January 21, 1948.
+ 4. A copy of the existing bylaws of the trustee.
5. Not applicable.
6. The consent of United States institutional trustees
required by Section 321(b) of the Act.
6
<PAGE> 8
[ ] 7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements of its
supervising or examining authority.
8. Not applicable.
9. Not applicable.
- ---------------
o Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-56195.
** Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-42814.
* Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-11 File No. 33-25132.
+ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-65055.
[ ] Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 333-26519.
---------------
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment
by the trustee of all facts on which to base responsive answers to Items 2 and
13, the answers to said Items are based on incomplete information. Such Items
may, however, be considered as correct unless amended by an amendment to this
Form T-1.
7
<PAGE> 9
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE
TRUSTEE, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING
ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF
AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF
HOUSTON, AND STATE OF TEXAS, ON THE 2nd DAY OF JULY, 1997.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Trustee)
By: /s/ Mauri J. Cowen
---------------------------------
Mauri J. Cowen
Vice President and Trust Officer
8
<PAGE> 10
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is trustee under an indenture dated as of July __,
1997, between Parker Drilling Company, a Delaware corporation, and Texas
Commerce Bank National Association, as Trustee, entered into in connection with
the issuance of their __ % Convertible Subordinated Notes Due 2004___.
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned hereby consents that reports of examinations of the
undersigned, made by Federal or State authorities authorized to make such
examinations, may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Mauri J. Cowen
---------------------------------
Mauri J. Cowen
Vice President and Trust Officer
