<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PARKER DRILLING COMPANY
(and certain subsidiaries identified in footnote (*) below)
(Exact name of registrant as specified in its charter)
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DELAWARE 1381 73-0618660
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
JAMES J. DAVIS
SENIOR VICE PRESIDENT OF FINANCE
AND CHIEF FINANCIAL OFFICER
8 EAST THIRD STREET 8 EAST THIRD STREET
TULSA, OKLAHOMA 74103 TULSA, OKLAHOMA 74103
(918) 585-8221 (918) 585-8221
(Address, including zip code, and (Name, address, including zip code, and
telephone number, including area code, telephone number, including area code,
of registrant's principal executive offices) of agent for service)
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Copies to:
T. MARK KELLY
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
(713) 758-4592
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable following the effectiveness of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED PROPOSED
OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
9.75% Senior Notes Due 2006,
Series D........................ $450,000,000 100% $450,000,000 $132,750
- -------------------------------------------------------------------------------------------------------------------
Guarantees(2)..................... -- -- -- --
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(1) The registration fee has been computed pursuant to rule 457(f)(2) under the
Securities Act of 1933, as amended (the "Securities Act"), based on the
stated principal amount of each outstanding Series B Note and Series C Note
which may be received by the Registrant in the exchange transaction in which
the Exchange Notes will be offered.
(2) Guarantees by subsidiaries of the Registrant of the payment of the principal
and interest on the 9.75% Senior Notes due 2006, Series D. Pursuant to Rule
457(n), no additional fee is required.
(*) The following subsidiaries of Parker Drilling Company are co-registrants and
are incorporated in the states and have the I.R.S. Employer Identification
Numbers indicated: (i) Parker Drilling Company of Oklahoma, Incorporated, an
Oklahoma corporation (73-0798949); (ii) Parker Technology, Inc., an Oklahoma
corporation (75-1246599); (iii) Parker Drilling Company International
Limited, a Nevada corporation (73-1046414); (iv) Choctaw International Rig
Corp., a Nevada corporation (73-1046415); (v) Parker Drilling Company
Limited, a Nevada corporation (73-1284516); (vi) Parker Drilling Company
Limited, an Oklahoma corporation (73-1294859); (vii) Parker Drilling Company
of New Guinea, Inc., an Oklahoma corporation (73-1331670); (viii) Parker
Drilling Company North America, Inc., a Nevada corporation (73-1506381);
(ix) Parker Drilling U.S.A. Ltd., a Nevada corporation (73-1030215); (x)
Vance Systems Engineering, Inc., a Texas corporation (75-1282282); (xi) DGH,
Inc., a Texas corporation (75-1726918); (xii) Mallard Bay Drilling, L.L.C.,
an Oklahoma corporation (72-1361469); (xiii) Quail Tools, L.L.P., an
Oklahoma corporation (72-1361471); (xiv) Parcan Limited, a Nevada
corporation (73-1097039); (xv) Parker Technology, L.L.C., a Louisiana
corporation (62-1681875); (xvi) Hercules Offshore Corporation, a Texas
corporation (76-0409092); (xvii) Hercules Rig Corp., a Texas corporation
(76-0432009); and (xviii) Parker Drilling Offshore Company, a Delaware
corporation (73-1526736).
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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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.
SUBJECT TO COMPLETION, DATED APRIL 1, 1998
PROSPECTUS
PARKER DRILLING COMPANY
OFFER TO EXCHANGE
9.75% SENIOR NOTES DUE 2006, SERIES D
($450,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES B
($300,000,000 PRINCIPAL AMOUNT OUTSTANDING)
AND 9.75% SENIOR NOTES DUE 2006, SERIES C
($150,000,000 PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED
---------------------
Parker Drilling Company, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $1,000 principal amount of its 9.75% Senior Notes due 2006, Series D
(the "Exchange Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined herein) of which this Prospectus constitutes a part, for each $1,000
principal amount of its outstanding 9.75% Senior Notes due 2006, Series B (the
"Series B Notes" or the "Series A/B Notes"), of which $300,000,000 principal
amount is outstanding, and its outstanding 9.75% Senior Notes due 2006, Series C
(the "Series C Notes"), of which $150,000,000 principal amount is outstanding
(the Series B Notes and the Series C Notes being referred to collectively as the
"Old Notes"). The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Series B Notes and Series C
Notes, except for certain transfer restrictions and registration rights relating
to the Series C Notes. The Exchange Notes will evidence the same debt as the Old
Notes and will be issued under and be entitled to the benefits of the Indenture
(as defined herein). The Exchange Notes and the Old Notes are collectively
referred to herein as the "Notes."
The Exchange Notes will be senior unsecured obligations of the Company,
ranking pari passu in right of payment with all senior Indebtedness (as defined)
of the Company and senior to all Subordinated Indebtedness (as defined) of the
Company. The Exchange Notes will be unconditionally guaranteed (the "Subsidiary
Guarantees") on a senior unsecured basis by the Company's principal operating
subsidiaries (the "Subsidiary Guarantors"), and the Subsidiary Guarantees will
rank pari passu in right of payment with all senior Indebtedness of the
Subsidiary Guarantors and senior to all Subordinated Indebtedness of the
Subsidiary Guarantors. The Subsidiary Guarantees may be released under certain
circumstances. The Exchange Notes and Subsidiary Guarantees will be effectively
subordinated to secured Indebtedness of the Company and the Subsidiary
Guarantors, respectively, including any Indebtedness under the Senior Credit
Facility (as defined), which is secured by liens on substantially all of the
assets of the Company and the Subsidiary Guarantors, to the extent of the
pledged collateral. At February 28, 1998, after giving effect to the application
of the net proceeds from the sale of the Series C Notes, the Company would have
had no secured Indebtedness outstanding (excluding letters of credit) and would
have had $75 million available under the revolving credit portion of the Senior
Credit Facility, less $12 million reserved to support outstanding letters of
credit. The Indenture governing the Exchange Notes permits the Company and its
subsidiaries to incur additional Indebtedness in the future, subject to certain
limitations.
(Cover continued on next page)
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER
AND IN EVALUATING AN INVESTMENT IN THE EXCHANGE NOTES.
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.
The date of this Prospectus is , 1998.
<PAGE> 3
The Company will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the date the Exchange
Offer expires, which will be , 1998, unless the Exchange Offer is
extended. See "The Exchange Offer -- Expiration Date; Extensions; Amendment."
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the business day prior to the Expiration Date (as defined herein),
unless previously accepted for exchange. The Exchange Offer is not conditioned
upon any minimum principal amount of Old Notes being tendered for exchange.
However, the Exchange Offer is subject to certain conditions which may be waived
by the Company and to the terms and provisions of the Registration Rights
Agreement related to the Series C Notes (as defined herein). Old Notes may be
tendered only in denominations of $1,000 principal amount and integral multiples
thereof. Pursuant to the terms of the Registration Rights Agreement, the Company
has agreed to pay certain expenses of the Exchange Offer. See "The Exchange
Offer."
The Exchange Notes will bear interest from the later of May 15, 1998 and
the date of issuance of the Exchange Notes at a rate equal to 9.75% per annum
and will be payable semi-annually on May 15 and November 15 of each year
commencing November 15, 1998. Interest on the Series C Notes that are tendered
in exchange for the Exchange Notes that has accrued from the date of issuance of
the Series C Notes (or the most recent Interest Payment Date to which interest
on the Series C Notes has been paid), through the Exchange Date and interest on
the Series B Notes that are tendered in exchange for the Exchange Notes since
the most recent date to which interest on the Series B Notes has been paid
through the Exchange Date will be payable on November 15, 1998.
The Series C Notes in an aggregate principal amount of $150 million were
sold by the Company on March 11, 1998 to Jefferies & Company, Inc. (the "Initial
Purchaser") in a transaction not registered under the Securities Act in reliance
upon Section 4(2) of the Securities Act. The Series C Notes were thereupon
offered and sold by the Initial Purchaser only to "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act) and to a limited
number of institutional "accredited investors" (as defined in Rule
501(a)(1),(2),(3) or (7) under the Securities Act), each of whom agreed to
comply with certain transfer restrictions and other conditions. Accordingly, the
Series C Notes may not be offered, resold or otherwise transferred unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The Exchange Notes
are being offered hereunder in order to satisfy the obligations of the Company
under the Registration Rights Agreement entered into with the Initial Purchaser
in connection with the offering of the Series C Notes. See "The Exchange Offer."
On November 12, 1996, the Company issued $300 million aggregate principal
amount of unregistered 9.75% Senior Notes due 2006, Series A (the "Series A
Notes"), all of which were exchanged in February 1997 for the registered Series
B Notes pursuant to the Indenture dated November 12, 1996 (the "Series A/B
Indenture"). As such, the Series B Notes are freely tradeable. THE COMPANY HAS
INCLUDED THE SERIES B NOTES IN THE EXCHANGE OFFER IN ORDER TO ALLOW THE SERIES C
NOTES AND THE SERIES B NOTES TO TRADE AS A SINGLE ISSUE, WHICH THE COMPANY
BELIEVES WILL INCREASE THE LIQUIDITY OF THE EXCHANGE NOTES. SEE "RISK
FACTORS -- EXCHANGE OFFER PROCEDURES" AND "RISK FACTORS -- ABSENCE OF A PUBLIC
MARKET FOR THE EXCHANGE NOTES."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission" or "SEC") to third parties, including
Exxon Capital Holdings Corporation, SEC No-Action Letter (available April 13,
1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (available June 5, 1991)
(the "Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC No-Action Letter
(available June 5, 1991), the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer for Series C Notes may be offered for resale,
resold and otherwise transferred by the respective holders thereof (other than a
"Restricted Holder," being (i) a broker-dealer who purchased Series C Notes
exchanged for such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii) a
person that is an affiliate of the Company within the meaning of Rule 405 under
the Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of such holder's business and such holder is not
participating in, and has no arrangement with any person to participate in, the
distribution (within the meaning of the Securities Act) of such Exchange Notes.
Eligible
ii
<PAGE> 4
holders wishing to accept the Exchange Offer must represent to the Company that
such conditions have been met. Holders who tender Series C Notes in the Exchange
Offer with the intention to participate in a distribution of the Exchange Notes
may not rely upon the Morgan Stanley Letter or similar no-action letters. See
"The Exchange Offer -- General." Each broker-dealer that receives Exchange Notes
for its own account in exchange for Series C Notes pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes. A broker-dealer that delivers such a prospectus
to purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations). This Prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Series C Notes where
such Series C Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that it will make this Prospectus and any amendment or supplement to this
Prospectus available to any broker-dealer for use in connection with any such
resale for a period of up to 180 days after consummation of the Exchange Offer.
See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer.
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to the liquidity of
any markets that may develop for the Exchange Notes or as to the ability of or
price at which the holders of Exchange Notes would be able to sell their
Exchange Notes. Future trading prices of the Exchange Notes will depend on many
factors, including, among others, prevailing interest rates, the Company's
operating results and the market for similar securities. The Company does not
intend to apply for listing of the Exchange Notes on any securities exchange.
The Initial Purchaser has informed the Company that they currently intend to
make a market for the Exchange Notes. However, they are not so obligated, and
any such market making may be discontinued at any time without notice.
Accordingly, no assurance can be given that an active public or other market
will develop for the Exchange Notes or as to the liquidity of or the trading
market for the Exchange Notes.
ANY SERIES C NOTES AND/OR SERIES B NOTES NOT TENDERED AND ACCEPTED IN THE
EXCHANGE OFFER WILL REMAIN OUTSTANDING. TO THE EXTENT THAT ANY SERIES C NOTES
AND/OR SERIES B NOTES OF OTHER HOLDERS ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED SERIES C NOTES AND/OR SERIES B
NOTES COULD BE ADVERSELY AFFECTED. FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER,
THE HOLDERS OF UNTENDERED SERIES C NOTES WILL CONTINUE TO BE SUBJECT TO THE
EXISTING RESTRICTIONS UPON TRANSFER THEREOF.
The Company expects that the Exchange Notes issued pursuant to this
Exchange Offer will be issued in the form of one or more Global Exchange Notes
(as defined herein), which will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") and registered in its name or in the name of
Cede & Co., its nominee. Beneficial interest in the Global Exchange Notes
representing the Exchange Notes will be shown on, and transfers thereof to
qualified institutional buyers will be effected through, records maintained by
DTC and its participants. After the initial issuance of the Global Exchange
Note, Exchange Notes in certificated form will be issued in exchange for the
Global Exchange Note on the terms set forth in the Indenture. See "Description
of Exchange Notes -- Book-Entry, Delivery and Form."
---------------------
No dealer, salesperson or other person has been authorized to give
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. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any security
other than the Exchange Notes offered hereby, nor does it constitute an offer to
sell or the solicitation of an offer to buy any of the Exchange Notes to any
person in any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any date subsequent to the
date hereof.
iii
<PAGE> 5
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
TABLE OF CONTENTS
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PAGE NO.
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Available Information....................................... iv
Incorporation of Certain Documents by Reference............. v
Summary..................................................... 1
Disclosure Regarding Forward-Looking Statements............. 11
Risk Factors................................................ 11
The Company................................................. 17
Management.................................................. 28
Private Placement........................................... 29
Use of Proceeds............................................. 29
Capitalization.............................................. 30
Unaudited Pro Forma Combined Financial Statements........... 31
Selected Consolidated Financial Information................. 37
The Exchange Offer.......................................... 39
Description of Senior Credit Facility....................... 46
Description of Exchange Notes............................... 47
Certain Federal Income Tax Considerations................... 74
Plan of Distribution........................................ 76
Transfer Restrictions on Series C Notes..................... 76
Legal Matters............................................... 78
Experts..................................................... 78
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (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. Such reports, proxy and information
statements and other information can also be inspected and copied at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. In
addition, the Commission maintains a site on the World Wide Web that contains
reports, proxy and information statements and other information filed
electronically by the Company with the Commission which can be accessed over the
Internet at http://www.sec.gov. While any Notes remain outstanding, the Company
will make available, upon request, to any holder and any prospective purchaser
of Notes, the information required pursuant to Rule 144A(d)(4) under the
Securities Act during any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act. Any such request should be directed to the
Secretary of the Company, 8 East Third Street, Tulsa, Oklahoma 74103. The
Company's common stock is listed on the New York Stock Exchange under the symbol
"PKD."
This Prospectus constitutes part of a registration statement on Form S-4
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus omits certain of the information set forth in
the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the securities offered hereby. Statements
iv
<PAGE> 6
contained herein concerning the provisions of contracts or other documents are
not necessarily complete, and each such statement is qualified in its entirety
by reference to the copy of the applicable contract or other document filed with
the Commission. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment of
the fee prescribed by the Commission, or may be examined without charge at the
public reference facilities of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS
TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE THEREIN,
ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED,
UPON ORAL OR WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY, 8 EAST THIRD
STREET, TULSA, OKLAHOMA 74103, TELEPHONE NUMBER (918) 585-8221. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1998. [5 DAYS PRIOR TO THE EXPIRATION DATE]
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act (File No. 1-7573) and are incorporated herein by
reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997;
(2) the Company's Current Reports on Form 8-K filed November 3, 1997
and January 8, 1998;
(3) the Company's Current Reports on Form 8-K/A filed January 6, 1997
and March 6 and March 31, 1998; and
(4) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended November 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Registration Statement of which this Prospectus is a part
with respect to the registration of the Exchange Notes, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
thereof. 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 herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
v
<PAGE> 7
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 acquisitions of Hercules Offshore Corporation ("HOC") and
Hercules Rig Corp. ("HRC" and collectively with HOC, "Hercules") in December
1997, (iv) the financings related to these acquisitions, and (v) the Series C
Notes Offering and the application of the net proceeds therefrom. 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 services,
operating in the transition zones of the Gulf of Mexico and Nigeria, in the
offshore waters of the Gulf of Mexico and in international and domestic land oil
and gas producing regions. Since 1996, the Company's growth strategy has focused
on expanding its business into higher margin offshore and transition zone
drilling and workover markets. Consistent with this strategy, 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"), (ii)
Quail, a leading provider of specialized rental equipment for drilling and
workover operations, primarily in the Gulf of Mexico (the "Quail Acquisition"),
(iii) the assets of Bolifor, S.A. ("Bolifor"), a leading provider of land
contract drilling services in Bolivia (the "Bolifor Acquisition") and (iv)
Hercules, a leading provider of contract drilling and workover services in the
Gulf of Mexico market (the "Hercules Acquisition").
Parker's rig fleet currently consists of 35 barge drilling and workover
rigs, eight offshore jackup rigs, six offshore platform rigs and 75 land rigs.
The Company's barge rig fleet is dedicated to transition zone waters, which are
generally defined as extending from the coast to depths of up to 25 feet. The
Company's offshore jackup and platform rig fleets currently operate in the Gulf
of Mexico market. The Company'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, 21 of the Company's land rigs
are helicopter-transportable, thus establishing the Company as the dominant
operator in the heli-rig market throughout the world. 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 to oil and gas
operators around the world 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 improved technology which has reduced
drilling costs. In the offshore drilling market, including transition zones, rig
day rates and utilization levels are at a 15-year high with many markets at or
approaching full utilization. During 1996 and 1997, the land drilling industry,
both in the United States and internationally, has also shown a marked
improvement in day rates and utilization driven by several factors, including
stronger commodity prices, rig attrition and the consolidation of drilling
contractors, especially in the domestic market. While oil prices have declined
in recent months due primarily to anticipation of reduced demand in the Asia
Pacific region and increased supply by certain OPEC members, the Company does
not expect such price reductions to materially affect its business unless oil
prices remain depressed for an extended period. See "Risk Factors -- Industry
Conditions."
The Company's principal offices are located at 8 East Third Street, Tulsa,
Oklahoma 74103, and its telephone number is (918) 585-8221.
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
1
<PAGE> 8
Company's business strategy is to (i) expand and diversify the Company's market
position in transition zones and in offshore drilling markets worldwide; (ii)
capitalize on the increased demand for contract drilling services in the
Company's core drilling markets by upgrading its existing rigs with newer
technology and equipment and by purchasing or constructing additional rigs; and
(iii) expand and diversify its operations by pursuing additional acquisitions of
complementary assets and businesses.
HERCULES TRANSACTION
In December 1997, the Company acquired Hercules for $195.6 million.
Hercules owns a fleet of seven jackup rigs and three self-erecting platform rigs
and is the second-largest jackup drilling and workover company in the shallow
waters of the Gulf of Mexico. The Hercules Acquisition further expands and
complements the Company's presence in the Gulf of Mexico market and provides
opportunities to operate jackup rigs internationally. Additionally, the Hercules
fleet of three platform rigs augments the Company's existing offshore platform
rig business.
THE EXCHANGE OFFER
The Series C Notes......... The Series C Notes were sold by the Company on
March 11, 1998 (the "Series C Notes Offering"), to
Jefferies & Company, Inc. (the Initial Purchaser)
pursuant to a Purchase Agreement dated March 4,
1998 (the "Purchase Agreement"). The Initial
Purchaser subsequently resold the Series C Notes to
qualified institutional buyers pursuant to Rule
144A under the Securities Act and to accredited
institutional investors.
The Series B Notes......... On November 12, 1996 the Company sold Series A
Notes to Jefferies & Company, Inc. and to ING
Baring (U.S.) Securities, Inc. (collectively, the
"Series A Initial Purchasers"). Pursuant to a
Registration Rights Agreement dated November 12,
1996, an exchange offer was made by the Company in
February 1997 to exchange all outstanding Series A
Notes for registered Series B Notes. Pursuant to
such exchange offer, all outstanding Series A Notes
were exchanged for registered Series B Notes.
Registration
Requirements............... Pursuant to the Purchase Agreement, the Company and
the Initial Purchaser entered into a Registration
Rights Agreement dated March 11, 1998 (the
"Registration Rights Agreement"), which grants the
holders of the Series C Notes certain exchange and
registration rights. The Exchange Offer is intended
to satisfy such exchange and registration rights,
which terminate upon the consummation of the
Exchange Offer. If applicable law or applicable
interpretations of the staff of the Commission do
not permit the Company to effect the Exchange
Offer, the Company has agreed to file a shelf
registration (the "Shelf Registration Statement")
covering resales of the Series C Notes. The
Registration Rights Agreement also obligates the
Company to make the Exchange Offer to the holders
of the Series B Notes.
The Exchange Offer......... The Company is offering to exchange $1,000
principal amount of the Exchange Notes for each
$1,000 principal amount of (i) Series C Notes and
(ii) Series B Notes. As of the date hereof,
$150,000,000 aggregate principal amount of Series C
Notes are outstanding and $300,000,000 aggregate
principal amount of Series B Notes are outstanding.
The Company will issue the Exchange Notes to
holders on [ ], 1998 (the "Exchange
Date").
2
<PAGE> 9
Based on an interpretation of the staff of the
Commission set forth in no action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Series C Notes may be offered for
resale, resold and otherwise transferred by any
holder thereof (other than any such holder which is
an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes.
Each broker-dealer must acknowledge that it will
deliver a prospectus in connection with any resale
of Exchange Notes issued in exchange for Series C
Notes. The Letter of Transmittal for the Exchange
Offer states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes
received in exchange for Series C Notes where such
Series C Notes were acquired by such broker-dealer
as a result of market-making activities or other
trading activities. The Company has agreed to make
this Prospectus available to any participating
broker-dealer for use in connection with any such
resale for a period of up to 180 days from the
consummation of the Exchange Offer.
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes could not rely on the position of the staff
of the Commission enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989) or
similar no-action letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the resale
transaction. Failure to comply with such
requirements in such instance may result in such
holder incurring liability under the Securities Act
for which the holder is not indemnified by the
Company.
Expiration Date Offer...... 5:00 p.m., New York City time, on ,
unless the Exchange is extended, in which case the
term "Expiration Date" means the latest date to
which the Exchange Offer is extended. See "The
Exchange Offer -- Expiration Date; Extensions;
Amendments."
Interest on the Exchange
Notes...................... The Exchange Notes will bear interest from the
later of May 15, 1998 and the date of issuance of
the Exchange Notes at a rate equal to 9.75% per
annum and will be payable semi-annually on May 15
and November 15 of each year commencing November
15, 1998. Interest on the Series C Notes that are
tendered in exchange for the Exchange Notes that
has accrued from the date of issuance of the Series
C Notes (or the most recent Interest Payment Date
to which interest on the Series C Notes has been
paid), through the Exchange Date and interest on
the Series B Notes that are tendered in exchange
for the Exchange Notes since the most recent date
to which interest on the Series B Notes has been
paid through the Exchange Date will be payable on
November 15, 1998.
3
<PAGE> 10
Procedures for Tendering
Series C Notes and/or
Series B Notes........... Each holder of Series C Notes and/or Series B Notes
wishing to accept the Exchange Offer must complete,
sign and date the accompanying Letter of
Transmittal, or a facsimile thereof, in accordance
with the instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Series C Notes and/or Series B Notes and any other
required documentation to the Exchange Agent at the
address set forth herein. By executing the Letter
of Transmittal, each holder will represent to the
Company that, among other things, the holder or the
person receiving such Exchange Notes, whether or
not such person is the holder, is acquiring the
Exchange Notes in the ordinary course of business
and that neither the holder nor any such other
person has any arrangement or understanding with
any person to participate in the distribution of
such Exchange Notes. In lieu of physical delivery
of the certificates representing Series C Notes
and/or Series B Notes, tendering holders may
transfer Series C Notes and/or Series B Notes
pursuant to the procedure for book-entry transfer
as set forth under "The Exchange
Offer -- Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Series C Notes and/or
Series B Notes are registered in the name of a
broker-dealer, commercial bank, trust company or
other nominee and who wishes to tender should
contact such registered holder promptly and
instruct such registered holder to tender on such
beneficial owner's behalf.
If such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to
completing and executing the Letter of Transmittal
and delivering its Series C Notes and/or Series B
Notes, either make appropriate arrangements to
register ownership of the Series C Notes and/or
Series B Notes in such owner's name or obtain a
properly completed bond power from the registered
holder. The transfer of record ownership may take
considerable time.
Guaranteed Delivery
Procedures................. Holders of Series C Notes and/or Series B Notes who
wish to tender their Series C Notes and/or Series B
Notes and whose Series C Notes and/or Series B
Notes are not immediately available or who cannot
deliver the Series C Notes and/or Series B Notes
(or comply with the procedures for book-entry
transfer prior to the Expiration Date) must tender
their Series C Notes and/or Series B Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date
pursuant to the procedures described under "The
Exchange Offer -- Withdrawal of Tenders."
Acceptance of Series C
Notes and/or Series B Notes
and Delivery of Exchange
Notes.................... Subject to certain conditions, the Company will
accept for exchange any and all Series C Notes and
any and all Series B Notes that are properly
tendered in the Exchange Offer prior to 5:00 p.m.,
New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the
4
<PAGE> 11
Exchange Offer will be delivered on the Exchange
Date. See "The Exchange Offer -- Terms of the
Exchange Offer."
Federal Income Tax
Consequences............. The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Consequences."
Effect on Holders of Series
C Notes.................... As a result of the making of this Exchange Offer,
the Company will have fulfilled one of its
obligations under the Registration Rights Agreement
and, with certain exceptions noted below, holders
of Series C Notes who do not tender their Series C
Notes will not have any further registration rights
under the Registration Rights Agreement or
otherwise. Such holders will continue to hold the
untendered Series C Notes and will be entitled to
all the rights and subject to all the limitations
applicable thereto under the Indenture, except to
the extent such rights or limitations, by their
terms, terminate or cease to have further
effectiveness as a result of the Exchange Offer.
All untendered Series C Notes will continue to be
subject to certain restrictions on transfer.
Accordingly, if any Series C Notes are tendered and
accepted in the Exchange Offer, the trading market
of the untendered Series C Notes could be adversely
affected. See "Risk Factors -- Exchange Offer
Procedures" and "Risk Factors -- Absence of a
Public Market for the Exchange Notes."
Effect on Holders of Series
B Notes.................... Holders of Series B Notes who do not tender their
Series B Notes will continue to hold untendered
Series B Notes and will be entitled to all the
rights and subject to all the limitations
applicable thereto under the Series A/B Indenture.
If any holders of the Series B Notes tender such
notes, the trading market of untendered Series B
Notes could be adversely affected. See "Risk
Factors -- Exchange Offer Procedures" and "Risk
Factors -- Absence of a Public Market for the
Exchange Notes."
Exchange Agent............. Chase Bank of Texas, National Association is
serving as exchange agent (the "Exchange Agent") in
connection with the Exchange Offer. The mailing
address of the Exchange Agent is: Chase Bank of
Texas, National Association, Attention: Frank
Ivins -- Registered Bond Events -- Personal &
Confidential, P. O. Box 2320, Dallas, Texas 75221-
2320. Hand deliveries and deliveries by overnight
courier should be addressed to Chase Bank of Texas,
National Association, Attention: Frank
Ivins -- Registered Bond Events -- Personal &
Confidential, 1201 Main Street, 18th Floor, Dallas,
Texas 75202. For information with respect to the
Exchange Offer, the telephone number for the
Exchange Agent is (800) 275-2048, and the facsimile
number for the Exchange Agent is (214) 672-5746.
See "The Exchange Offer -- Exchange Agent."
Use of Proceeds............ There will be no cash proceeds payable to the
Company from the issuance of the Exchange Notes
pursuant to the Exchange Offer. See "Use of
Proceeds." For a discussion of the use of the net
proceeds received by the Company from the sale of
the Series C Notes, see "Private Placement."
5
<PAGE> 12
SUMMARY OF TERMS OF THE EXCHANGE NOTES
Securities Offered......... $450,000,000 principal amount of 9.75% Senior Notes
due 2006, Series D.
Maturity Date.............. November 15, 2006.
Interest Rate and Payment
Dates...................... The Exchange Notes will bear interest at a rate of
9.75% per annum. Interest on the Exchange Notes
will accrue from the date of issuance thereof and
will be payable semi-annually on November 15 and
May 15 of each year, commencing November 15, 1998.
Optional Redemption........ The Exchange Notes will be redeemable at the option
of the Company, in whole or in part, at any time on
or after November 15, 2001, at the redemption
prices set forth herein, together with accrued and
unpaid interest to the date of redemption. In the
event the Company consummates a Public Equity
Offering on or prior to November 15, 1999, the
Company may at its option use all or a portion of
the proceeds from such offering to redeem up to 35%
of the aggregate principal amount of the Notes
originally issued (but disregarding, for this
purpose, any Exchange Notes other than additional
Notes) at a redemption price equal to 109.75% of
the aggregate principal amount thereof, together
with accrued and unpaid interest to the date of
redemption, provided that at least 65% of the
aggregate principal amount of Notes originally
issued (but disregarding, for this purpose, any
Exchange Notes other than additional Notes) remain
outstanding immediately after such redemption. See
"Description of Exchange Notes -- Optional
Redemption."
Change of Control.......... Upon the occurrence of a Change of Control (as
defined herein), each holder of Exchange Notes will
have the right to require the Company to purchase
all or a portion of such holder's Exchange Notes at
a price equal to 101% of the aggregate principal
amount thereof, together with accrued and unpaid
interest to the date of purchase. See "Description
of Exchange Notes -- Repurchase at the Option of
Holders -- Change of Control."
Guarantees................. The Exchange Notes will be unconditionally
guaranteed on a senior unsecured basis by each of
the Company's principal operating subsidiaries, and
such Subsidiary Guarantees will rank pari passu in
right of payment with all senior indebtedness of
the Subsidiary Guarantors and senior to all
subordinated indebtedness of the Subsidiary
Guarantors. The Subsidiary Guarantees may be
released under certain circumstances. See
"Description of Exchange Notes -- Subsidiary
Guarantees."
Ranking.................... The Exchange Notes will be senior unsecured
obligations of the Company, ranking pari passu in
right of payment with all senior indebtedness of
the Company and senior to all subordinated
indebtedness of the Company. The Exchange Notes and
the Subsidiary Guarantees will be effectively
subordinated to secured indebtedness of the Company
and the Subsidiary Guarantors, respectively,
including any indebtedness under the Senior Credit
Facility (as defined), which is secured by liens on
substantially all of the assets of the Company and
the Subsidiary Guarantors. At February 28, 1988,
after giving effect to the application of the net
proceeds from the sale of the Series C Notes, the
Company
6
<PAGE> 13
would have had no secured Indebtedness outstanding
(excluding letters of credit) and would have had
$75 million available under the revolving credit
portion of the Senior Credit Facility, less $12
million reserved to support outstanding letters of
credit. Subject to certain limitations, the Company
and its Subsidiaries may incur additional
indebtedness in the future. See "Description of
Senior Credit Facility" and "Description of
Exchange Notes -- General."
Certain Covenants.......... The Indenture relating to the Exchange Notes
contains certain covenants, including covenants
that limit: (i) indebtedness; (ii) restricted
payments; (iii) issuances and sales of capital
stock of restricted subsidiaries; (iv)
sale/leaseback transactions; (v) transactions with
affiliates; (vi) liens; (vii) asset sales; (viii)
dividends and other payment restrictions affecting
restricted subsidiaries; (ix) conduct of business;
and (x) mergers, consolidations or sales of assets.
See "Description of Exchange Notes -- Certain
Covenants."
Transfer Restrictions...... The Series C Notes were not registered under the
Securities Act and unless so registered may not be
offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the
registration requirements of the Securities Act.
See "Transfer Restrictions on Series C Notes".
Exchange Offer............. Pursuant to the Registration Rights Agreement by
and among the Company, the Subsidiary Guarantors
and the Initial Purchaser, the Company agreed to
(i) file a registration statement with the
Commission (the "Exchange Offer Registration
Statement") with respect to a SUPERtack(TM) offer
to exchange the Series C Notes and the Series B
Notes (the "Exchange Offer") for senior debt
securities of the Company with terms substantially
identical to the Old Notes (except that the
Exchange Notes generally will not contain terms
with respect to transfer restrictions) within 60
days after the date of original issuance of the
Series C Notes and (ii) use its best efforts to
cause such registration statement to become
effective under the Securities Act within 135 days
after such issue date. The Registration Statement
of which this Prospectus is a part constitutes such
Exchange Offer Registration Statement. In the event
that applicable law or interpretations of the staff
of the Commission do not permit the Company to
effect the Exchange Offer, or if certain holders of
the Series C Notes notify the Company that they are
not permitted to participate in, or would not
receive freely tradeable Exchange Notes pursuant to
the Exchange Offer, the Company will use its best
efforts to cause to become effective a registration
statement (the "Shelf Registration Statement") with
respect to the resale of the Series C Notes and to
keep the Shelf Registration Statement effective
until two years after the date of original issuance
of the Series C Notes. The interest rate on the
Series C Notes is subject to increase under certain
circumstances if the Company is not in compliance
with its obligations under the Registration Rights
Agreement.
RISK FACTORS
The Exchange Notes involves certain risks that a potential investor should
carefully evaluate prior to making an investment. See "Risk Factors."
7
<PAGE> 14
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 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, THREE MONTHS ENDED NOVEMBER 30,
----------------------------------------------------- ---------------------------------------
PRO FORMA PRO FORMA
1995 1996 1997 1997(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................ $ 157,371 $ 156,652 $ 311,644 $ 403,993 $ 45,198 $ 109,880 $ 128,870
Operating expenses:
Drilling, rental and
other..................... 120,891 116,438 203,250 265,064 31,706 66,606 77,621
Depreciation, depletion,
amortization.............. 23,745 23,061 46,256 62,424 6,898 14,559 17,613
General and
administrative............ 14,232 15,756 14,414 14,414 3,398 4,115 4,115
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses............ 158,868 155,255 263,920 341,902 42,002 85,280 99,349
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss)....... (1,497) 1,397 47,724 62,091 3,196 24,600 29,521
Interest income (expense),
net......................... 1,184 1,507 (27,484) (50,834) (1,489) (9,237) (10,919)
Other income (expense)........ 7,413 5,663 3,316 3,243 1,070 228 228
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes....................... 7,100 8,567 23,556 14,500 2,777 15,591 18,830
Income tax expense............ 3,184 4,514 7,241 7,371 1,298 4,909 7,344
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)............. $ 3,916 $ 4,053 $ 16,315 $ 7,129 $ 1,479 $ 10,682 $ 11,486
=========== =========== =========== =========== =========== =========== ===========
Earnings (loss) per share
(fully diluted)............. $ .07 $ .07 $ .23 $ .10 $ .02 $ .14 $ .15
=========== =========== =========== =========== =========== =========== ===========
Weighted average shares
outstanding (fully
diluted).................... 55,332,541 57,466,183 72,049,124 72,660,444 66,315,399 78,639,978 78,639,978
=========== =========== =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA(2)..................... $ 22,248 $ 24,458 $ 93,980 $ 124,515 $ 10,094 $ 39,159 $ 47,134
Ratio of earnings to fixed
charges(3).................. 81.7x 64.5x 1.7x 1.3x 2.1x 2.3x 2.4x
Capital expenditures:
Maintenance................. 5,133 6,646 14,702 16,471 1,472 4,270 5,403
Other....................... 16,407 24,190 72,724 84,355 7,539 29,386 31,376
Ratio of EBITDA to net
interest expense.......... n/a n/a 3.4x 2.4x 6.8x 4.2x 4.3x
</TABLE>
<TABLE>
<CAPTION>
AT NOVEMBER 30, 1997
--------------------------
ACTUAL AS ADJUSTED(4)
-------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and other short-term investments..... $183,521 $ 54,942
Property, plant and equipment, net.......................... 460,132 616,637
Total assets................................................ 989,042 1,105,390
Total long-term debt, including current portion............. 562,844 632,263
Total stockholders' equity.................................. 359,865 358,965
</TABLE>
- ---------------
(1) Pro forma information gives effect to the Series C Notes Offering (as
defined) and the use of net proceeds therefrom, the acquisitions of Mallard,
Quail and Hercules and the financings related to these acquisitions 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.
(4) Gives effect to the Hercules Acquisition and the sale of the Series C Notes
and the application of the net proceeds therefrom as if these transactions
had occurred on November 30, 1997.
8
<PAGE> 15
RIG ACTIVITY DATA
The following table presents certain rig activity data for the Company,
including Mallard, Hercules and the rigs acquired in the Bolifor Acquisition,
for the periods indicated, both prior to and subsequent to their respective
dates of acquisition:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------- FISCAL
1993 1994 1995 1996 1997 CURRENT(1)
------- ------- ------- ------- ------- ----------
(AVERAGE FOR PERIOD)
<S> <C> <C> <C> <C> <C> <C>
TRANSITION ZONE RIG DATA(2)
Domestic barge deep drilling:
Rigs available for service(3)........ 7.0 7.0 7.0 7.0 7.8 8.0
Utilization rate of rigs available
for service(4)..................... 83% 73% 75% 86% 98% 100%
Dayrate.............................. $ 9,606 $13,537 $12,880 $13,793 $15,660 $20,554
Cold stacked rigs(3)................. 1.0 1.0 1.0 2.0 3.0 3.0
Domestic barge intermediate drilling:
Rigs available for service(3)........ 5.0 5.0 5.0 5.0 4.1 5.0
Utilization rate of rigs available
for service(4)..................... 77% 65% 74% 85% 95% 100%
Dayrate.............................. $ 7,671 $10,432 $10,143 $10,381 $11,149 $13,963
Cold stacked rigs(3)................. 0.0 0.0 0.0 0.0 0.0 0.0
Domestic barge workover and shallow
drilling:
Rigs available for service(3)........ 10.0 9.0 7.3 8.7 8.7 10.0
Utilization rate of rigs available
for service(4)..................... 66% 48% 66% 71% 83% 70%
Dayrate.............................. $ 6,742 $ 8,181 $ 8,066 $ 7,595 $ 8,650 $ 9,409
Cold stacked rigs(3)................. 12.0 13.0 12.6 6.3 6.3 4.0
International barge drilling:
Rigs available for service(3)........ 1.0 1.0 1.0 1.7 3.5 3.0
Utilization rate of rigs available
for service(4)..................... 57% 46% 89% 89% 92% 100%
Dayrate.............................. $22,049 $23,531 $25,141 $25,302 $25,022 $26,495
Cold stacked rigs(3)................. 0.0 0.0 0.0 1.0 0.5 2.0
OFFSHORE RIG DATA(2)
Jackup rigs(5):
Rigs available for service(3)........ 2.7 3.5 5.0 5.0 5.8 6.0
Utilization rate of rigs available
for service(4)..................... 97% 76% 89% 97% 100% 100%
Dayrate.............................. $16,071 $15,429 $14,629 $19,390 $23,326 $28,100
Cold stacked rigs(3)................. 0.0 0.0 0.0 0.0 0.0 1.0
Platform rigs(6):
Rigs available for service(3)........ 5.0 4.5 4.0 3.2 3.0 3.0
Utilization rate of rigs available
for service(4)..................... 82% 68% 50% 91% 96% 100%
Dayrate.............................. $ 8,101 $ 9,379 $ 9,466 $12,226 $14,029 $16,667
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------
LAND RIG DATA 1993 1994 1995 1996 1997 CURRENT(1)
------------- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Utilization rate of international land rigs(7)....... 40% 56% 54% 55% 63% 72%
Utilization rate of domestic land rigs(7)(8)......... 41% 45% 46% 56% 87% 80%
</TABLE>
- ---------------
(1) As of February 26, 1998.
9
<PAGE> 16
(2) Transition zone rig data for fiscal year 1997 is presented for the period
November 12, 1996, the acquisition date of Mallard, through August 31, 1997.
Offshore rig data for fiscal year 1997 is presented for the 12 months ended
September 30, 1997.
(3) 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.
(4) 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 revenueproducing 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.
(5) Reflects information on the seven jackup rigs acquired by the Company in the
Hercules Acquisition, one of which is currently undergoing refurbishment and
is expected to be placed into service in April 1998, but does not include
one cold stacked liftboat owned by the Company.
(6) Reflects the three platform rigs 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 are available for
service, and one additional cold stacked platform rig.
(7) 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 (8) 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.
(8) Domestic land rig utilization for the fiscal years ended August 31, 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: 1993 -- 14%, 1994 -- 15%,
and 1995 -- 21%.
10
<PAGE> 17
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 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,
future operating results of the Company's 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
The following risk factors, as well as the other information set forth in
this Prospectus, should be carefully considered in connection with this Exchange
Offer or evaluated prior to making an investment in the Exchange Notes.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for Series C Notes and/or Series
B Notes pursuant to the Exchange Offer will be made only after a timely receipt
by the Company of such Series C Notes and/or Series B Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of the Series C Notes and/or Series B Notes
desiring to tender such Series C Notes and/or Series B Notes in exchange for
Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities with
respect to the tenders of Series C Notes and/or Series B Notes for exchange.
Series C Notes that are not tendered or are tendered but not accepted will,
following the consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. Upon consummation of the Exchange
Offer, the registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Series C Notes who tenders in the Exchange
Offer for the purpose of participating in a distribution of the Exchange Notes
may be deemed to have received restricted securities and, if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-
dealer that receives Exchange Notes for its own account in exchange for Series C
Notes, where such Series C Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any sale of such Exchange Notes.
TO THE EXTENT THAT SOME OF THE SERIES C NOTES OR SERIES B NOTES ARE TENDERED AND
ACCEPTED IN THE EXCHANGE OFFER, THE TRADING MARKET FOR UNTENDERED AND TENDERED
BUT UNACCEPTED SERIES C NOTES OR SERIES B NOTES, AS THE CASE MAY BE, COULD BE
ADVERSELY AFFECTED.
SUBSTANTIAL LEVERAGE
As of November 30, 1997, on a pro forma basis after giving effect to the
sale of the Series C Notes and the application of the net proceeds thereof, the
Company's total long-term debt and stockholders' equity would have been $632.3
million and $359.0 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
11
<PAGE> 18
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, among other
things, 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.
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, OPEC 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. In recent months crude oil prices have
declined, which the Company attributes primarily to (i) announced increases in
OPEC production quotas, (ii) anticipation that deteriorating economic conditions
in Southeast Asia will result in a decrease in worldwide demand for crude oil
and (iii) the potential for an increase in crude oil production by Iraq. A
prolonged reduction in crude oil prices at or below current levels could
eventually lead to a reduction in spending by oil and gas companies, which could
adversely effect the Company's business and operating results.
RISKS OF INTERNATIONAL OPERATIONS
A significant portion of the Company's operations is conducted in
international markets, including South America, the Asia Pacific region and West
Africa. International activities accounted for approximately 53% of the
Company's operating revenues for the year ended August 31, 1997. 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, the Company 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 legislation or
regulations restricting operations in Nigeria or if civil unrest in Nigeria were
to reoccur, the Company could lose an important source of income and could be
required to redeploy its remaining 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 for the year ended August 31,
1997 were $27.0 million and $7.4 million, respectively.
12
<PAGE> 19
EFFECTIVE SUBORDINATION
The Exchange Notes will be unsecured and effectively subordinated in right
of payment to all existing and future secured indebtedness of the Company and
the Subsidiary Guarantors, which will include future borrowings under the Senior
Credit Facility or any future secured credit facility, to the extent of the
pledged collateral. The Senior Credit Facility is secured by liens on
substantially all of the assets of the Company and the assets and stock of the
Subsidiary Guarantors. Accordingly, the lenders under the Senior Credit Facility
will have claims with respect to the assets constituting collateral for any
indebtedness thereunder that will be satisfied prior to the unsecured claims of
holders of the Notes. See "Description of Senior Credit Facility." In the event
of a default on the Notes or a bankruptcy, liquidation or reorganization of the
Company, such assets will be available to satisfy obligations with respect to
the indebtedness secured thereby before any payment therefrom could be made on
the Notes. Thus, the Notes and the Subsidiary Guarantees will be effectively
subordinated to claims of the lenders under the Senior Credit Facility to the
extent of such pledged collateral. At February 28, 1998, on a pro forma basis
after giving effect to the Series C Notes Offering and the application of the
net proceeds therefrom, the Company would have had no secured indebtedness
outstanding (excluding $12 million reserved to support letters of credit).
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 requires 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's business, financial condition
and results of operations.
RISKS OF ACQUISITION STRATEGY
The Company's growth strategy includes the acquisition of other oilfield
service 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 Senior
Credit Facility, the terms of its Series A/B Indenture or the Indenture
governing the Exchange 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
13
<PAGE> 20
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. See "The
Company -- Competition."
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 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. See "The
Company -- Government Regulation and Environmental Matters."
RESTRICTIONS IMPOSED BY LENDERS
The Senior Credit Facility, the Series A/B Indenture and the Indenture
governing the Exchange Notes contain a number of covenants that restrict the
ability of the Company to dispose of assets, merge or consolidate with another
entity, incur additional indebtedness, create liens, make capital expenditures
or other
14
<PAGE> 21
investments or acquisitions and otherwise restrict corporate activities. The
Senior Credit Facility also contains requirements that the Company maintain
certain financial ratios and may restrict the Company from prepaying the
Company's other indebtedness (including the Series B Notes, Series C Notes or
the Exchange Notes). The ability of the Company to comply with such provisions
may be affected by events that are beyond the Company's control. The breach of
any of these covenants could result in a default under the Senior Credit
Facility, the Series A/B Indenture and the Indenture. In addition, as a result
of these covenants, the ability of the Company to respond to changing business
and economic conditions and to secure additional financing, if needed, may be
significantly restricted, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company. See
"Description of Senior Credit Facility" and "Description of Exchange Notes."
FRAUDULENT CONVEYANCE
Various fraudulent conveyance laws enacted for the protection of creditors
may apply to the Subsidiary Guarantors' issuance of the Subsidiary Guarantees.
To the extent that a court were to find that (x) a Subsidiary Guarantee was
incurred by a Subsidiary Guarantor with intent to hinder, delay or defraud any
present or future creditor or the Subsidiary Guarantor contemplated insolvency
with a design to prefer one or more creditors to the exclusion in whole or in
part of others or (y) a Subsidiary Guarantor did not receive fair consideration
or reasonably equivalent value for issuing its Subsidiary Guarantee and such
Subsidiary Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of
the issuance of such Subsidiary Guarantee, (iii) was engaged or about to engage
in a business or transaction for which the remaining assets of such Subsidiary
Guarantor constituted unreasonably small capital to carry on its business or
(iv) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, the court could avoid or subordinate
such Subsidiary Guarantee in favor of the Subsidiary Guarantor's creditors.
Among other things, a legal challenge of a Subsidiary Guarantee on fraudulent
conveyance grounds may focus on the benefits, if any, realized by the Subsidiary
Guarantor as a result of the Company's issuance of the Notes. The Indenture
contains a savings clause, which generally will limit the obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee to the maximum amount as
will, after giving effect to all of the liabilities of such Subsidiary
Guarantor, result in such obligations not constituting a fraudulent conveyance.
To the extent a Subsidiary Guarantee of any Subsidiary Guarantor was avoided or
limited as a fraudulent conveyance or held unenforceable for any other reason,
holders of the Exchange Notes would cease to have any claim against such
Subsidiary Guarantor and would be creditors solely of the Company and any
Subsidiary Guarantor whose Subsidiary Guarantee was not avoided or held
unenforceable. In such event, the claims of the holders of the Notes against the
issuer of an invalid Subsidiary Guarantee would be subject to the prior payment
of all liabilities (including trade payables) of such Subsidiary Guarantor.
There can be no assurance that, after providing for all prior claims, there
would be sufficient assets to satisfy the claims of the holders of the Notes
relating to any avoided portions of any of the Subsidiary Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any such proceeding. Generally, however,
a Subsidiary Guarantor may be considered insolvent if the sum of its debts,
including contingent liabilities, was greater than the fair marketable value of
all of its assets at a fair valuation or if the present fair marketable value of
its assets was less than the amount that would be required to pay its probable
liability on its existing debts, including contingent liabilities, as they
become absolute and mature. The terms of the Subsidiary Guarantees will provide
that, for purposes of such limitations and the applicable fraudulent conveyance
laws, any indebtedness of a Subsidiary Guarantor incurred from time to time
pursuant to the Senior Credit Facility and secured by a perfected Lien on the
assets of such Subsidiary Guarantor (assuming, for purposes of such
determination, that the incurrence of any such indebtedness and the granting of
any such security interest did not violate any such fraudulent conveyance laws)
shall be deemed, to the extent of the value of the assets subject to such Lien,
to have been incurred prior to the incurrence by such Subsidiary Guarantor of
liability under its Subsidiary Guarantee. Based upon financial and other
information, the Company and the Subsidiary Guarantors believe that the
Subsidiary Guarantees are being incurred for proper purposes and in good faith
and that the Company and each Subsidiary Guarantor is solvent and will continue
to be solvent after issuing its Subsidiary Guarantee, will have sufficient
capital for carrying on its business after such issuance and will be able to pay
its debts as
15
<PAGE> 22
they mature. There can be no assurance, however, that a court passing on such
standards would agree with the Company. See "Description of Exchange
Notes -- Subsidiary Guarantees."
POTENTIAL DILUTION OF VOTING INTEREST
To the extent all of the Series B Notes and Series C Notes are exchanged
for Exchange Notes, $450 million aggregate principal amount of Exchange Notes
will be outstanding following consummation of the Exchange Offer, and the
Exchange Notes will be deemed to be a single series of debt securities
outstanding under the Indenture. Accordingly, the individual voting interest of
each holder of Series B or Series C Notes will be diluted. IN ADDITION,
ISSUANCES OF ADDITIONAL NOTES UNDER THE INDENTURE, TO THE EXTENT PERMITTED BY
THE DEBT INCURRENCE LIMITATIONS OF THE INDENTURE, MAY RESULT IN FURTHER DILUTION
OF THE INDIVIDUAL VOTING INTEREST OF THE HOLDERS OF EXCHANGE NOTES. See
"Description of Exchange Notes."
ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES
The Series C Notes have not been registered under the Securities Act and
are subject to significant restrictions on resale. The Exchange Notes will
constitute a new issue of securities with no established trading market. The
Company does not intend to apply for listing of the Series B Notes, the Series C
Notes or the Exchange Notes on any securities exchange or to seek the admission
thereof to trading in the National Association of Securities Dealers Automated
Quotation System. The Initial Purchaser has informed the Company that, following
completion of the Exchange Offer, it currently intends to make a market in the
Exchange Notes. However, it is not so obligated, and any such market making may
be discontinued at any time without notice. In addition, any such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer or the pendency of the
Shelf Registration Statement. Accordingly, no assurance can be given that an
active public or other market will develop for the Exchange Notes or as to the
liquidity of or the trading market for the Exchange Notes.
16
<PAGE> 23
THE COMPANY
GENERAL
Parker is a leading worldwide provider of contract drilling and drilling
related services, operating in the transition zones of the Gulf of Mexico and
Nigeria, in the offshore waters of the Gulf of Mexico and in international and
domestic land oil and gas producing regions. The Company's growth strategy is
focused on higher margin offshore 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 July 1997 the Company acquired the assets of Bolifor, a
leading provider of land contract drilling services in Bolivia. In addition, in
December 1997 the Company acquired Hercules, a leading provider of contract
drilling and workover services in the shallow waters of the Gulf of Mexico.
With the closing of the acquisition of Hercules, Parker's rig fleet
consists of 35 barge drilling and workover rigs, eight offshore jackup rigs, six
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 25 feet. The Company's offshore
jackup and platform rig fleets currently operate in the Gulf of Mexico market.
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, 21 of the Company's land rigs are
helicopter-transportable, thus establishing Parker as the dominant operator in
the heli-rig market throughout the world. 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 to oil and gas operators around the world
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 improved technology which has reduced
drilling costs. 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. During 1996 and 1997, 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. While oil prices have declined
in recent months due primarily to anticipation of reduced demand in the Asia
Pacific region and increased supply by certain OPEC members, the Company does
not expect such price reductions to materially affect its business unless oil
prices remain depressed for an extended period. See "Risk Factors -- Industry
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, where barge 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 25
feet of water. These rigs are towed by tug boats to the drill site with the
derrick laid down. The lower hull is submerged by flooding until it rests on the
sea floor. The derrick is then raised and drilling or workover operations are
conducted with the barge in this position.
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 16 drilling barges. Barge rigs are also employed inland in
lakes, bays, rivers and marshes.
17
<PAGE> 24
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
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 period from November 12, 1996 through August 31, 1997, the
Company's marketable deep drilling barge rigs averaged 98% utilization and an
average dayrate of $15,660. As of February 28, 1998, 100% of the Company's
marketable deep drilling barge rigs were in operation at an average dayrate of
$20,554.
The following table sets forth, as of February 28, 1998, 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>
R&B Falcon Corporation ("R&B Falcon")....................... 41 28
Parker...................................................... 16 13
Nabors Industries, Inc...................................... 1 0
-- --
Total............................................. 58 41
== ==
</TABLE>
A schedule of the Company's deep and intermediate drilling barges located
in the Gulf of Mexico, as of February 28, 1998, 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............................ 2,000 1993 25,000 Stacked
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 1997 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. 15(2)......................... 1,000 1998 15,000 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.
18
<PAGE> 25
(2) Refurbished into an intermediate drilling barge from a previously stacked
workover barge.
Given the improvement in barge drilling demand and dayrates, the Company
may also contemplate refurbishing its cold stacked barges.
Domestic Barge Workover and Shallow Drilling
The Company is the leading provider of domestic barge workover services in
the transition zones 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. In June 1997, the Company was awarded a one-year extension of its
alliance to provide barge rig completion and workover services to Texaco in the
transition zones of the Gulf of Mexico.
The following table sets forth, as of February 28, 1998, the Company's
estimate of the number of barge units in the workover and shallow drilling
sector of the domestic market:
<TABLE>
<CAPTION>
CONTRACTOR TOTAL ACTIVE
---------- ----- ------
<S> <C> <C>
Parker...................................................... 14 10
R&B Falcon.................................................. 11 9
Other contractors........................................... 5 2
-- --
Total............................................. 30 21
== ==
</TABLE>
A schedule of the Company's workover rigs, as of February 28, 1998, 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. 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.
19
<PAGE> 26
International Barge Drilling
The Company has focused its international barge drilling efforts in the
transition zones of West Africa, where it is one of the leading providers of
barge drilling services in Nigeria, with three 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, the
Middle East, the Caspian Sea and West Africa.
The Company is one of the largest barge rig operators in the transition
zones of Nigeria. The Company has operated in Nigeria since 1991 and currently
operates three barge rigs under long-term contracts at an average dayrate of
$26,495. 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 zones of Nigeria,
which will require the construction of a new drilling barge at an estimated cost
of $30 million. One of the Company's drilling rigs, which previously operated
offshore Nigeria, is currently undergoing modifications at a shipyard in
Louisiana for service under a long-term contract in the Caspian Sea.
A schedule of the Company's international drilling barges, as of February
28, 1998, is set forth below:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) STATUS(1)
---------- ----------- -------- ---------
<S> <C> <C> <C> <C>
Rig No. 71(2).......................... 3,000 1994 30,000 Shipyard
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
Rig No. 80............................. 2,000 1986 20,000 Active
</TABLE>
- ---------------
(1) "Active" denotes that the rig is currently under contract or available for
contract.
(2) Rig No. 71 is being refurbished for service under a long-term contract in
the Caspian Sea.
OFFSHORE OPERATIONS
Jackup Drilling
Pursuant to the Hercules Acquisition, the Company acquired seven shallow
water jackup rigs. As of February 28, 1998, six of the rigs were in active
service at 100% effective utilization, with an average dayrate of $28,100. The
seventh rig is in a shipyard undergoing modification and is expected to be in
service in April 1998. 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 Hercules Acquisition further expands and complements the Company's
business in the Gulf of Mexico shallow water market and augments the Company's
existing platform rig business.
20
<PAGE> 27
The following table sets forth certain information, as of February 28,
1998, 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......... Baker Marine Big Foot (IS) 85 20,000 Shipyard
Rig No. 15......... Baker Marine Big Foot III 100 20,000 Active
(IS)
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 being placed back into
service.
(3) Workover rig.
Platform Drilling
As a result of the Hercules Acquisition, the Company's fleet of platform
rigs consists of six 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 February 28,
1998, with respect to the Parker and Hercules platform rigs:
<TABLE>
<CAPTION>
MAXIMUM
YEAR BUILT DRILLING
OR LAST DEPTH
HORSEPOWER REFURBISHED (FEET) STATUS(1)
---------- ----------- -------- ---------
<S> <C> <C> <C> <C>
Parker:
Rig No. 41E........................... 1,000 1997 12,500 Active
Rig No. 42E........................... 1,000 1996 12,500 Active
Rig No. 47............................ 750 1993 11,000 Stacked
Hercules:
Rig No. 2............................. 1,000 1982 12,000 Active
Rig No. 3............................. 1,000 1997 12,000 Active
Rig No. 10............................ 650 1989 10,000 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.
21
<PAGE> 28
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 49 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 February 28, 1998, 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..................... 6 10 10 3 4 33
Asia Pacific...................... 4 3 11 2 -- 20
Africa and the Former Soviet
Union.......................... 3 2 2 -- -- 7
-- -- -- -- -- --
Total International....... 13 15 23 5 4 60
Domestic:
Gulf Coast........................ -- -- 2 -- 4 6
Rocky Mountains................... -- -- 2 -- 2 4
Mid-Continent..................... -- -- 4 -- -- 4
Alaska............................ -- -- -- -- 1 1
-- -- -- -- -- --
Total Domestic............ -- -- 8 -- 7 15
-- -- -- -- -- --
Total..................... 13 15 31 5 11 75
== == == == == ==
</TABLE>
International Operations
The Company's international land drilling operations are focused primarily
in South America and the Asia Pacific region, where it 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 21 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 what the Company estimates to
be a 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, Kazakhstan, Poland 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 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
22
<PAGE> 29
inventory of spare parts and other ancillary equipment; and (iv) drilling of
difficult wells requiring considerable experience.
South America. The Company has 33 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.
Asia Pacific Region. The Company operates 13 of its fleet of 21 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, which market is currently being adversely
affected by political and currency instability in Indonesia. The six rigs in the
Indonesian geothermal market currently are inactive and may be remarketed in
other regions if the adverse conditions in the Indonesian market continue to
persist. 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 all four
of its drilling rigs from Russia to Kazakhstan. As anticipated, the recently
announced agreement regarding the pipeline to be built to accommodate
incremental production from the Tengiz field in Kazakhstan 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 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. 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 market improvements have been a result of a combination of a
general consolidation trend in the industry, and until very recently, higher
crude 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 15 rigs located in the United States, 14 are SCR electric,
four 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-
23
<PAGE> 30
Terrain ("AT2000E(R)") rig. Management believes that Parker's 21 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.
RENTAL TOOLS
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. During fiscal 1997, Quail
entered into a contract with a major oil company to be its preferred provider of
rental tools to the land and offshore Texas markets. In November 1997, the
Company opened 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. 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
24
<PAGE> 31
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 the Company has
significantly improved from previous years. In the Gulf of Mexico barge drilling
and workover markets, the Company competes primarily with Falcon Drilling.
However, a few small contractors remain, principally in the barge workover
market.
The land drilling market is generally more competitive than the offshore
market due to the larger number of rigs and companies. 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. A number of Quail's competitors in the
Gulf of Mexico and in the Gulf Coast land markets are substantially larger than,
and have greater financial resources than, Quail.
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 strategy is maintaining and developing relationships and
strategic alliances with its customers. An increasing number of the Company's
customers have been seeking to establish exploration or development drilling
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 two largest customers
accounted for approximately 19% and 18% of total revenues for fiscal year 1996
and its largest customer accounted for approximately 13% of total revenues for
fiscal year 1997.
25
<PAGE> 32
LEGAL PROCEEDINGS
The Company is a party to certain 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 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
26
<PAGE> 33
contingency plan. Amendments to the OPA adopted earlier this year 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 negligible dredging operations and
approximately two-thirds of the Company's offshore 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.
27
<PAGE> 34
MANAGEMENT
The following table sets forth certain information regarding the directors
and executive officers of the Company as of February 28, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert L. Parker.......................... 74 Chairman of the Board of Directors
Robert L. Parker Jr....................... 49 President and Chief Executive Officer
James W. Linn............................. 52 Executive Vice President and Chief
Operating Officer
James J. Davis............................ 51 Senior Vice President -- Finance and Chief
Financial Officer
Bernard J. Duroc-Danner................... 44 Director
David L. Fist............................. 66 Director
Earnest F. Gloyna......................... 76 Director
R. Rudolph Reinfrank...................... 42 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
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 refining and retail motor fuel marketing. He
serves as a member of the board of directors of Dollar Thrifty Funding Corp.
Bernard J. Duroc-Danner has been a Director since November 1996. Mr.
Duroc-Danner has been President, Chief Executive Officer and a director of EVI,
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 International Inc., a provider of
services and equipment to the oil and gas industry.
28
<PAGE> 35
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 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.
PRIVATE PLACEMENT
The net proceeds to the Company from the sale of the Series C Notes were
$152.2 million after deducting the estimated fees and expenses of the Series C
Notes Offering. The Company used the proceeds from the sale of the Series C
Notes to repay the outstanding balance under the term loan portion of the Senior
Credit Facility and plans to use the remaining net proceeds for general
corporate purposes, including to fund the Company's capital expenditure program.
Pending these uses, such net proceeds of the Series C Notes Offering is being
invested in interest bearing securities to the extent permitted by the terms of
the Indenture.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Company will receive in exchange a like
principal amount of Old Notes, the terms of which are identical in all material
respects to the Exchange Notes. The Old Notes surrendered in exchange for the
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any change in the
capitalization of the Company.
29
<PAGE> 36
CAPITALIZATION
The following table sets forth as of November 30, 1997 the actual cash and
capitalization of the Company and the cash and capitalization of the Company as
adjusted to give effect to the Hercules Acquisition and the sale of the Series C
Notes and the application of the net proceeds therefrom. This table should be
read in conjunction with the Unaudited Pro Forma Combined Financial Statements
and Parker's Consolidated Financial Statements, including the notes thereto,
included elsewhere or incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
AT NOVEMBER 30, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and other short-term investments..... $183,521 $ 54,942
Long-term debt:
Senior Credit Facility, including current portion of
long-term debt(1)...................................... $ 86,500 $ --
9 3/4% Senior Notes due 2006, Series B, less unamortized
discount of $2,107..................................... 297,893 297,893
9 3/4% Senior Notes due 2006, Series C, plus unamortized
premium of $5,750...................................... -- 155,750
5 1/2% Convertible Subordinated Notes due 2004............ 175,000 175,000
Other long-term debt...................................... 3,451 3,620
-------- --------
Total long-term debt.............................. $562,844 $632,263
======== ========
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, 76,699,314 shares outstanding and
outstanding, as adjusted............................... 12,783 12,783
Capital in excess of par value............................ 340,508 340,508
Retained earnings (accumulated deficit)................... 6,659 5,759
Other..................................................... (85) (85)
-------- --------
Total stockholders' equity............................. 359,865 358,965
-------- --------
Total capitalization.............................. $922,709 $991,228
======== ========
</TABLE>
- ---------------
(1) At the time of consummation of the sale of the Series C Notes, the
outstanding balance of the term loan portion of the Senior Credit Facility
was $83.0 million, which balance was repaid in full from the net proceeds of
the sale of the Series C Notes. At such time, the Company also had maximum
borrowing capacity of $75 million under the revolving credit portion of the
Senior Credit Facility, less the $12 million reserved to support outstanding
letters of credit. See "Description of Senior Credit Facility."
30
<PAGE> 37
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
three months ended November 30, 1997 and for the year ended August 31, 1997
reflect: (i) the Mallard Acquisition, (ii) the Quail Acquisition, (iii) the
Hercules Acquisition, (iv) the issuance of $300 million of the Series A Notes in
November 1996 (subsequently exchanged for Series B Notes in February 1997), (v)
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, (vi) the issuance of $175 million of Convertible Notes in July
1997 and (vii) the Series C Notes Offering, in each case as if such transactions
had occurred on September 1, 1996. The Unaudited Pro Forma Combined Balance
Sheet as of November 30, 1997 reflects such transactions as if they had occurred
on November 30, 1997. Such 12 months unaudited pro forma combined information
combines: (i) the audited operating results for the Company for the fiscal year
ended August 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 12 months ended September 30, 1997. Such three months unaudited
pro forma combined information combines the unaudited operating results of the
Company and the unaudited operating results of Hercules, in both cases for the
three months ended November 30, 1997. Revenues and net income of Hercules of
approximately $6.2 million and $0.8 million, respectively, for the month of
September, 1997 are included in both the unaudited pro forma combined statement
of operations for the three months ended November 30, 1997 and for the year
ended August 31, 1997. 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 as it is not considered material.
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, the Quail Acquisition and the Hercules Acquisition have
been accounted for by the Company under the purchase method of accounting and
the assets and liabilities of Mallard, Quail and Hercules were 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."
31
<PAGE> 38
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------
AS REPORTED
PARKER HERCULES(1) ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Drilling..................................... $ 101,400 $19,072 $ (82)(1) $ 120,390
Rental....................................... 8,089 -- -- 8,089
Other........................................ 391 -- -- 391
----------- ------- ------- -----------
Total revenues........................ 109,880 19,072 (82) 128,870
----------- ------- ------- -----------
Operating expense:
Drilling..................................... 63,326 10,110 909(f) 74,341
(4)(l)
Rental....................................... 2,786 -- 2,786
Other........................................ 494 -- -- 494
Depreciation, depletion and amortization..... 14,559 1,974 837(d) 17,613
257(e)
(14)(1)
General and administrative................... 4,115 909 (909)(f) 4,115
----------- ------- ------- -----------
Total operating expenses.............. 85,280 12,993 1,076 99,349
----------- ------- ------- -----------
Operating income............................... 24,600 6,079 (1,158) 29,521
----------- ------- ------- -----------
Other income (expense):
Interest expense............................. (12,025) (877) (1,681)(g) (13,707)
(1)(j)
877(h)
Interest income.............................. 2,788 -- 2,788
Other........................................ 228 -- -- 228
----------- ------- ------- -----------
Total other income (expense).......... (9,009) (877) (805) (10,691)
----------- ------- ------- -----------
Income before income taxes..................... 15,591 5,202 (1,963) 18,830
----------- ------- ------- -----------
Income tax expense (benefit)................... 4,909 2,028 (2,028)(k) 7,344
2,435(k)
-------
Net income..................................... $ 10,682 $ 3,174 $(2,370) $ 11,486
=========== ======= ======= ===========
Earnings per share, primary and fully
diluted...................................... $ .14 $ 0.15
=========== ===========
Weighted average shares outstanding (fully
diluted)..................................... 78,639,978 78,639,978
=========== ===========
Other financial data:
EBITDA(2).................................... $ 39,159 $ 47,134
Ratio of earnings to fixed charges(3)........ 2.4x
</TABLE>
- ---------------
(1) Reflects combined results of operations of HOC and HRC for the three months
ended November 30, 1997. See note (m) for the summary capsular combining
statement of operations of HOC and HRC for the three months ended November
30, 1997. Subsequent to the periods presented in the Hercules Historical
Statements of Operations and before the consummation of the Hercules
Acquisition by the Company, due to non-recurring expenses associated with
the acquisition, a $6.2 million pretax loss was recorded by Hercules in
December 1997. The non-recurring expenses consisted primarily of bonuses
paid to certain Hercules employees and costs associated with retiring
Hercules' long term debt.
(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.
32
<PAGE> 39
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 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........................ $ 283,598 $23,678 $ -- $64,251 $ (967)(1) $ 370,560
Rental.......................... 25,457 -- 5,387 -- -- 30,844
Other........................... 2,589 -- -- -- -- 2,589
---------- ------- ------ ------- -------- ----------
Total revenues........... 311,644 23,678 5,387 64,251 (967) 403,993
---------- ------- ------ ------- -------- ----------
Operating expense:
Drilling........................ 189,979 14,382 -- 39,090 7,253(f) 250,615
(89)(1)
Rental.......................... 8,549 -- 439 -- 739(f) 9,727
Other........................... 4,722 -- -- -- -- 4,722
Depreciation, depletion and
amortization.................. 46,256 2,695 505 5,715 5,519(d) 62,424
1,922(e)
(188)(1)
General and administrative...... 14,414 1,933 739 5,320 (7,992)(f) 14,414
---------- ------- ------ ------- -------- ----------
Total operating
expenses............... 263,920 19,010 1,683 50,125 7,164 341,902
---------- ------- ------ ------- -------- ----------
Operating income.................. 47,724 4,668 3,704 14,126 (8,131) 62,091
---------- ------- ------ ------- -------- ----------
Other income (expense):
Interest expense................ (32,851) (102) -- (3,068) (22,369)(g) (56,214)
(892)(j)
3,068(h)
Interest income................. 5,367 -- 962 -- (949)(i) 5,380
Other........................... 3,316 (78) 5 -- -- 3,243
---------- ------- ------ ------- -------- ----------
Total other income
(expense).............. (24,168) (180) 967 (3,068) (21,142) (47,591)
---------- ------- ------ ------- -------- ----------
Income before income taxes........ 23,556 4,488 4,671 11,058 (29,273) 14,500
---------- ------- ------ ------- -------- ----------
Income tax expense (benefit)...... 7,241 403 -- 4,808 (4,846)(k) 7,371
(235)(l)
--------
Net income........................ $ 16,315 $ 4,085 $4,671 $ 6,250 $(24,192) $ 7,129
========== ======= ====== ======= ======== ==========
Earnings per share, primary and
fully diluted................... $ .23 $ 0.10
========== ==========
Weighted average shares
outstanding (fully diluted)..... 72,049,124 72,660,444
========== ==========
Other financial data:
EBITDA(3)....................... $ 93,980 $ 124,515
Ratio of earnings to fixed
charges(4).................... 1.3x
</TABLE>
- ---------------
(1) Includes the operations of Mallard and Quail from November 13, 1996 through
August 31, 1997.
(2) Reflects combined results of operations of HOC and HRC for the 12 months
ended September 30, 1997. See Note (m) for the summary capsular combining
statement of operations of HOC and HRC for the 12 months ended September 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.
33
<PAGE> 40
PARKER DRILLING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
PARKER HERCULES(1)
------------ ------------
AS OF AS OF
NOVEMBER 30, NOVEMBER 30,
1997 1997 ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................... $183,291 $ 55 $ 152,250(a) $ 54,712
(195,552)(b)
1,378(b)
(86,710)(g)
Other short-term investments................ 230 230
Accounts and notes receivable............... 114,479 27,642 (16,144)(b) 125,977
Rig materials and supplies.................. 20,067 20,067
Other current assets........................ 16,749 1,245 (477)(b) 17,517
-------- -------- --------- ----------
Total current assets................. 334,816 28,942 (145,255) 218,503
-------- -------- --------- ----------
Property, plant and equipment:
Drilling equipment.......................... 744,188 91,901 54,713(b,1) 890,802
Rental equipment............................ 29,591 29,591
Buildings, land and improvements............ 12,557 12,557
Other....................................... 22,287 22,287
Construction in progress.................... 39,242 9,891 49,133
-------- -------- ----------
847,865 101,792 54,713 1,004,370
Less accumulated depreciation, depletion and
amortization.............................. 387,733 8,819 (8,819)(d,1) 387,733
-------- -------- --------- ----------
Net property, plant and equipment........... 460,132 92,973 63,532 616,637
-------- -------- --------- ----------
Goodwill, net of accumulated amortization..... 138,272 16,037 56,483(b,1) 210,792
-------- -------- --------- ----------
Other noncurrent assets....................... 55,822 1,036 (900)(g) 59,458
3,500(a)
Total assets......................... $989,042 $138,988 $ (22,640) $1,105,390
======== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt........... $ 15,085 $ 4,605 $ (4,436)(b) $ 1,754
(13,500)(g)
Accounts payable............................ 26,467 9,114 35,581
Accrued liabilities......................... 26,919 5,461 (210)(g) 31,667
(503)(b)
Accrued income taxes........................ 7,124 7,124
-------- ----------
Total current liabilities............ 75,595 19,180 (18,649) 76,126
-------- -------- --------- ----------
Long-term debt................................ 547,759 36,767 (36,767)(b) 630,509
(73,000)(g)
155,750(a)
Deferred income taxes......................... -- 12,346 (12,346)(b) 33,967
33,967(b)
---------
Other long-term liabilities................... 5,823 5,823
Preferred stock............................... -- 4,000 (4,000)(b)
Stockholders' equity:
Common stock................................ 12,783 18,035 (18,035)(b) 12,783
Capital in excess of par value.............. 340,508 39,598 (39,598)(b) 340,508
Retained earnings (accumulated deficit)..... 6,659 9,062 (9,062)(b) 5,759
(900)(g)
Other....................................... (85) (85)
-------- ----------
Total stockholders' equity........... 359,865 66,695 (67,595) 358,965
-------- -------- --------- ----------
Total liabilities and stockholders'
equity............................. $989,042 $138,988 $ (22,640) $1,105,390
======== ======== ========= ==========
</TABLE>
- ---------------
(1) Represents the combined balances of HOC and HRC as of November 30, 1997. See
Note (c) for summary capsular combining balance sheet of HOC and HRC as of
November 30, 1997.
34
<PAGE> 41
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) To record the issuance of the Notes.
(b) To reflect the Hercules Acquisition. The purchase price was allocated as
follows:
<TABLE>
<CAPTION>
PURCHASE PRICE HERCULES
-------------- --------
<S> <C>
Cash........................................................ $195,052
Fees and expenses........................................... 500
--------
Total............................................. $195,552
========
Purchase price allocation:
Increase in property and equipment........................ 63,532
Working capital adjustment per purchase agreement......... 1,378
Eliminate stockholders' equity............................ 66,695
Reverse assets/liabilities which are not a part of
acquisition:
Amounts due to/from affiliates............................ (15,641)
Debt and capital lease obligations........................ 41,203
Redeemable preferred stock................................ 4,000
Intangible assets......................................... (16,037)
Deferred income taxes..................................... (22,098)
Cost in excess of net assets acquired....................... 72,520
--------
$195,552
========
</TABLE>
(c) Following is the summary capsular combining balance sheets of HOC and HRC
as of November 30, 1997.
<TABLE>
<CAPTION>
HOC HRC ELIMINATIONS COMBINED
-------- ------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Current assets....................... $ 30,898 $ 349 $(2,305) $ 28,942
Noncurrent assets.................... 85,132 24,914 110,046
-------- ------- ------- --------
Total assets............... 116,030 25,263 (2,305) 138,988
======== ======= ======= ========
Current liabilities.................. $ 16,910 $ 2,270 -- $ 19,180
Noncurrent liabilities............... 36,828 14,590 (2,305) 49,113
Preferred stock...................... 4,000 -- -- 4,000
Stockholders' equity................. 58,292 8,403 -- 66,695
-------- ------- ------- --------
Total liabilities and
stockholders' equity..... $116,030 $25,263 $(2,305) $138,988
======== ======= ======= ========
</TABLE>
The eliminations represent approximately $2,305,000 of HRC's note payable
to HOC as of November 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 adjust amortization of excess cost over fair value of net assets
acquired over 30 years.
(f) Reclassify the general and administrative expenses of Mallard and Hercules
to drilling expense and of Quail to rental expense.
35
<PAGE> 42
(g) To adjust interest expense on $450 million of Series B and Series C Notes
at 9.75% and $175 million of Convertible Notes at 5.5%, to adjust
amortization of original issue discount and premium over the term of the
Series B and Series C Notes, respectively, to remove interest expense
related to the $100 million bank term loan and to retire the $100 million
bank term loan with proceeds from the Series C Notes Offering. In addition,
the Company would have recorded $0.9 million extraordinary loss from the
early debt extinguishment.
(h) To eliminate interest expense on Hercules debt not assumed.
(i) To eliminate interest and investment income on Quail cash and investments
not acquired.
(j) To adjust amortization of debt issuance costs over the ten-year term of the
Series B Notes, the remaining term of the Series C Notes and the seven-year
term of the Convertible Notes.
(k) To eliminate current U.S. federal income taxes allocated to Mallard by its
former parent and eliminate current U.S. federal income taxes recorded by
Hercules due to the existence of the Company's net operating loss tax carry
forwards and to record deferred income tax expense.
(l) To eliminate operating results and balance sheet accounts related to Rig
No. 1 which was sold by Hercules in October 1997.
(m) Following is the summary capsular combining statements of operations of HOC
and HRC, as applicable for the periods indicated:
<TABLE>
<CAPTION>
12 MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------
HOC HRC ELIMINATIONS COMBINED
------- ------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues................................ $64,251 $1,923 $(1,923) $64,251
Total operating expenses................ 50,621 1,427 (1,923) 50,125
Other (income) expense.................. 2,013 1,055 -- 3,068
Income (loss) before income taxes....... 11,617 (559) -- 11,058
Income tax expenses..................... 4,808 -- -- 4,808
------- ------ ------- -------
Net income (loss)............. $ 6,809 $ (559) $ -- $ 6,250
======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30, 1997
---------------------------------------------
HOC HRC ELIMINATIONS COMBINED
------- ------ ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues................................ $19,072 $ 515 $ (515) $19,072
Total operating expenses................ 13,074 434 (515) 12,993
Other (income) expense.................. 557 320 -- 877
Income (loss) before income taxes....... 5,441 (239) -- 5,202
Income tax expenses..................... 2,028 -- -- 2,028
------- ------ ------- -------
Net income (loss)............. $ 3,413 $ (239) $ -- $ 3,174
======= ====== ======= =======
</TABLE>
Elimination entries represent the elimination of approximately $1,923,000
and $515,000 of HRC's billings to HOC for the 12 months ended September 30,
1997 and three months ended November 30, 1997, respectively, for HOC's
bareboat charter of HRC's drilling and workover rigs.
36
<PAGE> 43
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, 1997 are derived from
the Consolidated Financial Statements of the Company audited by Coopers &
Lybrand L.L.P., independent accountants. The data presented below should be read
in conjunction with the Company's Consolidated Financial Statements, including
the notes thereto, included elsewhere or incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED AUGUST 31, ENDED NOVEMBER 30,
------------------------------------------------------------------- -------------------------
1993 1994(1) 1995 1996 1997(3) 1996 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Drilling............... $ 96,719 $ 147,480 $ 153,075 $ 145,160 $ 283,598 $ 42,871 $ 101,400
Rental................. -- -- -- -- 25,457 1,713 8,089
Other.................. 4,082 4,944 4,296 11,492 2,589 614 391
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues... 100,801 152,424 157,371 156,652 311,644 45,198 109,880
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating Expenses:
Drilling............... 71,533 117,430 115,963 104,614 189,979 30,444 63,326
Rental................. -- -- -- -- 8,549 339 2,786
Other.................. 5,951 6,563 4,928 11,824 4,722 923 494
Depreciation, depletion
and amortization..... 23,376 23,246 23,745 23,061 46,256 6,898 14,559
General and
administrative....... 12,321 14,320 14,232 15,756 14,414 3,398 4,115
Provision for reduction
in carrying value of
certain assets(1).... -- 19,718 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses....... 113,181 181,277 158,868 155,255 263,920 42,002 85,280
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income
(loss)................. (12,380) (28,853) (1,497) 1,397 47,724 3,196 24,600
----------- ----------- ----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest income
(expense) -- net.... 1,676 1,150 1,184 1,507 (27,484) (1,489) (9,237)
Minority interest...... 149 (135) (227) -- -- -- --
Other.................. (469) 919 7,640 5,663 3,316 1,070 228
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total other
income
(expense)...... 1,356 1,934 8,597 7,170 (24,168) (419) (9,009)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes........... (11,024) (26,919) 7,100 8,567 23,556 2,777 15,591
Income tax expense
(benefit).............. (337) 1,887 3,184 4,514 7,241 1,298 4,909
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income
(loss)......... $ (10,687) $ (28,806) $ 3,916 $ 4,053 $ 16,315 $ 1,479 $ 10,682
=========== =========== =========== =========== =========== =========== ===========
Earnings (loss) per share
(fully diluted)........ $ (.20) $ (.53) $ .07 $ .07 $ .23 $ .02 $ .14
=========== =========== =========== =========== =========== =========== ===========
Weighted average shares
outstanding (fully
diluted)............... 53,082,078 54,247,664 55,332,541 57,466,183 72,049,124 66,315,399 78,639,978
=========== =========== =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA(2)................ $ 10,996 $ 14,111 $ 22,248 $ 24,458 $ 93,980 $ 10,094 $ 39,159
Ratio of earnings to
fixed charges(4)....... -- -- 81.7x 64.5x 1.7x 2.1x 2.3x
Capital expenditures:
Maintenance............ 3,552 5,444 5,133 6,646 14,702 1,472 4,270
Other.................. 15,165 29,320 16,407 24,190 72,724 7,539 29,386
BALANCE SHEET DATA (END
OF PERIOD):
Cash, cash equivalents
and other short-term
investments............ $ 43,989 $ 14,471 $ 22,124 $ 77,985 $ 212,789 $ 86,753 $ 183,521
Property, plant and
equipment, net......... 139,326 127,178 122,258 124,177 439,651 382,859 460,132
Total assets............. 236,342 209,348 216,959 275,959 984,136 740,680 989,042
Total long-term debt,
including current
portion................ -- -- 2,037 3,378 567,126 403,897 562,844
Total stockholders'
equity................. 207,679 180,583 186,920 244,048 348,723 271,392 359,865
</TABLE>
37
<PAGE> 44
- ---------------
(1) 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) Results for fiscal 1997 include the results of Mallard and Quail from
November 13, 1996.
(4) 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 1993 and 1994 to cover fixed
charges. The deficiencies were: 1993 -- $11.0 million and 1994 -- $26.9
million.
38
<PAGE> 45
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Series C Notes were sold by the Company on March 11, 1998 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently placed the Series C Notes with qualified institutional buyers in
reliance on Rule 144A under the Securities Act and accredited institutional
investors. As a condition of the purchase of Series C Notes by the Initial
Purchaser, the Company entered into the Registration Rights Agreement with the
Initial Purchaser, which requires, among other things, that the Company file
with the Commission a registration statement under the Securities Act with
respect to a SUPERtack(TM) offer by the Company to the holders of the Series C
Notes and the Series B Notes to issue and deliver to such holders, in exchange
for such Old Notes, a like principal amount of Exchange Notes. The Company is
required to use its best efforts to cause the Registration Statement relating to
the Exchange Offer to be declared effective by the Commission under the
Securities Act and commence the Exchange Offer. The Exchange Notes are to be
issued without a restrictive legend and may be reoffered and resold by the
holder without restrictions or limitations under the Securities Act (other than
any such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act). A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
On November 12, 1996, the Company sold Series A Notes to the Series A
Initial Purchasers. The Series A Initial Purchasers subsequently placed the
Series A Notes with qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to accredited institutional investors. As a
condition to the purchase of the Series A Notes by the Series A Initial
Purchasers, the Company entered into a Registration Rights Agreement with the
Series A Initial Purchasers which required the Company to file with the
Commission a Registration Statement of the Securities Act with respect to an
offer by the Company to the holders of the Series A Notes to issue and deliver
to such holders, in exchange for the Series A Notes, a like principal amount of
Series B Notes. In January 1997, the Company filed a Registration Statement with
respect to the Series B Notes, and in February 1997, all Series A Notes were
exchanged for registered Series B Notes in an exchange offer pursuant thereto.
The Series B Notes are identical in all material respects to the Exchange Notes.
The Company is including the Series B Notes in the Exchange Offer to combine
both series of notes in order to enhance the liquidity of the Exchange Notes.
The term "holder" with respect to the Exchange Offer means any person in
whose name the Series C Notes or the Series B Notes are registered on the books
of the Company or any other person who has obtained a properly completed bond
power from the registered holder.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all
Series B Notes and Series C Notes properly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the Expiration Date. Holders may tender some
or all of their Old Notes pursuant to the Exchange Offer in integral multiples
of $1,000 principal amount. On the Exchange Date, the Company will issue for
each $1,000 principal amount of Old Notes surrendered to the Company pursuant to
the Exchange Offer a like principal amount of Exchange Notes.
Each holder of Series C Notes who wishes to exchange Old Notes for Exchange
Notes in the Exchange Offer is required to make certain representations,
including that (i) it is neither an affiliate of the Company nor a broker-dealer
tendering Old Notes acquired directly from the Company for its own account, (ii)
any Exchange Notes to be received by it are being acquired in the ordinary
course of its business and (iii) it is not participating in, and it has no
arrangement with any person to participate in, the distribution (within the
meaning of the Securities Act) of the Exchange Notes. In addition, in connection
with any resales of Exchange Notes received in exchange for Series C Notes
pursuant to the Exchange Offer, any broker-dealer who acquired such Exchange
Notes for its own account as a result of market-making activities or other
trading activities must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes. The staff of the SEC has taken the position in no-action letters
issued to third parties including Shearman & Sterling, SEC No-Action Letter
(available July 2, 1993),
39
<PAGE> 46
that participating broker-dealers may fulfill their prospectus delivery
requirements with respect to the Exchange Notes (other than a resale of an
unsold allotment from the original sale of Series C Notes) with this Prospectus,
as it may be amended or supplemented from time to time. Under the Registration
Rights Agreement, the Company is required to allow participating broker-dealers
to use this Prospectus, as it may be amended or supplemented from time to time,
in connection with the resale of such Exchange Notes. See "Plan of
Distribution."
The Exchange Offer shall be deemed to have been consummated upon the
earlier to occur of (i) the Company having exchanged Exchange Notes for all
outstanding Old Notes (other than Series C Notes held by a Restricted Holder)
pursuant to the Exchange Offer and (ii) the Company having exchanged, pursuant
to the Exchange Offer, Exchange Notes for all Old Notes that have been tendered
and not withdrawn on the date that is 30 days following the commencement of the
Exchange Offer. After such event, holders of Series C Notes seeking liquidity in
their investment would have to rely on exemptions to registration requirements
under the securities laws, including the Securities Act.
As of the date of this Prospectus, $450,000,000 principal amount of Old
Notes are issued and outstanding ($300,000,000 of Series B Notes and
$150,000,000 of Series C Notes). In connection with the issuance of the Series C
Notes, the Company arranged for the Series C Notes to be eligible for trading in
the Private Offering, Resale and Trading through Automated Linkages (PORTAL)
Market, the National Association of Securities Dealers' screen based, automated
market trading of securities eligible for resale under Rule 144A.
The Company shall be deemed to have accepted for exchange validly tendered
Old Notes when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. See "-- Exchange Agent." The Exchange Agent will act as
agent for the tendering holders of Old Notes for the purpose of receiving
Exchange Notes from the Company and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date. Holders of Old Notes who tender in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Fees and Expenses."
This Prospectus, together with the accompanying Letter of Transmittal, is
being sent to all registered holders as of the date of this Prospectus.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Notes an announcement thereof, each prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that the Company is extending the
Exchange Offer for a specified period of time. The Company reserves the right
(i) to delay acceptance of any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Old Notes not previously
accepted, if any of the conditions set forth herein under "-- Termination" shall
have occurred and shall not have been waived by the Company (if permitted to be
waived by the Company), by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, and (ii) to amend the terms of
the Exchange Offer in any manner deemed by it to be advantageous to the holders
of the Old Notes. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment. Without limiting the manner in which the Company may
choose to make public announcements of any delay in acceptance,
40
<PAGE> 47
extension, termination or amendment of the Exchange Offer, the Company shall
have no obligation to publish, advertise, or otherwise communicate any such
public announcement, other than by making a timely release to the Dow Jones News
Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from the later of May 15, 1998 and
the date of issuance of the Exchange Notes at a rate equal to 9.75% per annum
and will be payable semi-annually on May 15 and November 15 of each year
commencing November 15, 1998. Interest on the Series C Notes that are tendered
in exchange for the Exchange Notes that has accrued from the date of issuance of
the Series C Notes (or the most recent Interest Payment Date to which interest
on the Series C Notes has been paid), through the Exchange Date and interest on
the Series B Notes that are tendered in exchange for the Exchange Notes since
the most recent date to which interest on the Series B Notes has been paid
through the Exchange Date will be payable on November 15, 1998. Consequently,
assuming the Exchange Offer is consummated prior to the record date in respect
of the November 15, 1998 interest payment for the Old Notes, holders who
exchange their Old Notes for Exchange Notes will receive the same interest
payment on November 15, 1998 that they would have received had they not accepted
the Exchange Offer. Interest on the Old Notes accepted for exchange will cease
to accrue upon issuance of the Exchange Notes.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. The tender by a holder of Old
Notes will constitute an agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal. Delivery of all documents must be made to the
Exchange Agent at its address set forth herein. Holders may also request that
their respective brokers, dealers, commercial banks, trust companies or nominees
effect such tender for such holders. The method of delivery of Old Notes and the
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the holders. Instead of delivery by mail, it is
recommended that holders use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Notes should be sent to the Company. Only a holder of Old
Notes may tender such Old Notes in the Exchange Offer.
Any beneficial holder whose Old Notes are registered in the name of such
holder's broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on behalf of the registered holder. If such
beneficial holder wishes to tender directly, such beneficial holder must, prior
to completing and executing the Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed bond power from the
registered holder. The transfer of record ownership may take considerable time.
If the Letter of Transmittal is signed by the record holder(s) of the Old Notes
tendered thereby, the signature must correspond with the name(s) written on the
face of the Old Notes without alteration, enlargement or any change whatsoever.
If the Letter of Transmittal is signed by a participant in DTC, the signature
must correspond with the name as it appears on the security position listing as
the holder of the Old Notes. Signatures on a Letter of Transmittal or a notice
of withdrawal, as the case may be, must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution")
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder (or by a participant in DTC whose name appears on a security position
listing as the owner) who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
and the Exchange Notes are being issued directly to such registered holder (or
deposited into the participant's account at DTC) or (ii) for the account of an
Eligible Institution. If the Letter of Transmittal is signed by a person other
than the
41
<PAGE> 48
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by appropriate bond powers which authorize such person
to tender the Old Notes on behalf of the registered holder, in either case
signed as the name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Old Notes
(or a timely confirmation received of a book-entry transfer of Old Notes into
the Exchange Agent's account at DTC) or a Notice of Guaranteed Delivery from an
Eligible Institution is received by the Exchange Agent. Issuances of Exchange
Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed
Delivery by an Eligible Institution will be made only against delivery of the
Letter of Transmittal (and any other required documents) and the tendered Old
Notes (or a timely confirmation received of a book-entry transfer of Old Notes
into the Exchange Agent's account at DTC) with the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of the Company or its counsel, be unlawful. The Company also
reserves the absolute right to waive any conditions of the Exchange Offer or
defects or irregularities in tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under any
duty to give notification of defects or irregularities with respect to tenders
of Old Notes nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the Exchange Agent to the tendering holder of such Old Notes unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date. In addition, the Company reserves the right in its sole
discretion to (i) purchase or make offers for any Old Notes that remain
outstanding subsequent to the Expiration Date, or, as set forth under
"-- Termination," to terminate the Exchange Offer and (ii) to the extent
permitted by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
may differ from the terms of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account with respect to the Old Notes
at DTC within two business days after the date of this Prospectus, and any
financial institution which is a participant in DTC may make book-entry delivery
of the Old Notes by causing DTC to transfer such Old Notes into the Exchange
Agent's account in accordance with DTC's procedure for such transfer. Although
delivery of Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must in any case be
transmitted to and received by the Exchange Agent on or prior to the Expiration
Date at one of its addresses set forth below under "-- Exchange Agent", or the
guaranteed delivery procedure described below must be complied with. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All
references in this Prospectus to deposit or delivery of Old Notes shall be
deemed to include DTC's book-entry delivery method.
42
<PAGE> 49
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and whose Old Notes are not
immediately available or who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or who cannot complete the procedure for book-entry transfer on
a timely basis, may effect a tender if: (i) the tender is made by or through an
Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Notes, the
registration number or numbers of such Old Notes (if applicable), and the total
principal amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five business days after the Expiration
Date, the Letter of Transmittal, together with the Old Notes in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange Agent's
account at DTC) and any other documents required by the Letter of Transmittal,
will be deposited by the Eligible Institution with the Exchange Agent; and (iii)
such properly completed and executed Letter of Transmittal, together with the
certificate(s) representing all tendered Old Notes in proper form for transfer
(or a confirmation of such a book-entry transfer) and all other documents
required by the Letter of Transmittal are received by the Exchange Agent within
five business days after the Expiration Date.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, certain terms and
conditions which are summarized below and are part of the Exchange Offer.
Each holder who participates in the Exchange Offer will be required to
represent that any Exchange Notes received by it will be acquired in the
ordinary course of its business, that such holder is not participating in, and
has no arrangement with any person to participate in, the distribution (within
the meaning of the Securities Act) of the Exchange Notes, and that such holder
is not a Restricted Holder.
Old Notes tendered in exchange for Exchange Notes (or a timely confirmation
of a book-entry transfer of such Old Notes into the Exchange Agent's account at
DTC) must be received by the Exchange Agent, with the Letter of Transmittal and
any other required documents, by the Expiration Date or within the time periods
set forth above pursuant to a Notice of Guaranteed Delivery from an Eligible
Institution. Each holder tendering the Old Notes for exchange sells, assigns and
transfers the Old Notes to the Exchange Agent, as agent of the Company, and
irrevocably constitutes and appoints the Exchange Agent as the holder's agent
and attorney-in-fact to cause the Old Notes to be transferred and exchanged. The
holder warrants that it has full power and authority to tender, exchange, sell,
assign and transfer the Old Notes and to acquire the Exchange Notes issuable
upon the exchange of such tendered Old Notes, that the Exchange Agent, as agent
of the Company, will acquire good and unencumbered title to the tendered Old
Notes, free and clear of all liens, restrictions, charges and encumbrances, and
that the Old Notes tendered for exchange are not subject to any adverse claims
when accepted by the Exchange Agent, as agent of the Company. The holder also
warrants and agrees that it will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment and transfer of the Old
Notes. All authority conferred or agreed to be conferred in the Letter of
Transmittal by the holder will survive the death, incapacity or dissolution of
the holder and any obligation of the holder shall be binding upon the heirs,
personal representatives, successors and assigns of such holder.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the business day prior to
the Expiration Date, unless previously accepted for exchange. To withdraw a
tender of Old Notes in the Exchange Offer, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth herein prior to 5:00 p.m., New York City time, on the business day prior
to the Expiration Date and prior to acceptance for exchange thereof by the
Company. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn
43
<PAGE> 50
(including, if applicable, the registration number or numbers and total
principal amount of such Old Notes), (iii) be signed by the Depositor in the
same manner as the original signature on the Letter of Transmittal by which such
Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to permit the Trustee with
respect to the Old Notes to register the transfer of such Old Notes into the
name of the Depositor withdrawing the tender, (iv) specify the name in which any
such Old Notes are to be registered, if different from that of the Depositor and
(v) if applicable because the Old Notes have been tendered pursuant to the
book-entry procedures, specify the name and number of the participant's account
at DTC to be credited, if different than that of the Depositor. All questions as
to the validity, form and eligibility (including time of receipt) of such
withdrawal notices will be determined by the Company, whose determination shall
be final and binding on all parties. Any Old Notes so withdrawn will be deemed
not to have been validly tendered for purposes of the Exchange Offer and no
Exchange Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly retendered. Any Old Notes which have been tendered but
which are not accepted for exchange will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange any Old Notes not theretofore accepted for
exchange, and may terminate the Exchange Offer if it determines that the
Exchange Offer violates any applicable law or interpretation of the staff of the
SEC.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Old Notes and return any
Old Notes that have been tendered to the holders thereof, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration of the
Exchange Offer, subject to the rights of such holders of tendered Old Notes to
withdraw their tendered Old Notes or (iii) waive such termination event with
respect to the Exchange Offer and accept all properly tendered Old Notes that
have not been withdrawn. If such waiver constitutes a material change in the
Exchange Offer, the Company will disclose such change by means of a supplement
to this Prospectus that will be distributed to each registered holder of Old
Notes, and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders of the Old Notes, if the Exchange Offer
would otherwise expire during such period. Holders of Series C Notes will have
certain rights against the Company under the Registration Rights Agreement
should the Company fail to consummate the Exchange Offer.
EXCHANGE AGENT
Chase Bank of Texas, National Association has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance and requests
for additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
Chase Bank of Texas, National Association Chase Bank of Texas, National Association
ATTN: Frank Ivins -- Registered Bond ATTN: Frank Ivins -- Registered Bond
Events Events
Personal & Confidential Personal & Confidential
P. O. Box 2320 1201 Main Street, 18th Floor
Dallas, Texas 75221-2320 Dallas, Texas 75202
</TABLE>
Facsimile Transmission: (214) 672-5746; Confirm by Telephone: (800)
275-2048
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telegraph or telephone. The Company will not make any payments to brokers,
dealers or other persons
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soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus, Letters of Transmittal and related
documents to the beneficial owners of the Old Notes and in handling or
forwarding tenders for exchange.
The other expenses incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees, will be paid by the Company. The Company will pay all transfer
taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange
Offer. If, however, Exchange Notes or Old Notes not tendered or accepted for
exchange are to be delivered to, or are to be registered or issued in the name
of, any person other than the registered holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the Company
upon the consummation of the Exchange Offer. The expenses of the Exchange Offer
will be amortized by the Company over the term of the Exchange Notes under
generally accepted accounting principles.
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DESCRIPTION OF SENIOR CREDIT FACILITY
In November 1996, the Company established a Senior Credit Facility with ING
(U.S.) Capital Corporation ("ING") and a syndicate of financial institutions
(the "Lenders"), consisting of a $100 million term loan and a $45 million
revolving credit facility, which was subsequently increased to $75 million in
December 1997. The balance of the term loan of $83 million was repaid with the
proceeds of the Series C Offering, and such term loan was terminated.
The revolving credit facility can be used for general corporate purposes,
including capital expenditures for rig refurbishments and upgrades, working
capital and standby letters of credit. Availability under the revolving credit
facility is subject to certain borrowing base limitations based on eligible
accounts receivable and 50% of rig supplies in inventory. 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, depending on the percentage of the
credit used. The revolving credit facility is guaranteed by the principal
subsidiaries of the Company, is secured by substantially all of the assets of
the Company and the stock and assets of the Subsidiary Guarantors. The revolving
credit contains customary representations and warranties and restricts the
Company's ability to, among other things, incur indebtedness, merge or sell
assets, pay dividends or other distributions, make investments and capital
expenditures, and engage in transactions with affiliates. The revolving credit
also requires the Company to maintain a consolidated current ratio of not less
than 1 to 1, maintain a consolidated Cash Flow Coverage Ratio (as defined
therein) of 1.25 to 1 prior to March 1, 1998 and 1.4 to 1 thereafter, maintain a
consolidated Debt-to-Capital Ratio (as defined therein) of not greater than 65%
prior to September 1, 1998 and not greater than 60% thereafter. The revolving
credit facility matures on December 31, 1999.
The Company is obligated to pay the Lenders certain fees on the average
daily unadvanced portion of the commitment on the revolving credit facility, and
certain fees for issuance of letters of credit.
Future advances under the revolving credit portion of the Senior Credit
Facility are conditioned on, among other things, the representations and
warranties being true and correct, the delivery of certain opinions and
certificates, environmental and insurance reviews and no material changes having
occurred in the financial condition, operations or properties of the Company.
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<PAGE> 53
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued, and the Series C Notes were issued,
pursuant to the Indenture between the Company and Chase Bank of Texas, National
Association, as trustee (the "Trustee"), dated March 11, 1998. The terms of the
Exchange Notes include those stated in the Indenture and, upon effectiveness of
the Exchange Offer Registration Statement, those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The Exchange Notes are subject to all such terms, and holders of Exchange
Notes are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below. The
Indenture and the Registration Rights Agreement are exhibits to the Registration
Statement. The definitions of certain terms used in the following summary are
set forth below under "-- Certain Definitions."
As used below in this "Description of Exchange Notes," the "Company" means
Parker Drilling Company, but not any of its Subsidiaries.
The Indenture provides for the issuance of up to $450 million principal
amount of 9 3/4% Senior Notes due 2006, Series D to permit the Company to issue
the Exchange Notes (the Series D Notes) for all of the Series C Notes and Series
B Notes. The Indenture also provides the Company the flexibility of issuing
additional Notes in the future; however, any issuance of additional Notes would
be subject to the covenant described under "-- Certain Covenants -- Incurrence
of Indebtedness and Issuance of Preferred Stock." The Series C Notes, any such
additional Notes and the Exchange Notes are collectively referred to as the
"Notes" in this "Description of Exchange Notes."
The Exchange Notes will rank senior in right of payment to all Subordinated
Indebtedness of the Company. The Exchange Notes will rank pari passu in right of
payment with all other senior Indebtedness of the Company, including borrowings
under the Senior Credit Facility and the Series B Notes. However, the Exchange
Notes will be unsecured obligations of the Company and the borrowings under the
Senior Credit Facility are secured by Liens on substantially all of the assets
of the Company and its Subsidiaries. As a result, the Indebtedness under the
Senior Credit Facility will effectively rank senior to the Exchange Notes to the
extent of the security therefor. The Exchange Notes will be unconditionally
guaranteed on a senior unsecured basis by the Subsidiary Guarantors. See
"-- Subsidiary Guarantees."
As of the date of the Indenture, all of the Company's Significant
Subsidiaries will be Restricted Subsidiaries. However, certain of the Company's
other Subsidiaries were designated as Unrestricted Subsidiaries at the time the
Indenture was executed. At November 30, 1997, such Unrestricted Subsidiaries had
total assets of approximately $19.1 million. In addition, subject to the
requirements of the Indenture, the Company will be able to designate other
current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to the restrictive covenants set forth in the
Indenture.
Any Series C Notes that remain outstanding after the completion of the
Exchange Offer, together with the Exchange Notes issued in exchange for Series C
Notes and Series B Notes in connection with the Exchange Offer, will be treated
as a single class of debt securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes will mature on November 15, 2006. Interest on the Notes will
accrue at the rate of 9.75% per annum and will be payable semi-annually in
arrears on November 15 and May 15 commencing on November 15, 1998, to holders of
record on the immediately preceding November 1 and May 1. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to November
15, 2001. Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, upon not less than 30
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<PAGE> 54
nor more than 60 days notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the 12-month period beginning on November 15, of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001...................................................... 104.875%
2002...................................................... 103.250%
2003...................................................... 101.625%
2004 and thereafter....................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to November 15,
1999, the Company may redeem up to 35% of the aggregate principal amount of
Notes originally issued (but disregarding, for this purpose, any Exchange Notes
other than additional Notes) at a redemption price of 109.75% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon
to the redemption date, with the net proceeds of a Public Equity Offering;
provided that at least 65% of the aggregate principal amount of the Notes
originally issued (but disregarding, for this purpose, any Exchange Notes other
than additional Notes) remains outstanding immediately after the occurrence of
such redemption; and, provided, further, that such redemption shall occur within
60 days of the date of the closing of such Public Equity Offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided that no
Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall
be mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SUBSIDIARY GUARANTEES
Each of the Company's Significant Subsidiaries (other than any Exempt
Foreign Subsidiary, as designated by the Company) on the Issue Date of the
Series C Notes and each other Restricted Subsidiary that provides a guarantee
under the Senior Credit Facility will become a Subsidiary Guarantor under the
Indenture. Each Subsidiary Guarantor will unconditionally guarantee on a senior
basis, jointly and severally, the full and prompt performance of the Company's
obligations under the Indenture and the Notes, including the payment of
principal and interest on the Notes. The obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee will be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. The terms of the Subsidiary Guarantees will provide that,
for purposes of such limitations and the applicable fraudulent conveyance laws,
any indebtedness of a Subsidiary Guarantor incurred from time to time pursuant
to the Senior Credit Facility and secured by a perfected Lien on the assets of
such Subsidiary Guarantor (assuming, for purposes of such
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<PAGE> 55
determination, that the incurrence of any such indebtedness and the granting of
any such security interest did not violate any such fraudulent conveyance laws)
shall be deemed, to the extent of the value of the assets subject to such Lien,
to have been incurred prior to the incurrence by such Subsidiary Guarantor of
liability under its Subsidiary Guarantee. See "Risk Factors -- Fraudulent
Conveyance."
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person) another Person (other than the Company or another Subsidiary Guarantor),
whether or not affiliated with such Subsidiary Guarantor, unless (i) subject to
the provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Subsidiary Guarantor) shall
execute a Subsidiary Guarantee and deliver an Opinion of Counsel in accordance
with the terms of the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would have Consolidated Net Worth (immediately after giving effect to
such transaction), equal to or greater than the Consolidated Net Worth of such
Subsidiary Guarantor immediately preceding the transaction; (iv) the Company
would be permitted by virtue of the Company's pro forma Fixed Charge Coverage
Ratio, immediately after giving effect to such transaction, to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the covenant described above under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(v) such transaction does not violate any of the covenants described under
"-- Certain Covenants."
The Indenture provides that in the event of (i) the designation of any
Subsidiary Guarantor as an Unrestricted Subsidiary or (ii) a sale or other
disposition of all or substantially all of the properties or assets of any
Subsidiary Guarantor to a third party or an Unrestricted Subsidiary, by way of
merger, consolidation or otherwise, or a sale or other disposition of all of the
capital stock of any Subsidiary Guarantor, in either case, in a transaction or
manner that does not violate any of the covenants in the Indenture, then such
Subsidiary Guarantor (in the event of such a designation or a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of the
capital stock of such Subsidiary Guarantor) or the Person acquiring the property
(in the event of a sale or other disposition of all or substantially all of the
properties or assets of such Subsidiary Guarantor) will be released from and
relieved of any obligations under its Subsidiary Guarantee, provided that any
Net Proceeds of such sale or other disposition are applied in accordance with
the covenant described under the caption "-- Repurchase at the Option of
Holders -- Asset Sales," and provided, further, however, that any such
termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests that secure, any other
Indebtedness of the Company or its Restricted Subsidiaries shall also terminate
upon such release, sale or disposition.
The Indenture provides that (a) if the Company or any of its Restricted
Subsidiaries shall, after the Issue Date, (i) transfer or cause to be
transferred, any assets, businesses, divisions, real property or equipment
having an aggregate fair market or book value in excess of $1 million to any
Restricted Subsidiary that is not a Subsidiary Guarantor or (ii) make any
Investment having an aggregate fair market or book value in excess of $1 million
in any Restricted Subsidiary that is not a Subsidiary Guarantor, or (b) if,
after the Issue Date of the Series C Notes, any Restricted Subsidiary that is
not a Subsidiary Guarantor shall own any assets or properties having an
aggregate fair market or book value in excess of $1 million, then the Company
shall cause such Restricted Subsidiary (other than any Exempt Foreign
Subsidiary) to execute a Subsidiary Guarantee and deliver an opinion of counsel,
in accordance with the terms of the Indenture. In addition, the Company shall
not permit any of its Restricted Subsidiaries, other than a Subsidiary
Guarantor, directly or indirectly, to (i) incur, guarantee or secure through the
granting of Liens the payment of any Indebtedness of the Company or (ii) pledge
any intercompany notes representing obligations of any of its Restricted
Subsidiaries to secure the payment of any Indebtedness of the Company, in each
case, unless the Company shall cause such Restricted Subsidiary to execute a
Subsidiary Guarantee and deliver an opinion of counsel in advance in accordance
with the terms of the Indenture.
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REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such holder's Notes on a Business Day (the
"Change of Control Payment Date") not more than 60 nor less than 30 days
following such Change of Control, pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company will mail
a notice to each holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase all of the Notes
then outstanding pursuant to the procedures required by the Indenture and
described in such notice. The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control. The Change
of Control Offer is required to remain open for at least 20 Business Days and
until the close of business on the fifth Business Day prior to the Change of
Control Payment Date.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted, together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent will promptly mail or otherwise deliver to each
holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The occurrence of a Change of Control may result in a default under the
Senior Credit Facility and give the Lenders the right to require the Company to
repay all Indebtedness outstanding thereunder. There can be no assurance that
the Company will have available funds sufficient to repay all Indebtedness owing
under the Senior Credit Facility or to fund the purchase of the Notes upon a
Change of Control. In the event a Change of Control occurs at a time when the
Company does not have available funds sufficient to pay for all of the Notes
delivered by holders seeking to accept the Company's repurchase offer, an Event
of Default would occur under the Indenture.
The Company is not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any person (as such term is used in Section 13(d)(3) of the
Exchange Act); (ii) the Company consolidates with or merges into another Person
or any Person consolidates with, or merges into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transaction where
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(a) the outstanding voting stock of the Company is changed into or exchanged for
voting stock of the surviving or resulting Person that is Qualified Capital
Stock and (b) the holders of the voting stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a majority of the
voting stock of the surviving or resulting Person immediately after such
transaction; (iii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iv) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any
person (as defined above) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the voting stock of the Company; or (v) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors. For purposes of this definition, any
transfer of an equity interest of an entity that was formed for the purpose of
acquiring voting stock of the Company will be deemed to be a transfer of such
portion of such voting stock as corresponds to the portion of the equity of such
entity that has been so transferred.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, engage in an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are Subordinated Indebtedness or
otherwise by their terms subordinated to the Notes or the Subsidiary Guarantees)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any notes or other obligations received by the Company
or any such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash within 180 days of closing such
Asset Sale (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from any Asset Sale,
the Company may (i) apply all or any of the Net Proceeds therefrom to repay
Indebtedness (other than Subordinated Indebtedness) of the Company or any
Restricted Subsidiary, provided, in each case, that the related loan commitment
of any revolving credit facility or other borrowing (if any) is thereby
permanently reduced by the amount of such Indebtedness so repaid, or (ii) invest
all or any part of the Net Proceeds thereof in properties and other capital
assets that replace the properties or other capital assets that were the subject
of such Asset Sale or in other properties or other capital assets that will be
used in the business of the Company and its Restricted Subsidiaries. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
borrowings under any revolving credit facility or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds equals or exceeds $15 million, the
Company will be required to (i) make an offer
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to purchase (the "Series A/B Asset Sale Offer") the Series B Notes, if any are
then outstanding, at a price equal to 100% of the principal amount of the Series
B Notes, plus accrued and unpaid interest (ii) in the event that any Excess
Proceeds are not applied to a Series B Asset Sale Offer, to make an offer to all
holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of any Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon to the date of
purchase, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
The Company will not permit any Restricted Subsidiary to enter into or
suffer to exist any agreement that would place any restriction of any kind
(other than pursuant to law or regulation) on the ability of the Company to make
an Asset Sale Offer following any Asset Sale. The Company will comply with Rule
14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder, if applicable, in the event that an Asset Sale occurs and the
Company is required to purchase Notes as described above.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company or dividends or distributions payable to the Company or any Wholly Owned
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company or any Affiliate
of the Company (other than (A) any such Equity Interests owned by the Company or
any Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor and (B) Employee Stock Repurchases); (iii) make any principal payment
on, or purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except in accordance with the mandatory redemption or
repayment provisions set forth in the original documentation governing such
Indebtedness; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-
quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock";
and,
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted
Subsidiaries after the Series A/B Issue Date (excluding Restricted
Payments permitted by clauses (x) and (y) the next succeeding
paragraph is less than the sum of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing
after the Series A/B Issue Date to the end of the Company's most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment
(or, if such
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Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (ii) 100% of the aggregate Net Equity Proceeds (A)
received by the Company from the issue or sale, subsequent to the
Series A/B Issue Date, of Qualified Capital Stock of the Company or
(B) of any other Equity Interests or debt securities of the Company
that have been issued subsequent to the Series A/B Issue Date and that
have been converted into such Qualified Capital Stock (other than any
Qualified Capital Stock sold to a Restricted Subsidiary of the Company
or issued upon conversion of the Convertible Preferred Stock), plus
(iii) to the extent not otherwise included in Consolidated Net Income,
the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or a Restricted
Subsidiary after the Series A/B Issue Date from any Unrestricted
Subsidiary or from the redesignation of an Unrestricted Subsidiary as
a Restricted Subsidiary (valued as provided below), plus (iv) $15
million.
The foregoing provisions will not prohibit any of the following: (w) the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration such payment would have complied with the provisions
of the Indenture; (x) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the Net Equity Proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of Qualified Capital Stock of the Company
(other than any Disqualified Stock); provided that the amount of any such Net
Equity Proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph; (y) the defeasance, redemption or repurchase of
Subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness or the substantially concurrent sale (other
than to a Restricted Subsidiary of the Company) of Qualified Capital Stock of
the Company; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph.
For purposes of the foregoing provisions, the amount of any Restricted
Payment (other than cash) shall be the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this "Restricted
Payments" covenant were computed, which calculations may be based upon the
Company's latest available financial statements.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would be permitted by the provisions
of this "Restricted Payments" covenant and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. For purposes of
making such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash prior to such
designation) in the Restricted Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under paragraph (c) of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the Fair Market Value of such Investments at the time of such
designation.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness but excluding any Permitted
Indebtedness) and that the Company will not issue any Disqualified Stock and
will not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Company may incur Indebtedness
(including Acquired Indebtedness) or issue
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shares of Disqualified Stock, and any Restricted Subsidiary may incur
Indebtedness (including Acquired Indebtedness), if the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The Indenture also provides that neither the Company nor any Subsidiary
Guarantor will, directly or indirectly, in any event incur any Indebtedness that
by its terms (or by the terms of any agreement governing such Indebtedness) is
subordinated to any other Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or
by the terms of any agreement governing such Indebtedness) made expressly
subordinate to the Notes or the Subsidiary Guarantee of such Subsidiary
Guarantor, as the case may be, to the same extent and in the same manner as such
Indebtedness is subordinated pursuant to subordination provisions that are most
favorable to the holders of any other Indebtedness of the Company or such
Subsidiary Guarantor, as the case may be.
Liens
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume, affirm
or suffer to exist or become effective any Lien of any kind, except for
Permitted Liens, upon any of their respective property or assets, whether now
owned or acquired after the Issue Date, or any income, profits or proceeds
therefrom, to secure (a) any Indebtedness of the Company or such Restricted
Subsidiary (if it is not also a Subsidiary Guarantor), unless prior to, or
contemporaneously therewith, the Notes are equally and ratably secured, or (b)
any Indebtedness of any Subsidiary Guarantor, unless prior to, or
contemporaneously therewith, the Subsidiary Guarantees are equally and ratably
secured; provided, however, that if such Indebtedness is expressly subordinated
to the Notes or the Subsidiary Guarantees, the Lien securing such Indebtedness
will be subordinated and junior to the Lien securing the Notes or the Subsidiary
Guarantees, as the case may be, with the same relative priority as such
Indebtedness has with respect to the Notes or the Subsidiary Guarantees. The
foregoing covenant will not apply to any Lien securing Acquired Indebtedness,
provided that any such Lien extends only to the property or assets that were
subject to such Lien prior to the related acquisition by the Company or such
Restricted Subsidiary and was not created, incurred or assumed in contemplation
of such transaction. The incurrence of additional secured Indebtedness by the
Company and its Restricted Subsidiaries is subject to further limitations on the
incurrence of Indebtedness as described under "-- Incurrence of Indebtedness and
Issuance of Preferred Stock."
Sale-and-Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale-and-leaseback
transaction; provided that the Company or any Restricted Subsidiary, as
applicable, may enter into a sale-and-leaseback transaction if (i) the Company
could have (a) incurred Indebtedness in an amount equal to the Attributable
Indebtedness relating to such sale-and-leaseback transaction pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "-- Incurrence of Additional
Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure
such Indebtedness pursuant to the covenant described above under the caption
"-- Liens," (ii) the gross cash proceeds of such sale-and-leaseback transaction
are at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale-and-leaseback
transaction and (iii) the transfer of assets in such sale-and-leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales."
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Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, (a) sell, lease, transfer or otherwise
dispose of any of its properties, assets or securities to, (b) purchase or lease
any property, assets or securities from, (c) make any Investment in, or (d)
enter into or suffer to exist any other transaction or series of related
transactions with, or for the benefit of, any Affiliate of the Company unless
(i) such transaction or series of transactions is on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that would be available in a comparable arm's length transaction with an
unrelated third party, (ii) with respect to any one transaction or series of
related transactions involving aggregate payments in excess of $1 million, the
Company delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (i) above,
and (iii) with respect to a transaction or series of related transactions
involving payments in excess of $5 million, the Company delivers an Officers'
Certificate to the Trustee certifying that (A) such transaction or series of
related transactions complies with clause (i) above and (B) such transaction or
series of related transactions has been approved by a majority of the
Disinterested Directors of the Company; provided, however, that the foregoing
restriction shall not apply to (u) any arrangements in effect on the Series A/B
Issue Date, (v) transactions between or among the Company and its Wholly Owned
Restricted Subsidiaries, (w) loans or advances to officers, directors and
employees of the Company or any Restricted Subsidiary made in the ordinary
course of business and consistent with past practices of the Company and its
Restricted Subsidiaries in an aggregate amount not to exceed $1 million
outstanding at any one time, (x) indemnities of officers, directors and
employees of the Company or any Restricted Subsidiary permitted by bylaw or
statutory provisions, (y) the payment of reasonable and customary regular fees
to directors of the Company or any of its Restricted Subsidiaries who are not
employees of the Company or any Affiliate and (z) the Company's employee
compensation and other benefit arrangements.
Issuances and Sales of Capital Stock of Wholly Owned Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, or otherwise dispose of any Capital Stock of any Wholly Owned Restricted
Subsidiary of the Company to any Person (other than the Company or a Wholly
Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, or other disposition is of all the Capital Stock of such
Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, or other disposition are applied in accordance with
the covenant described above under the caption "-- Repurchase at the Option of
Holders -- Asset Sales," and (ii) will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests to any Person
other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company; except, in the case of both clauses (i) and (ii) above, with respect to
dispositions or issuances by a Wholly Owned Restricted Subsidiary of the Company
as contemplated in clauses (i) and (ii) of the definition of "Wholly Owned
Restricted Subsidiary."
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (r) Existing
Indebtedness as in effect on the Series A/B Issue Date, (s) the Senior Credit
Facility as in effect as of the date of the Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refunds,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refunds,
replacement or refinancings are no more restrictive with respect to
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such dividend and other payment restrictions than those contained in the Senior
Credit Facility as in effect on the Series A/B Issue Date, (t) the Indenture,
the Series A/B Indenture, the Notes and the Series A/B Notes, (u) applicable
law, (v) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the Series A/B Indenture and the
Indenture to be incurred, (w) by reason of customary nonassignment provisions in
leases entered into in the ordinary course of business and customary provisions
in other agreements that restrict assignment of such agreements or rights
thereunder, (x) customary restrictions contained in asset sale agreements
limiting the transfer of such assets pending the closing of such sale, (y)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, or (z) Permitted Refinancing Indebtedness with
respect to any indebtedness referred to in clauses (r), (t) and (v) above,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
Person unless (i) the Company is the surviving corporation or the Person formed
by or surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) except in the
case of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, immediately after such transaction no Default or Event of Default
exists; and (iv) except in the case of a merger of the Company with or into a
Wholly Owned Subsidiary of the Company, the Company or the Person formed by or
surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-- Incurrence
of Indebtedness and Issuance of Preferred Stock."
Business Activities
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than (i) the Drilling
Business, (ii) such other businesses as the Company or its Restricted
Subsidiaries are engaged in on the Series A/B Issue Date and (iii) such other
business activities as are reasonably related or incidental thereto.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms
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10-Q and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the consolidated financial condition and results of
operations of the Company and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
information that would be required to be contained in a filing with the
Commission on Form 8-K if the Company were required to file such Form. In
addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Company and the
Subsidiary Guarantors have agreed that, for so long as any Notes remain
outstanding, they will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes; (ii) default in payment when due
of the principal of or premium, if any, on the Notes; (iii) failure by the
Company to comply with the provisions described under the caption "-- Repurchase
at the Option of Holders" or "-- Certain Covenants -- Merger, Consolidation or
Sale of Assets"; (iv) failure by the Company for 45 days after notice to comply
with any of its other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (A) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (B) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $7.5 million or more; (vi) failure by the Company or
any of its Subsidiaries to pay final judgments aggregating in excess of $10.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect (except pursuant to the release of any Subsidiary
Guarantee in accordance with the Indenture); and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that constitute a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
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The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of the
obligations of itself and the Subsidiary Guarantors discharged with respect to
the outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders
of outstanding Notes to receive payments in respect of the principal of,
premium, if any, and interest and Liquidated Damages on such Notes when such
payments are due from the trust referred to below, (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including nonpayment, bankruptcy, receivership, rehabilitation and insolvency
events) described under the caption "-- Events of Default and Remedies" will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or
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violation of, or constitute a default under, any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii) the
Company must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the holders of
Notes over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and (viii)
the Company must deliver to the Trustee an Officers' Certificate and an opinion
of counsel, which, taken together, state that all conditions precedent provided
for relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of at
least a majority in aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of a majority in aggregate principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder): (i) reduce the
principal amount of Notes whose holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders"); (iii) reduce the rate of or change
the time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration); (v) make any Note payable
in money other than that stated in the Notes; (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes; (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"); (viii) alter the ranking of
the Notes relative to other Indebtedness of the Company; or (ix) make any change
in the foregoing amendment and waiver provisions. In addition, without the
consent of holders of not less than 66 2/3% in aggregate principal amount of the
Notes then outstanding, no such amendment, supplement or waiver may amend,
change or modify the obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control or make and consummate an
Asset Sale Offer with respect to any Asset Sale or modify any of the provisions
or definitions with respect thereto.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption
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of the Company's obligations to holders of Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such holder, to secure the Notes pursuant to
the requirements of the "Liens" covenant or otherwise or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains 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; 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 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 provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care 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 and indemnity satisfactory to it against any loss,
liability or expense.
Chase Bank of Texas, National Association acts as trustee under the
Indenture pursuant to which the Series A/B Notes were issued.
GOVERNING LAW
The Indenture, the Exchange Notes and the Subsidiary Guarantees provide
that they will be governed by the laws of the State of New York.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Exchange Notes initially
will be issued in the form of one or more fully registered global Exchange Notes
(collectively, the "Global Exchange Note"). The Global Exchange Note will be
deposited on the Exchange Date with, or on behalf of, The Depository Trust
Company (the "Depository") and registered in the name of Cede & Co., as nominee
of the Depository (such nominee being referred to herein as the "Global Exchange
Note Holder").
Exchange Notes whose holders elect to take physical delivery of their
certificates instead of holding their interests through the Global Exchange Note
(and which are thus ineligible to trade through the Depository) will be issued
in registered certificated form ("Certificated Exchange Securities").
The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only thorough the Depository's
Participants or the Depository's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Exchange Note, the Depository will
credit on its internal system, the principal amount of the Exchange Notes of the
individual beneficial interests represented by such Global Exchange Note to the
respective
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accounts of exchanging holders who have accounts with the Depository and (ii)
ownership of the Exchange Notes evidenced by the Global Exchange Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depository (with respect to the interests of the
Depository's Participants), the Depository's Participants and the Depository's
Indirect Participants. Prospective purchasers are advised that the laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer Exchange Notes
evidenced by the Global Exchange Note will be limited to such extent. For
certain other restrictions on the transferability of the Series C Notes, see
"Transfer Restrictions on Series C Notes."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole holder under the Indenture of any
Notes evidenced by the Global Exchange Note. Beneficial owners of Exchange Notes
evidenced by the Global Exchange Note 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. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depository or for maintaining,
supervising or reviewing any records of the Depository relating to the Exchange
Notes.
Payments in respect of the principal of, premium, if any and interest on
any Exchange Notes registered in the name of the Global Exchange Note Holder on
the applicable record date will be made by the Company through the paying agent
to or at the direction of the Global Exchange Note Holder in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the persons in whose names Exchange Notes,
including the Global Exchange Note, are registered as the owners thereof for the
purpose of receiving such payments. 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 Exchange Notes. The Company believes, however,
that it is currently the policy of the Depository to immediately credit the
accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of the Depository. Payments by the
Depository's Participants and the Depository's Indirect Participants to the
beneficial owners of Exchange Notes will be governed by standing instructions
and customary practice and will be the responsibility of the Depository's
Participants or the Depository's Indirect Participants.
As long as the Exchange Notes are represented by a Global Exchange Note,
the Depository's nominee will be the holder of the Exchange Notes and therefore
will be the only entity that can exercise a right to repurchase the Notes. See
"-- Certain Covenants" and "-- Repurchase at the Option of Holders." Notice by
Participants or Indirect Participants or by owners of beneficial interests in a
Global Exchange Note held through such Participants or Indirect Participants of
the exercise of the option to elect repurchase of beneficial interests in
Exchange Notes represented by Global Exchange Note must be transmitted to the
Depository in accordance with its procedures on a form required by the
Depository and provided to Participants. In order to ensure that the
Depository's nominee will timely exercise a right to repurchase with respect to
a particular Exchange Note, the beneficial owner of such Exchange Note must
instruct the broker or other Participant or Indirect Participant through which
it holds an interest in such Exchange Note to notify the Depository of its
desire to exercise a right to repurchase. Different firms have different cut-off
times for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other Participant or Indirect
Participant through which it holds an interest in an Exchange Note in order to
ascertain the cut-off time by which such an instruction must be given in order
for timely notice to be delivered to the Depository. The Company will not be
liable for any delay in delivery to the paying agent of notices of the exercise
of any option to elect repurchase.
If (i) the Company notifies the Trustee in writing that the Depository is
no longer willing or able to act as a depository 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 Exchange
Notes in the form of Certificated Securities under the Indenture, then, upon
surrender by the Global Note Holder of its Global Exchange Note, Exchange Notes
in such form will be issued to each person that the Global Exchange Note Holder
and the Depository identify as being the beneficial owner of the related
Exchange Notes.
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Neither the Company nor the Trustee will be liable for any delay by the
Global Exchange Note Holder or the Depository in identifying the beneficial
owners of Exchange Notes and the Company and the Trustee may conclusively rely
on, and will be protected in relying on, instructions from the Global Exchange
Note Holder or the Depository for all purposes.
Same-Day Settlement and Payment
The Indenture requires that payments in respect of the Exchange Notes
represented by the Global Exchange Note (including principal, premium, if any
and interest) be made by wire transfer of immediately available funds to the
accounts specified by the Global Exchange Note Holder. With respect to
Certificated Exchange Securities, the Company will make all payments of
principal, premium, if any, and interest by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. The Exchange Notes represented by the Global Exchange Note are expected
to trade in the Depository's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Notes will, therefore, be required by
the Depository to be settled in immediately available funds. The Company expects
that secondary trading in any Certificated Exchange Securities will also be
settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Additional Series D Notes" means any Exchange Notes issued in exchange for
Series A/B Notes pursuant to the Exchange Offer.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by means of a sale-and-leaseback
transaction or a merger or consolidation) (collectively, for purposes of this
definition, a "transfer"), directly or indirectly, in one or a series of related
transactions, of (a) any Capital Stock of any Restricted Subsidiary held by the
Company or any other Restricted Subsidiary, (b) all or substantially all of the
properties and assets of any division or line of business of the Company or any
of its Restricted Subsidiaries, (c) any Event of Loss or (d) any other
properties or assets of the Company or any of its Restricted Subsidiaries other
than transfers of cash, Cash Equivalents, accounts receivable, or properties or
assets in the ordinary course of business; provided that the sale, lease,
conveyance or other disposition of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries, taken as a whole, will be
governed by the provisions of the Indenture described above under the caption
"-- Repurchase at the Option of Holders -- Change of Control" and/or the
provisions described above under the caption "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets" and not by the provisions of the "Asset Sales"
covenant. For the purposes of this definition, the term "Asset Sale" also shall
not include any of the following: (i) any transfer of properties or assets to an
Unrestricted Subsidiary, if such transfer is permitted under the "Restricted
Payments" covenant described above; (ii) sales of damaged, worn-out or obsolete
equipment or
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assets that, in the Company's reasonable judgment, are either (A) no longer used
or (B) no longer useful in the business of the Company or its Restricted
Subsidiaries; (iii) any lease of any property entered into in the ordinary
course of business and with respect to which the Company or any Restricted
Subsidiary is the lessor, except any such lease that provides for the
acquisition of such property by the lessee during or at the end of the term
thereof for an amount that is less than the fair market value thereof at the
time the right to acquire such property is granted; (iv) any trade or exchange
by the Company or any Restricted Subsidiary of one or more drilling rigs for one
or more other drilling rigs owned or held by another Person, provided that (A)
the Fair Market Value of the drilling rig or rigs traded or exchanged by the
Company or such Restricted Subsidiary (including any cash or Cash Equivalents to
be delivered by the Company or such Restricted Subsidiary) is reasonably
equivalent to the Fair Market Value of the drilling rig or rigs (together with
any cash or Cash Equivalents) to be received by the Company or such Restricted
Subsidiary and (B) such exchange is approved by a majority of the Disinterested
Directors of the Company; (v) any transfer by the Company or any Restricted
Subsidiary to its customers of drill pipe, tools and associated drilling
equipment utilized in connection with a drilling contract for the employment of
a drilling rig in the ordinary course of business and consistent with past
practice; and (vi) any transfers that, but for this clause (vi), would be Asset
Sales, if (A) the Company elects to designate such transfers as not constituting
Asset Sales and (B) after giving effect to such transfers, the aggregate Fair
Market Value of the properties or assets transferred in such transaction or any
such series of related transactions so designated by the Company does not exceed
$500,000.
"Attributable Indebtedness" in respect of a sale-and-leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale-and-leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended). As used in the preceding sentence, the "net rental
payments" under any lease for any such period shall mean the sum of rental and
other payments required to be paid with respect to such period by the lessee
thereunder, excluding any amounts required to be paid by such lessee on account
of maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges. In the case of any lease that is terminable by the lessee upon
payment of penalty, such net rental payment shall also include the amount of
such penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability
corporation or similar entity, any membership or other similar interests
therein; and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 365 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 365 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500 million; (iii) commercial
paper with a maturity of 270 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-2 by Standard and
Poor's Ratings Group (or its successors) or at least P-2 by Moody's Investors
Service, Inc. (or its successors); (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any commercial bank meeting the
specifications of clause (ii) above; (v) overnight bank deposits and bankers'
acceptances at any commercial bank meeting the qualifications specified in
clause (ii) above; (vi) deposits available for withdrawal on demand with any
commercial bank not
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meeting the qualifications specified in clause (ii) above, provided all such
deposits do not exceed $5 million in the aggregate at any one time; (vii) demand
and time deposits and certificates of deposit with any commercial bank organized
in the United States not meeting the qualifications specified in clause (ii)
above, provided that such deposits and certificates support bond, letter of
credit and other similar types of obligations incurred in the ordinary course of
business: and (viii) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (v) above.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such Consolidated
Net Income, plus (iii) consolidated net interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable
Indebtedness, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Interest Rate Protection Obligations), to the extent that
any such expense was deducted in computing such Consolidated Net Income, plus
(iv) depreciation, amortization (including amortization of goodwill, debt
issuance costs and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges (including
any provision for the reduction in the carrying value of assets recorded in
accordance with GAAP but excluding any such non-cash charge to the extent that
it represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income, minus (v) any non-cash items increasing the
Consolidated Net Income of such Person and its Restricted Subsidiaries during
such period (excluding any such items that represent the reversal of any accrual
of, or cash reserve for, anticipated cash charges in any prior period commencing
subsequent to the Series A/B Issue Date), in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other noncash charges of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividended to the Company by
such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof that is a Subsidiary Guarantor; (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders; (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded; and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
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"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Restricted Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the Series A/B Issue Date in the book value of
any asset owned by such Person or a consolidated Restricted Subsidiary of such
Person, (y) all investments as of such date in unconsolidated Subsidiaries and
in Persons that are not Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Currency Hedge Obligations" means, at any time as to any Person, the
obligations of such Person at such time that were incurred in the ordinary
course of business pursuant to any foreign currency exchange agreement, option
or futures contract or other similar agreement or arrangement designed to
protect against or manage such Person's or any of its Subsidiaries exposure to
fluctuations in foreign currency exchange rates.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a resolution of the Board of Directors under the Indenture,
a member of the Board of Directors of the Company who does not have any material
direct or indirect financial interest (other than an interest arising solely
from the beneficial ownership of Capital Stock of the Company) in or with
respect to such transaction or series of transactions.
"Disqualified Stock" means the Convertible Preferred Stock and any other
Capital Stock that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date on which the Notes mature.
"Drilling Business" means (i) the drilling for oil, gas or other
hydrocarbons, whether offshore or onshore, and whether as an agent or principal,
and (ii) any business relating to or arising from drilling for oil, gas or other
hydrocarbons, including, without limitation, the rental of drill pipe, tools or
other equipment.
"Employee Stock Repurchases" means purchases by the Company of any of its
Capital Stock from employees for the purpose of permitting such employees to pay
personal income tax obligations with the proceeds, provided that the aggregate
amount of all such purchases shall not exceed $500,000 during any fiscal year of
the Company.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Loss" means, with respect to any drilling rig or similar or
related property or asset of the Company or any Restricted Subsidiary, (i) any
damage to such drilling rig or similar or related property or asset that results
in an insurance settlement with respect thereto on the basis of a total loss or
a constructive or compromised total loss or (ii) the confiscation, condemnation
or requisition of title to such drilling rig or similar or related property or
asset by any government or instrumentality or agency thereof. An Event of Loss
shall be deemed to occur as of the date of the insurance settlement,
confiscation, condemnation or requisition of title, as applicable.
"Exchange Notes" means the Company's 9.75% Senior Notes due 2006, Series D
issued in exchange for the Series C Notes pursuant to an Exchange Offer and
shall also include any Additional Series D Notes.
"Exempt Foreign Subsidiary" means (i) any Restricted Subsidiary engaged in
the Drilling Business exclusively outside the United States of America,
irrespective of its jurisdiction of incorporation and (ii) any other Restricted
Subsidiary whose assets (excluding any cash and Cash Equivalents) consist
exclusively of
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Capital Stock or Indebtedness of one or more Restricted Subsidiaries described
in clause (i) of this definition, that, in any case, is so designated by the
Company in an Officers' Certificate delivered to the Trustee and (a) is not a
guarantor of, and has not granted any Lien to secure, the Senior Credit Facility
or any other Indebtedness of the Company or any Restricted Subsidiary other than
another Exempt Foreign Subsidiary and (b) does not have total assets that, when
aggregated with the total assets of any other Exempt Foreign Subsidiary, exceed
10% of the Company's consolidated total assets, as determined in accordance with
GAAP, as reflected on the Company's most recent quarterly or annual balance
sheet. The Company may revoke the designation of any Exempt Foreign Subsidiary
by notice to the Trustee.
"Existing Indebtedness" means up to $8 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Senior Credit Facility) in existence on the Series A/B
Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset or Investment, the
fair market value of such asset or Investment at the time of the event requiring
such determination, and, with respect to any assets or Investment in excess of
$5 million (other than cash or Cash Equivalents) as determined by a reputable
appraisal firm that is, in the reasonable judgment of the Board of Directors of
the Company, qualified to perform the task for which such firm has been engaged
and independent with respect to the Company.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense (net of any interest income) of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(excluding amortization of debt issuance costs and including, without
limitation, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Indebtedness, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Interest
Rate Protection Obligations); (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period;
(iii) any interest expense on Indebtedness of another Person that is guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries (whether or not such
guarantee or Lien is called upon); and (iv) the product of (A) all cash dividend
payments (and noncash dividend payments in the case of a Person that is a
Restricted Subsidiary) on any series of preferred stock of such Person, to the
extent such preferred stock is owned by Persons other than such Person or its
Restricted Subsidiaries, times (B) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the Company or any of its Restricted Subsidiaries
incurs, assumes, guarantees or redeems any Indebtedness (other than revolving
credit borrowings) or issues preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions of businesses that
have been made by the referent Person or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period; (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded; and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed
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Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
"GAAP" means 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 or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
The term "guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down under letters of credit. When used as a verb, "guarantee"
has a corresponding meaning.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any obligations in respect of
Currency Hedge Obligations or Interest Rate Protection Obligations, except any
such balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness (other than letters of credit, Currency
Hedge Obligations and Interest Rate Protection Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the guarantee by such Person of any Indebtedness
of any other Person.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's or any of its Subsidiaries exposure to
fluctuations in interest rates.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that the following shall not constitute Investments: (i) an acquisition
of assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company, (ii) extensions of trade
credit or other advances to customers on commercially reasonable terms in
accordance with normal trade practices or otherwise in the ordinary course of
business, (iii) Interest Rate Protection Obligations and Currency Hedge
Obligations, but only to the extent that the same constitute Permitted
Indebtedness, and (iv) endorsements of negotiable instruments and documents in
the ordinary course of business. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of.
"Issue Date" means the date on which the Series C Notes were first issued
under the Indenture.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction other
than a precautionary financing statement respecting a lease not intended as a
security agreement).
"Net Equity Proceeds" means (i) in the case of any sale by the Company of
Qualified Capital Stock of the Company, the aggregate net proceeds received by
the Company, after payment of expenses, commissions and the like incurred in
connection therewith, whether such proceeds are in cash or in other property
(valued as determined reasonably and in good faith by the Board of Directors of
the Company, as evidenced by a written resolution of said Board of Directors, at
the fair market value thereof at the time of receipt) and (ii) in the case of
any exchange, exercise, conversion or surrender of any outstanding Indebtedness
of the Company or any Restricted Subsidiary for or into shares of Qualified
Capital Stock of the Company, the amount of such Indebtedness (or, if such
Indebtedness was issued at an amount less than the stated principal amount
thereof, the accrued amount thereof as determined in accordance with GAAP) as
reflected in the consolidated financial statements of the Company prepared in
accordance with GAAP as of the most recent date next preceding the date of such
exchange, exercise, conversion or surrender (plus any additional amount required
to be paid by the holders of such Indebtedness to the Company or to any Wholly
Owned Restricted Subsidiary of the Company upon such exchange, exercise,
conversion or surrender and less any and all payments made to the holders of
such Indebtedness, and all other expenses incurred by the Company in connection
therewith), in the case of each of clauses (i) and (ii) to the extent
consummated after the Series A/B Issue Date.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), other than any gains associated with reimbursements for lost or damaged
rental tools in the ordinary course of business, together with any related
provision for taxes on such gain (but not loss), realized in connection with (a)
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or other sale of assets or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries; (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss); and (iii) any interest income, together with
any related provision for taxes on such interest income.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under the Senior Credit Facility) secured by a Lien on
the asset or assets that were the subject of such Asset Sale, amounts required
to be paid to any Person (other than the Company or any Restricted Subsidiary)
owning a beneficial interest in the asset or assets that were the subject of
such Asset Sale, and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (A) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (B) is directly or indirectly liable (as a Subsidiary
Guarantor or otherwise), or (C) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
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writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-Recourse Purchase Money Indebtedness" means Indebtedness or that
portion of Indebtedness of the Company or any Restricted Subsidiary incurred in
connection with the acquisition by the Company or such Restricted Subsidiary,
subsequent to the Series A/B Issue Date, of any property or assets and as to
which (i) the holders of such Indebtedness agree that they will look solely to
the property or assets so acquired (or, in the case of the acquisition of all of
the outstanding Capital Stock of a Person, the underlying properties and assets
of such Person at the time of such acquisition, including proceeds thereof) and
securing such Indebtedness for payment on or in respect of such Indebtedness,
and neither the Company nor any Restricted Subsidiary (a) provides credit
support, including any undertaking, agreement or instrument which would
constitute Indebtedness or (b) is directly or indirectly liable for such
Indebtedness, and (ii) no default with respect to such Indebtedness would permit
(after notice or passage of time or both), according to the terms thereof, any
holder of any Indebtedness of the Company or a Restricted Subsidiary to declare
a default on such Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and, provided, however, that any portion
of the purchase price of such property or assets that is not financed through
the incurrence of such Indebtedness, shall be deemed to be a "Restricted
Investment" under the Indenture, and shall only be permitted to be expended by
the Company or any Restricted Subsidiary to the extent that the Company would be
permitted to make a Restricted Payment in such amount under the terms of the
covenant described above under "-- Certain Covenants -- Restricted Payments."
"Permitted Indebtedness" means any of the following:
(i) Indebtedness (and any guarantee thereof) under the Revolving
Credit Facility in an aggregate principal amount at any one time
outstanding not to exceed the greater of (A) $50 million, less any amounts
derived from Asset Sales and applied to the permanent reduction of the
Indebtedness thereunder as contemplated by the covenant described above
under the caption "Repurchase at the Option of Holders -- Asset Sales" or
(B) the sum of (1) 80% of the Company's Eligible Accounts Receivable (as
defined in for purposes of the Revolving Credit Facility) and (2) 50% of
the rig materials and supplies of the Company and its Restricted
Subsidiaries determined in accordance with GAAP (the "Maximum Bank Facility
Amount"), and any renewals, amendments, extensions, supplements,
modifications, deferrals, refinancing or replacements (each, for purposes
of this clause (i), a "refinancing") thereof, including any successive
refinancing thereof, so long as the aggregate principal amount of any such
new Indebtedness, together with the aggregate principal amount of all other
Indebtedness outstanding pursuant to this clause (i), shall not at any one
time exceed the Maximum Bank Facility Amount;
(ii) Indebtedness under the Series A/B Notes, the Series C Notes
issued on the Issue Date and the Exchange Notes;
(iii) Indebtedness under the Term Credit Facility, any Existing
Indebtedness, and any Indebtedness under Letters of Credit existing on the
Series A/B Issue Date;
(iv) Indebtedness under Interest Rate Protection Obligations, provided
that (A) such Interest Rate Protection Obligations are related to payment
obligations on Permitted Indebtedness or Indebtedness otherwise permitted
by the initial paragraph of the "Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant, and (B) the notional principal amount of such
Interest Rate Protection Obligations does not exceed the principal amount
of such Indebtedness to which such Interest Rate Protection Obligations
relate;
(v) Indebtedness under Currency Hedge Obligations, provided that (A)
such Currency Hedge Obligations are related to payment obligations on
Permitted Indebtedness or Indebtedness otherwise permitted by the initial
paragraph of the "Incurrence of Indebtedness and Issuance of Preferred
Stock" covenant or to the foreign currency cash flows reasonably expected
to be generated by the Company and its Restricted Subsidiaries, and (B) the
notional principal amount of such Currency Hedge Obligations
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does not exceed the principal amount of such Indebtedness and the amount of
such foreign currency cash flows to which such Currency Hedge Obligations
relate;
(vi) the Subsidiary Guarantees of the Series A/B Notes, the Series C
Notes issued on the Issue Date, any additional Notes subsequently issued,
but only to the extent that the Indebtedness represented by such additional
Notes is otherwise permitted under the Indenture, and the Exchange Notes
(and any assumption of the obligations guaranteed thereby);
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary of the Company to
the Company or a Wholly Owned Restricted Subsidiary, provided, however,
that upon any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly Owned Restricted Subsidiary
ceasing to be a Wholly Owned Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Company or a Wholly Owned
Restricted Subsidiary), such Indebtedness shall be deemed, in each case, to
be incurred and shall be treated as an incurrence for purposes of the
initial paragraph of the "Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant at the time the Wholly Owned Restricted
Subsidiary in question ceased to be a Wholly Owned Restricted Subsidiary or
the time such subsequent transfer occurred;
(viii) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary thereof
in the ordinary course of business, including guarantees or obligations of
the Company or any Restricted Subsidiary thereof with respect to letters of
credit supporting such bid, performance or surety obligations (in each case
other than for an obligation for money borrowed);
(ix) the incurrence by the Company or its Restricted Subsidiaries of
Non-Recourse Purchase Money Indebtedness;
(x) any Permitted Refinancing Indebtedness incurred by the Company or
a Restricted Subsidiary of any Indebtedness incurred pursuant to clause
(ii) or (iii) of this definition, including any successive refinancing by
the Company or such Restricted Subsidiary; and
(xi) any additional Indebtedness in an aggregate principal amount not
in excess of $30 million at any one time outstanding and any guarantee
thereof.
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in the Company or any of its Wholly Owned
Restricted Subsidiaries; (iii) Investments by the Company or any of its
Restricted Subsidiaries in another Person, if as a result of such Investment (A)
such other Person becomes a Wholly Owned Restricted Subsidiary or (B) such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all of its properties and assets to, the Company or a Wholly Owned
Restricted Subsidiary; (iv) Investments permitted under the covenant described
above under the caption "-- Repurchase at the Option of Holders -- Asset Sales";
(v) Investments made in the ordinary course of business in prepaid expenses,
lease, utility, workers' compensation, performance and other similar deposits;
(vi) Investments in stock, obligations or securities received in settlement of
debts owing to the Company or any Restricted Subsidiary as a result of
bankruptcy or insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of the Company or any Restricted Subsidiary, in
each case as to debt owing to the Company or any Restricted Subsidiary that
arose in the ordinary course of business of the Company or any such Restricted
Subsidiary, provided that any stocks, obligations or securities received in
settlement of debts that arose in the ordinary course of business (and received
other than as a result of bankruptcy or insolvency proceedings or upon
foreclosure, perfection or enforcement of any Lien) that are, within 30 days of
receipt, converted into cash or Cash Equivalents shall be treated as having been
cash or Cash Equivalents at the time received; and (vii) other Investments in
joint ventures, corporations, limited liability companies or partnerships formed
with or organized by third Persons, which joint ventures, corporations, limited
liability companies or partnerships, engage in the Drilling Business and are not
Unrestricted Subsidiaries at the time of such Investment, provided such
Investments do not, in the aggregate, exceed $12 million.
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"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the Series A/B Issue Date;
(b) Liens securing the Series A/B Notes, the Notes, the Exchange Notes
or the Subsidiary Guarantees;
(c) Liens in favor of the Company;
(d) Liens securing Indebtedness that constitutes Permitted
Indebtedness pursuant to clause (i) or (iii) of the definition of Permitted
Indebtedness;
(e) Liens for taxes, assessments and governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(g) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds,
bids, government contracts and leases, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(h) judgment Liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the
period within which such proceeding may be initiated shall not have
expired;
(i) any interest or title of a lessor under any Capital Lease
Obligation or operating lease;
(j) Liens securing Non-Recourse Purchase Money Indebtedness and other
purchase money Liens; provided, however, that (i) the related Non-Recourse
Purchase Money Indebtedness or other purchase money Indebtedness shall not
be secured by any property or assets of the Company or any Restricted
Subsidiary other than the property or assets so acquired and any proceeds
therefrom and (ii) the Lien securing any such Indebtedness shall be created
within 90 days of such acquisition;
(k) Liens securing obligations under or in respect of either Currency
Hedge Obligations or Interest Rate Protection Obligations;
(l) Liens upon specific items of inventory or other goods of any
Person securing such Person's obligations in respect of bankers acceptances
issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(m) Liens securing reimbursement obligations with respect to
commercial letters of credit that encumber documents and other property or
assets relating to such letters of credit and products and proceeds
thereof;
(n) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off; and
(o) Liens on, or related to, properties or assets to secure all or
part of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that:
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(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) with respect to
any such Indebtedness of the Company being extended, refinanced, renewed,
replaced, defeased or refunded, such Permitted Refinancing Indebtedness shall
not be incurred by any Restricted Subsidiary.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Public Equity Offering" means an underwriter offer and sale of common
stock of the Company pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Disqualified Stock.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Restricted Investment" means (without duplication) (i) the designation of
a Subsidiary as an Unrestricted Subsidiary in the manner described in the
definition of Unrestricted Subsidiary, (ii) any Investment other than a
Permitted Investment and (iii) any amount constituting a "Restricted Investment"
as contemplated in the definition of "Non-Recourse Purchase Money Indebtedness."
"Revolving Credit Facility" means the revolving loan facility under the
Senior Credit Facility.
"Series A/B Indenture" means the Indenture dated as of November 12, 1996
between the Company and Chase Bank of Texas National Association (formerly Texas
Commerce Bank, National Association), as Trustee, providing for the issuance of
the Series A/B Notes in the aggregate principal amount of $300 million, as such
may be amended and supplemented from time to time.
"Series A/B Issue Date" means November 12, 1996, the date on which the
Series A/B Notes were originally issued under the Series A/B Indenture.
"Series A/B Notes" means the Company's 9.75% Senior Notes due 2006, Series
B issued pursuant to the Series A/B Indenture, as such may be amended or
supplemented from time to time.
"Senior Credit Facility" means, collectively, the Revolving Credit
Agreement and the Term Loan Agreement, each dated as of November 8, 1996, among
the Company, ING (U.S.) Capital Corporation ("ING") and the other lenders
identified therein, and ING, as agent, each as amended, modified, supplemented,
extended, restated, or renewed from time to time.
"Significant Subsidiary" means any (a) Subsidiary that would be a
significant subsidiary as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof and (b) any other Subsidiary that contributed more than 10% of
the Company's Consolidated Cash Flow for the most recent four fiscal quarters
for which financial statements are available.
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"Subordinated Indebtedness" means any Indebtedness of the Company or a
Subsidiary Guarantor that is expressly subordinated in right of payment to the
Notes or the Subsidiary Guarantees, as the case may be, including, without
limitation, the 5.50% Convertible Subordinated Notes due 2004 of the Company.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (A) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (B)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any guarantee of the Notes by any Subsidiary
Guarantor in accordance with the provisions described under "-- Subsidiary
Guarantees."
"Subsidiary Guarantors" means each of (i) the Company's Significant
Subsidiaries on the Issue Date (other than any Exempt Foreign Subsidiary, as
designated by the Company) or any other Restricted Subsidiary that provides a
guarantee under the Senior Credit Facility, (ii) any other Subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of the
Indenture, and (iii) their respective successors and assigns, as required under
the Indenture.
"Term Credit Facility" means the term loans under the Senior Credit
Facility in an aggregate amount not to exceed $100 million, less any amounts
derived from Asset Sales and applied to the permanent reduction of Indebtedness
thereunder as contemplated by the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales."
"Unrestricted Subsidiary" means any Subsidiary (or any successor to any of
them) that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a resolution of the Board of Directors; but only to the extent that
such Subsidiary (i) has no Indebtedness other than Non-Recourse Indebtedness;
(ii) is not party to any agreement, contract, arrangement or understanding with
the Company or any Restricted Subsidiary of the Company unless the terms of any
such agreement, contract, arrangement or understanding are no less favorable to
the Company or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of the Company; (iii) is a Person
with respect to which neither the Company nor any of its Restricted Subsidiaries
has any direct or indirect obligation (A) to subscribe for additional Equity
Interests or (B) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; and (iv)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption "-- Certain Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock," the Company shall be in default of such
covenant). The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," and
(ii) no Default or Event of Default would be in existence following such
designation.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (A) the amount of each
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then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (B) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (ii) the then
outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii) such
Restricted Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be partially
owned by the government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction in order for such Restricted Subsidiary to
transact business in such foreign jurisdiction, provided that the Company,
directly or indirectly, owns the remaining Capital Stock or ownership interests
in such Restricted Subsidiary and, by contract or otherwise, controls the
management and business of such Restricted Subsidiary and derives the economic
benefits of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
"Wholly Owned Subsidiary" means any Subsidiary to the extent (i) all of the
Capital Stock or other ownership interests in such Subsidiary, other than any
directors' qualifying shares mandated by applicable law, is owned directly or
indirectly by the Company or (ii) such Subsidiary is organized in a foreign
jurisdiction and is required by the applicable laws and regulations of such
foreign jurisdiction to be partially owned by the government of such foreign
jurisdiction or individual or corporate citizens of such foreign jurisdiction in
order for such Subsidiary to transact business in such foreign jurisdiction,
provided that the Company, directly or indirectly, owns the remaining Capital
Stock or ownership interests in such Subsidiary and, by contract or otherwise,
controls the management and business of such Subsidiary and derives the economic
benefits of ownership of such Subsidiary to substantially the same extent as if
such Subsidiary were a wholly owned Subsidiary.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Exchange Notes
which may be relevant to a holder or prospective purchaser of one or more of
such Exchange Notes. The tax consequences to a holder of the Exchange Notes may
vary depending upon the particular situation of such holder. The legal
conclusions expressed in this summary are based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
Regulations ("Regulations"), judicial authority and administrative rulings and
practice, all as in effect as of the date of this Prospectus, and all of which
are subject to change, either prospectively or retroactively. These authorities
are subject to various interpretations and it is therefore possible that the tax
treatment of the Exchange Notes may differ from the treatment described below.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to holders.
This summary deals only with persons who will hold the Exchange Notes as
capital assets, and does not address tax considerations applicable to investors
who may be subject to special tax rules, such as financial institutions, tax
exempt organizations, insurance companies, foreign persons, dealers in
securities or currencies, persons who hold Exchange Notes as a hedge or as a
position in a "straddle" for tax purposes, and persons who have a "functional
currency" other than the U.S. dollar. In addition, the following summary is
limited to the United States federal income tax consequences relevant to a U.S.
Holder of the Exchange Notes. A U.S. Holder of an Exchange Note means a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized under the laws of the U.S. or any political subdivision
thereof, or a person otherwise subject to U.S. federal income tax on a net
income basis. In addition, the description does not consider the effect of any
applicable foreign, state, local or other tax laws or estate or gift tax
considerations.
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<PAGE> 81
PERSONS CONSIDERING THE ACQUISITION OF EXCHANGE NOTES SHOULD CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS
WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR
PARTICULAR SITUATIONS.
PAYMENT OF INTEREST
Subject to the discussions of amortizable bond premium below, interest on
an Exchange Note generally will be includable in the income of a Holder as
ordinary income at the time such interest is received or accrued, in accordance
with such Holder's method of accounting for United States federal income tax
purposes.
AMORTIZABLE BOND PREMIUM
Generally, if the tax basis of an obligation held as a capital asset (in
the case of the Exchange Notes, the initial purchase price of the Old Note
exchanged for such Exchange Note) exceeds the amount payable at maturity of the
obligation, such excess will constitute amortizable bond premium that the holder
may elect to amortize under the constant interest rate method and deduct over
the period from his acquisition date to the obligation's maturity date (or to an
earlier call date, if the use of such a date results in a smaller amount of
amortizable bond premium). A holder who elects to amortize bond premium must
reduce his tax basis in the related obligation by the amount of the aggregate
deductions allowable for amortizable bond premium. Amortizable bond premium will
be treated under the Code as an offset to interest income on the related debt
instrument for federal income tax purposes, subject to the promulgation of
Treasury Regulations altering such treatment.
EXCHANGE OFFER
Pursuant to the Regulations, the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer should not constitute a significant modification
of the terms of the Old Notes, and, accordingly, such exchange should be treated
as a "non-event" for federal income tax purposes. Therefore, such exchange
should have no federal income tax consequences to Holders of Old Notes.
SALES, EXCHANGE OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement (including redemption) of an Exchange
Note, other than the exchange of an Old Note for an Exchange Note (see
"-- Exchange Offer" above), a holder of an Exchange Note generally will
recognize gain or loss in an amount equal to the difference between the amount
of cash and the fair market value of any property received on the sale, exchange
or retirement of the Exchange Note (other than in respect of accrued and unpaid
interest on the Exchange Note, which such amounts are treated as ordinary
interest income) and such holder's adjusted tax basis in the Exchange Note. Such
gain or loss will generally be capital gain or loss, and will generally be
long-term capital gain if the Exchange Note is held for more than 12 months. For
individuals, long term capital gains generally are subject to a maximum tax rate
of 28% (20% for assets held more than 18 months). The deductibility of capital
losses is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to interest
payments on the Exchange Notes made to Holders other than certain exempt
recipients (such as corporations) and to proceeds realized by such Holders on
dispositions of Exchange Notes. A 31% backup withholding tax will apply to such
amounts only if the Holder: (i) fails to furnish its social security or other
taxpayer identification number ("TIN") within a reasonable time after request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividend income, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that is not subject to backup withholding.
Any amount withheld from a payment to a Holder under the backup withholding
rules is allowable as a refund or as a credit against such Holder's federal
income tax liability, provided that the required information is furnished to the
Service. Holders of Exchange Notes should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
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<PAGE> 82
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes in exchange for Series C
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Series C Notes where such Series C Notes were acquired
as a result of market-making activities or other trading activities. The Company
has agreed that it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale for a
period of 180 days after consummation of the Exchange Offer, or such shorter
period as will terminate when all Series C Notes acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities have been exchanged for Exchange Notes and resold by such
broker-dealers. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Registration Rights Agreement (including certain indemnification rights and
obligations).
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received in exchange for Series C Notes
pursuant to the Exchange Offer by broker-dealers for their own account pursuant
to the Exchange Offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the Exchange Notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own account
pursuant to the Exchange Offer in exchange for Series C Notes pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. For a period of 180 days
after consummation of the Exchange Offer, or such shorter period as will
terminate when all Series C Notes acquired by broker-dealers for their own
accounts as a result of market-making activities or other trading activities
have been exchanged for Exchange Notes and resold by such broker-dealers, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed in the
Registration Rights Agreement to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act.
TRANSFER RESTRICTIONS ON SERIES C NOTES
The Series C Notes have not been registered under the Securities Act and
may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
Accordingly, the Series C Notes were offered and sold by the Initial Purchaser
only (1) to "Qualified Institutional Buyers" (as defined in Rule 144A under the
Securities Act) in compliance with Rule 144A and (2) to a limited number of
other institutional "Accredited Investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) that, prior to their purchase of any Series
C Notes, delivered to the Initial Purchaser a letter containing certain
representations and agreements.
Each purchaser of Series C Notes, by its acceptance thereof, is deemed to
have acknowledged, represented and agreed as follows:
(1) it was purchasing the Series C Notes for its own account or an
account with respect to which it exercises sole investment discretion and
that it and any such account is a Qualified Institutional Buyer or an
Accredited Investor, in each case for investment and not with a view to
distribution;
76
<PAGE> 83
(2) the Series C Notes have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except as set forth below;
(3) if it should resell or otherwise transfer the Series C Notes
within two years after the original issuance of the Series C Notes, it will
do so only (a) to the Company or any of its subsidiaries, (b) inside the
United States to a Qualified Institutional Buyer in compliance with Rule
144A, (c) inside the United States to an Accredited Investor that, prior to
such transfer, furnishes to the Trustee a signed letter containing certain
representations and agreements relating to the restrictions on transfer of
the Series C Notes (the form of which letter can be obtained from such
Trustee), (d) outside the United States in compliance with Rule 904 of
Regulation S under the Securities Act, (e) pursuant to Rule 144 under the
Securities Act, or (f) pursuant to an effective registration statement
under the Securities Act;
(4) it will give to each transferee of the Series C Notes notice of
any restrictions on transfer of such Series C Notes;
(5) none of the Company or the Initial Purchaser or any person
representing the Company or the Initial Purchaser has made any
representation to it with respect to the Company or the offering or sale of
any Series C Notes, other than the information contained in the Offering
Circular dated March 5, 1998, provided in connection with the sale of the
Series C Notes, which has been delivered to it and upon which it is relying
in making its investment decision with respect to the Series C Notes;
accordingly, it acknowledges that no representation or warranty is made by
the Company or the Initial Purchaser as to the accuracy or completeness of
such materials;
(6) it has had access to such financial and other information
concerning the Company and the Series C Notes as it has deemed necessary in
connection with its decision to purchase the Series C Notes, including an
opportunity to ask questions of and request information from the Company
and the Initial Purchaser;
(7) the Trustee will not be required to accept for registration of
transfer any Series C Notes acquired by it, except upon presentation of
evidence satisfactory to the Company and the Trustee that the restrictions
set forth herein have been complied with;
(8) the Company, the Trustee, the Initial Purchaser and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that, if any of the
acknowledgments, representations or agreements deemed to have been made by
its purchase of the Series C Notes are no longer accurate, it shall
promptly notify the Initial Purchaser; and
(9) if it is acquiring the Notes as a fiduciary or agent for one or
more investor accounts, it represents that it has sole investment
discretion with respect to each such account and it has full power to make
the foregoing acknowledgments, representations and agreements on behalf of
each account.
Each Accredited Investor that is an original purchaser of the Series C
Notes from the Initial Purchaser was required to sign an agreement to the
foregoing effect.
Each certificate representing the Series C Notes bears the following
legend:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITU-
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<PAGE> 84
TIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO
THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
Any Series C Notes not exchanged in the Exchange Offer for Exchange Notes
will remain subject to the transfer restrictions described above.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Exchange Notes
offered hereby will be passed upon for the Company by Vinson & Elkins L.L.P.,
Houston, Texas.
EXPERTS
The consolidated balance sheets of Parker Drilling Company and subsidiaries
(the "Company") as of August 31, 1997 and 1996, 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, 1997,
incorporated by reference in this Prospectus, have been audited by 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, 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 for the quarter
ended November 30, 1997, and incorporated by reference herein, 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 provision
of Section 11 of the Securities Act 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 Section 7 or Section 11 of the Securities Act.
The combined balance sheets of Mallard Bay Drilling Division of EVI, Inc.
as of December 31, 1995 and 1994 and the combined statements 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 incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
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, have been
incorporated by reference in this Prospectus in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, 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.
78
<PAGE> 85
The balance sheet of Hercules Offshore Corporation as of December 31, 1996
and the related statement of income (loss), shareholder's equity and cash flows
of the Predecessor Company as restated for the four months ended April 30, 1996
and the statement of income, shareholder's equity and cash flows of Hercules
Offshore Corporation 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 incorporated by reference
herein in reliance upon the authority of Arthur Andersen LLP as experts in
accounting and auditing in giving said report.
The balance sheet of Hercules Rig Corp. as of December 31, 1996 and the
related statements of income, shareholder's equity and cash flows for the year
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 incorporated by reference herein in reliance upon the authority of
Arthur Andersen LLP as experts in accounting and auditing in giving said report.
79
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. 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 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 (i) for breaches of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or involving
intentional misconduct or known violations of law, (iii) for the payment of
unlawful dividends or unlawful stock purchases or redemptions, or (iv) for
transactions in which the director received an improper personal benefit. 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, Certificate of
Incorporation, By-Laws and agreements referred to above and are qualified in
their entirety by reference thereto.
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES
The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are so indicated by
parenthetical information.
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.1 -- Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to Annual
Report on Form 10-K for the year ended August 31, 1989,
as amended by Form 8 dated December 27, 1989).
3.2 -- 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).
</TABLE>
II-1
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
4.1 -- Indenture dated as of November 12, 1996 among the
Company, as issuer, certain Subsidiary Guarantors (as
defined therein) and Chase Bank of Texas, National
Association f/k/a Texas Commerce Bank National
Association, as trustee (incorporated by reference to
Exhibit 4.3 the Registration Statement on Form S-4 dated
January 6, 1997).
4.2* -- First Supplemental Indenture dated as of April 1, 1997
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.3* -- Second Supplemental Indenture dated as of May 30, 1997
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.4* -- Third Supplemental Indenture dated as of March 13, 1998
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.5* -- Indenture dated as of March 11, 1998 among the Company,
as issuer, certain Subsidiary Guarantors (as defined
therein) and Chase Bank of Texas, National Association,
as trustee.
4.6* -- Registration Rights Agreement dated as of March 11, 1998
by and among the Company, certain Subsidiary Guarantors
(as defined therein) and Jefferies & Company, Inc.
5.1* -- Opinion of Vinson & Elkins L.L.P.
23.1* -- Consent of Coopers & Lybrand L.L.P.
23.2* -- Consent of Arthur Andersen LLP.
23.3* -- Consent of Arthur Andersen LLP.
23.4* -- Consent of KPMG Peat Marwick LLP.
23.5* -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1).
24.1* -- Powers of Attorney (included on the signature pages of
this Registration Statement).
25.1* -- Statement of Eligibility of Chase Bank of Texas, National
Association.
99.1* -- Form of Letter of Transmittal.
</TABLE>
- ---------------
* Filed herewith
ITEM 22. UNDERTAKINGS
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 15 above, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless, in
the opinion of its counsel, the matter has been settled by controlling
precedent,
II-2
<PAGE> 88
submit to a court of appropriate jurisdiction the question 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. The
undersigned registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b),
11, or 13 of this form, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding to
the request. The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY
By: /s/ ROBERT L. PARKER JR.
----------------------------------
Robert L. Parker Jr.
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT L. PARKER Chairman of the Board March 31, 1998
- -----------------------------------------------------
Robert L. Parker
/s/ ROBERT L. PARKER JR. President, Chief Executive Officer March 31, 1998
- ----------------------------------------------------- and Director (Principal
Robert L. Parker Jr. Executive Officer)
/s/ JAMES W. LINN Executive Vice President, Chief March 31, 1998
- ----------------------------------------------------- Operating Officer and Director
James W. Linn
/s/ BERNARD DUROC-DANNER Director March 31, 1998
- -----------------------------------------------------
Bernard Duroc-Danner
/s/ DAVID L. FIST Director March 31, 1998
- -----------------------------------------------------
David L. Fist
/s/ EARNEST F. GLOYNA Director March 31, 1998
- -----------------------------------------------------
Earnest F. Gloyna
/s/ R. RUDOLPH REINFRANK Director March 31, 1998
- -----------------------------------------------------
R. Rudolph Reinfrank
/s/ JAMES J. DAVIS Senior Vice President -- Finance March 31, 1998
- ----------------------------------------------------- and Chief Financial Officer
James J. Davis (Principal Financial and
Accounting Officer)
</TABLE>
II-4
<PAGE> 90
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY OF
OKLAHOMA, INCORPORATED
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., each of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-5
<PAGE> 91
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Odessa, the
State of Texas, on March 31, 1998.
PARKER TECHNOLOGY, INC.
By: /s/ JOE N. BROWN
----------------------------------
Joe N. Brown
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOE N. BROWN Director March 31, 1998
- -----------------------------------------------------
Joe N. Brown
/s/ DAVID L. HOLLAND Director March 31, 1998
- -----------------------------------------------------
David L. Holland
/s/ KENNETH R. HOIT Director March 31, 1998
- -----------------------------------------------------
Kenneth R. Hoit
</TABLE>
II-6
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY
INTERNATIONAL LIMITED
By: /s/ JOHN R. GASS
----------------------------------
John R. Gass
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN R. GASS Director March 31, 1998
- -----------------------------------------------------
John R. Gass
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-7
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
CHOCTAW INTERNATIONAL RIG CORP.
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I.E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-8
<PAGE> 94
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY LIMITED
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
(NEVADA)
II-9
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY LIMITED
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
(OKLAHOMA)
II-10
<PAGE> 96
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING COMPANY OF
NEW GUINEA, INC.
By: /s/ T. BRUCE BLACKMAN
----------------------------------
T. Bruce Blackman
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ T. BRUCE BLACKMAN Director March 31, 1998
- -----------------------------------------------------
T. Bruce Blackman
/s/ EVELYN ONA Director March 31, 1998
- -----------------------------------------------------
Evelyn Ona
/s/ ROBERT A. WAGNER Director March 31, 1998
- -----------------------------------------------------
Robert A. Wagner
</TABLE>
II-11
<PAGE> 97
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998
PARKER DRILLING COMPANY
NORTH AMERICA, INC.
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-12
<PAGE> 98
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING U.S.A. LTD.
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-13
<PAGE> 99
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Odessa, the
State of Texas, on March 31, 1998.
VANCE SYSTEMS ENGINEERING, INC.
By: /s/ JOE N. BROWN
----------------------------------
Joe N. Brown
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOE N. BROWN Director March 31, 1998
- -----------------------------------------------------
Joe N. Brown
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-14
<PAGE> 100
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
DGH, INC.
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
</TABLE>
II-15
<PAGE> 101
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
MALLARD BAY DRILLING, LLC
By: /s/ ROBERT L. PARKER JR.
----------------------------------
Robert L. Parker Jr.
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
Leslie D. Rosencutter
</TABLE>
II-16
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
QUAIL TOOLS, LLP
By: /s/ JAMES W. LINN
----------------------------------
James W. Linn
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS L. WINGERTER Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
I. E. Hendrix, Jr.
/s/ LESLIE D. ROSENCUTTER Director of Parker Drilling U.S.A. March 31, 1998
- ----------------------------------------------------- Ltd.
Leslie D. Rosencutter
</TABLE>
II-17
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma on March 31, 1998.
PARCAN LIMITED
By: /s/ THOMAS L. WINGERTER
----------------------------------
Thomas L. Wingerter
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
/s/ THOMAS . WINGERTER Director March 31, 1998
- -----------------------------------------------------
Thomas L. Wingerter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
</TABLE>
II-18
<PAGE> 104
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER TECHNOLOGY, LLC
By: /s/ JOE N. BROWN
----------------------------------
Joe N. Brown
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOE N. BROWN Director of Parker Technology, Inc. March 31, 1998
- ------------------------------------------------
Joe N. Brown
/s/ DAVID L. HOLLAND Director of Parker Technology, Inc. March 31, 1998
- ------------------------------------------------
David L. Holland
/s/ KENNETH R. HOITT Director of Parker Technology, Inc. March 31, 1998
- ------------------------------------------------
Kenneth R. Hoitt
</TABLE>
II-19
<PAGE> 105
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
HERCULES OFFSHORE CORPORATION
By: /s/ THOMAS J. SEWARD, II
----------------------------------
Thomas J. Seward, II
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES J. DAVIS Director March 31, 1998
- -----------------------------------------------------
James J. Davis
/s/ THOMAS J. SEWARD, II Director March 31, 1998
- -----------------------------------------------------
Thomas J. Seward, II
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
</TABLE>
II-20
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
HERCULES RIG CORP.
By: /s/ THOMAS J. SEWARD, II
----------------------------------
Thomas J. Seward, II
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES J. DAVIS Director March 31, 1998
- -----------------------------------------------------
James J. Davis
/s/ THOMAS J. SEWARD, II Director March 31, 1998
- -----------------------------------------------------
Thomas J. Seward, II
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
</TABLE>
II-21
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa, the
State of Oklahoma, on March 31, 1998.
PARKER DRILLING OFFSHORE COMPANY
By: /s/ JAMES J. DAVIS
----------------------------------
James J. Davis
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James J. Davis and I. E. Hendrix, Jr., and each
of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement or Amendment has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES J. DAVIS Director March 31, 1998
- -----------------------------------------------------
James J. Davis
/s/ LESLIE D. ROSENCUTTER Director March 31, 1998
- -----------------------------------------------------
Leslie D. Rosencutter
/s/ I. E. HENDRIX, JR. Director March 31, 1998
- -----------------------------------------------------
I. E. Hendrix, Jr.
</TABLE>
II-22
<PAGE> 108
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.1 -- Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to Annual
Report on Form 10-K for the year ended August 31, 1989,
as amended by Form 8 dated December 27, 1989).
3.2 -- 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).
4.1 -- Indenture dated as of November 12, 1996 among the
Company, as issuer, certain Subsidiary Guarantors (as
defined therein) and Chase Bank of Texas, National
Association f/k/a Texas Commerce Bank National
Association, as trustee (incorporated by reference to
Exhibit 4.3 the Registration Statement on Form S-4 dated
January 6, 1997).
4.2* -- First Supplemental Indenture dated as of April 1, 1997
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.3* -- Second Supplemental Indenture dated as of May 30, 1997
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.4* -- Third Supplemental Indenture dated as of March 13, 1998
among the Company, as issuer, certain Subsidiary
Guarantors (as defined therein) and Chase Bank of Texas,
National Association f/k/a Texas Commerce Bank National
Association, as trustee.
4.5* -- Indenture dated as of March 11, 1998 among the Company,
as issuer, certain Subsidiary Guarantors (as defined
therein) and Chase Bank of Texas, National Association,
as trustee.
4.6* -- Registration Rights Agreement dated as of March 11, 1998
by and among the Company, certain Subsidiary Guarantors
(as defined therein) and Jefferies & Company, Inc.
5.1* -- Opinion of Vinson & Elkins L.L.P.
23.1* -- Consent of Coopers & Lybrand L.L.P.
23.2* -- Consent of Arthur Andersen LLP.
23.3* -- Consent of Arthur Andersen LLP.
23.4* -- Consent of KPMG Peat Marwick LLP.
23.5* -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
5.1).
24.1* -- Powers of Attorney (included on the signature pages of
this Registration Statement).
25.1* -- Statement of Eligibility of Chase Bank of Texas, National
Association.
99.1* -- Form of Letter of Transmittal.
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 4.2
______________________________________________________________________________
PARKER DRILLING COMPANY
and Subsidiary Guarantors
9 3/4% SENIOR NOTES DUE 2006
_____________
FIRST SUPPLEMENTAL INDENTURE
Dated as of April 1, 1997
Supplementing the Indenture dated as of November 12, 1996
_____________
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
______________________________________________________________________________
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture dated and effective as of April 1, 1997
(the "First Supplemental Indenture") is made and entered into by and among
Parker Drilling Company, a Delaware corporation (the "Company"), Parker
Drilling Company Limited, an Oklahoma Corporation and a wholly-owned subsidiary
of the Company ("PDC Limited"), Parcan, Limited, a Nevada corporation and a
wholly-owned subsidiary of the Company ("Parcan"), Quail Tools, LLP, an
Oklahoma limited liability partnership which is wholly-owned indirectly by the
Company ("Quail"), Parker Technology, LLC, a Louisiana limited liability
company which is wholly-owned indirectly by the Company ("Partech") and Mallard
Bay Drilling, LLC, an Oklahoma limited liability company which is wholly-owned
indirectly by the Company ("Mallard," together with PDC Limited, Parcan, Quail
and Partech, the "New Guarantors") and Texas Commerce Bank National
Association, a national banking association, as trustee (the "Trustee").
RECITALS OF THE COMPANY AND THE NEW GUARANTORS
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
executed and delivered an Indenture dated as of November 12, 1996 by and among
the Company, the Trustee and the Subsidiary Guarantors thereof (the "Original
Indenture"), providing for the issuance by the Company of $300,000,000 in
aggregate principal amount of the Company's 9 3/4% Senior Notes due 2006 (the
"Notes"), and pursuant to which the Subsidiary Guarantors have agreed, jointly
and severally, to unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest on the Notes and all other amounts
due and payable under the Original Indenture and the Notes by the Company (the
"Indenture Obligations");
WHEREAS, Section 9.01(a)(vi) of the Original Indenture provides that under
certain conditions the Company and the Trustee may, without the consent of any
Holder of a Note, amend or supplement the Original Indenture to add any
Restricted Subsidiary as an additional Subsidiary Guarantor as provided in
Section 10.02 of the Original Indenture or to evidence the succession of
another Person to any Subsidiary Guarantor pursuant to Section 10.04 of the
Original Indenture and the assumption by any such successor of the covenants
and agreements of such Subsidiary Guarantor contained in the Original Indenture
and in the Subsidiary Guarantee of such Subsidiary Guarantor;
WHEREAS, the Company and certain Restricted Subsidiaries, including the New
Guarantors, have determined that considerable operating and financial
efficiencies can be achieved by reorganizing the legal status of said
Restricted Subsidiaries, restructuring the legal and financial relationships
among said Restricted Subsidiaries and consolidating the operations of said
Restricted Subsidiaries, which efficiencies will accrue to the benefit of all
Restricted Subsidiaries involved in said reorganization and restructuring;
<PAGE> 3
WHEREAS, the foregoing restructuring will involve transferring assets or
real property or equipment having a fair market value or book value in excess
of $1M to certain of the New Guarantors and the making of an investment in
certain of the New Guarantors in excess of $1M and the providing of a guarantee
under the Senior Credit Facility by the New Guarantors (the "Proposed
Actions");
WHEREAS, Section 10.02 of the Original Indenture provides that the
undertaking of the Proposed Actions requires: (i) the execution and delivery by
the New Guarantors of this First Supplemental Indenture whereby the New
Guarantors agree to be bound by the terms of the Original Indenture as
applicable to a Subsidiary Guarantor; and (ii) the execution of a Subsidiary
Guarantee of the Notes by the New Guarantors;
WHEREAS, the execution and delivery of this First Supplemental Indenture
has been duly authorized by a Board Resolution of the respective Boards of the
Company and each of the New Guarantors; and
WHEREAS, all conditions and requirements necessary to make this First
Supplemental Indenture valid and binding upon the Company and the New
Guarantors, and enforceable against the Company and the New Guarantors in
accordance with its terms, have been performed and fulfilled;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto mutually covenant and agree for the
equal and ratable benefit of the respective Holders of the Notes as follows:
ARTICLE I
ADDITIONAL GUARANTORS
Section 1.1 Addition of Guarantors. Each of the New Guarantors, by
execution and delivery of this First Supplemental Indenture, hereby agrees to
be bound by the terms of the Indenture as Subsidiary Guarantors.
Section 1.2 Guarantees of Subsidiary Guarantors. Attached as Exhibit A
and incorporated herein by reference, are the respective Subsidiary Guarantees
of the New Guarantors in the form prescribed in the Original Indenture, by
which each of the New Guarantors agrees to guarantee the obligations of the
Company, in accordance with the terms set out in such form of Subsidiary
Guarantee.
<PAGE> 4
ARTICLE II
PARTICULAR REPRESENTATIONS OF THE COMPANY
Section 2.1 Authority. The Company is duly authorized by a resolution of
its Board of Directors to execute and deliver this First Supplemental
Indenture, and all corporate action on its part required for the execution and
delivery of this Firsts Supplemental Indenture has been duly and effectively
taken.
Section 2.2 Correctness of Recitals. The Company represents and warrants
that all recitals and statements contained in this First Supplemental Indenture
are true and correct.
ARTICLE III
CONCERNING THE TRUSTEE
Section 3.1 Acceptance of Trusts. The trustee accepts the trusts
hereunder and agrees to perform same, but only upon the terms and conditions
set forth in the Indenture.
Section 3.2 Responsibility for Recitals. The recitals and statements
contained in this First Supplemental Indenture shall be taken as recitals and
statements of the Company, and the Trustee assumes no responsibility for the
correctness of same. The Trustee makes no representations as to the validity
or sufficiency of this First Supplemental Indenture, except that the Trustee is
duly authorized to deliver it.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.1 Relation to the Original Indenture. This First Supplemental
Indenture shall become effective immediately upon execution and delivery. All
terms and conditions in it shall form a part of the Original Indenture as fully
and with the same effect as if all such terms and conditions had been set forth
in the Original Indenture. The Original Indenture is hereby ratified and
confirmed and shall remain and continue in full force and effect in accordance
with its terms, as supplemented by this First Supplemental Indenture. The
Original Indenture and the First Supplemental Indenture shall be read, taken
and construed together as one instrument. Capitalized terms used but not
defined in this First Supplemental Indenture have the meaning ascribed to such
terms in the Original Indenture.
Section 4.2 Execution in Counterparts. This First Supplemental Indenture
may be executed in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.
<PAGE> 5
Section 4.3 Governing Law. The internal laws of the State of New York
shall govern and be used to construe this First Supplemental Indenture and the
new Subsidiary Guarantees executed and delivered pursuant to it.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the date first above written.
PARKER DRILLING COMPANY
By: /s/ JAMES J. DAVIS
-----------------------------------------
Name: James J. Davis
Title: Sr. Vice President
PARKER DRILLING COMPANY LIMITED
By: /s/ I.E. HENDRIX
-----------------------------------------
Name: I.E. Hendrix
Title: Vice President
PARCAN, LIMITED
By: /s/ I. E. HENDRIX
-----------------------------------------
Name: I. E. Hendrix
Title: Vice President
QUAIL TOOLS, LLP
By: /s/ JAMES J. DAVIS
-----------------------------------------
Name: James J. Davis
Title: Treasurer
PARKER TECHNOLOGY, LLC
By: /s/ I. E. HENDRIX
-----------------------------------------
Name: I. E. Hendrix
Title: Treasurer
<PAGE> 6
MALLARD BAY DRILLING, LLC
By: /s/ JAMES J. DAVIS
-----------------------------------------
Name: James J. Davis
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ WAYNE MENTZ
-----------------------------------------
Wayne Mentz
Vice President
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
PARKER DRILLING COMPANY
and Subsidiary Guarantors
9 3/4% SENIOR NOTES DUE 2006
-----------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of May 30, 1997
Supplementing and Amending the Indenture
dated as of November 12, 1996
-----------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS TRUSTEE
- --------------------------------------------------------------------------------
<PAGE> 2
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 30, 1997, among
Parker Drilling Company, a Delaware corporation (the "Company"), the
Subsidiary Guarantors named on the signature page hereof, and Texas Commerce
Bank National Association, a national banking association (the "Trustee"), as
Trustee under the Original Indenture referred to below,
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the issuance of its 9 3/4%
Senior Notes due 2006 (the "Notes"); and the Company has heretofore made,
executed, and delivered to the Trustee its Indenture dated as of November 12,
1996 (such Indenture, as supplemented by the First Supplemental Indenture dated
April 1, 1997, being sometimes referred to herein as the "Original Indenture")
pursuant to which the Notes were issued;
WHEREAS, it is deemed desirable to supplement and amend the Original
Indenture to correct an inconsistency between the definitions of "Non-Recourse
Purchase Money Indebtedness" and "Permitted Liens" therein;
WHEREAS, Section 9.01 of the Original Indenture provides that under
certain conditions the Company, the Subsidiary Guarantors and Trustee, may,
without the consent of any Holders, from time to time and at any time, amend or
supplement the Original Indenture or the Notes, for the purpose, inter alia, of
curing any ambiguity, defect or inconsistency existing therein, provided such
action shall not affect the rights, duties or immunities of the Trustee; and
WHEREAS, all things necessary to authorize the execution and delivery
of this Second Supplemental Indenture, to effect the modification of the
Original Indenture provided for in this Second Supplemental Indenture, and to
make the Original Indenture, as supplemented and amended by this Second
Supplemental Indenture, a valid agreement of the Company, in accordance with
its terms, have been done;
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH that for
and in consideration of the premises and the acceptances or purchases of the
Notes by the Holders, the Company, the Subsidiary Guarantors and the Trustee
mutually covenant and agree for the equal and proportionate benefit of the
respective Holders from time to time of the Notes as follows:
ARTICLE I
MODIFICATION OF THE ORIGINAL INDENTURE
Section 1.1 Amendment to Article One of the Original Indenture.
(a) Section 1.01 of the Original Indenture is amended by deleting,
from the end of clause (i) of subparagraph (x) within the paragraph defining
"Permitted Liens," the text "and any proceeds therefrom" and inserting the
following text in the place of such deleted text:
-2-
<PAGE> 3
"(or, in the case of the acquisition of all of the outstanding
Capital Stock of a Person, the underlying properties and assets of
such Person at the time of such acquisition, including proceeds
thereof)"
ARTICLE 2
PARTICULAR REPRESENTATIONS AND COVENANTS OF THE COMPANY
Section 2.1 Authority of the Company. Each of the Company and the
Subsidiary Guarantors is duly authorized to execute and deliver this Second
Supplemental Indenture, and all corporate action on its part required for the
execution and delivery of this Second Supplemental Indenture has been duly and
effectively taken.
Section 2.2 Truth of Recitals and Statements. The Company warrants
that the recitals of fact and statements contained in this Second Supplemental
Indenture are true and correct, and that the recitals of fact and statements
contained in all certificates and other documents furnished thereunder will be
true and correct.
ARTICLE 3
CONCERNING THE TRUSTEE
Section 3.1 Acceptance of Trusts. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and
conditions set forth in the Original Indenture and in this Second Supplemental
Indenture, to all of which the Company and the Subsidiary Guarantors and the
respective Holders of Notes at any time hereafter outstanding agree by their
acceptance thereof.
Section 3.2 No Responsibility of Trustee for Recitals, etc. The
recitals and statements contained in this Second Supplemental Indenture shall
be taken as the recitals and statements of the Company, and the Trustee assumes
no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Second Supplemental
Indenture, except that the Trustee is duly authorized to execute and deliver
this Second Supplemental Indenture.
ARTICLE 4
MISCELLANEOUS PROVISIONS
Section 4.1 Relation to the Indenture. The provisions of this Second
Supplemental Indenture shall become effective immediately upon the execution
and delivery hereof. This Second Supplemental Indenture and all the terms and
provisions herein contained shall form a part of the Original Indenture as
fully and with the same effect as if all such terms and provisions had been set
forth in the Original Indenture and each and every term and condition contained
in the Original Indenture shall apply to this Second Supplemental Indenture
with the same force and effect as if the same were in this Second Supplemental
Indenture set forth in full, with such omissions, variations and modifications
thereof as may be appropriate to make each such term and condition conform to
this Second Supplemental Indenture. The Original Indenture is hereby ratified
and confirmed and shall
-3-
<PAGE> 4
remain and continue in full force and effect in accordance with the terms and
provisions thereof, as supplemented and amended by this Second Supplemental
Indenture, and the Original Indenture and this Second Supplemental Indenture
shall be read, taken and construed together as one instrument.
Section 4.2 Meaning of Terms. Any term used in this Second
Supplemental Indenture which is defined in the Original Indenture shall have
the meaning specified in the Original Indenture, unless the context shall
otherwise require.
Section 4.3 Counterparts of First Supplemental Indenture. This
Second Supplemental Indenture may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
Section 4.4 Governing Law. This Second Supplemental Indenture shall
be governed by and construed in accordance with the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental indenture to be duly executed, all as of the date first above
written.
PARKER DRILLING COMPANY
By: /s/ I. E. HENDRIX, JR.
----------------------------------------
Name: I. E. Hendrix, Jr.
Title: Vice President
SUBSIDIARY GUARANTORS:
QUAIL TOOLS, INC.
By: /s/ JAMES W. LINN
----------------------------------------
Name: James W. Linn
Title: President
MALLARD BAY DRILLING, INC.
By: /s/ JAMES J. DAVIS
----------------------------------------
Name: James J. Davis
Title: Vice President
BAY DRILLING CORPORATION
By: /s/ JAMES J. DAVIS
----------------------------------------
Name: James J. Davis
Title: Vice President
-4-
<PAGE> 5
AWI DRILLING AND WORKOVER, INC.
By: /s/ I. E. HENDRIX, JR.
----------------------------------------
Name: I. E. Hendrix, Jr.
Title: Vice President
PARKER DRILLING COMPANY OF
OKLAHOMA, INC.
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
PARKER TECHNOLOGY, INC.
By: /s/ DAVID L. HOLLAND
----------------------------------------
Name: David L. Holland
Title: Executive Vice President
PARKER DRILLING COMPANY
INTERNATIONAL LTD.
By: /s/ JOHN R. GASS
----------------------------------------
Name: John R. Gass
Title: President
CHOCTAW INTERNATIONAL RIG
CORPORATION
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
PARKER DRILLING COMPANY LIMITED
By: /s/ I. E. HENDRIX, JR.
----------------------------------------
Name: I. E. Hendrix, Jr.
Title: Vice President
PARKER DRILLING COMPANY OF
ALASKA LIMITED
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
-5-
<PAGE> 6
VANCE SYSTEMS ENGINEERING, INC.
By: /s/ LESLIE D. ROSENCUTTER
----------------------------------------
Name: Leslie D. Rosencutter
Title: Vice President
DGH, INC.
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
PARKER DRILLING U.S.A. LTD.
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
PARKER DRILLING COMPANY OF
NEW GUINEA, INC.
By: /s/ T. BRUCE BLACKMAN
----------------------------------------
Name: T. Bruce Blackman
Title: President
PARKER DRILLING COMPANY
NORTH AMERICA, INC.
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
PARCAN, LIMITED
By: /s/ THOMAS L. WINGERTER
----------------------------------------
Name: Thomas L. Wingerter
Title: President
QUAIL TOOLS, L.L.P.
By: /s/ JAMES W. LINN
----------------------------------------
Name: James W. Linn
Title: President and Manager
-6-
<PAGE> 7
PARKER TECHNOLOGY, L.L.C.
By: /s/ I. E. HENDRIX, JR.
----------------------------------------
Name: I. E. Hendrix, Jr.
Title: Treasurer
MALLARD BAY DRILLING, L.L.C.
By: /s/ JAMES J. DAVIS
----------------------------------------
Name: James J. Davis
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Trustee
By: /s/ WAYNE MENTZ
----------------------------------------
Name: Wayne Mentz
Title: Vice President
-7-
<PAGE> 1
EXHIBIT 4.4
----------------------------------------------
PARKER DRILLING COMPANY
and Subsidiary Guarantors
9 3/4% SENIOR NOTES DUE 2006
THIRD SUPPLEMENTAL INDENTURE
Dated as of March 13, 1998
Supplementing the Indenture dated as of November 12, 1996
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
----------------------------------------------
<PAGE> 2
THIRD SUPPLEMENTAL INDENTURE
This Third Supplemental Indenture dated and effective as of March 13, 1998
(the "Third Supplemental Indenture") is made and entered into by and among
Parker Drilling Company, a Delaware corporation (the "Company"), Parker
Drilling Offshore Company, a Delaware corporation and a wholly owned subsidiary
of the Company ("Parker Offshore"), and Hercules Offshore Corporation, a Texas
corporation, and Hercules Rig Corp., a Texas corporation, which are wholly-
owned indirectly by the Company, ("Hercules Companies" together with Parker
Offshore the "New Guarantors"), and Texas Commerce Bank National Association, a
national banking association, as Trustee (the "Trustee").
RECITALS OF THE COMPANY AND THE NEW GUARANTORS
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
executed and delivered an Indenture dated as of November 12, among the Company,
the Subsidiary Guarantors and the Trustee (as supplemented by the First and
Second Supplemental Indentures, the "Original Indenture") providing for the
issuance by the Company of $300,000,000 aggregate principal amount of the
Company's 9 3/4% Senior Notes due 2006 (the "Notes") and pursuant to which the
Subsidiary Guarantors have agreed, jointly and severally, to unconditionally
guarantee the due and punctual payment of the principal of, premium, if any,
and interest on the Notes and all other amounts due and payable under the
Original Indenture and the Notes by the Company ("Indenture Obligations");
WHEREAS, Section 9.01(a)(vi) of the Original Indenture provides that under
certain conditions the Company and the Trustee may, without the consent of any
Holder of a Note, may amend or supplement the Original Indenture (x) to add any
Restricted Subsidiary as an additional Subsidiary Guarantor as provided in
Section 10.02 of the Original Indenture or (y) to evidence the succession of
another Person to any Subsidiary Guarantor pursuant to Section 10.04 of the
Original Indenture and the assumption by any such successor of the covenants
and agreements of such Subsidiary Guarantor contained in the Original Indenture
and in the Subsidiary Guarantee of such Subsidiary Guarantor;
WHEREAS, the Company has acquired the Hercules Companies indirectly through
Parker Offshore (the "Acquisition");
WHEREAS, the Hercules Companies have a fair market value or book value in
excess of $1M and requires the New Guarantors to issue a guarantee under the
Senior Credit Facility;
WHEREAS, Section 10.02 of the Original Indenture provides that the
Acquisition requires: (i) the execution and delivery by the New Guarantors of
this Third Supplemental Indenture whereby the New Guarantors agree to be bound
by the terms of the Original Indenture as applicable to a Subsidiary Guarantor;
and (ii) the execution of a Subsidiary Guarantee of the Notes by the New
Guarantors;
WHEREAS, all conditions and requirements necessary to make this Third
Supplemental Indenture valid and binding upon the Company and the New
Guarantors, and enforceable against the Company and the New Guarantors in
accordance with its terms, have been performed and fulfilled;
NOW, THEREFORE, in consideration of the above premises, each of the parties
hereto agrees, for the benefit of the others and for the equal and
proportionate benefit of the Holders of the Notes, as follows:
-1-
<PAGE> 3
ARTICLE I
ADDITIONAL GUARANTORS
Section 1.1. Addition of Guarantors. Each of the New Guarantors, by
execution and delivery of this Third Supplemental Indenture, hereby agrees to
be bound by the terms of the Indenture as Subsidiary Guarantors.
Section 1.2. Guarantees of Subsidiary Guarantors. Attached as Exhibit A
and incorporated hereby reference, are the respective Subsidiary Guarantees of
the New Guarantees in the form prescribed in the Original Indenture, by which
each of the New Guarantors agrees to guarantee the obligations of the Company,
in accordance with the terms set out in such form of Subsidiary Guarantee.
ARTICLE II
PARTICULAR REPRESENTATIONS AND COVENANTS
Section 2.1. Authority. The Company and each of the New Guarantors are duly
authorized by a resolution of their respective Board of Directors to execute
and deliver this Third Supplemental Indenture, and all corporate action on its
part required for the execution and delivery of this Third Supplemental
Indenture has been duly and effectively taken.
Section 2.2. Correctness of Recitals. The Company and each New Guarantor
represent and warrant that all recitals and statements in this Third
Supplemental Indenture are true and correct.
ARTICLE III
CONCERNING THE TRUSTEE
Section 3.1 Acceptance of Trusts. The trustee accepts the trusts
hereunder and agrees to perform same, but only upon the terms and conditions
set forth in the Indenture.
Section 3.2 Responsibility for Recitals. The recitals and statements
contained in this Third Supplemental Indenture shall be taken as recitals and
statements of the Company, and the Trustee assumes no responsibility for the
correctness of same. The Trustee makes no representations as to the validity
or sufficiency of this Third Supplemental Indenture, except that the Trustee is
duly authorized to deliver it.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.1 Relation to the Original Indenture. This Third Supplemental
Indenture shall become effective immediately upon execution and delivery. All
terms and conditions in it shall form a part of the Original Indenture as fully
and with the same effect as if all such terms and conditions had been set forth
in the Original Indenture. The Original Indenture is hereby ratified and
confirmed and shall remain and continue in full force and effect in accordance
with its terms, as supplemented by this Third Supplemental Indenture. The
Original Indenture and the Third Supplemental Indenture shall be read, taken
and construed together as one instrument. Capitalized terms used but not
defined in this Third Supplemental Indenture have the meaning ascribed to such
terms in the Original Indenture.
Section 4.2 Execution in Counterparts. This Third Supplemental Indenture
may be executed in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one instrument.
-2-
<PAGE> 4
Section 4.3 Governing Law. The internal laws of the State of New York
shall govern and be used to construe this Third Supplemental Indenture and the
new Subsidiary Guarantees executed and delivered pursuant to it.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, all as of the date first above
written.
PARKER DRILLING COMPANY
By: /s/ JAMES J. DAVIS
-----------------------------------------------
Name: James J. Davis
Title: Sr. Vice President-Finance and
Chief Financial Officer
HERCULES OFFSHORE CORPORATION
By: /s/ JAMES J. DAVIS
-----------------------------------------------
Name: James J. Davis
Title: Vice President-Finance
HERCULES RIG CORP.
By: /s/ JAMES J. DAVIS
-----------------------------------------------
Name: James J. Davis
Title: Vice President-Finance
PARKER DRILLING OFFSHORE COMPANY
By: /s/ JAMES J. DAVIS
-----------------------------------------------
Name: James J. Davis
Title: President
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ REBECCA NEWMAN
-----------------------------------------------
Name: Rebecca Newman
Title: Vice President and Trust Officer
-3-
<PAGE> 1
EXHIBIT 4.5
PARKER DRILLING COMPANY
AND
SUBSIDIARY GUARANTORS
$150,000,000
9-3/4% SENIOR NOTES DUE 2006, SERIES C
_________________
INDENTURE
Dated as of March 11 , 1998
Chase Bank of Texas, National Association
Trustee
_________________
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.21
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03;11.04;11.05
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05;11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . 1
SECTION 1.01 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . 18
SECTION 1.04 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . 19
ARTICLE 2 THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.01 FORM AND DATING . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.02 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . . 20
SECTION 2.03 REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . . 20
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . . . . 21
SECTION 2.05 HOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.06 TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . . . . 21
SECTION 2.07 REPLACEMENT NOTES . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.08 OUTSTANDING NOTES . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.09 TREASURY NOTES . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.10 TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.11 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.12 DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.13 CUSIP NUMBERS . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 3 REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . 28
SECTION 3.01 NOTICES TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED . . . . . . . . . . . . . 28
SECTION 3.03 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . 29
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . 29
SECTION 3.06 NOTES REDEEMED IN PART . . . . . . . . . . . . . . . . . . . 30
SECTION 3.07 OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.08 MANDATORY REDEMPTION . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.09 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS . . . . 30
ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.01 PAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . 33
SECTION 4.03 REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.04 COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . 34
SECTION 4.05 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.06 STAY, EXTENSION AND USURY LAWS . . . . . . . . . . . . . . . 34
SECTION 4.07 RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES . . . . . . . . . . . . . . . . . . . 36
SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED EQUITY 37
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.10 ASSET SALES . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.11 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . 39
SECTION 4.12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.13 ISSUANCES AND SALES OF CAPITAL STOCK OF
WHOLLY OWNED SUBSIDIARIES . . . . . . . . . . . . . . . . . 40
SECTION 4.14 SALE-AND-LEASEBACK TRANSACTIONS . . . . . . . . . . . . . . 40
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL . . . . . . . . . 41
SECTION 4.16 BUSINESS ACTIVITIES . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS . . . . . . . . . . 42
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . . 42
ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . 43
SECTION 6.01 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.02 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.03 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.04 WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . . . 45
SECTION 6.05 CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.06 LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. . . . . . . . 45
SECTION 6.08 COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . . . . 46
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . 46
SECTION 6.10 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.11 UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . 47
ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.01 DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.02 RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . 48
SECTION 7.04 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.05 NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES . . . . . . . . . 49
SECTION 7.07 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . 49
SECTION 7.08 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . . 50
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC . . . . . . . . . . . . . . 51
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . 51
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY . . . 51
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . 51
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE . . 51
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE . . . . . . . . . . . . . . . 51
SECTION 8.03 COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE . . . . . . . . . 52
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO
BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 8.06 REPAYMENT TO THE COMPANY . . . . . . . . . . . . . . . . . . 54
SECTION 8.07 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . 55
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES . . . . . . . . . . . . 55
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES . . . . . . . . . . . . . . 55
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT . . . . . . . . . . . . 57
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . . . . 57
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES . . . . . . . . . . . . . . 57
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC . . . . . . . . . . . . . . 57
ARTICLE 10 SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . 58
SECTION 10.01 SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . 58
SECTION 10.02 ADDITIONAL SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . 59
SECTION 10.03 LIMITATION OF SUBSIDIARY GUARANTORS' LIABILITY . . . . . . . 59
SECTION 10.04 SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.05 RELEASES OF SUBSIDIARY GUARANTORS . . . . . . . . . . . . . 61
SECTION 10.06 "TRUSTEE" TO INCLUDE PAYING AGENT . . . . . . . . . . . . . 61
SECTION 10.07 CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.08 EXECUTION OF SUBSIDIARY GUARANTEES . . . . . . . . . . . . . 62
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.01 TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . . . 62
SECTION 11.02 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . . 64
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION . . . . . . . 64
SECTION 11.06 RULES BY TRUSTEE AND AGENTS . . . . . . . . . . . . . . . . 65
SECTION 11.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS . . . . . . . . . . . . . . . . . 65
SECTION 11.08 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS . . . . . . . 65
SECTION 11.10 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.12 COUNTERPART ORIGINALS . . . . . . . . . . . . . . . . . . . 65
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC . . . . . . . . . . . . . . 66
</TABLE>
iii
<PAGE> 6
INDENTURE dated as of March 11, 1998 by and among Parker Drilling
Company, a Delaware corporation (the "Company"), the Subsidiary Guarantors (as
defined herein) and Chase Bank of Texas, National Association, as trustee (the
"Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as
follows for the benefit of one another and for the equal and ratable benefit of
the Holders of the 9-3/4% Senior Notes due 2006, Series C of the Company (the
"Series C Notes") and the 9-3/4% Senior Notes due 2006, Series D of the Company
to be issued to Holders pursuant to an Exchange Offer (the "Series D Notes"
and, together with the Series C Notes , the "Notes"), without preference of one
series of Notes over the other:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Acquired Indebtedness" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary of such specified Person, and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Additional Series D Notes" means any Exchange Notes issued in
exchange for Series A/B Notes pursuant to the initial Exchange Offer.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of
this definition, "control" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"Attributable Indebtedness" in respect of a sale-and-leaseback
transaction means, at the time of determination, the present value
(discounted at the rate of interest implicit in such transaction,
determined in accordance with GAAP) of the obligation of the lessee
for net rental payments during the remaining term of the lease
included in such sale-and-leaseback transaction (including any period
for which such lease has been extended or may, at the option of the
lessor, be extended). As used in the preceding sentence, the "net
rental payments" under any lease for any such period shall mean the
sum of rental and other payments required to be paid with respect to
such period by the lessee thereunder, excluding any amounts required
to be paid by such lessee on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges. In the
case of any lease that is terminable by the lessee upon payment of
penalty, such net rental payment shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so
terminated.
"Bankruptcy Custodian" means any receiver, trustee, assignee,
liquidator or similar officer under any Bankruptcy Law.
<PAGE> 7
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in
respect of a capital lease that would at such time be required to be
capitalized on a balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock; (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; (iii) in the case
of a partnership, partnership interests (whether general or limited),
(iv) in the case of a limited liability corporation or similar entity,
any membership or other similar interests therein; and (v) any other
interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) any evidence of Indebtedness with
a maturity of 365 days or less issued or directly and fully guaranteed
or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof); (ii)
demand and time deposits and certificates of deposit or acceptances
with a maturity of 365 days or less of any financial institution that
is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500 million; (iii)
commercial paper with a maturity of 270 days or less issued by a
corporation that is not an Affiliate of the Company and is organized
under the laws of any state of the United States or the District of
Columbia and rated at least A-2 by Standard and Poor's or at least P-2
by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause
(i) above entered into with any commercial bank meeting the
specifications of clause (ii) above; (v) overnight bank deposits and
bankers' acceptances at any commercial bank meeting the qualifications
specified in clause (ii) above; (vi) deposits available for withdrawal
on demand with any commercial bank not meeting the qualifications
specified in clause (ii) above, provided all such deposits do not
exceed $5 million in the aggregate at any one time; (vii) demand and
time deposits and certificates of deposit with any commercial bank
organized in the United States not meeting the qualifications
specified in clause (ii) above, provided that such deposits and
certificates support bond, letter of credit and other similar types of
obligations incurred in the ordinary course of business: and (viii)
investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in clauses (i)
through (v) above, including those for which the Trustee, or any
Affiliate thereof, receives compensation with respect to such
investment.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or
a series of related transactions, of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole
to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act); (ii) the Company consolidates with or merges into
another Person or any Person consolidates with, or merges into, the
Company, in any such event pursuant to a transaction in which the
outstanding voting stock of the Company is changed into or exchanged
for cash, securities or other property, other than any such
transaction where (a) the outstanding voting stock of the Company is
changed into or exchanged for voting stock of the surviving or
resulting Person that is Qualified
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Capital Stock and (b) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not
less than a majority of the voting stock of the surviving or resulting
Person immediately after such transaction; (iii) the adoption of a plan
relating to the liquidation or dissolution of the Company; (iv) the
consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above) becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the voting stock of the Company or (v)
the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors. For purposes of
this definition, any transfer of an equity interest of an entity that
was formed for the purpose of acquiring voting stock of the Company
will be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been
so transferred.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" or "SEC" means the Securities and Exchange
Commission.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period
plus (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses
were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net
Income, plus (iii) consolidated net interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable
Indebtedness, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Interest Rate
Protection Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill, debt
issue costs and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-
cash charges (including any provision for the reduction in the
carrying value of assets recorded in accordance with GAAP but
excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period
to the extent that such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income, minus
(v) any non-cash items increasing the Consolidated Net Income of such
Person and its Restricted Subsidiaries during such period (excluding
any such items that represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period commencing
subsequent to the Series A/B Issue Date), in each case, on a
consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation and amortization and other
non-cash charges of, a Restricted Subsidiary of the referent Person
shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in same proportion) that the Net Income
of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding
amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct
or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders,
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<PAGE> 9
statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted
Subsidiary thereof that is a Subsidiary Guarantor; (ii) the Net Income
of any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders; (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded; and (iv) the
cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common
stockholders of such Person and its consolidated Restricted
Subsidiaries as of such date plus (ii) the respective amounts reported
on such Person's balance sheet as of such date with respect to any
series of preferred stock (other than Disqualified Stock) that by its
terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect
of the year of such declaration and payment, but only to the extent of
any cash received by such Person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of a
going concern business made within 12 months after the acquisition of
such business) subsequent to the Series A/B Issue Date in the book
value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries
(except, in each case, Permitted Investments), and (z) all unamortized
debt discount and expense and unamortized deferred charges as of such
date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a
member of such Board of Directors on the Issue Date or (ii) was
nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.
"Convertible Preferred Stock" means the Series D Convertible
Preferred Stock of the Company.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.02 hereof or such other
address as to which the Trustee may give notice to the Company.
"Currency Hedge Obligations" means, at any time as to any
Person, the obligations of such Person at such time that were incurred
in the ordinary course of business pursuant to any foreign currency
exchange agreement, option or futures contract or other similar
agreement or arrangement designed to protect against or manage such
Person's or any of its Subsidiaries' exposure to fluctuations in
foreign currency exchange rates.
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<PAGE> 10
"Custodian" or "Note Custodian" means the Trustee, as
custodian with respect to the Notes in global form, or any successor
entity thereto.
"Default" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the
Notes attached hereto as Exhibit A, that do not include the
information called for by footnotes 1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in
Section 2.03 hereof as the Depository with respect to the Notes, until
a successor shall have been appointed and become such pursuant to the
applicable provision of this Indenture, and, thereafter, "Depository"
shall mean or include such successor.
"Disinterested Director" means, with respect to any
transaction or series of transactions in respect of which the Board of
Directors of the Company is required to deliver a resolution of the
Board of Directors under this Indenture, a member of the Board of
Directors of the Company who does not have any material direct or
indirect financial interest (other than an interest arising solely
from the beneficial ownership of Capital Stock of the Company) in or
with respect to such transaction or series of transactions.
"Disqualified Stock" means the Convertible Preferred Stock and
any other Capital Stock that, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the Holder thereof, in whole
or in part, on or prior to the date on which the Notes mature.
"Drilling Business" means (i) the drilling for oil, gas or
other hydrocarbons, whether offshore or onshore, and whether as an
agent or principal, and (ii) any business relating to or arising from
drilling for oil, gas or other hydrocarbons, including, without
limitation, the rental of drill pipe, tools or other equipment.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or
its equivalent in foreign currency, whose debt (or the debt of whose
holding company) is rated "A" (or higher) according to Standard and
Poor's or "A2" (or higher) by Moody's at the time as of which any
investment or rollover therein is made.
"Employee Stock Repurchases" means purchases by the Company of
any of its Capital Stock from employees for the purpose of permitting
such employees to pay personal income tax obligations with the
proceeds, provided that the aggregate amount of all such purchases
shall not exceed $500,000 during any fiscal year of the Company.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Stock).
"Event of Loss" means, with respect to any drilling rig or
similar or related property or asset of the Company or any Restricted
Subsidiary, (i) any damage to such drilling rig or similar or related
property or asset that results in an insurance settlement with respect
thereto on the basis of a total loss or a constructive or compromised
total loss or (ii) the confiscation, condemnation or requisition of
title to such drilling rig or similar or related property or asset by
any government or instrumentality or
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<PAGE> 11
agency thereof. An Event of Loss shall be deemed to occur as of the
date of the insurance settlement, confiscation, condemnation or
requisition of title, as applicable.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Company's 9-3/4% Senior Notes due
2006, Series D issued in exchange for the Series C Notes pursuant to
an Exchange Offer and shall also include any Additional Series D
Notes.
"Exchange Offer" means the offer that may be made by the
Company pursuant to a Registration Rights Agreement to exchange Series
D Notes for Series C Notes and, in the case of the initial Exchange
Offer, Series A/B Notes.
"Executive Officer" means, for any Person, the managing
general partner, the chief financial officer, chief operating officer
or chief executive officer of such Person.
"Exempt Foreign Subsidiary" means (i) any Restricted
Subsidiary engaged in the Drilling Business exclusively outside the
United States of America, irrespective of its jurisdiction of
incorporation and (ii) any other Restricted Subsidiary whose assets
(excluding any cash and Cash Equivalents) consist exclusively of
Capital Stock or Indebtedness of one or more Restricted Subsidiaries
described in clause (i) of this definition, that, in any case, is so
designated by the Company in an Officer's Certificate delivered to the
Trustee and (a) is not a guarantor or, and has not granted any Lien to
secure, the Senior Credit Facility or any other Indebtedness of the
Company or any Restricted Subsidiary other than another Exempt Foreign
Subsidiary and (b) does not have total assets that, when aggregated
with the total assets of any other Exempt Foreign Subsidiary, exceed
10% of the Company's consolidated total assets, as determined in
accordance with GAAP, as reflected on the Company's most recent
quarterly or annual balance sheet. The Company may revoke the
designation of any Exempt Foreign Subsidiary by notice to the Trustee.
"Existing Indebtedness" means up to $8 million in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries
(other than Indebtedness under the Senior Credit Facility) in
existence on the Series A/B Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset or
Investment, the fair market value of such asset or Investment at the
time of the event requiring such determination, and, with respect to
any assets or Investment in excess of $5 million (other than cash or
Cash Equivalents) as determined by a reputable appraisal firm that is,
in the reasonable judgment of the Board of Directors, qualified to
perform the task for which such firm has been engaged and independent
with respect to the Company.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense (net of any
interest income) of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued (excluding amortization of debt
issuance costs and including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Indebtedness, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Interest Rate Protection Obligations); (ii) the
consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period; (iii) any
interest expense on Indebtedness of another Person that is guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries
(whether or not such guarantee or Lien is called upon);
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and (iv) the product of (A) all cash dividend payments (and non-cash
dividend payments in the case of a Person that is a Restricted
Subsidiary) on any series of preferred stock of such Person, to the
extent such preferred stock is owned by Persons other than such Person
or its Restricted Subsidiaries, times (A) a fraction, the numerator of
which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such
Person, expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges
of such Person for such period. In the event that the Company or any
of its Restricted Subsidiaries incurs, assumes, guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or issues
preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or
such issuance or redemption of preferred stock, as if the same had
occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred
to above, (i) acquisitions of businesses that have been made by the
referent Person or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date shall
be deemed to have occurred on the first day of the four-quarter
reference period; (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date,
shall be excluded; and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date,
shall be excluded, but only to the extent that the obligations giving
rise to such Fixed Charges will not be obligations of the referent
Person or any of its Restricted Subsidiaries following the Calculation
Date.
"GAAP" means 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 or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which
are in effect from time to time.
"Global Note" means a Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (b) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, which, in either case, are
not callable or redeemable as the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such Government Security or a specific payment of principal of
or interest on any such Government Security held by such custodian for
the account of the holder of such depository receipt; provided, that
(except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
Government Security or the specific payment of principal of or
interest on the Government Security evidenced by such depository
receipt.
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The term "guarantee" means, as applied to any obligation, (i)
a guarantee (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, in
any manner, of any part or all of such obligation and (ii) an
agreement, direct or indirect, contingent or otherwise, the practical
effect of which is to assure in any way the payment or performance (or
payment of damages in the event of non-performance) of all or any part
of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down under letters of credit. When used as a
verb, "guarantee" has a corresponding meaning.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price
of any property or representing any obligations in respect of Currency
Hedge Obligations or Interest Rate Protection Obligations, except any
such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than
letters of credit, Currency Hedge Obligations and Interest Rate
Protection Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and, to
the extent not otherwise included, the guarantee by such Person of any
Indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Independent Appraiser" means an investment banking firm of
national standing with non-investment grade debt underwriting
experience or any third party appraiser of national standing;
provided, however, that such firm or appraiser is not an Affiliate of
the Company.
"Interest Rate Protection Obligations" means the obligations
of any Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in
exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional
amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed
to protect against or manage such Person's or any of its Subsidiaries'
exposure to fluctuations in interest rates.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in
the forms of direct or indirect loans (including guarantees of
Indebtedness or other obligations), advances or capital contributions
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance
with GAAP; provided that the following shall not constitute
Investments: (i) an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common
equity securities of the Company, (ii) extensions of trade credit or
other advances to customers on commercially reasonable terms in
accordance with normal trade practices or otherwise in the ordinary
course of business, (iii) Interest Rate Protection Obligations and
Currency Hedge Obligations, but only to the extent that the same
constitute Permitted Indebtedness, and (iv) endorsements of negotiable
instruments and documents in the ordinary course of business. If the
Company or any Subsidiary of
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<PAGE> 14
the Company sells or otherwise disposes of any Equity Interests of any
direct or indirect Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold
or disposed of.
"Issue Date" means the date on which the Series C Notes were
first issued under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of Houston, Texas or the City of New
York or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on
the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in and
any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction
other than a precautionary financing statement respecting a lease not
intended as a security agreement).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the initial Registration Rights Agreement or
any similar provision of any subsequent Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc. and any
successor to the rating agency business thereof.
"Net Equity Proceeds" means (i) in the case of any sale by the
Company of Qualified Capital Stock of the Company, the aggregate net
proceeds received by the Company, after payment of expenses,
commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in other property (valued as determined
reasonably and in good faith by the Board of Directors of the Company,
as evidenced by a written resolution of said Board of Directors, at
the fair market value thereof at the time of receipt) and (ii) in the
case of any exchange, exercise, conversion or surrender of any
outstanding Indebtedness of the Company or any Restricted Subsidiary
for or into shares of Qualified Capital Stock of the Company, the
amount of such Indebtedness (or, if such Indebtedness was issued at an
amount less than the stated principal amount thereof, the accrued
amount thereof as determined in accordance with GAAP) as reflected in
the consolidated financial statements of the Company prepared in
accordance with GAAP as of the most recent date next preceding the
date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holders of such
Indebtedness to the Company or to any Wholly Owned Restricted
Subsidiary of the Company upon such exchange, exercise, conversion or
surrender and less any and all payments made to the holders of such
Indebtedness, and all other expenses incurred by the Company in
connection therewith), in the case of each of clauses (i) and (ii) to
the extent consummated after the Series A/B Issue Date.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), other than any gains associated
with
9
<PAGE> 15
reimbursements for lost or damaged rental tools in the ordinary course
of business, together with any related provision for taxes on such
gain (but not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and
leaseback transactions) or other sale of assets or (b) the disposition
of any securities by such Person or any of its Restricted Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss); and (iii) any
interest income, together with any related provision for taxes on such
interest income.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received in
any Asset Sale), net of the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result
thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness
under the Senior Credit Facility) secured by a Lien on the asset or
assets that were the subject of such Asset Sale, amounts required to
be paid to any Person (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in the asset or assets that
were the subject of such Asset Sale, and any reserve for adjustment in
respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which
neither the Company nor any of its Restricted Subsidiaries (A)
provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (B) is
directly or indirectly liable (as a Subsidiary Guarantor or
otherwise), or (C) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of
the Company or any of its Restricted Subsidiaries.
"Non-Recourse Purchase Money Indebtedness" means Indebtedness
or that portion of Indebtedness of the Company or any Restricted
Subsidiary incurred in connection with the acquisition by the Company
or such Restricted Subsidiary, subsequent to the Series A/B Issue
Date, of any property or assets and as to which (i) the holders of
such Indebtedness agree that they will look solely to the property or
assets so acquired (or, in the case of the acquisition of all of the
outstanding Capital Stock of a Person, the underlying properties and
assets of such Person at the time of such acquisition, including
proceeds thereof) and securing such Indebtedness for payment on or in
respect of such Indebtedness, and neither the Company nor any
Restricted Subsidiary (a) provides credit support, including any
undertaking, agreement or instrument which would constitute
Indebtedness or (b) is directly or indirectly liable for such
Indebtedness, and (ii) no default with respect to such Indebtedness
would permit (after notice or passage of time or both), according to
the terms thereof, any holder of any Indebtedness of the Company or a
Restricted Subsidiary to declare a default on such Indebtedness or
cause the payment thereof to be accelerated or payable prior to its
stated maturity; and, provided, however, that any portion of the
purchase price of such property or assets that is not financed through
the incurrence of such Indebtedness, shall be deemed to be a
"Restricted Investment" under this Indenture, and shall only be
permitted to be expended by the Company or any Restricted Subsidiary
to the extent that the Company would be permitted to make a Restricted
Payment in such amount under the terms of Section 4.07 hereof.
10
<PAGE> 16
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Original Notes by the
Company pursuant to the Offering Circular.
"Offering Circular" means the Offering Circular of the
Company, dated March 5, 1998, with respect to the Original Notes.
"Officer" means, with respect to any Person, the President,
Chief Financial Officer, Treasurer or any Vice President of such
Person.
"Officers' Certificate" means a certificate signed by two
Officers, at least one of whom shall be the principal executive
officer, principal accounting officer or principal financial officer
of the Company, that meets the requirements of Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements
of Section 11.05 hereof. The counsel may be an employee of or counsel
to the Company.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness (and any guarantee thereof) under the
Revolving Credit Facility in an aggregate principal amount at any one
time outstanding not to exceed the greater of (A) $50 million, less
any amounts derived from Asset Sales and applied to the permanent
reduction of the Indebtedness thereunder as contemplated by Section
4.10 hereof or (B) the sum of (1) 80% of the Company's Eligible
Accounts Receivable (as defined for purposes of the Revolving Credit
Facility) and (2) 50% of the rig materials and supplies of the Company
and its Restricted Subsidiaries determined in accordance with GAAP
(the "Maximum Bank Facility Amount"), and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancing or
replacements (each, for purposes of this clause (i), a "refinancing")
thereof, including any successive refinancing thereof, so long as the
aggregate principal amount of any such new Indebtedness, together with
the aggregate principal amount of all other Indebtedness outstanding
pursuant to this clause (i), shall not at any one time exceed the
Maximum Bank Facility Amount;
(ii) Indebtedness under the Series A/B Notes, the Original
Notes, and the Exchange Notes;
(iii) Indebtedness under the Term Credit Facility, any
Existing Indebtedness, and any Indebtedness under Letters of Credit
existing on the Series A/B Issue Date;
(iv) Indebtedness under Interest Rate Protection
Obligations, provided that (A) such Interest Rate Protection
Obligations are related to payment obligations on Permitted
Indebtedness or Indebtedness otherwise permitted by the initial
paragraph of Section 4.09 hereof, and (B) the notional principal
amount of such Interest Rate Protection Obligations does not exceed
the principal amount of such Indebtedness to which such Interest Rate
Protection Obligations relate;
11
<PAGE> 17
(v) Indebtedness under Currency Hedge Obligations,
provided that (A) such Currency Hedge Obligations are related to
payment obligations on Permitted Indebtedness or Indebtedness
otherwise permitted by the initial paragraph of Section 4.09 hereof or
to the foreign currency cash flows reasonably expected to be generated
by the Company and its Restricted Subsidiaries, and (B) the notional
principal amount of such Currency Hedge Obligations does not exceed
the principal amount of such Indebtedness and the amount of such
foreign currency cash flows to which such Currency Hedge Obligations
relate;
(vi) the Subsidiary Guarantees of the Series A/B Notes,
the Original Notes, any additional Series C Notes subsequently issued,
but only to the extent that the Indebtedness represented by such
additional Series C Notes is otherwise permitted under this Indenture,
and the Exchange Notes (and any assumption of the obligations
guaranteed thereby);
(vii) Indebtedness of the Company to a Wholly Owned
Restricted Subsidiary and Indebtedness of any Restricted Subsidiary of
the Company to the Company or a Wholly Owned Restricted Subsidiary,
provided, however, that upon any subsequent issuance or transfer of
any Capital Stock or any other event which results in any such Wholly
Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any other subsequent transfer of any such Indebtedness
(except to the Company or a Wholly Owned Restricted Subsidiary), such
Indebtedness shall be deemed, in each case, to be incurred and shall
be treated as an incurrence for purposes of the initial paragraph of
Section 4.09 hereof at the time the Wholly Owned Restricted Subsidiary
in question ceased to be a Wholly Owned Restricted Subsidiary or the
time such subsequent transfer occurred;
(viii) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any Restricted
Subsidiary thereof in the ordinary course of business, including
guarantees or obligations of the Company or any Restricted Subsidiary
thereof with respect to letters of credit supporting such bid,
performance or surety obligations (in each case other than for an
obligation for money borrowed);
(ix) the incurrence by the Company or its Restricted
Subsidiaries of Non-Recourse Purchase Money Indebtedness;
(x) any Permitted Refinancing Indebtedness incurred by
the Company or a Restricted Subsidiary of any Indebtedness incurred
pursuant to clause (ii) or (iii) of this definition, including any
successive refinancing by the Company or such Restricted Subsidiary;
and
(xi) any additional Indebtedness in an aggregate principal
amount not in excess of $30 million at any one time outstanding and
any guarantee thereof.
"Permitted Investments" means any of the following: (i)
Investments in Cash Equivalents; (ii) Investments in the Company or
any of its Wholly Owned Restricted Subsidiaries; (iii) Investments by
the Company or any of its Restricted Subsidiaries in another Person,
if as a result of such Investment (A) such other Person becomes a
Wholly Owned Restricted Subsidiary or (B) such other Person is merged
or consolidated with or into, or transfers or conveys all or
substantially all of its properties and assets to, the Company or a
Wholly Owned Restricted Subsidiary; (iv) Investments permitted under
Section 4.10 hereof; (v) Investments made in the ordinary course of
business in prepaid expenses, lease, utility, workers' compensation,
performance and other similar deposits; (vi) Investments in stock,
obligations or securities received in settlement of debts owing to the
Company or any Restricted Subsidiary as a result of bankruptcy or
insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of the Company or any Restricted
Subsidiary, in each case as to debt owing to the Company or any
Restricted Subsidiary that arose in
12
<PAGE> 18
the ordinary course of business of the Company or any such Restricted
Subsidiary, provided that any stocks, obligations or securities
received in settlement of debts that arose in the ordinary course of
business (and received other than as a result of bankruptcy or
insolvency proceedings or upon foreclosure, perfection or enforcement
of any Lien) that are, within 30 days of receipt, converted into cash
or Cash Equivalents shall be treated as having been cash or Cash
Equivalents at the time received; and (vii) other Investments in joint
ventures, corporations, limited liability companies or partnerships
formed with or organized by third Persons, which joint ventures,
corporations, limited liability companies or partnerships engage in
the Drilling Business and are not Unrestricted Subsidiaries at the
time of such Investment, provided such investments do not, in the
aggregate, exceed $12 million.
"Permitted Liens" means the following types of Liens:
(i) Liens existing as of the Series A/B Issue Date;
(ii) Liens ratably securing the Series A/B Notes, the
Notes (including the Exchange Notes) or the Subsidiary Guarantees;
(iii) Liens in favor of the Company;
(iv) Liens securing Indebtedness that constitutes
Permitted Indebtedness pursuant to clause (i) or (iii) of the
definition of "Permitted Indebtedness" included in Section 4.09
hereof;
(v) Liens for taxes, assessments and governmental charges
or claims either (A) not delinquent or (B) contested in good faith by
appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(vi) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not delinquent or being contested in good faith, if such reserve
or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof;
(vii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the payment or performance of tenders, statutory or regulatory
obligations, surety and appeal bonds, bids, government contracts and
leases, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money);
(viii) judgment Liens not giving rise to an Event of Default
so long as any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated
shall not have expired;
(ix) any interest or title of a lessor under any Capital
Lease Obligation or operating lease;
(x) Liens securing Non-Recourse Purchase Money
Indebtedness and other purchase money Liens; provided, however, that
(i) the related Non-Recourse Purchase Money Indebtedness or other
purchase money Indebtedness shall not be secured by any property or
assets of the Company or any Restricted Subsidiary other than the
property or assets so acquired (or, in the case of the acquisition of
all of the outstanding Capital Stock of a Person, the underlying
properties and assets
13
<PAGE> 19
of such Person at the time of such acquisition, including proceeds
thereof) and (ii) the Lien securing any such Indebtedness shall be
created within 90 days of such acquisition;
(xi) Liens securing obligations under or in respect of
either Currency Hedge Obligations or Interest Rate Protection
Obligations;
(xii) Liens upon specific items of inventory or other goods
of any Person securing such Person's obligations in respect of bankers
acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or
other goods;
(xiii) Liens securing reimbursement obligations with respect
to commercial letters of credit that encumber documents and other
property or assets relating to such letters of credit and products and
proceeds thereof;
(xiv) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and set-off; and
(xv) Liens on, or related to, properties or assets to
secure all or part of the costs incurred in the ordinary course of
business for the exploration, drilling, development or operation
thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness of the Company or
any of its Restricted Subsidiaries; provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded and (iv)
with respect to any such Indebtedness of the Company being extended,
refinanced, renewed, replaced, defeased or refunded, such Permitted
Refinancing Indebtedness shall not be incurred by any Restricted
Subsidiary.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Public Equity Offering" means an underwritten offer and sale
of common stock of the Company pursuant to a registration statement
that has been declared effective by the Commission pursuant to the
Securities Act (other than a registration statement on Form S-8 or
otherwise relating to equity securities issuable under any employee
benefit plan of the Company).
"Qualified Capital Stock" of any Person means any and all
Capital Stock of such Person other than Disqualified Stock.
14
<PAGE> 20
"Rating Agencies" means Standard and Poor's and Moody's, or
any successor to the respective rating agency businesses thereof.
"Registration Rights Agreement" means (a) the Registration
Rights Agreement, dated as of the Issue Date, by and among the Company
and the other parties named on the signature pages thereof relating to
the Original Notes, and (b) any similar agreement that the Company and
the Subsidiary Guarantors may enter into in relation to any other
Series C Notes, in each case as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee
(or any successor group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Restricted Investment" means (without duplication) (i) the
designation of a Subsidiary as an Unrestricted Subsidiary in the
manner described in the definition of "Unrestricted Subsidiary," (ii)
any Investment other than a Permitted Investment and (iii) any amount
constituting a "Restricted Investment" as contemplated in the
definition of "Non-Recourse Purchase Money Indebtedness."
"Revolving Credit Facility" means the revolving loan facility
under the Senior Credit Facility.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means, collectively, the Revolving
Credit Agreement and the Term Loan Agreement, each dated November 8,
1996, among the Company, ING (U.S.) Capital Corporation ("ING
Capital") and the other lenders identified therein, and ING Capital,
as agent, each as amended, modified, supplemented, extended, restated
or renewed from time to time.
"Series A/B Indenture" means the Indenture dated as of
November 12, 1996 between the Company and Chase Bank of Texas,
National Association (formerly Texas Commerce Bank National
Association), as Trustee, providing for the issuance of the Series A/B
Notes in the aggregate principal amount of $300 million, as such may
be amended and supplemented from time to time.
"Series A/B Issue Date" means November 12, 1996, the date on
which the Series A/B Notes were originally issued under the Series A/B
Indenture.
"Series A/B Notes" means the Company's Series B 9-3/4% Senior
Notes due 2006 issued pursuant to the Series A/B Indenture, as such
may be amended or supplemented from time to time.
"Significant Subsidiary" means any (a) Subsidiary that would
be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof or (b) any other Subsidiary
that contributed more than 10% of the Company's Consolidated Cash Flow
for the most recent four fiscal quarters for which financial
statements are available.
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<PAGE> 21
"Standard and Poor's" means Standard and Poor's Ratings Group,
a division of The McGraw-Hill Companies, Inc., and any successor to
the rating agency business thereof.
"Subordinated Indebtedness" means any Indebtedness of the
Company or a Subsidiary Guarantor that is expressly subordinated in
right of payment to the Notes or the Subsidiary Guarantees, as the
case may be, including, without limitation, the 5 1/2% Convertible
Subordinated Notes due 2004 of the Company.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (A) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (B) the only general partners of which are such Person
or of one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Guarantors" means each of (i) the Company's
Significant Subsidiaries on the Issue Date (other than an Exempt
Foreign Subsidiary, as designated by the Company) or any other
Restricted Subsidiary that provides a guarantee under the Senior
Credit Facility, (ii) any other Subsidiary that executes a Subsidiary
Guarantee in accordance with Article 10 hereof, and (iii) their
respective successors and assigns, as required under Article 10
hereof.
"Term Credit Facility" means the term loans under the Senior
Credit Facility in an aggregate amount not to exceed $100 million,
less any amounts derived from Asset Sales and applied to the permanent
reduction of Indebtedness thereunder as contemplated by Section 4.10
hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this
Indenture is qualified under the TIA, except as provided in Section
9.03 hereof.
"Transfer Restricted Securities" means securities that bear or
are required to bear the legend set forth in Section 2.06(g) hereof.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary (or any
successor to any of them) that is designated by the Board of Directors
as an Unrestricted Subsidiary pursuant to a resolution of the Board of
Directors; but only to the extent that such Subsidiary (i) has no
Indebtedness other than Non-Recourse Indebtedness; (ii) is not party
to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates
of the Company; (iii) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (A) to subscribe for additional Equity Interests
or (B) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating
results; and (iv) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company
or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with
the Trustee a certified copy of the resolution of the Board of
Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the
foregoing conditions
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<PAGE> 22
and was permitted by Section 4.07 hereof. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof, the Company shall be in default of such Section).
The Board of Directors may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness
of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the Section 4.09
hereof and (ii) no Default or Event of Default would be in existence
following such designation.
"Voting Stock" means, with respect to any specified Person,
Capital Stock with voting power, under ordinary circumstances and
without regard to the occurrence of any contingency, to elect the
directors or other managers or trustees of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (A) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity,
in respect thereof, by (B) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making
of such payment, by (ii) the then outstanding principal amount of such
Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary to the extent (i) all of the Capital Stock or other
ownership interests in such Restricted Subsidiary, other than any
directors' qualifying shares mandated by applicable law, is owned
directly or indirectly by the Company or (ii) such Restricted
Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be
partially owned by the government of such foreign jurisdiction or
individual or corporate citizens of such foreign jurisdiction in order
for such Restricted Subsidiary to transact business in such foreign
jurisdiction, provided that the Company, directly or indirectly, owns
the remaining Capital Stock or ownership interests in such Restricted
Subsidiary and, by contract or otherwise, controls the management and
business of such Restricted Subsidiary and derives the economic
benefits of ownership of such Restricted Subsidiary to substantially
the same extent as if such Restricted Subsidiary were a wholly owned
Subsidiary.
"Wholly Owned Subsidiary" means any Subsidiary to the extent
(i) all of the Capital Stock or other ownership interests in such
Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii)
such Subsidiary is organized in a foreign jurisdiction and is required
by the applicable laws and regulations of such foreign jurisdiction to
be partially owned by the government of such foreign jurisdiction or
individual or corporate citizens of such foreign jurisdiction in order
for such Subsidiary to transact business in such foreign jurisdiction,
provided that the Company, directly or indirectly, owns the remaining
Capital Stock or ownership interests in such Subsidiary and, by
contract or otherwise, controls the management and business of such
Subsidiary and derives the economic benefits of ownership of such
Subsidiary to substantially the same extent as if such Subsidiary were
a wholly owned Subsidiary.
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<PAGE> 23
SECTION 1.02 OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Adjusted Net Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.07
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
"Asset Sale" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Asset Sale Offer Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Asset Sale Offer Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Asset Sale Offer Trigger Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Benefitted Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
"Change of Control Offer Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
"Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
"DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Funding Guarantor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.07
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Interest Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
"Maximum Bank Facility Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Original Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"refinancing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07
"Series A/B Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Subsidiary Guarantees" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
</TABLE>
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
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:
"indenture securities" means the Notes and the Subsidiary
Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
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"obligor" on the Notes means the Company, any Subsidiary
Guarantor and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC
rule under the TIA have the meanings so assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular;
(v) provisions apply to successive events and
transactions; and
(vi) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the Commission from time to
time.
ARTICLE 2
THE NOTES
SECTION 2.01 FORM AND DATING.
The Series C Notes, the notation thereon relating to the
Subsidiary Guarantees and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Series D
Notes, the notation thereon relating to the Subsidiary Guarantees and
the Trustee's certificate of authentication shall be substantially in
the form of Exhibit B hereto. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall
be issued in minimum denominations of $1,000 and integral multiples
thereof.
The Series C Notes and the Series D Notes shall be considered
collectively to be a single class for all purposes of this Indenture,
including, without limitation, waivers, amendments, redemptions and
offers to purchase.
The terms and provisions contained in the form of the Notes
and the notation thereon relating to the Subsidiary Guarantees annexed
hereto as Exhibit A and Exhibit B and the Subsidiary Guarantees shall
constitute, and are hereby expressly made, a part of this Indenture
and 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.
Notes issued in global form shall be substantially in the form
of Exhibit A or Exhibit B attached hereto, as applicable (including,
in each case, the text referred to in footnotes 1 and 2 thereto).
Notes issued in definitive form shall be substantially in the form of
Exhibit A or Exhibit B attached hereto, as applicable (but without
including the text referred to in footnotes 1 and 2 thereto). Each
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Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate,
to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount
of outstanding Notes represented thereby shall be made by the Trustee
or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section
2.06 hereof.
SECTION 2.02 EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time a Note is authenticated, the Note
shall nevertheless be valid. Each Subsidiary Guarantor shall execute
its Subsidiary Guarantee in the manner set forth in Section 10.07.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall authenticate (i) the Series C Notes for
original issue on the Issue Date up to the aggregate principal amount
of $150,000,000 (the "Original Notes"), (ii) additional Series C Notes
for original issue from time to time after the Issue Date in such
principal amounts as may be set forth in a written order of the
Company described in this sentence and (iii) the Series D Notes from
time to time for issue only in exchange for a like principal amount of
Series C Notes or Series A/B Notes, in each case upon a written order
of the Company signed by two Officers, which written order shall
specify (a) the amount of Notes to be authenticated and the date of
original issue thereof, (b) whether the Notes are Series C Notes or
Series D Notes, and (c) the amount of Notes to be issued in global
form or definitive form. In the event that the Company delivers a
written order to authenticate additional Series C Notes, as
contemplated in clause (ii) of the preceding sentence, such order
shall be accompanied by an Officer's Certificate and an Opinion of
Counsel confirming that the issuance of such additional Series C Notes
complies with the requirements of Section 4.09 hereof and all other
applicable requirements of this Indenture. The aggregate principal
amount of Notes outstanding at any time may not exceed (x)
$150,000,000, plus (y) the aggregate principal amount of Series D
Notes issued in exchange for a like principal amount of Series A/B
Notes in the Exchange Offer, plus (z) such additional principal
amounts as may be issued and authenticated pursuant to clause (ii) of
this paragraph, except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may
authenticate Notes 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 or an Affiliate of the
Company.
SECTION 2.03 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of each
series of the Notes and of their transfer and exchange. The Company
may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder.
The Company shall notify the Trustee in writing of the
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name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect
to the Global Notes.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal, premium or Liquidated Damages, if
any, or interest on the Notes, and will notify the Trustee of any
default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary thereof) shall have no further liability for
the money. If the Company or a Subsidiary thereof acts as Paying
Agent, it shall segregate and hold in 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, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05 HOLDER 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 all Holders and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least seven Business Days before 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 may reasonably require of the names and addresses of the
Holders of Notes and the Company shall otherwise comply with TIA
Section 312(a).
SECTION 2.06 TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; provided,
however, that the Definitive Notes presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in
writing; and
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(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of Exhibit
C hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from such Holder (in substantially the form of Exhibit
C hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit C hereto) and an Opinion of
Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Security, a certification from the Holder thereof (in substantially
the form of Exhibit C hereto) to the effect that such Definitive Note
is being transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to
make, an endorsement on the Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by the Global
Note,
in which case the Trustee shall cancel such Definitive Note in
accordance with Section 2.11 hereof and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, the
aggregate principal amount of Notes represented by the Global Note to
be increased accordingly. If no Global Notes are then outstanding,
the Company shall issue and, upon receipt of an authentication order
in accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture and the procedures of
the Depository therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act.
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(d) Transfer of a Beneficial Interest in a Global Note
for a Definitive Note.
(i) Any Person having a beneficial interest in a Global
Note may upon request exchange such beneficial interest for a
Definitive Note. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depository,
from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of Exhibit C
hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of
Exhibit C hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit C hereto) and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of
the Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian,
cause the aggregate principal amount of Global Notes to be reduced
accordingly and, following such reduction, the Company shall execute
and the Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Note may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository.
If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository
for the Global Notes and a successor Depository for the Global Notes
is not appointed by the Company within 90 days after delivery of such
notice; or
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(ii) the Company, at its discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute, and the Trustee shall authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to
the principal amount of the Global Notes in exchange for such Global
Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and
Definitive Notes (and all Notes issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION
5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or pursuant
to an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the legend
set forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i)
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<PAGE> 30
above, but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect
to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a Definitive
Note that does not bear the legend set forth in (i) above,
which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such certification
to be substantially in the form of Exhibit C hereto).
(iii) Notwithstanding the foregoing, upon consummation of
an Exchange Offer, the Company shall issue and the Trustee shall
authenticate Series D Notes in exchange for Series C Notes and, in the
case of the initial Exchange Offer, Series A/B Notes accepted for
exchange in the Exchange Offer, which Series D Notes shall not bear
the legend set forth in (i) above, and the Registrar shall rescind any
restriction on the transfer of such Notes, in each case unless the
Holder of such Series C Notes is either (A) a broker-dealer, (B) a
Person participating in the distribution of the Series C Notes or (C)
a Person who is an affiliate (as defined in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or canceled, all Global Notes shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or canceled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the
Trustee or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.07, 3.09, 4.10, 4.15 and
9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Definitive Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close
of business on the day of selection; or
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<PAGE> 31
(B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in
part; or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest
payment date.
(j) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes, and
neither the Trustee, any Agent nor the Company shall be affected by notice to
the contrary.
SECTION 2.07 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company, and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and
the Trustee shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company,
the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Notes duly issued
hereunder.
SECTION 2.08 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in
a Global Note effected by the Trustee in accordance with the
provisions hereof, and those described in this Section as not
outstanding. Except as set forth in Section 2.09 hereof, a Note does
not cease to be outstanding because the Company, any of the Subsidiary
Guarantors or any Affiliate of the Company or any of the Subsidiary
Guarantors holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide
purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.
SECTION 2.09 TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company, any of the Subsidiary Guarantors or any
Affiliate of the Company or any of the Subsidiary Guarantors, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected
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<PAGE> 32
in relying on any such direction, waiver or consent, only Notes that
the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10 TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a
written order of the Company signed by two Officers thereof.
Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company considers appropriate for
temporary Notes and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Notes.
The Trustee shall provide a certificate of destruction to the Company
from time to time, at the written request of the Company. The Company
may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation. If the Company or any
Subsidiary Guarantor shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section
2.11.
SECTION 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each
case at the rate provided in the Notes and in Section 4.01 hereof.
The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of
the proposed payment. The Company shall fix or cause to be fixed each
such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the
special record date, the Company (or, upon the written request of the
Company, the Trustee in the name and at the expense of the Company)
shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13 CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use CUSIP
numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be
placed only on the other identification numbers printed on the Notes,
and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company shall promptly notify the
Trustee of any change in the CUSIP numbers.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a
redemption date, an Officers' Certificate setting forth (i) the clause
of this Indenture pursuant to which the redemption shall occur, (ii)
the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of
the Notes in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed
or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and
appropriate; provided that no Notes of $1,000 or less will be redeemed
in part. In the event that less than all of the Notes are to be
redeemed by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be
redeemed. Notes and portions of Notes selected shall be in amounts of
$1,000 or whole multiples of $1,000; except that if all of the Notes
of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of
this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.
The provisions of the two preceding paragraphs of this Section
3.02 shall not apply with respect to any redemption affecting only a
Global Note, whether such Global Note is to be redeemed in whole or in
part. In case of any such redemption in part, the unredeemed portion
of the principal amount of the Global Note shall be in an authorized
denomination.
SECTION 3.03 NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company
shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its
registered address. Failure to receive such notice or any defect in
the notice to any such Holder shall not affect the validity of the
proceedings for the redemption of any other Notes or portion thereof.
The notice shall identify the Notes to be redeemed (including
CUSIP number) and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or
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Notes in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Note;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(vi) that, unless the Company's defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
(vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(viii) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
If any of the Notes to be redeemed is in the form of a Global
Note, then the Company shall modify such notice to the extent
necessary to accord with the procedures of the Depository applicable
to redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided,
however, that the Company shall have delivered to the Trustee, at
least 45 days (unless the Trustee and the Company agree to a shorter
period) prior to the redemption date, an Officers' Certificate
requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding
paragraph.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of
redemption may not be conditional.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 2.04 hereof) money sufficient to pay the
redemption price of and accrued interest and Liquidated Damages, if
any, on all Notes to be redeemed on that date. The Trustee or the
Paying Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest
on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to
accrue on the Notes or the portions of Notes called for redemption.
If a Note is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and
unpaid interest and Liquidated Damages, if any, shall be paid to the
Person in whose name such Note was registered at the close of business
on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest shall be paid
on the unpaid principal, from the redemption date until such principal
is paid, and to the extent lawful on any
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interest not paid on such unpaid principal, in each case at the rate
provided in the Note and in Section 4.01 hereof.
SECTION 3.06 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION.
(a) The Notes will not be redeemable at the Company's
option prior to November 15, 2001. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages
thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on November 15, of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.875%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.250%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.625%
2004 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or
prior to November 15, 1999, the Company may redeem up to 35% of the
aggregate principal amount of Notes originally issued (but
disregarding, for this purpose, any Exchange Notes other than
Additional Series D Notes) at a redemption price of 109.75% of the
principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon to the redemption date, with the net
proceeds of a Public Equity Offering; provided that at least 65% of
the aggregate principal amount of the Notes originally issued (but
disregarding, for this purpose, any Exchange Notes other than
Additional Series D Notes) remains outstanding immediately after the
occurrence of such redemption; and, provided, further, that such
redemption shall occur within 60 days of the date of the closing of
such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08 MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments or
sinking fund payments with respect to the Notes.
SECTION 3.09 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
(i) The Asset Sale Offer shall be made to all Holders and
shall remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period
is required by applicable law (the "Offer Period").
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(ii) If the Asset Sale Offer Purchase Date is on or after
an interest record date and on or before the related interest payment
date, any accrued and unpaid interest and Liquidated Damages thereon,
if any, shall be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the
Asset Sale Offer.
(iii) Within 10 days following any Asset Sale Offer Trigger
Date, the Company shall send, by first class mail, a notice to each of
the Holders at such Holder's registered address, with a copy to the
Trustee. The notice, which shall govern the terms of the Asset Sale
Offer, shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer,
and shall state:
(A) that the Asset Sale Offer Trigger Date has
occurred pursuant to Section 4.10 hereof and that the Company
is offering to purchase the maximum principal of Notes that
may be purchased out of the Excess Proceeds (the "Offer
Amount") at an offer price in cash in an amount equal to
100.0% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to
date of purchase, which shall be a Business Day (the "Asset
Sale Offer Purchase Date") that is not earlier than 30 days
nor later than 60 days from the date such notice is mailed;
(B) the amount of accrued and unpaid interest, if
any, and unpaid Liquidated Damages, if any, as of the Asset
Sale Offer Purchase Date;
(C) that any Note subject to the Asset Sale Offer
not tendered shall continue to accrue interest;
(D) that, unless the Company defaults in the
payment of the purchase price for the Notes payable pursuant
to the Asset Sale Offer, any such Notes accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue
interest, after the Asset Sale Offer Purchase Date;
(E) that Holders electing to have a Note
purchased pursuant to an Asset Sale Offer may only elect to
have all of such Note purchased and may not elect to have only
a portion of such Note purchased;
(F) that Holders electing to have a Note
purchased pursuant to any Asset Sale Offer shall be required
to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed
to the Company or a Paying Agent at the address specified in
the notice at least three days before the Purchase Date;
(G) that Holders shall be entitled to withdraw
their election if the Company or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer
Period, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Note purchased;
(H) that, if the aggregate principal amount of
Notes surrendered by Holders exceeds the Offer Amount or less
than all of the Notes tendered pursuant to the Asset Sale
Offer are accepted for payment by the Company for any reason
consistent with this Indenture, the Trustee shall select the
Notes to be purchased in compliance with the requirements of
the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes
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are not so listed, on a pro rata basis, by lot or by such
method as the Trustee deems fair and appropriate; provided
that Notes accepted for payment in part will only be purchased
in integral multiples of $1,000; and
(I) that Holders whose Notes were purchased only
in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
If any of the Notes subject to an Asset Sale Offer is in the
form of a Global Note, then the Company shall modify such notice to
the extent necessary to accord with the procedures of the Depository
applicable to repurchases.
(b) On the Asset Sale Offer Purchase Date, the Company shall: (i)
accept for payment the maximum principal amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer that can be purchased out of the
Excess Proceeds; (ii) deposit with the Paying Agent the aggregate purchase
price of all Notes or portions thereof accepted for payment; and (iii) deliver
or cause to be delivered to the Trustee all Notes tendered pursuant to the
Asset Sale Offer. The Company or the Paying Agent, as the case may be, shall
promptly mail to each Holder of Notes or portions thereof accepted for payment
an amount equal to the purchase price for such Notes and the Trustee shall
promptly authenticate and mail to any such Holder of Notes accepted for payment
in part a new Note equal in principal amount to any unpurchased portion of the
Notes, and any Note not accepted for payment in whole or in part shall be
promptly returned to the Holder of such Note. The Company shall announce the
results of the Asset Sale Offer to Holders of the Notes on or as soon as
practicable after the Asset Sale Offer Purchase Date. The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act, and any other
securities laws or regulations, if applicable, in connection with any Asset
Sale Offer.
(c) Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the
manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent,
if other than the Company or a Subsidiary thereof, holds as of 10:00
a.m. Eastern Time one Business Day prior to the due date money
deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest
then due. The Company shall pay all Liquidated Damages, if any, in
the same manner on the dates and in the amounts set forth in the
Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1.0% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
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SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the
Trustee or an affiliate of the Trustee, Registrar or co-registrar)
where Notes may be presented for payment, surrendered for registration
of transfer or for exchange and where notices and demands to or upon
the Company in respect of the Notes 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 Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes 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 agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance
with Section 2.03 hereof.
SECTION 4.03 REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the consolidated financial condition and results of
operations of the Company and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
information that would be required to be contained in a filing with the
Commission on Form 8-K if the Company were required to file such Forms. In
addition, whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all
times comply with TIA Section 314(a).
(b) For so long as any Transfer Restricted Securities remain
outstanding, the Company shall furnish to all Holders and prospective
purchasers of the Notes designated by the Holders of Transfer Restricted
Securities, promptly upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company'
compliance with any of the covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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<PAGE> 39
SECTION 4.04 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its 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, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred and is continuing, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company' independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.05 TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in
good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee,
but shall suffer and permit the execution of every such power as
though no such law has been enacted.
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SECTION 4.07 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any other payment or distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection
with any merger or consolidation involving the Company) or to the
direct or indirect holders of the Company's Equity Interests in their
capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned
Restricted Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the
Company or any Affiliate of the Company (other than (A) any such
Equity Interests owned by the Company or any Wholly Owned Restricted
Subsidiary of the Company that is a Subsidiary Guarantor and (B)
Employee Stock Repurchases); (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except in accordance with the mandatory
redemption or repayment provisions set forth in the original
documentation governing such Indebtedness; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the Series A/B Issue Date (excluding
Restricted Payments permitted by clauses (y) and (z) the next
succeeding paragraph is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the Series A/B Issue Date to the end of the Company's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (ii) 100% of the aggregate Net Equity
Proceeds (A) received by the Company from the issue or sale,
subsequent to the Series A/B Issue Date, of Qualified Capital Stock of
the Company or (B) of any other Equity Interests or debt securities of
the Company that have been issued subsequent to the Series A/B Issue
Date and that have been converted into such Qualified Capital Stock
(other than any Qualified Capital Stock sold to a Restricted
Subsidiary of the Company or issued upon conversion of the Convertible
Preferred Stock), plus (iii) to the extent not otherwise included in
Consolidated Net Income, the net reduction in Investments in
Unrestricted Subsidiaries resulting from dividends, repayments of
loans or advances, or other transfers of assets, in each case to the
Company or a Restricted Subsidiary after the Series A/B Issue Date
from any Unrestricted Subsidiary or from the redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary (valued as provided
below), plus (iv) $15 million.
The foregoing provisions shall not prohibit any of the
following: (x) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this Indenture; (y)
the redemption, repurchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the
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Net Equity Proceeds of, the substantially concurrent sale (other than
to a Restricted Subsidiary of the Company) of Qualified Capital Stock
of the Company (other than any Disqualified Stock); provided that the
amount of any such Net Equity Proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the preceding paragraph and (z) the
defeasance, redemption or repurchase of Subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of Qualified Capital Stock of
the Company; provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or
other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph.
For purposes of the foregoing provisions, the amount of any
Restricted Payment (other than cash) shall be the fair market value
(evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the
Company or such Restricted Subsidiary, as the case may be, pursuant to
the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations
required by this Section 4.07 were computed, which calculations may be
based upon the Company's latest available financial statements.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would be
permitted by the provisions of this Section 4.07 and if such
Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. For purposes of making such determination,
all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash prior to such
designation) in the Restricted Subsidiary so designated will be deemed
to be Restricted Payments at the time of such designation and will
reduce the amount available for Restricted Payments under the
paragraph (c) of this Section 4.07. All such outstanding Investments
will be deemed to constitute Investments in an amount equal to the
Fair Market Value of such Investments at the time of such designation.
SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary to (i)(a)
pay dividends or make any other distributions to the Company or any of
its Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries; (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries; or (iii) transfer any of its
properties or assets to the Company or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (r) Existing Indebtedness as in effect on the
Series A/B Issue Date, (s) the Senior Credit Facility as in effect as
of the Issue Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to
such dividend and other payment restrictions than those contained in
the Senior Credit Facility as in effect on the Series A/B Issue Date,
(t) this Indenture, the Series A/B Indenture, the Notes, and the
Series A/B Notes, (u) applicable law, (v) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the
case
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of Indebtedness, such Indebtedness was permitted by the terms of the
Series A/B Indenture and this Indenture to be incurred, (w) by reason
of customary non-assignment provisions in leases entered into in the
ordinary course of business and customary provisions in other
agreements that restrict assignment of such agreements or rights
thereunder, (x) customary restrictions contained in asset sale
agreements limiting the transfer of such assets pending the closing of
such sale, (y) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iii) above on the property so acquired, or (z)
Permitted Refinancing Indebtedness with respect to any indebtedness
referred to in clauses (r), (t) and (v) above, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced.
SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED EQUITY.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
continentally or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness but excluding any Permitted
Indebtedness) and that the Company will not issue any Disqualified Stock and
will not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Company may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock, and
any Restricted Subsidiary may incur Indebtedness (including Acquired
Indebtedness), if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
(b) The Company shall not , and shall not permit any Subsidiary
Guarantor to, directly or indirectly, in any event incur any Indebtedness that
by its terms (or by the terms of any agreement governing such Indebtedness) is
subordinated to any other Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is also by its terms
(or by the terms of any agreement governing such Indebtedness) made expressly
subordinate to the Notes or the Subsidiary Guarantee of such Subsidiary
Guarantor, as the case may be, to the same extent and in the same manner as
such Indebtedness is subordinated pursuant to subordination provisions that are
most favorable to the holders of any other Indebtedness of the Company or such
Subsidiary Guarantor, as the case may be.
SECTION 4.10 ASSET SALES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, sell, issue, convey, transfer, lease or otherwise
dispose of, to any Person other than the Company or any of its
Restricted Subsidiaries (including, without limitation, by means of a
sale-and-leaseback transaction or a merger or consolidation)
(collectively, for purposes of this Section 4.10, a "transfer"),
directly or indirectly, in one or a series of related transactions,
(a) any Capital Stock of any Restricted Subsidiary held by the Company
or any other Restricted Subsidiary, (b) all or substantially all of
the properties and assets of any division or line of business of the
Company or any of its Restricted Subsidiaries, (c) any Event of Loss
or (d) any other properties or assets of the Company or any of its
Restricted Subsidiaries other than transfers of cash, Cash
Equivalents, accounts receivable, or properties or assets in the
ordinary course of business; provided that the sale, lease, conveyance
or other disposition of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries, taken as a
whole, shall be governed by Sections 4.15 and/or 5.01 and not by the
provisions of this Section 4.10 (each of the
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foregoing, an "Asset Sale"), unless (i) the Company (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by
a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least
75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents;
provided that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet)
of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are Subordinated Indebtedness or
otherwise by their terms subordinated to the Notes or the Subsidiary
Guarantees) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any notes
or other obligations received by the Company or any such Restricted
Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash within 180 days of closing such
Asset Sale (to the extent of the cash received) shall be deemed to be
cash for purposes of this clause (ii).
Notwithstanding the foregoing, any of the following shall, not
be deemed an "Asset Sale": (i) any transfer of properties or assets
to an Unrestricted Subsidiary, if such transfer is permitted under
Section 4.07 hereof; (ii) sales of damaged, worn-out or obsolete
equipment or assets that, in the Company's reasonable judgment, are
either (A) no longer used or (B) no longer useful in the business of
the Company or its Restricted Subsidiaries; (iii) any lease of any
property entered into in the ordinary course of business and with
respect to which the Company or any Restricted Subsidiary is the
lessor, except any such lease that provides for the acquisition of
such property by the lessee during or at the end of the term thereof
for an amount that is less than the fair market value thereof at the
time the right to acquire such property is granted; (iv) any trade or
exchange by the Company or any Restricted Subsidiary of one or more
drilling rigs for one or more other drilling rigs owned or held by
another Person, provided that (A) the Fair Market Value of the
drilling rig or rigs traded or exchanged by the Company or such
Restricted Subsidiary (including any cash or Cash Equivalents to be
delivered by the Company or such Restricted Subsidiary) is reasonably
equivalent to the Fair Market Value of the drilling rig or rigs
(together with any cash or Cash Equivalents) to be received by the
Company or such Restricted Subsidiary and (B) such exchange is
approved by a majority of the Disinterested Directors of the Company;
(v) any transfer by the Company or any Restricted Subsidiary to its
customers of drill pipe, tools and associated drilling equipment
utilized in connection with a drilling contract for the employment of
a drilling rig in the ordinary course of business and consistent with
past practice; and (vi) any transfers that, but for this clause (vi),
would be Asset Sales, if (A) the Company elects to designate such
transfers as not constituting Asset Sales and (B) after giving effect
to such transfers, the aggregate Fair Market Value of the properties
or assets transferred in such transaction or any such series of
related transactions so designated by the Company does not exceed
$500,000.
Within 365 days after the receipt of any Net Proceeds from any
Asset Sale, the Company may (i) apply all or any of the Net Proceeds
therefrom to repay Indebtedness (other than Subordinated Indebtedness)
of the Company or any Restricted Subsidiary, provided, in each case,
that the related loan commitment of any revolving credit facility or
other borrowing (if any) is thereby permanently reduced by the amount
of such Indebtedness so repaid, or (ii) invest all or any part of the
Net Proceeds thereof in properties and other capital assets that
replace the properties or other capital assets that were the subject
of such Asset Sale or in other properties or other capital assets that
will be used in the business of the Company and its Restricted
Subsidiaries. Pending the final application of any such Net Proceeds,
the Company may temporarily reduce borrowings under any revolving
credit facility or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first
sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds equals or
exceeds $15 million (the date of such occurrence being called the
"Asset Sale Offer
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Trigger Date"), the Company shall (i) make an offer to purchase
("Series A/B Asset Sale Offer") the Series A/B Notes, if any are then
outstanding, at a price equal to 100% of the principal amount of the
Series A/B Notes, plus accrued and unpaid interest to the date of
purchase and (ii) in the event that any Excess Proceeds are not
applied to a Series A/B Asset Sale Offer, to make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of any Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase, in accordance with
the procedures set forth in Section 3.09 hereof. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. Upon completion of
such Asset Sale Offer, the amount of Excess Proceeds shall be deeded
to be reset at zero.
The Company shall not permit any Restricted Subsidiary to
enter into or suffer to exist any agreement (other than the Series A/B
Indenture) that would place any restriction of any kind (other than
pursuant to law or regulation) on the ability of the Company to make
an Asset Sale Offer following any Asset Sale. The Company shall
comply with Rule 14e-1 under the Exchange Act, and any other
securities laws and regulations thereunder, if applicable, in the
event that an Asset Sale occurs and the Company is required to
purchase Notes pursuant to this Section 4.10.
SECTION 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, (a) sell, lease, transfer or otherwise
dispose of any of its properties, assets or securities to, (b)
purchase or lease any property, assets or securities from, (c) make
any Investment in, or (d) enter into or suffer to exist any other
transaction or series of related transactions with, or for the benefit
of, any Affiliate of the Company unless (i) such transaction or series
of transactions is on terms that are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than those that
would be available in a comparable arm's length transaction with an
unrelated third party, (ii) with respect to any one transaction or
series of related transactions involving aggregate payments in excess
of $1 million, the Company delivers an Officers' Certificate to the
Trustee certifying that such transaction or series of related
transactions complies with clause (i) above, and (iii) with respect to
a transaction or series of related transactions involving payments in
excess of $5 million, the Company delivers an Officers' Certificate to
the Trustee certifying that (A) such transaction or series of related
transactions complies with clause (i) above and (B) such transaction
or series of related transactions has been approved by a majority of
the Disinterested Directors of the Company; provided, however, that
the foregoing restriction shall not apply to (u) any arrangements in
effect on the Series A/B Issue Date, (v) transactions between or among
the Company and its Wholly Owned Restricted Subsidiaries, (w) loans or
advances to officers, directors and employees of the Company or any
Restricted Subsidiary made in the ordinary course of business and
consistent with past practices of the Company and its Restricted
Subsidiaries in an aggregate amount not to exceed $1 million
outstanding at any one time, (x) indemnities of officers, directors
and employees of the Company or any Restricted Subsidiary permitted by
bylaw or statutory provisions, (y) the payment of reasonable and
customary regular fees to directors of the Company or any of its
Restricted Subsidiaries who are not employees of the Company or any
Affiliate and (z) the Company's employee compensation and other
benefit arrangements.
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SECTION 4.12 LIENS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume, affirm
or suffer to exist or become effective any Lien of any kind, except
for Permitted Liens, upon any of their respective property or assets,
whether now owned or acquired after the Issue Date, or any income,
profits or proceeds therefrom, to secure (i) any Indebtedness of the
Company or such Restricted Subsidiary (if it is not also a Subsidiary
Guarantor), unless prior to, or contemporaneously therewith, the Notes
are equally and ratably secured, or (ii) any Indebtedness of any
Subsidiary Guarantor, unless prior to, or contemporaneously therewith,
the Subsidiary Guarantees are equally and ratably secured; provided,
however, that if such Indebtedness is expressly subordinated to the
Notes or the Subsidiary Guarantees, the Lien securing such
Indebtedness will be subordinated and junior to the Lien securing the
Notes or the Subsidiary Guarantees, as the case may be, with the same
relative priority as such Indebtedness has with respect to the Notes
or the Subsidiary Guarantees. The foregoing covenant shall not apply
to any Lien securing Acquired Indebtedness, provided that any such
Lien extends only to the property or assets that were subject to such
Lien prior to the related acquisition by the Company or such
Restricted Subsidiary and was not created, incurred or assumed in
contemplation of such transaction.
SECTION 4.13 ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED
SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly
Owned Restricted Subsidiary of the Company to, transfer, convey, sell,
or otherwise dispose of any Capital Stock of any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the
Company or a Wholly Owned Restricted Subsidiary of the Company),
unless (A) such transfer, conveyance, sale, or other disposition is of
all the Capital Stock of such Wholly Owned Restricted Subsidiary and
(B) the cash Net Proceeds from such transfer, conveyance, sale, or
other disposition are applied in accordance with Section 4.10 hereof,
and (ii) will not permit any Wholly Owned Restricted Subsidiary of the
Company to issue any of its Equity Interests to any Person other than
to the Company or a Wholly Owned Restricted Subsidiary of the Company;
except, in the case of both clauses (i) and (ii) above, with respect
to dispositions or issuances by a Wholly Owned Restricted Subsidiary
of the Company as contemplated in clauses (i) and (ii) of the
definition of "Wholly Owned Restricted Subsidiary" included in Section
1.01 hereof.
SECTION 4.14 SALE-AND-LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale-and-leaseback
transaction; provided that the Company or any Restricted Subsidiary,
as applicable, may enter into a sale-and-leaseback transaction if (i)
the Company could have (A) incurred Indebtedness in an amount equal to
the Attributable Indebtedness relating to such sale-and-leaseback
transaction pursuant to the Fixed Charge Coverage Ratio test set forth
in the first paragraph of Section 4.09 hereof and (B) incurred a Lien
to secure such Indebtedness pursuant to Section 4.12 hereof; (ii) the
gross cash proceeds of such sale-and-leaseback transaction are at
least equal to the fair market value (as determined in good faith by
the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such
sale-and- leaseback transaction; and (iii) the transfer of assets in
such sale- and-leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, Section
4.10 hereof.
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SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes on a
Business Day (the "Change of Control Payment Date") not more than 60 nor less
than 30 days following such Change of Control, pursuant to the offer described
below (the "Change of Control Offer") at an offer price in cash equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by this Section 4.15 and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control. The Change of Control Offer shall be
required to remain open for at least 20 Business Days and until the close of
business on the fifth Business Day prior to the Change of Control Payment Date.
(b) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent an amount equal to the Change of Control Payment in respect of
all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted, together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail or
otherwise deliver to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(c) The Change of Control provisions described above shall be
applicable whether or not any other provisions of this Indenture are
applicable.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control
Offer made by the Company and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.16 BUSINESS ACTIVITIES.
The Company shall not, and will not permit any Restricted
Subsidiary to, engage in any business other than (i) the Drilling
Business, (ii) such other businesses as the Company or its Restricted
Subsidiaries are engaged in on the Series A/B Issue Date and (iii)
such other business activities as are reasonably related or incidental
thereto.
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ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless (i) the Company is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the
laws of the United States, any state thereof or the District of
Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the
Company under the Notes and this Indenture pursuant to a supplemental
Indenture in a form reasonably satisfactory to the Trustee; (iii)
except in the case of a merger of the Company with or into a Wholly
Owned Subsidiary of the Company, immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a
merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately
after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B)
will, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof.
In connection with any consolidation, merger or transfer
contemplated by this provision, the Company shall deliver, or cause to
be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer
and the supplemental indenture in respect thereto comply with this
provision and that all conditions precedent in this Indenture provided
for relating to such transaction or transactions have been complied
with.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or
substantially all of the properties or assets of the Company in
accordance with Section 5.01 hereof, the Person formed by such
consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that
from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture
referring to "the Company" shall refer instead to such Person and not
to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such Person had been
named as the Company herein; provided, however, that the Company shall
not be relieved from the obligation to pay the principal of, premium,
if any, and interest on the Notes except in the case of a sale of all
or substantially all of the Company's properties or assets that meets
the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(i) the Company defaults for 30 days in the payment when
due of interest on, or Liquidated Damages with respect to, the Notes;
(ii) the Company defaults in payment when due of the
principal of or premium, if any, on the Notes;
(iii) the Company fails to comply with the provisions of
Section 4.10, 4.15 or 5.01 hereof;
(iv) the Company fails for 45 days after notice to comply
with any of its other agreements in this Indenture or the Notes;
(v) the Company or any of its Restricted Subsidiaries
defaults under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the Issue
Date, which default (A) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (B) results in the
acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $7.5 million or more;
(vi) a final judgment or final judgments for the payment
of money are entered by a court or courts of competent jurisdiction
against the Company or any of its Subsidiaries and such judgment or
judgments remain unpaid and undischarged for a period (during which
execution shall not be effectively stayed) of 60 consecutive days,
provided that the aggregate of all such unpaid and undischarged
judgments exceeds $10 million;
(vii) any Subsidiary Guarantee shall for any reason cease
to be, or be asserted by the Company or any Subsidiary Guarantor, as
applicable, not to be, in full force and effect (except pursuant to
the release of any Subsidiary Guarantee in accordance with this
Indenture);
(viii) the Company or any of its Restricted Subsidiaries
that constitutes a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, pursuant to or within the meaning of Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property,
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(D) makes a general assignment for the benefit of
its creditors, or
(E) generally is not paying its debts as they
become due; or
(ix) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief, in an involuntary case,
against the Company or any of its Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute
a Significant Subsidiary;
(B) appoints a Bankruptcy Custodian of the
Company or any of its Restricted Subsidiaries that constitutes
a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a
Significant Subsidiary, for all or substantially all of the
property of the Company or any of such Restricted
Subsidiaries; or
(C) orders the liquidation of the Company or any
of its Restricted Subsidiaries that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, for all
or substantially all of the property of the Company or any of
such Restricted Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02 ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clause (viii) or (ix) of Section 6.01 hereof with respect
to the Company or any of its Restricted Subsidiaries that constitutes
a Significant Subsidiary or any group of Restricted Subsidiaries that,
taken together, would constitute a Significant Subsidiary) occurs and
is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Upon any such declaration,
the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (viii) or
(ix) of Section 6.01 hereof occurs with respect to the Company or any
of its Restricted Subsidiaries that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding
Notes shall be due and payable immediately without further action or
notice.
The Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf
of all of the Holders waive any existing Default or Event of Default
acceleration and its consequences if the rescission would not conflict
with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived.
SECTION 6.03 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a
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Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on
behalf of the Holders of all of the Notes waive an existing Default or
Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of interest on, or the
principal of, the Notes (including in connection with an offer to
purchase). 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 any right
consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY.
Holders of a majority in aggregate principal amount of the
then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the
Trustee or exercising any trust or power conferred on it. However,
the Trustee may refuse to follow any direction that conflicts with law
or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06 LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Note only if:
(i) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes make a written request to the
Trustee to pursue the remedy;
(iii) such Holder of a Notes or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(v) during such 60-day period the Holders of a majority
in aggregate principal amount of the then outstanding Notes do not
give the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or
priority over another Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium
and Liquidated Damages, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
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SECTION 6.08 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii)
occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against
the Company for the whole amount of principal of, premium and
Liquidated Damages, if any, and interest remaining unpaid on the Notes
and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
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
agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor
upon the Notes), its creditors or its property and shall be entitled
and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian
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 to 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 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise. 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
Notes or the rights of any Holder, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium and Liquidated Damages, if any, and interest, respectively;
and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS.
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
or omitted by it as a Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee,
a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the
then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE.
(a) If 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 its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) 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, in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Trustee, 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 liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) 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 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
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Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon 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
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(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 that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(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 or direction
of any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company
or any Affiliate of the Compete with the same rights it would have if
it were not Trustee. However, in the event that the Trustee acquires
any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall
not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be
responsible for any statement
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or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture
other than its certificate of authentication.
SECTION 7.05 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of
Notes a notice of the Default or Event of Default within 90 days after
it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest on any Notes,
the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the
notice is in the interests of the Holders of the Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a
brief report dated as of such reporting date that complies with TIA
Section 313(a) (but if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA
Section 313(b)(2) and Section 313(b)(1). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the
Commission and each stock exchange on which the Notes are listed in
accordance with TIA Section 313(d). The Company shall promptly
notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed between the Company and the Trustee
for its acceptance of this Indenture and services hereunder. 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 promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify each of the Trustee and any
predecessor Trustee against any and all losses, liabilities, damages,
claims or expenses, including taxes (other than taxes based on the
income of the Trustee), incurred by it arising out of or in connection
with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder,
except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust
to pay principal, premium and Liquidated Damages, if any, and interest
on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(f) or (g) hereof occurs,
the expenses and the compensation for the services (including the fees
and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law. The Trustee
shall also be entitled to receive compensation for extraordinary
services in default administration.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company.
The Holders of Notes of a majority in aggregate principal amount of
the then outstanding Notes may remove the Trustee by so notifying the
Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Bankruptcy Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
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 Holders of a majority in aggregate principal
amount of the then outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
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 Holders of Notes of at least 10% in
aggregate principal amount of the then outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to
comply with Section 7.10 hereof, such Holder of a Note may petition
any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon,
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. The successor Trustee
shall mail a notice of its succession to Holders of the Notes. The
retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for
in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to
another corporation, the successor corporation without any further act
shall be the successor Trustee. As soon as practicable, the successor
Trustee shall mail a notice of its succession to the Company and the
Holders of the Notes.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United
States of America or of any state thereof that is authorized under
such laws to exercise corporate trustee power, that is subject to
supervision or examination by federal or state authorities and that
has a combined capital and surplus of at least $50 million as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is
subject to TIA Section 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to 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 therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied
to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and each
Subsidiary Guarantor shall, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes,
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which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in clauses (i) and (ii) below, and the Company
and each Subsidiary Guarantor shall be deemed to have satisfied all of
its other obligations under such Notes or Subsidiary Guarantee and
this Indenture (and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging the same),
except for the following provisions, which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages on such Notes when such payments are
due; (ii) the Company's obligations with respect to such Notes under
Article 2 and Section 4.02 hereof; (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith; and (iv) this Article 8. Subject
to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from its obligations under the covenants contained in
Sections 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15
and 4.16 hereof and Article 10 hereof with respect to the outstanding
Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the
Company and any Subsidiary Guarantor may omit to comply with and shall
have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason
of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in
any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except
as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section
8.03 hereof, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, Sections 6.01(v) and 6.01(vii) hereof shall
not constitute Events of Default.
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) The Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
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(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence) or insofar as Section 6.01(viii) or 6.01(ix)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date such opinion, (i) the trust funds
will not be subject to rights of holders of Indebtedness other than the Notes
and (ii) assuming no intervening bankruptcy of the Company between the date of
deposit and the 91st day following the deposit (assuming no Holder of Notes is
an insider of the Company) or the day following the end of such other
preference period in effect at the time of such opinion (assuming a Holder of
Notes is an insider of the Company), as applicable, following the deposit, the
trust funds will not be subject to the effects of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable United States or state law;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over any other creditors of the
Company or any Subsidiary Guarantor with the intent of defeating, hindering,
delaying or defrauding creditors of the Company, or any Subsidiary Guarantor or
others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of
this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Notes and
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this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the Trustee
may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and
interest and Liquidated Damages, but such money need not be segregated
from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04
hereof or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account
of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon
the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof that, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee (which may be the opinion delivered under Section 8.04(a)
hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.06 REPAYMENT TO THE COMPANY.
Subject to the applicable escheat and abandoned property laws,
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, premium,
if any, or interest or Liquidated Damages on any Note and remaining
unclaimed for two years after such principal, and premium, if any, or
interest or Liquidated Damages has become due and payable shall be
paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Notes
shall thereafter, as a secured creditor, 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 as
trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published
once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 8.07 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance
with Section 8.05 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though
no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.05 hereof; provided, however,
that, if the Company makes any payment of principal of, premium, if
any, or interest or Liquidated Damages on any Note following the
reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Notes to receive such payment from
the money held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES.
(a) Notwithstanding Section 9.02 of this Indenture, the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Holder of a Note:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(iii) to provide for the assumption of the Company's
obligations to the Holders of the Notes pursuant to
Article 5 or Section 10.04(b) hereof;
(iv) to secure the Notes pursuant to the requirements of
Section 4.12 or otherwise;
(v) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights under
this Indenture of any such Holder;
(vi) to add any Restricted Subsidiary as an additional
Subsidiary Guarantor as provided in Section 10.02
hereof or to evidence the succession of another
Person to any Subsidiary Guarantor pursuant to
Section 10.04 hereof and the assumption by any such
successor of the covenants and agreements of such
Subsidiary Guarantor contained herein and in the
Subsidiary Guarantee of such Subsidiary Guarantor;
(vii) to release a Subsidiary Guarantor from its
obligations under this Indenture and its Subsidiary
Guarantee pursuant to Section 10.05 hereof; or
(viii) to comply with requirements of the Commission in
order to effect or maintain the qualification of this
Indenture under the TIA.
(b) Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company and
the Subsidiary Guarantors in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture, the Subsidiary
Guarantors or the Notes with the consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes) and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that
has been rescinded) or compliance with any provision of this Indenture
or the Notes may be waived with the consent of the
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Holders of a majority in aggregate principal amount of the then
outstanding Notes (including consents obtained in connection with a
purchase of, tender offer or exchange offer for Notes).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended
or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the
Company and the Subsidiary Guarantors in the execution of such amended
or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding
may waive compliance in a particular instance by the Company and the
Subsidiary Guarantors with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-
consenting Holder):
(i) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity
of any Note or alter or waive any of the provisions
with respect to the redemption of the Notes (except
as provided below with respect to Sections 3.09, 4.10
and 4.15 hereof);
(iii) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the
Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding
Notes and a waiver of the payment default that
resulted from such acceleration);
(v) make any Note payable in money other than that stated
in the Notes;
(vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of
Holders of Notes to receive payments of principal of
or premium, if any, or interest on the Notes;
(vii) waive a redemption payment with respect to any Note
(other than a payment required by Section 4.10 or
4.15 hereof);
(viii) alter the ranking of the Notes relative to other
Indebtedness of the Company; or
(ix) make any change in the foregoing amendment and waiver
provisions.
In addition, without the consent of Holders of not less than
66-2/3% in aggregate principal amount of the Notes then outstanding,
no such amendment, supplement or waiver may amend, change or modify
the obligation of the Company to make and consummate a Change of
Control Offer in the event of a Change of Control or make and
consummate an Asset Sale Offer with respect to any Asset Sale or
modify any of the provisions or definitions with respect thereto.
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It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Notes
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 amended or supplemental Indenture or waiver.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that
complies with the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the
Holder of a Note and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any
such Holder of a Note or subsequent Holder of a Note may revoke the
consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated.
The Company in exchange for all Notes may issue and the Trustee shall
authenticate new Notes that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement
or waiver.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement
does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Company may not sign an amendment or
supplemental Indenture until its Board of Directors approves it. In
executing any amended or supplemental Indenture, the Trustee shall be
entitled to receive and (subject to Section 7.01 hereof) shall be
fully protected in relying upon, Officers' Certificates and Opinions
of Counsel stating that the execution of such amended or supplemental
Indenture is authorized or permitted by this Indenture.
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ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01 SUBSIDIARY GUARANTEES.
(a) The Subsidiary Guarantors and each Subsidiary of the Company
that in accordance with Section 10.02 hereof is required to guarantee the
obligations of the Company under the Notes and this Indenture hereby jointly
and severally and unconditionally guarantees, on a senior basis (each such
guarantee being a "Subsidiary Guarantee"), to each Holder of a Note
authenticated and delivered by the Trustee irrespective of the validity or
enforceability of this Indenture, the Notes or the obligations of the Company
under this Indenture or the Notes, that: (i) the principal of, premium, if any,
and interest on the Notes shall be paid in full when due, whether at the
maturity or interest payment or mandatory redemption date, by acceleration,
call for redemption or otherwise, and interest on the overdue principal and
interest, if any, of the Notes and all other obligations of the Company to the
Holders or the Trustee under this Indenture or the Notes shall be promptly paid
in full or performed, all in accordance with the terms of this Indenture and
the Notes; and (ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, they shall be paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed for whatever reason, each Subsidiary Guarantor shall be
obligated to pay the same whether or not such failure to pay has become an
Event of Default that could cause acceleration pursuant to Section 6.02 hereof.
Each Subsidiary Guarantor agrees that this is a guarantee of payment not a
guarantee of collection.
(b) Each Subsidiary Guarantor hereby agrees that its obligations
with regard to its Subsidiary Guarantee shall be unconditional, irrespective of
the validity or enforceability of the Notes or the obligations of the Company
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) that might otherwise constitute
a legal or equitable discharge or defense of a Subsidiary Guarantor. Each
Subsidiary Guarantor further, to the extent permitted by law, waives and
relinquishes all claims, rights and remedies accorded by applicable law to
guarantors and agrees not to assert or take advantage of any such claims,
rights or remedies, including but not limited to: (i) any right to require the
Trustee, the Holders or the Company (each, a "Benefitted Party") to proceed
against the Company or any other Person or to proceed against or exhaust any
security held by a Benefitted Party at any time or to pursue any other remedy
in any Benefitted Party's power before proceeding against such Subsidiary
Guarantor; (ii) the defense of the statute of limitations in any action
hereunder or in any action for the collection of any Indebtedness or the
performance of any obligation hereby guaranteed; (iii) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
any other Person or the failure of a Benefitted Party to file or enforce a
claim against the estate (in administration, bankruptcy or any other
proceeding) of any other Person; (iv) demand, protest and notice of any kind
including but not limited to notice of the existence, creation or incurring of
any new or additional Indebtedness or obligation or of any action or non-action
on the part of such Subsidiary Guarantor, the Company, any Benefitted Party,
any creditor of such Subsidiary Guarantor, the Company or on the part of any
other Person whomsoever in connection with any Indebtedness or Obligations
hereby guaranteed; (v) any defense based upon an election of remedies by a
Benefitted Party, including but not limited to an election to proceed against
such Subsidiary Guarantor for reimbursement; (vi) any defense based upon any
statute or rule of law that provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (vii) any defense arising because of a Benefitted Party's election,
in any proceeding instituted under any Bankruptcy Law, of the application of
Section 1111(b)(2) under the Bankruptcy Law; (viii) any defense based on any
borrowing or grant of a security interest under Section 364 under the
Bankruptcy Law; or (ix) any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever. Each Subsidiary Guarantor
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hereby covenants that its Subsidiary Guarantee will not be discharged except by
complete performance of all of the obligations contained in its Subsidiary
Guarantee, the Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Subsidiary Guarantor, or any
custodian, trustee, or similar official acting in relation to either the
Company or such Subsidiary Guarantor, any amount paid by the Company or such
Subsidiary Guarantor to the Trustee or such Holder, the applicable Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(d) Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 6.02 hereof for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration as to the Company or any other obligor on the
Notes of the obligations guaranteed hereby and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 6.02
hereof, those obligations (whether or not due and payable) will forthwith
become due and payable by such Subsidiary Guarantor for the purpose of this
Subsidiary Guarantee.
SECTION 10.02 ADDITIONAL SUBSIDIARY GUARANTEES.
(a) If, after the Issue Date, (i) the Company or any of its
Restricted Subsidiaries shall (A) transfer or cause to be transferred, any
assets, businesses, divisions, real property or equipment having a fair market
or book value in excess of $1 million to any Restricted Subsidiary that is not
a Subsidiary Guarantor or (B) make any Investment having an aggregate fair
market or book value in excess of $1 million in any Restricted Subsidiary that
is not a Subsidiary Guarantor, or (ii) any Restricted Subsidiary that is not a
Subsidiary Guarantor (A) shall provide a guarantee under the Senior Credit
Facility or (B) shall own any assets or properties having an aggregate fair
market or book value in excess of $1 million, then the Company shall cause such
Restricted Subsidiary (other than any Exempt Foreign Subsidiary) to execute and
deliver a supplemental indenture to this Indenture agreeing to be bound by its
terms applicable to a Subsidiary Guarantor and providing for a Subsidiary
Guarantee of the Notes by such Restricted Subsidiary, in accordance with the
terms of this Indenture.
(b) The Company shall not permit any of its Restricted
Subsidiaries, other than a Subsidiary Guarantor, directly or indirectly, to (i)
incur, guarantee or secure through the granting of Liens the payment of any
Indebtedness of the Company or (ii) pledge any intercompany notes representing
obligations of any of its Restricted Subsidiaries to secure the payment of any
Indebtedness of the Company, in each case, unless the Company shall cause such
Restricted Subsidiary to execute a Subsidiary Guarantee and deliver an Opinion
of Counsel in advance in accordance with the terms of this Indenture. Further,
if after the Issue Date, the Company shall revoke the designation of any Exempt
Foreign Subsidiary, then the Company shall cause such subsidiary to execute a
Subsidiary Guarantee and deliver an Opinion of Counsel in accordance with the
terms of this Indenture.
SECTION 10.03 LIMITATION OF SUBSIDIARY GUARANTORS' LIABILITY.
(a) Each Subsidiary Guarantor and by its acceptance hereof, each
beneficiary hereof, hereby confirm that it is its intention that the Subsidiary
Guarantee by such Subsidiary Guarantor not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any of the Subsidiary Guarantees. To
effectuate the foregoing intention, each such person hereby irrevocably agrees
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that the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee under this Article 10 shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law.
(b) For purposes of such limitations and the applicable fraudulent
conveyance laws, any indebtedness of a Subsidiary Guarantor incurred from time
to time pursuant to the Senior Credit Facility and secured by a perfected Lien
on the assets of such Subsidiary Guarantor (assuming, for purposes of such
determination, that the incurrence of any such indebtedness and the granting of
any such security interest did not violate any such fraudulent conveyance laws)
shall be deemed, to the extent of the value of the assets subject to such Lien,
to have been incurred prior to the incurrence by such Subsidiary Guarantor of
liability under its Subsidiary Guarantee.
(c) Each beneficiary under the Subsidiary Guarantees, by accepting
the benefits hereof, confirms its intention that, in the event of a bankruptcy,
reorganization or other similar proceeding of the Company or any Subsidiary
Guarantor in which concurrent claims are made upon such Subsidiary Guarantor
hereunder, to the extent such claims will not be fully satisfied, each such
claimant with a valid claim against the Company shall be entitled to a ratable
share of all payments by such Subsidiary Guarantor in respect of such
concurrent claims.
SECTION 10.04 SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person),
another Person (other than the Company or another Subsidiary Guarantor),
whether or not affiliated with such Subsidiary Guarantor, unless (i) subject to
the provisions of the following paragraph, the Person formed by or surviving
any such consolidation or merger (if other than such Subsidiary Guarantor)
shall execute and deliver a supplemental indenture to this Indenture agreeing
to be bound by its terms applicable to a Subsidiary Guarantor and providing for
a Subsidiary Guarantee of the Notes by such Person, in accordance with the
terms of this Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would have Consolidated Net Worth (immediately after giving effect to
such transaction), equal to or greater than the Consolidated Net Worth of such
Subsidiary Guarantor immediately preceding the transaction; (iv) the Company
would be permitted by virtue of the Company's pro forma Fixed Charge Coverage
Ratio, immediately after giving effect to such transaction, to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.09 hereof; and (v) such transaction does not
violate any of the covenants contained in Articles 4 and 5 hereof..
(b) Notwithstanding the foregoing, (i) a Subsidiary Guarantor may
consolidate with or merge with or into the Company, provided that the surviving
corporation (if other than the Company) shall expressly assume by supplemental
indenture complying with the requirements of this Indenture, the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be performed by the Company; and
(ii) a Subsidiary Guarantor may consolidate with or merge with or into any
other Subsidiary Guarantor.
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SECTION 10.05 RELEASES OF SUBSIDIARY GUARANTORS.
In the event of (i) the designation of any Subsidiary
Guarantor as an Unrestricted Subsidiary or (ii) a sale or other
disposition of all or substantially all of the properties or assets of
any Subsidiary Guarantor to a third party or an Unrestricted
Subsidiary, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of any Subsidiary
Guarantor, in either case, in a transaction or manner that does not
violate any of the covenants or other provision of this Indenture,
then such Subsidiary Guarantor (in the event of such a designation or
a sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of such Subsidiary Guarantor)
or the Person acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Subsidiary Guarantor) will be released from and relieved of any
obligations under this Indenture and its Subsidiary Guarantee,
provided that any Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 hereof and provided, further,
however, that any such termination shall occur only to the extent that
all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other
security interests that secure, any other Indebtedness of the Company
or its Restricted Subsidiaries shall also terminate upon such release,
sale or disposition.
SECTION 10.06 "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article 10 shall in such case
(unless the context shall otherwise require) be construed as extending
to and including such Paying Agent within its meaning as fully and for
all intents and purposes as if such Paying Agent were named in this
Article 10 in place of the Trustee.
SECTION 10.07 CONTRIBUTION.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se,
that in the event any payment or distribution is made by any
Subsidiary Guarantor (a "Funding Guarantor") under a Subsidiary
Guarantee, such Funding Guarantor shall be entitled to a contribution
from all other Subsidiary Guarantors in a pro rata amount based on the
Adjusted Net Assets (as defined below) of each Subsidiary Guarantor
(including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the
Company's obligations with respect to the Notes or any other
Subsidiary Guarantor's obligations with respect to such Subsidiary
Guarantee. "Adjusted Net Assets" of such Subsidiary Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value
of the property of such Subsidiary Guarantor exceeds the total amount
of liabilities, including, without limitation, contingent liabilities,
but excluding liabilities under the Subsidiary Guarantee of such
Subsidiary Guarantor at such date and (y) the present fair salable
value of the assets of such Subsidiary Guarantor at such date exceeds
the amount that will be required to pay the probable liability of such
Subsidiary Guarantor on its debts (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any subsidiary of such
Subsidiary Guarantor in respect of the obligations of such subsidiary
under the Subsidiary Guarantees), excluding debt in respect of the
Subsidiary Guarantees, as they become absolute and matured.
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SECTION 10.08 EXECUTION OF SUBSIDIARY GUARANTEES.
To evidence its guarantee to each Holder of Notes, each of the
Subsidiary Guarantors hereby agree to execute its Subsidiary Guarantee
in substantially the form of Exhibit A recited to be endorsed on each
Note ordered to be authenticated and delivered by the Trustee. Each
Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 10.01 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee. Each such Subsidiary Guarantee shall be signed
on behalf of each Subsidiary Guarantor by one Officer of such
Subsidiary Guarantor who shall have been duly authorized by all
requisite corporate actions, and the delivery of such Note by the
Trustee, after the authentication thereof hereunder, shall constitute
due delivery of such Subsidiary Guarantee on behalf of such Subsidiary
Guarantor. Such signatures upon the Subsidiary Guarantee may be by
manual or facsimile signature of such Officer and may be imprinted or
otherwise reproduced on the Subsidiary Guarantee, and in case any such
Officer who shall have signed the Subsidiary Guarantee shall cease to
be such Officer before the Note on which such Subsidiary Guarantee is
endorsed shall have been authenticated and delivered by the Trustee or
disposed of by the Company, such Note nevertheless may be
authenticated and delivered or disposed of as though the person who
signed the Subsidiary Guarantee had not ceased to be such officer of
the Subsidiary Guarantor.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed
duties shall control.
SECTION 11.02 NOTICES.
Any notice or communication by the Company, any of the
Subsidiary Guarantors or the Trustee to any of the others is duly
given if in writing and delivered in person or mailed by first class
mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next-day delivery, to such
other's address:
If to the Company:
Parker Drilling Company
Parker Building
8 East Third Street
Tulsa, Oklahoma 74103
Telecopier No.: (918) 631-1253
Attention: Chief Financial Officer
With a copy to:
T. Mark Kelly, Esq. and
C. Michael Harrington
Vinson & Elkins L.L.P.
1001 Fannin, 36th Floor
Houston, Texas 77002-6760
Telecopier No.: (713) 758-2346
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If to any Subsidiary Guarantor:
c/o Parker Drilling Company
Parker Building
8 East Third Street
Tulsa, Oklahoma 74103
Telecopier No.: (918) 631-1253
Attention: Chief Financial Officer
With a copy to:
T. Mark Kelly, Esq. and
C. Michael Harrington
Vinson & Elkins L.L.P.
1001 Fannin, 36th Floor
Houston, Texas 77002-6760
Telecopier No.: (713) 758-2346
If to the Trustee:
For payment, registration, transfer, exchange and
tender of Notes:
By hand:
Chase Bank of Texas, 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:
Chase Bank of Texas, National Association
P.O. Box 2320
Dallas, Texas 75221-2320
Attention: Registered Bond Events
For all other communications relating to the Notes:
Chase Bank of Texas, National Association
600 Travis Street, Suite 1150
Houston, Texas 77002
Telephone: (713) 216-6686
Telecopy No.: (713) 216-5476
Attention: Global Trust Services
The Company, any of the Subsidiary Guarantors or the Trustee,
by notice to the others, may designate additional or different
addresses for subsequent notices or communications.
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<PAGE> 69
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days after
being deposited in the United States mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; the next Business Day after
timely delivery to the courier, if sent for overnight delivery by a
courier guaranteeing next-day delivery; and the second Business Day
after timely delivery to the courier, if sent for second-day delivery
by a courier guaranteeing second-day delivery.
Any notice or communication to a Holder shall be mailed by
first class U.S. mail to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Notes. The Company, the Subsidiary Guarantors, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 11.04 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, such requesting entity shall
furnish to the Trustee:
(i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action
have been satisfied; and
(ii) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been satisfied.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall comply
with the provisions of TIA Section 314(e) and shall include:
(i) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(ii) 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;
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<PAGE> 70
(iii) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
SECTION 11.06 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 11.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
the Company or such Subsidiary Guarantor under the Notes, this
Indenture or the Subsidiary Guarantees, as the case may be, or for any
claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Subsidiary Guarantees.
SECTION 11.08 GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES.
SECTION 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries
or of any other Person. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
SECTION 11.10 SUCCESSORS.
All agreements of the Company or any Subsidiary Guarantor in
this Indenture and the Notes shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.11 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.12 COUNTERPART ORIGINALS.
The parties hereto may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
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SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of
the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part of this
Indenture and shall in no way modify or restrict any of the terms or
provisions hereof.
[signature page follows]
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<PAGE> 72
IN WITNESS WHEREOF, the parties hereto have executed this Indenture as
of the date first written above.
PARKER DRILLING COMPANY
By: /s/ JAMES J. DAVIS
---------------------------------------------------
Name: James J. Davis
Title: Senior Vice President of Finance
and Chief Financial Officer
SUBSIDIARY GUARANTORS:
Parker Drilling Company of Oklahoma Incorporated
Parker Drilling Company Limited (Nevada)
Parker Drilling Company Limited (Oklahoma)
Choctaw International Rig Corp.
Parker Drilling Company of New Guinea, Inc.
Parker Drilling Company North America, Inc.
Vance Systems Engineering, Inc.
DGH, Inc.
Parker Drilling Company International Limited
Mallard Bay Drilling, LLC
Parcan Limited
Parker Technology, LLC
Parker Technology, Inc.
Parker Drilling U.S.A. Ltd.
Hercules Offshore Corporation
Hercules Rig Corp.
Parker Drilling Offshore Company
By: /s/ I.E. HENDRIX, JR.
---------------------------------------------------
Name: I.E. Hendrix, Jr.
(for each of the above-listed Subsidiary
Guarantors)
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<PAGE> 73
Quail Tools, LLP
By: /s/ JAMES J. DAVIS
---------------------------------------------------
Name: James J. Davis
Title: Vice President and Treasurer
(for the above listed Subsidiary Guarantor)
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION,
as Trustee
By: /s/ MAURIE COWAN
--------------------------
Authorized Signatory
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<PAGE> 74
EXHIBIT A
[FORM OF SERIES C NOTE]
9-3/4% Senior Notes due 2006, Series C
PARKER DRILLING COMPANY
promises to pay to
or registered assigns,
the principal sum of
Dollars on November 15, 2006
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
PARKER DRILLING COMPANY
By:
-----------------------------------------------
Name: James J. Davis
Title: Senior Vice President of Finance
and Chief Financial Officer
Trustee's Certificate of Authentication:
Dated: March 11, 1998
This is one of the Notes referred to in the
within-mentioned Indenture:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------
Authorized Signatory
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<PAGE> 75
(Parker Drilling Company)
9-3/4% Senior Notes due 2006, Series C
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("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 such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be 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)
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
- --------------------
(1) This paragraph should be included only in the Note if issued in global
form.
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1. Interest. Parker Drilling Company, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-3/4% per annum from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of original issuance hereof until
maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of
the Registration Rights Agreement referred to below. The Company shall pay
interest and Liquidated Damages semi-annually on May 15 and November 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each, an "Interest Payment Date"). Interest on the Notes shall accrue from
the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance; provided that the first Interest Payment
Date shall be May 15, 1998. The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Liquidated Damages (without regard to
any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. If this Note is exchanged for a Series D Note (as
defined in the Indenture) pursuant to the Registration Rights Agreement, dated
March 11, 1998 (the "Registration Rights Agreement"), among the Company, the
Subsidiary Guarantors and the parties named on the signature pages thereof,
then accrued but unpaid interest on this Note shall be paid on the first
Interest Payment Date for such Series D Note.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium, interest and Liquidated
Damages at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall
have provided written wire transfer instructions to the Company or the Paying
Agent at least 10 Business Days prior to the applicable payment date. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association., the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and Subsidiary Guarantees. The Company issued the Notes
under an Indenture dated as of March 11, 1998 (the "Indenture") among the
Company, the Subsidiary Guarantors and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. The
Notes are obligations of the Company limited to (x) $150 million in aggregate
principal amount in the case of Notes issued on the Issue Date, plus (y) an
additional amount, not to exceed $300 million, equal to the principal amount of
Series A/B Notes exchanged for Notes pursuant to the initial Exchange Offer,
plus (z) such additional principal amount of Notes as the Company may issue
from time to time in accordance with the requirements of the Indenture.
Payment on each Note is guaranteed on a senior basis, jointly and severally, by
the Subsidiary Guarantors pursuant to Article 10 of the Indenture.
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5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to November 15,
2001. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 15 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 104.875%
2002 103.250%
2003 101.625%
2004 and thereafter 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
paragraph 5, at any time on or prior to November 15, 1999, the Company may
redeem up to 35% of the aggregate principal amount of Notes originally issued
(but disregarding, for this purpose, any Exchange Notes other than Additional
Series D Notes) at a redemption price of 109.75% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon to the
redemption date, with the net proceeds of a Public Equity Offering; provided
that at least 65% of the aggregate principal amount of the Notes originally
issued (but disregarding, for this purpose, any Exchange Notes other than
Additional Series D Notes) remains outstanding immediately after the occurrence
of such redemption; and, provided, further, that such redemption shall occur
within 60 days of the date of the closing of such Public Equity Offering
6. Mandatory Redemption. The Company shall not be required to
make mandatory redemption payments or sinking fund payments with respect to the
Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and any unpaid interest and Liquidated Damages thereon, if any, to the
Change of Control Payment Date (as hereinafter defined) (the "Change of Control
Payment"). Within 30 days of the occurrence of a Change of Control, the
Company shall notify the Trustee in writing of such proposed occurrence and
shall make a Change of Control Offer. Within 50 days following the occurrence
of a Change of Control, the Company shall mail a notice to each Holder setting
forth the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Restricted Subsidiary consummates any
Asset Sales, within 10 days following each Asset Sale Trigger Date, (i) the
Company shall commence an offer to all Holders of Series A/B Notes (the "Series
A/B Asset Sale Offer") pursuant to Section 4.10 of the Indenture to purchase
the maximum principal amount of Series A/B Notes that may be purchased out of
the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest to the purchase date
and (ii) in the event that any Excess Proceeds are not applied to a Series A/B
Asset Sale Offer, the Company shall commence an offer to all Holders of Notes
(an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase
the maximum principal amount of Notes that may be purchased out of any Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus any accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Asset Sale Offer Purchase Date, in
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<PAGE> 78
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company (or such Subsidiary) may use such excess
for general corporate purposes. Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer, from the Company prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes.
8. Notice of Redemption. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before a redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Notes. Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to secure the Notes, to add or release any Subsidiary Guarantor
pursuant to the terms of the Indenture or to comply with the requirements of
the Commission in order to effect or maintain the qualification of the
Indenture under the TIA.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase)
or otherwise, (iii) failure by the Company to comply with Section 4.10, 4.15 or
5.01 of the Indenture; (iv) failure by the Company for 45 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding to comply with certain other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company, which default (A) is caused
by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (B) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has
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<PAGE> 79
been a Payment Default or the maturity of which has been so accelerated,
aggregates $7.5 million or more; (vi) certain final judgments for the payment
of money that remain undischarged for a period of 60 days; (vii) any Subsidiary
Guarantee shall for any reason cease to be, or be asserted by the Company or
any Restricted Subsidiary that is a Guarantor, as applicable, not to be, in
full force and effect (except pursuant to the release of any Subsidiary
Guarantee in accordance with the Indenture); and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. No past, present or future
director, officer, employee, incorporation, stockholder of the Company or any
Subsidiary Guarantor, as such, shall have any liability for any obligations of
the Company or such Subsidiary Guarantor under the Notes, the Indenture or the
Subsidiary Guarantees, as the case may be, or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes and the
Subsidiary Guarantees.
15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee.
16. Abbreviations. Customary abbreviations may be used in the
name of a Holder 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).
17. Additional Rights of Holders of Transfer Restricted
Securities. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transferred Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement dated as of March 11,
1998, among the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and
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<PAGE> 80
the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Parker Drilling Company
8 East Third Street
Tulsa, Oklahoma 74103
Telecopier No.: (918) 585-8221
Attention: Treasurer
[intentionally left blank]
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[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEES]
Each of the Subsidiary Guarantors under the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed, has
unconditionally guaranteed the obligations of the Company under the Notes and
the Indenture, jointly and severally (each such guarantee being a "Subsidiary
Guarantee"), to each Holder of a Note authenticated and delivered by the
Trustee irrespective of the validity or enforceability of the Indenture, the
Notes or the obligations of the Company under the Indenture or the Notes, that:
(i) the principal of, premium, if any, and interest on the Notes of every
series issued hereunder shall be paid in full when due, whether at the maturity
or interest payment or mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal and interest, if
any, of the Notes and all other obligations of the Company to the Holders or
the Trustee under the Indenture or the Notes shall be promptly paid in full or
performed, all in accordance with the terms of the Indenture and the Notes; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, they shall be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Subsidiary Guarantor shall be obligated to
pay the same whether or not such failure to pay has become an Event of Default
that could cause acceleration pursuant to Section 6.02 of the Indenture. Each
Subsidiary Guarantor agrees that this is a guarantee of payment, not a
guarantee of collection. Capitalized terms used herein have the meanings
assigned to them in the Indenture unless otherwise indicated, and the
obligations of the Subsidiary Guarantors pursuant to the Subsidiary Guarantees
are subject to the terms of the Indenture, to which reference is hereby made
for the precise terms thereof. The obligations of each Subsidiary Guarantor to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee
and the Indenture are expressly set forth, and are senior unsecured obligations
of each such Subsidiary Guarantor to the extent and in the manner provided, in
Article 10 of the Indenture, and may be released or limited under certain
circumstances. Reference is hereby made to such Indenture for the precise
terms of the Subsidiary Guarantee therein made.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note on which the
Subsidiary Guarantees are noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
By each of the following, and any other Subsidiary Guarantor as may be
added or substituted from time to time, as Subsidiary Guarantors:
[signature page follows]
A-8
<PAGE> 82
SUBSIDIARY GUARANTORS:
PARKER DRILLING COMPANY OF OKLAHOMA INCORPORATED
PARKER DRILLING COMPANY LIMITED (NEVADA)
PARKER DRILLING COMPANY LIMITED (OKLAHOMA)
CHOCTAW INTERNATIONAL RIG CORP.
PARKER DRILLING COMPANY OF NEW GUINEA, INC.
PARKER DRILLING COMPANY NORTH AMERICA, INC.
VANCE SYSTEMS ENGINEERING, INC.
DGH, INC.
PARKER DRILLING COMPANY INTERNATIONAL LIMITED
MALLARD BAY DRILLING, LLC
PARCAN LIMITED
PARKER TECHNOLOGY, LLC
PARKER TECHNOLOGY, INC.
PARKER DRILLING U.S.A. LTD.
HERCULES OFFSHORE CORPORATION
HERCULES RIG CORP.
PARKER DRILLING OFFSHORE COMPANY
By:
---------------------------------------------------
Name: I.E. Hendrix, Jr.
(for each of the above-listed Subsidiary
Guarantors)
QUAIL TOOLS, LLP
By:
---------------------------------------------------
Name: James J. Davis
Title: Vice President and Treasurer
(for the above listed Subsidiary Guarantor)
A-9
<PAGE> 83
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________________________
Your Signature:__________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-10
<PAGE> 84
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $___________
Date:________________
Your Signature:__________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-11
<PAGE> 85
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES(1)
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Amount of Principal Amount of Signature of
decrease in this Global Note authorized
Principal Amount Amount of increase in following such signatory of
Date of Exchange of this Global Principal Amount of decrease (or Trustee or Note
Note this Global Note increase) Custodian
---------------- ---------------- --------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
(1) This should be included only in the Note if issued in global form.
A-12
<PAGE> 86
EXHIBIT B
[FORM OF SERIES D NOTE]
9-3/4% Senior Notes due 2006, Series D
CUSIP: __________
No. ____ $__________________
PARKER DRILLING COMPANY
promises to pay to ____________________________
or registered assigns,
the principal sum of _________________________
Dollars on November 15, 2006
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
PARKER DRILLING COMPANY
By:______________________________________
Name:
Title:
Dated: _______________________
Trustee's Certificate of Authentication:
This is one of the
Notes referred to in the
within-mentioned Indenture:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Signatory
B-1
<PAGE> 87
[intentionally left blank]
B-2
<PAGE> 88
(Parker Drilling Company)
9-3/4% Senior Notes due 2006, Series D
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("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 such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be 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)
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Parker Drilling Company, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-3/4% per annum from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of original issuance hereof until
maturity. The Company shall pay interest semi-annually on May 15 and November
15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each, an "Interest Payment Date"). Interest on the
Notes shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of issuance; provided that the
first Interest Payment Date shall be _______________. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 1 or November 1 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium and interest at the office or agency of the Company
maintained for such purpose within or without 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 register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest premium on, all Global
Notes and all other Notes the Holders of which shall have provided written wire
transfer instructions to the Company or the Paying Agent at least 10 Business
Days prior to the applicable payment date. Such payment shall be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, Chase Bank of Texas, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying
- -----------------------
(1) This paragraph should be included only in the Note if issued in global
form.
B-3
<PAGE> 89
Agent or Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. Indenture and Subsidiary Guarantees. The Company issued the Notes
under an Indenture dated as of March 11, 1998 (the "Indenture") among the
Company, the Subsidiary Guarantors and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. The
Notes are obligations of the Company limited to (x) $150 million in aggregate
principal amount in the case of Notes issued on the Issue Date, plus (y) an
additional amount, not to exceed $300 million, equal to the principal amount of
Series A/B Notes exchanged for Notes pursuant to the initial Exchange Offer,
plus (z) such additional principal amount of Notes as the Company may issue
from time to time in accordance with the requirements of the Indenture.
Payment on each Note is guaranteed on a senior basis, jointly and severally, by
the Subsidiary Guarantors pursuant to Article 10 of the Indenture.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to November 15,
2001. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period
beginning on November 15 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 104.875%
2002 103.250%
2003 101.625%
2004 and thereafter 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
paragraph 5, at any time on or prior to November 15, 1999, the Company may
redeem up to 35% of the aggregate principal amount of Notes originally issued
(but disregarding, for this purpose, any Exchange Notes other than Additional
Series D Notes) at a redemption price of 109.75% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon to the
redemption date, with the net proceeds of a Public Equity Offering; provided
that at least 65% of the aggregate principal amount of the Notes originally
issued (but disregarding, for this purpose, any Exchange Notes other than
Additional Series D Notes) remains outstanding immediately after the occurrence
of such redemption; and, provided, further, that such redemption shall occur
within 60 days of the date of the closing of such Public Equity Offering.
6. Mandatory Redemption. The Company shall not be required to
make mandatory redemption payments or sinking fund payments with respect to the
Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and any unpaid interest thereon, if any, to the Change of Control
Payment Date (as hereinafter defined) (the "Change of Control Payment").
Within 30 days of the occurrence of a Change of Control, the Company shall
B-4
<PAGE> 90
notify the Trustee in writing of such proposed occurrence and shall make a
Change of Control Offer. Within 50 days following the occurrence of a Change
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any
Asset Sales, within 10 days following each Asset Sale Trigger Date, (i) the
Company shall commence an offer to all Holders of Series A/B Notes (the "Series
A/B Asset Sale Offer") pursuant to Section 4.10 of the Indenture to purchase
the maximum principal amount of Series A/B Notes that may be purchased out of
the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest to the purchase date
and (ii) in the event that any Excess Proceeds are not applied to a Series A/B
Asset Sale Offer, the Company shall commence an offer to all Holders of Notes
(an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase
the maximum principal amount of Notes that may be purchased out of any Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus any accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Asset Sale Offer Purchase Date, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such excess for general
corporate purposes. Holders of Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer, from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
8. Notice of Redemption. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before a redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Notes. Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to secure the Notes, to add or release any Subsidiary Guarantor
B-5
<PAGE> 91
pursuant to the terms of the Indenture or to comply with the requirements of
the Commission in order to effect or maintain the qualification of the
Indenture under the TIA.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
with Section 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company
for 45 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding to comply
with certain other agreements in the Indenture or the Notes; (v) default under
certain other agreements relating to Indebtedness of the Company, which default
(A) is caused by a failure to pay principal of or premium, if any, or interest
on such Indebtedness prior to the expiration of the grace period provided in
such Indebtedness on the date of such default (a "Payment Default") or (B)
results in the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been
a Payment Default or the maturity of which has been so accelerated, aggregates
$7.5 million or more; (vi) certain final judgments for the payment of money
that remain undischarged for a period of 60 days; (vii) any Subsidiary
Guarantee shall for any reason cease to be, or be asserted by the Company or
any Restricted Subsidiary that is a Guarantor, as applicable, not to be, in
full force and effect (except pursuant to the release of any Subsidiary
Guarantee in accordance with the Indenture); and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. No past, present or future
director, officer, employee, incorporation, stockholder of the Company or any
Subsidiary Guarantor, as such, shall have any liability for any obligations of
the Company or such Subsidiary Guarantor under the Notes, the Indenture or the
Subsidiary Guarantees, as the case may be, or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes and the
Subsidiary Guarantees.
B-6
<PAGE> 92
15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee.
16. Abbreviations. Customary abbreviations may be used in the
name of a Holder 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).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Parker Drilling Company
8 East Third Street
Tulsa, Oklahoma 74103
Telecopier No.: (918) 585-8221
Attention: Treasurer
B-7
<PAGE> 93
[intentionally left blank]
B-8
<PAGE> 94
[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEES]
Each of the Subsidiary Guarantors under the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed, has
unconditionally guaranteed the obligations of the Company under the Notes and
the Indenture, jointly and severally (each such guarantee being a "Subsidiary
Guarantee"), to each Holder of a Note authenticated and delivered by the
Trustee irrespective of the validity or enforceability of the Indenture, the
Notes or the obligations of the Company under the Indenture or the Notes, that:
(i) the principal of, premium, if any, and interest on the Notes of every
series issued hereunder shall be paid in full when due, whether at the maturity
or interest payment or mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal and interest, if
any, of the Notes and all other obligations of the Company to the Holders or
the Trustee under the Indenture or the Notes shall be promptly paid in full or
performed, all in accordance with the terms of the Indenture and the Notes; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, they shall be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Subsidiary Guarantor shall be obligated to
pay the same whether or not such failure to pay has become an Event of Default
that could cause acceleration pursuant to Section 6.02 of the Indenture. Each
Subsidiary Guarantor agrees that this is a guarantee of payment, not a
guarantee of collection. Capitalized terms used herein have the meanings
assigned to them in the Indenture unless otherwise indicated, and the
obligations of the Subsidiary Guarantors pursuant to the Subsidiary Guarantees
are subject to the terms of the Indenture, to which reference is hereby made
for the precise terms thereof. The obligations of each Subsidiary Guarantor to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee
and the Indenture are expressly set forth, and are senior unsecured obligations
of each such Subsidiary Guarantor to the extent and in the manner provided, in
Article 10 of the Indenture, and may be released or limited under certain
circumstances. Reference is hereby made to such Indenture for the precise
terms of the Subsidiary Guarantee therein made.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note on which the
Subsidiary Guarantees are noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
By each of the following, and any other Subsidiary Guarantor as may be
added or substituted from time to time, as Subsidiary Guarantors:
[signature page follows]
B-9
<PAGE> 95
SUBSIDIARY GUARANTORS:
PARKER DRILLING COMPANY OF OKLAHOMA
INCORPORATED
PARKER DRILLING COMPANY LIMITED (NEVADA)
PARKER DRILLING COMPANY LIMITED (OKLAHOMA)
CHOCTAW INTERNATIONAL RIG CORP.
PARKER DRILLING COMPANY OF NEW GUINEA, INC.
PARKER DRILLING COMPANY NORTH AMERICA, INC.
VANCE SYSTEMS ENGINEERING, INC.
DGH, INC.
PARKER DRILLING COMPANY INTERNATIONAL LIMITED
MALLARD BAY DRILLING, LLC
PARCAN LIMITED
PARKER TECHNOLOGY, LLC
PARKER TECHNOLOGY, INC.
PARKER DRILLING U.S.A. LTD.
HERCULES OFFSHORE CORPORATION
HERCULES RIG CORP.
PARKER DRILLING OFFSHORE COMPANY
By: _______________________________________
Name: I.E. Hendrix, Jr.
(for each of the above-listed
Subsidiary Guarantors)
QUAIL TOOLS, LLP
By:_______________________________________
Name: James J. Davis
(for the above listed Subsidiary
Guarantor)
B-10
<PAGE> 96
[intentionally left blank]
B-11
<PAGE> 97
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:____________________________
Your Signature:_____________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
B-12
<PAGE> 98
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $___________
Date:______________________________
Your Signature:_____________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
B-13
<PAGE> 99
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES(1)
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Amount of Principal Amount of Signature of
decrease in this Global Note authorized
Principal Amount Amount of increase in following such signatory of
Date of Exchange of this Global Principal Amount of decrease (or Trustee or Note
Note this Global Note increase) Custodian
- ---------------- ---------------- --------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
(1) This should be included only in the Note if issued in global form.
B-14
<PAGE> 100
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF NOTES
Re: 9-3/4% Senior Notes due 2006, Series C of Parker Drilling Company.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Note held by or on behalf of the
Depository a Note or Notes in definitive, registered form of
authorized denominations in an aggregate principal amount equal to its
beneficial interest in such Global Note (or the portion thereof
indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Notes and as provided in
Section 2.06 of such Indenture, the transfer of this Note does not
require registration under the Securities Act (as defined below)
because:*
[ ] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
[ ] Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of
Section 2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i) (B)
of the Indenture) or pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (in satisfaction of
Section 2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the Indenture.)
[ ] Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or
Section 2.06(d)(i)(B) of the Indenture).
[ ] Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Rule 904 under the Securities Act. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
_____________________________
[INSERT NAME OF TRANSFEROR]
Date:__________________________ By:__________________________
*Check applicable box.
C-1
<PAGE> 1
EXHIBIT 4.6
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 11, 1998
by and among
Parker Drilling Company
and the
Subsidiary Guarantors as defined in the Indenture referred to herein
and
Jefferies & Company, Inc.
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 11, 1998 by and among Parker Drilling Company, a
Delaware corporation (the "Company"), and each of the Company's subsidiaries
that are "Subsidiary Guarantors" under the Indenture (as defined below), which
are listed on Annex I hereto (collectively, the "Subsidiary Guarantors"), and
Jefferies & Company, Inc. (the "Initial Purchaser") who has agreed to purchase
the Company's 9 3/4% Senior Notes due 2006, Series C (the "Original Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March
5, 1998 (the "Purchase Agreement"), by and among the Company, the Subsidiary
Guarantors and the Initial Purchaser. In order to induce the Initial Purchaser
to purchase the Original Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Certificated Securities: The registered certificated form of the
Global Notes and the Definitive Notes.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture of New Notes in the same aggregate
principal amount as the aggregate principal amount of Original Notes and Series
A/B Notes that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Original Notes, each
Interest Payment Date.
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<PAGE> 3
Definitive Notes: One or more fully registered definitive notes, as
provided for in the Indenture, evidencing all or a portion of the Original
Notes.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
New Notes pursuant to a Registration Statement pursuant to which the Company
offers the Holders of Transfer Restricted Securities and Series A/B Notes the
opportunity to exchange the Transfer Restricted Securities and the Series A/B
Notes held by such Holders for New Notes in an aggregate principal amount equal
to the aggregate principal amount of the Transfer Restricted Securities and the
Series A/B Notes tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Original Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
institutional "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3) and (7) of Regulation D under the Act ("Accredited
Institutions").
Global Note: One or more fully registered global notes, as provided
for in the Indenture, evidencing all or a portion of the Original Notes.
Global Note Holder: The nominee of the Depository in whose name the
Global Note is registered.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of March 11, 1998, among the
Company, Chase Bank of Texas, National Association, as trustee (the "Trustee")
and the Subsidiary Guarantors, pursuant to which the Notes are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
Initial Purchaser: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
New Notes: The Company's 9 3/4% Senior Notes due 2006, Series D to be
issued pursuant to the Indenture in the Exchange Offer.
Notes: The Original Notes and the New Notes.
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<PAGE> 4
Person: An individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference into such
Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
the Notes, each Person who is a Holder of Notes on the record date with respect
to the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (i) an offering of New Notes pursuant to an Exchange Offer or (ii)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference or deemed to be
incorporated by reference into such registration statement.
Series A/B Notes: The Company's 9 3/4% Senior Notes due 2006 in the
aggregate principal amount of $300,000,000 issued pursuant to the indenture
dated as of November 12, 1996 between the Company, the Subsidiary Guarantors
and Chase Bank of Texas, National Association (formerly Texas Commerce Bank,
National Association).
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Filing Event: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note until the earliest to occur
of (i) the date on which such Note has been exchanged by a person other than a
broker-dealer for a New Note in the Exchange Offer, (ii) following the exchange
by a broker-dealer in the Exchange Offer of a Note for a New Note, the date on
which such New Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Note has
been effectively registered under the Act and disposed of in accordance with
the Shelf Registration Statement or (iv) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
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<PAGE> 5
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities and Series A/B Notes. The
securities entitled to the benefits of this Agreement are the Transfer
Restricted Securities and the Series A/B Notes.
(b) Holders of Transfer Restricted Securities and Series A/B
Notes. A Person is deemed to be a holder of Transfer Restricted Securities
and/or Series A/B Notes (each, a "Holder") whenever such Person owns Transfer
Restricted Securities and/or Series A/B Notes.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) The Company hereby agrees: (i) to file an Exchange Offer
Registration Statement with the Commission on or prior to 60 days after the
Closing Date, (ii) to use its best efforts to have the Exchange Offer
Registration Statement declared effective by the Commission on or prior to 135
days after the Closing Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, to commence the Exchange
Offer and use its best efforts to issue, on or prior to 30 business days after
the date on which the Exchange Offer Registration Statement was declared
effective by the Commission, New Notes in exchange for all Original Notes and
Series A/B Notes tendered prior thereto in the Exchange Offer and (iv) if
obligated to file the Shelf Registration Statement, to use its best efforts to
file the Shelf Registration Statement with the Commission on or prior to 30
days after such filing obligation arises (and in any event within 90 days after
the Closing Date) and to cause the Shelf Registration to be declared effective
by the Commission on or prior to 90 days after such obligation arises.
(b) The Company shall cause the Exchange Offer Registration
Statement to be effective continuously and shall keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 business days. The
Company shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Notes, the Series A/B
Notes and the New Notes shall be included in the Exchange Offer Registration
Statement. The Company shall use its best efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Original Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Original Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the New Notes received by such Broker-Dealer in
the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the
5
<PAGE> 6
amount of Notes held by any such Broker-Dealer except to the extent required by
the Commission as a result of a change in policy after the date of this
Agreement.
The Company and the Subsidiary Guarantors shall use their best efforts
to keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for resales of Notes
acquired by Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of nine months
from the date on which the Exchange Offer Registration Statement is declared
effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
nine-month period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to
file an Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 10 business days of the Consummation of the
Exchange Offer (A) that such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) that such
Holder may not resell the New Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and that the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds
Original Notes acquired directly from the Company or any affiliate of the
Company (each such event referred to in clauses (i) and (ii) above, a "Shelf
Filing Event"), then the Company and each of the Subsidiary Guarantors shall:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf
Registration Statement") on or prior to the later to occur of (1) the
30th day after the occurrence of a Shelf Filing Event, and (2) the
90th day after the Closing Date (such earliest date being the "Shelf
Filing Deadline"), which Shelf Registration Statement shall provide
for resales of all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 4(b)
hereof; and
(y) use their best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on
or before the 90th day after the Shelf Filing Event.
The Company and each of the Subsidiary Guarantors shall use its best
efforts to keep such Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that such Shelf Registration Statement
is available for resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that
such Shelf Registration Statement conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
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<PAGE> 7
announced from time to time, for a period of (A) two years following the
Closing Date or (B) if sooner, the date immediately following the date that all
Transfer Restricted Securities covered by the Shelf Registration Statement have
been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
(a) If (i) the Company fails to file any of the Registration
Statements required by this Agreement on or before the date specified for such
filing, (ii) any of such Registration Statements is not declared effective by
the Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), (iii) the Company fails to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement, or (iv) the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
the Exchange Offer or resales of Transfer Restricted Securities, as the case
may be, during the periods specified in the Registration Rights Agreement (each
such event referred to in clauses (i) through (iv) above, a "Registration
Default"), then the interest rate on the Transfer Restricted Securities, with
respect to the first 90-day period immediately following the occurrence of such
Registration Default shall increase ("Liquidated Damages") by 0.50% per annum
and will increase by an additional 0.50% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of 2% per annum with respect to all
Registration Defaults. All accrued Liquidated Damages shall be paid by the
Company on each Damages Payment Date to the Global Note Holder by wire transfer
of immediately available funds and to Holders of Certificated Securities by
wire transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages shall
cease.
(b) All obligations of the Company and the Subsidiary Guarantors set
forth in Section 5(a) above that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such Transfer Restricted Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and each of the Subsidiary Guarantors shall comply
with all of the provisions of Section 6(c) below, shall use its best efforts to
effect such exchange to permit the sale of Transfer Restricted Securities
7
<PAGE> 8
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the
Company there is a question as to whether the Exchange Offer is
permitted by applicable law, the Company and the Subsidiary Guarantors
hereby agree to seek a no-action letter or other favorable decision
from the Commission allowing the Company and the Subsidiary Guarantors
to Consummate an Exchange Offer for the Original Notes and the Series
A/B Notes. The Company and the Subsidiary Guarantors each hereby
agrees to pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Company and the Subsidiary Guarantors each hereby agrees, however, to
(A) participate in telephonic conferences with the Commission, (B)
deliver to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities and Series A/B Notes shall furnish, upon the
request of the Company, prior to the Consummation thereof, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the Company, (B) it
is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the New Notes to be issued in the Exchange Offer and
(C) it is acquiring the New Notes in its ordinary course of business.
In addition, all such Holders of Transfer Restricted Securities and
Series A/B Notes shall otherwise cooperate in the Company's
preparations for the Exchange Offer. Each Holder hereby acknowledges
and agrees that any Broker-Dealer and any such Holder using the
Exchange Offer to participate in a distribution of the securities to
be acquired in the Exchange Offer (1) could not under Commission
policy as in effect on the date of this Agreement rely on the position
of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including any no- action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of New Notes obtained
by such Holder in exchange for Original Notes acquired by such Holder
directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Subsidiary Guarantors
shall provide a supplemental letter to the Commission (A) stating that
the Company and the Subsidiary Guarantors are registering the Exchange
Offer in reliance on the position of the Commission enunciated in
Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no- action letter obtained pursuant to clause (i) above and (B)
including a representation that neither the Company nor any of the
Subsidiary Guarantors has entered into any arrangement or
understanding with any Person to distribute the New Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange
Offer is acquiring the
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<PAGE> 9
New Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of
the New Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and each of the Subsidiary Guarantors shall
comply with all the provisions of Section 6(c) below and shall use its best
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company shall as
expeditiously as possible prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of distribution
thereof.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Notes by Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation
thereunder, financial statements of the Subsidiary Guarantors) for the
period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the case of
clause (A), correcting any such misstatement or omission, and, in the
case of either clause (A) or (B), use its best efforts to cause such
amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s)
as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable,
or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by
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<PAGE> 10
the Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky
laws, the Company and the Subsidiary Guarantors shall use their best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish to each of the selling Holders and each of
the underwriter(s), if any, before filing with the Commission, copies
of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after
the initial filing of such Registration Statement), which documents
will be subject to the review of such Holders and underwriter(s), if
any, for a period of at least five business days, and the Company will
not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which a selling Holder of Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, shall
reasonably object within five business days after the receipt thereof.
A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission;
(v) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders and
to the underwriter(s), if any, make the Company's representatives
available (and representatives of the Subsidiary Guarantors) for
discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably
may request;
(vi) make available at reasonable times for inspection by
the selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or
accountant retained by such selling Holders or any of the
underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and the Subsidiary Guarantors
and cause the Company's and the Subsidiary Guarantors' officers,
directors and employees to supply all information reasonably requested
by any such Holder, underwriter, attorney or accountant in connection
with such Registration Statement subsequent to the filing thereof and
prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may
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<PAGE> 11
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after
the Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; the
Company and the Subsidiary Guarantors hereby consent to the use of the
Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
(x) enter into, and cause the Subsidiary Guarantors to
enter into, such agreements (including an underwriting agreement), and
make, and cause the Subsidiary Guarantors to make, such
representations and warranties, and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such
extent as may be requested by any Purchaser or by any Holder of
Transfer Restricted Securities or underwriter in connection with any
sale or resale pursuant to any Registration Statement contemplated by
this Agreement; and whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, the Company and the Subsidiary Guarantors shall:
(A) furnish to the Initial Purchaser, each
selling Holder and each underwriter, if any, in such substance
and scope as they may request and as are customarily made by
issuers to underwriters in primary underwritten offerings,
upon the date of the Consummation of the Exchange Offer and,
if applicable, the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, signed by (y) the President or any
Vice President and (z) a principal financial or
accounting officer of each of the Company and the
Subsidiary Guarantors, confirming, as of the date
thereof, the matters set forth in paragraphs (b)
through (f) of Section 9 of the Purchase Agreement
and such other matters as such parties may reasonably
request;
(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, of
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counsel for the Company and the Subsidiary
Guarantors, covering the matters set forth in Section
9(h) and 9(i) of the Purchase Agreement and such
other matter as such parties may reasonably request,
and in any event including a statement to the effect
that such counsel has participated in conferences
with officers and other representatives of the
Company, representatives of the independent public
accountants for the Company, the Initial Purchaser's
representatives and the Initial Purchaser's counsel
in connection with the preparation of such
Registration Statement and the related Prospectus and
have considered the matters required to be stated
therein and the statements contained therein,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel
by officers and other representatives of the Company
and without independent check or verification), no
facts came to such counsel's attention that caused
such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post- effective amendment thereto
became effective, and, in the case of the Exchange
Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or that the
Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated
the date of Consummation of the Exchange Offer, as of
the date of Consummation, contained an untrue
statement of a material fact or omitted to state a
material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility
for, and has not independently verified, the
accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial
data included in any Registration Statement
contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated as
of the date of Consummation of the Exchange Offer or
the date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Company's
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters by underwriters in connection with
primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered
pursuant to Sections 9(l) and 9(m) of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference
in the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates
as may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause
(xi), if any.
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<PAGE> 13
If at any time the representations and warranties of the
Company and the Subsidiary Guarantors contemplated in clause (A)(1)
above cease to be true and correct, the Company or the Subsidiary
Guarantors shall so advise the Initial Purchaser and the
underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with, and cause the Subsidiary Guarantors to
cooperate with, the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
Shelf Registration Statement; provided, however, that neither the
Company nor the Subsidiary Guarantors shall be required to register or
qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it
is not now so subject;
(xii) shall issue, upon the request of any Holder of
Original Notes and Series A/B Notes covered by the Shelf Registration
Statement, New Notes, having an aggregate principal amount equal to
the aggregate principal amount of Original Notes and Series A/B Notes
surrendered to the Company by such Holder in exchange therefor or
being sold by such Holder; such New Notes to be registered in the name
of such Holder or in the name of the purchaser(s) of such Notes, as
the case may be; in return, the Original Notes and the Series A/B
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiii) cooperate with, and cause the Subsidiary Guarantors
to cooperate with, the selling Holders and the underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as
the Holders or the underwriter(s), if any, may request at least two
business days prior to any sale of Transfer Restricted Securities made
by such underwriter(s);
(xiv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause
(xii) above;
(xv) if any fact or event contemplated by clause
(c)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or deemed
to be incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed
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<PAGE> 14
certificates for the Transfer Restricted Securities that are in a form
eligible for deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to
consummate the disposition of such Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate,
and cause the Subsidiary Guarantors to cooperate, with the Trustee and
the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute, and cause the Subsidiary Guarantors to
execute, and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner;
(xx) cause all Transfer Restricted Securities covered by
the Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount
of Original Notes or the managing underwriter(s), if any; and
(xxi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as
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<PAGE> 15
applicable, shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Subsidiary
Guarantors' performance of or compliance with this Agreement will be borne by
the Company or the Subsidiary Guarantors, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all registration
and filing fees and expenses (including filings made by the Initial Purchaser
or Holder with the NASD (and, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel that may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the New Notes to be
issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company, the Subsidiary Guarantors and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities and Series A/B Notes; (v) all
application and filing fees in connection with listing Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company and the Subsidiary Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company shall, in any event, bear its and the Subsidiary
Guarantor's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company shall reimburse
the Initial Purchaser and the Holders of Transfer Restricted Securities and
Series A/B Notes being tendered in the Exchange Offer and/or resold pursuant to
the "Plan of Distribution" contained in the Exchange Offer Registration
Statement or registered pursuant to the Shelf Registration Statement, as
applicable, for the reasonable fees and disbursements of not more than one
counsel, who shall be Latham & Watkins or such other counsel as may be chosen
by the Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is being prepared.
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<PAGE> 16
SECTION 8. INDEMNIFICATION
(a) The Company and each Subsidiary Guarantor, jointly and
severally, agree: (i) to indemnify and hold harmless the Initial Purchaser and
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Initial Purchaser (any of such persons
being hereinafter referred to as a "controlling person") and the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchaser or any controlling person (any person referred to above being
sometimes referred to as an "Indemnified Party"), to the fullest extent lawful,
from and against any and all losses, claims, damages, liabilities, actions and
judgments directly or indirectly caused by, related to, based upon, arising out
of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (and any
amendment or supplement thereto) or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither the Company nor any
Subsidiary Guarantor will be liable in any such case to the extent, but only to
the extent, that any such loss, claim, damage, liability, action or judgment is
based upon an untrue statement or omission or alleged untrue statement or
omission made in any Registration Statement or Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written
information furnished to the Company or the Subsidiary Guarantors by or on
behalf of the Holders specifically for use therein; and (ii) to reimburse any
Indemnified Party for any reasonable legal or other expenses incurred by such
person in connection with investigating, preparing, pursuing or defending
against any such loss, claim, damage, liability, action or judgment or any
investigation or proceeding by any governmental or regulatory agency or body,
commenced or threatened, as such expenses are incurred. The Company and the
Subsidiary Guarantors shall notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental or
regulatory investigation or proceeding) or action of which the Company or the
Subsidiary Guarantors are aware in connection with the matters addressed by
this Agreement that involves the Company, the Subsidiary Guarantors or any
Indemnified Party.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Parties with respect to which indemnity may be sought
against the Company or the Subsidiary Guarantors, such Indemnified Party shall
promptly notify the Company in writing (provided that the failure to give such
notice shall not relieve the Company or the Subsidiary Guarantors of their
obligations pursuant to this Agreement) and the Company or the Subsidiary
Guarantors, as the case may be, shall assume the defense thereof, including the
employment of counsel satisfactory to such Indemnified Party or Indemnified
Parties and payment of all fees and expenses. Notwithstanding the foregoing,
such Indemnified Party or Indemnified Parties shall have the right to employ
its or their own counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Indemnified
Parties unless (i) the Company or any of the Subsidiary Guarantors agrees in
writing to pay such fees and expenses, (ii) the Company or any of the
Subsidiary Guarantors shall not have employed counsel reasonably satisfactory
to such Indemnified Party to take charge of the defense of such action promptly
after notice of commencement of the action, or (iii) such Indemnified Party or
Indemnified Parties shall have been advised that a conflict-of-interest would
arise with counsel representing them and the Company or any of the Subsidiary
Guarantors (in which case the Company or the Subsidiary Guarantors shall not
have the right to direct the defense of such action on behalf of the
Indemnified Party or Indemnified Parties); provided, however, that unless there
exists a conflict among Indemnified Parties hereunder, the Company or the
Subsidiary Guarantors shall only be liable for the legal fees and expenses of
one firm of attorneys (in addition to any local counsel) for all Indemnified
Parties
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<PAGE> 17
and that all such fees and expenses shall be reimbursed by the Company and the
Subsidiary Guarantors as they are incurred (regardless of whether it is
ultimately determined that such Indemnified Party or Indemnified Parties are
not entitled to indemnification hereunder). The Company and the Subsidiary
Guarantors shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
unreasonably withheld, and such persons agree to indemnify and hold harmless
each of the Indemnified Parties from and against any loss, claim, damage,
expense or liability by reason of any settlement of any action effected with
the consent of the Company. Notwithstanding the foregoing sentence, if at any
time an Indemnified Party has requested an indemnifying party to reimburse the
Indemnified Party for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 10 business days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, an indemnifying
party shall not be liable for any settlement of the nature contemplated by
clause (ii) of the first paragraph of this Section 8(a) effected without its
consent if such indemnifying party, prior to the date of settlement, (i)
reimburses such indemnified party in accordance with such request to the extent
such indemnifying party considers such request to be reasonable and (ii)
provides written notice in reasonable detail to the indemnified party of the
reasons such indemnifying party considers the unpaid balance unreasonable.
Such indemnifying party shall be liable for all costs and expenses of the
indemnifying party in seeking to recover such unpaid balance if a court of
competent jurisdiction (or an arbitrator, if such matter is submitted to
arbitration) finds such balance to be reasonable.
No indemnifying party shall, without the prior written consent of the
Indemnified Party, settle or compromise or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, claim,
litigation or proceeding in respect of which indemnity could have been sought
hereunder (whether or not any Indemnified Party is a party thereto), unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such action, claim,
litigation or proceeding.
(b) The Holders of Transfer Restricted Securities jointly agree to
indemnify and hold harmless the Company, the Subsidiary Guarantors and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company or any Subsidiary Guarantor and the
respective officers, directors, partners, employees, representatives and agents
of the Company, the Subsidiary Guarantors or any such controlling person, to
the same extent as the foregoing indemnity from the Company provided in Section
8(a) above, the Subsidiary Guarantors to the Indemnified Parties but only with
respect to claims and actions based on information relating to the Indemnified
Parties furnished in writing by or on behalf of such Indemnified Party
specifically for use in any Registration Statement or Prospectus (and any
amendment or supplement thereto).
(c) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) (other than by reason of exceptions provided in Section
8(a) or (b) above) in respect of any losses, claims, damages, liabilities,
actions or judgments referred to herein, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall
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<PAGE> 18
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, actions and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Subsidiary Guarantors, on the one hand, and the Holders, on the
other hand, from their sale of the Transfer Restricted Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or if the indemnified party failed to give the notice required under Section
8(a) above, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, the Subsidiary Guarantors, on the one hand, and the Holders, on
the other hand, in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities, actions or judgments, as well as any
other relevant equitable considerations. The relative fault of the Company and
the Subsidiary Guarantors, on the one hand, and the Holders, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Subsidiary Guarantors, on the one hand, or the Holders, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and each Holder of a Transfer
Restricted Security agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities, actions or judgments referred to in
the immediately preceding paragraph shall be deemed to include any legal or
other expenses incurred by such indemnified party in connection with
investigating, preparing to defend or defending any such action or claim.
Notwithstanding the provisions of this Section 8(c), none of the Holders shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the total discounts and commissions received by it with respect to the
Original Notes exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) In any proceeding relating to any Registration Statement or
Prospectus (or any supplement or amendment thereto), each party against whom
contribution may be sought under this Section 8 hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing
party, agrees that process issuing from such court may be served upon him or it
by any other contributing party and consents to the service of such process and
agrees that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is a
party.
(e) The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the indemnifying persons may
otherwise have to the indemnified persons referred to above.
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SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and each of the Subsidiary Guarantors
agree that monetary damages (including the liquidated damages contemplated
hereby) would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. The Company shall not, and shall
cause the Subsidiary Guarantor not to, on or after the date of this Agreement
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Except as identified to you in an officers'
certificate of the Company separately delivered, neither the Company nor the
Subsidiary Guarantors has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company shall not take
any action, or permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be
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<PAGE> 20
given unless the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the Holders
of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on
the records of the Registrar (as defined in the Indenture)
under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company, to:
Parker Drilling Company
Parker Building
8 East Third Street
Tulsa, Oklahoma 74103
Fax: (918) 631-1253;
with a copy to:
T. Mark Kelly, Esq.
Vinson & Elkins L.L.P.
1001 Fannin Street, 36th Floor
Houston, Texas 77002
Fax: (713) 615-5531.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities and Series A/B
Notes; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign acquired Transfer Restricted Securities or Series A/B
Notes, as applicable, from such Holder.
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(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Transfer Restricted Securities and the Series A/B
Notes. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
[signature page follows]
21
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Very truly yours,
THE COMPANY:
Parker Drilling Company
By: /s/ James J. David
-----------------------------------------------
Name: James J. Davis
Title: Senior Vice President of Finance
and Chief Financial Officer
By: /s/ I. E. Hendrix, Jr.
-----------------------------------------------------
(for each of the above-named Subsidiaries of the
Issuer, which are Subsidiary Guarantors)
By: /s/ James J. Davis
------------------------------------------------
Name: James J. Davis
Title: Vice President and Treasurer
(for the above-named Subsidiary of the
Issuer, which is a Subsidiary Guarantor)
SUBSIDIARY GUARANTORS:
Parker Drilling Company of Oklahoma Incorporated
Parker Drilling Company Limited (Nevada)
Parker Drilling Company Limited (Oklahoma)
Choctaw International Rig Corp.
Parker Drilling Company of New Guinea, Inc.
Parker Drilling Company North America, Inc.
Vance Systems Engineering, Inc.
DGH, Inc.
Parker Drilling Company International Limited
Mallard Bay Drilling, LLC
Parcan Limited
Parker Technology, LLC
Parker Technology, Inc.
Parker Drilling U.S.A. Ltd.
Hercules Offshore Corporation
Hercules Rig Corp.
Parker Drilling Offshore Company
22
<PAGE> 23
Accepted and Agreed to:Jefferies & Company, Inc.
By: /s/ S. Kundagrami
---------------------------------------
Name: Shauvik Kundagrami
Title: Managing Director
23
<PAGE> 24
ANNEX I
SUBSIDIARY GUARANTORS
Parker Drilling Company of Oklahoma Incorporated
Parker Drilling Company Limited (Nevada)
Parker Drilling Company Limited (Oklahoma)
Choctaw International Rig Corp.
Parker Drilling Company of New Guinea, Inc.
Parker Drilling Company North America, Inc.
Vance Systems Engineering, Inc.
DGH, Inc.
Parker Drilling Company International Limited
Mallard Bay Drilling, LLC
Parcan Limited
Parker Technology, LLC
Quail Tools, LLP
Parker Technology, Inc.
Parker Drilling U.S.A. Ltd.
Hercules Offshore Corporation
Hercules Rig Corp.
Parker Drilling Offshore Company
24
<PAGE> 1
EXHIBIT 5.1
March 31, 1998
Parker Drilling Company
Subsidiary Guarantors (as defined below)
8 East Third Street
Tulsa, Oklahoma 74103
Dear Sirs:
We have acted as counsel for Parker Drilling Company, a Delaware
corporation (the "Company"), and the Subsidiary Guarantors (defined below) in
connection with the proposed offer by the Company to exchange (the "Exchange
Offer") for all outstanding 9.75% Senior Notes Due 2006, Series B (the "Series B
Notes") ($300 million principal amount outstanding) and all outstanding 9.75%
Senior Notes Due 2006, Series C (the "Series C Notes") ($150 million principal
amount outstanding) (collectively, the "Old Notes"), the 9.75% Senior Notes Due
2006, Series D ($450 million principal amount) (the "Exchange Notes"). The
Series B Notes have been issued pursuant to an Indenture dated as of November
12, 1996 (the "Old Indenture") among the Company, the Subsidiary Guarantors and
Chase Bank of Texas, National Association (formerly Texas Commerce Bank National
Association), as trustee (the "Trustee"). The Series C Notes have been, and the
Exchange Notes will be, issued pursuant to an Indenture dated as of March 11,
1998 (the "Indenture") among the Company, The Subsidiary Guarantors (defined
below) and the Trustee. Parker Drilling Company of Oklahoma, Incorporated;
Parker Technology, Inc.; Parker Drilling Company International Limited; Choctaw
International Rig Corp; Parker Drilling Company Limited; Parker Drilling Company
Limited; Parker Drilling Company of New Guinea, Inc.; Parker Drilling Company
North America, Inc.; Parker Drilling U.S.A. Ltd.; Vance Systems Engineering,
Inc.; DGH Inc.; Mallard Bay Drilling, L.L.C.; Quail Tools, L.L.P.; Parcan
Limited; Parker Technology, L.L.C.; Hercules Offshore Corporation; Hercules Rig
Corp; and Parker Drilling Offshore Company are collectively referred to as the
"Subsidiary Guarantors," and the guarantees by the Subsidiary Guarantors with
respect to the Exchange Notes are collectively referred to as the "Subsidiary
Guarantees."
In connection with such matters we have examined the Old Indenture, the
Indenture, the Registration Statement on Form S-4, filed by the Company with the
Securities and Exchange Commission, for the registration of the Exchange Notes
and the Subsidiary Guarantees thereof (collectively referred to as the
"Securities") under the Securities Act of 1933 (the Registration Statement, as
amended at the time it becomes effective, being referred to as the "Registration
Statement") and such corporate records of the Company and the Subsidiary
Guarantors, certificates of public officials and such other documents as we have
deemed necessary or appropriate for the purpose of this opinion.
Based upon the foregoing, subject to the qualifications hereinafter set
forth, and having regard for such legal considerations as we deem relevant, we
are of the opinion that the Securities proposed to be issued pursuant to the
Exchange Offer have been duly authorized for issuance and, subject to the
Registration Statement becoming effective under the Securities Act of 1933, and
to compliance with any applicable state securities laws, when issued, delivered
and sold in accordance with the Exchange Offer and the Indenture, will be valid
and legally binding obligations of the Company and the Subsidiary Guarantors,
enforceable against the Company and the Subsidiary Guarantors in accordance with
their respective terms.
The opinions expressed herein are subject to the following: the
enforceability of the Securities may be limited or affected by (i) bankruptcy,
insolvency, reorganization, moratorium, liquidation, rearrangement, fraudulent
transfer, fraudulent conveyance and other similar laws (including court
decisions) now or hereafter in effect and affecting the rights and remedies of
creditors generally or providing for the relief of debtors, (ii) the refusal of
a particular court to grant equitable remedies, including without limitation
specific performance and injunctive relief, and (iii) general principles of
equity (regardless of whether such remedies are sought in a proceeding in equity
or at law).
The opinions expressed herein are limited exclusively to the laws of the
State of New York and the General Corporation Law of the State of Delaware.
<PAGE> 2
Parker Drilling Company
Page 2
March 31, 1998
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to Vinson & Elkins L.L.P. under
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 and the rules and regulations of the Securities and Exchange Commission
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-4 (File No. 333- ) of our report dated October 14, 1997,
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 "Experts."
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
March 31, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 (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
March 30, 1998
<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-4 to be filed on or about April 1, 1998 of our report
dated June 27, 1997, except with respect to items described in Note 1,
"Restatement of Previously Issued Financial Statements" for which the date is
March 3, 1998, 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 our report dated June 27,
1997 on the financial statements 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
March 30, 1998
<PAGE> 1
EXHIBIT 23.4
The Board of Directors
Parker Drilling Company:
We consent to the incorporation by reference in the registration statement on
Form S-4 of Parker Drilling Company 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
March 30, 1998
<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) ____
--------------
CHASE BANK OF TEXAS, 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)
9 3/4% SENIOR NOTES DUE 2006, SERIES C
(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.
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
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.
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
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.
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
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.
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
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.
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
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.
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
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.
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
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:
COL. A COL. B COL. C
NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
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.
NOTE REGARDING INCORPORATED EXHIBITS
Effective January 20, 1998, the name of the Trustee was changed from
Texas Commerce Bank National Association to Chase Bank of Texas, National
Association. The exhibits incorporated herein by reference, including Exhibit 7,
the Trustee's Consolidated Reports of Condition and Income for the fourth
quarter of 1997, were filed under the former name of the Trustee.
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-4 File No. 333-47745.
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, CHASE BANK OF TEXAS, 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 1ST DAY OF APRIL, 1998.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Trustee)
By:/s/ REBECCA A. NEWMAN
-----------------------------------
Rebecca A. Newman
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 March 11,
1998, between Parker Drilling Company (the "Company") together with certain of
its Subsidiary Guarantors, and Chase Bank of Texas, National Association, as
Trustee, entered into in connection with the issuance of the Company's 9 3/4%
Senior Notes due 2006, Series C.
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,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /s/ REBECCA A. NEWMAN
--------------------------------
Rebecca A. Newman
Vice President and Trust Officer
<PAGE> 1
EXHIBIT 99.1
PARKER DRILLING COMPANY
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES B
AND ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES C
IN EXCHANGE FOR
9.75% SENIOR NOTES DUE 2006, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE")
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE
DELIVER TO THE EXCHANGE AGENT:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
Chase Bank of Texas, National Association Chase Bank of Texas, National Association
ATTN: Frank Ivins -- Registered Bond Events -- ATTN: Frank Ivins -- Registered Bond Events --
Personal & Confidential Personal & Confidential
1201 Main St, 18th Floor P.O. Box 2320
Dallas, TX 75202 Dallas, TX 75221-2320
</TABLE>
By Facsimile:
(214) 672-5746
Confirm by Telephone:
(800) 275-2048
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated (the "Prospectus") of Parker Drilling Company, a Delaware
corporation (the "Company"), and this Letter of Transmittal (the "Letter of
Transmittal"), which together describe the Company's offer (the "Exchange
Offer") to exchange its 9.75% Senior Notes due 2006, Series D (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement of which the
Prospectus is a part, for a like principal amount of its issued and outstanding
9.75% Senior Notes due 2006, Series B and its 9.75% Senior Notes Due 2006,
Series C (collectively the "Old Notes"). Capitalized terms used but not defined
herein have the respective meaning given to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is extended. The Company
shall notify the holders of the Old Notes of any extension by oral or written
notice and will mail to the record holders of Old Notes an announcement thereof,
each prior to 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date.
This Letter of Transmittal is to be used by a holder of Old Notes either if
original Old Notes, if available, are to be forwarded herewith or if delivery of
Old Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering" and "Book-Entry
Transfer." Holders of Old Notes whose Old Notes are not immediately available,
or who are unable to deliver their Old Notes and all other documents required by
this Letter of Transmittal to the Exchange Agent on or prior to the Expiration
Date, or who are unable to complete the procedure for book-entry transfer on a
timely basis, must tender their Old Notes according to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The term "holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the
<PAGE> 2
undersigned desires to take with respect to the Exchange Offer. Holders who wish
to tender their Old Notes must complete this Letter of Transmittal in its
entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If the
space below is inadequate, list the registered numbers and principal amounts on
a separate signed schedule and affix the list to this Letter of Transmittal.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) EXACTLY AS NAME(S)
APPEAR(S) ON OLD NOTES
(PLEASE FILL IN, IF BLANK) OLD NOTE(S) TENDERED
- ----------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL
REGISTERED AMOUNT REPRESENTED BY AMOUNT
NUMBER(S)* NOTE(S) TENDERED**
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, any tendering holder of Old Notes will be deemed to have tendered the entire
aggregate principal amount represented by such Old Notes. All tenders must be in integral multiples of
$1,000.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE
INSTITUTIONS ONLY):
Name of Tendering Institution:..................................................
Account Number:.................................................................
Transaction Code Number:........................................................
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered holder(s) of Old Notes:...................................
Date of Execution of Notice of Guaranteed Delivery:.............................
Window Ticket Number (if available):............................................
Name of Eligible Institution that Guaranteed Delivery:..........................
Account Number (if delivered by book-entry transfer):...........................
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name:...........................................................................
Address:........................................................................
<PAGE> 3
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned hereby exchanges, assigns and transfers to the
Company all right, title and interest in and to the Old Notes tendered for
exchange hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent, the agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company in
connection with the Exchange Offer) with respect to the tendered Old Notes with
full power of substitution to (i) deliver such Old Notes, or transfer ownership
of such Old Notes on the account books maintained by the Book-Entry Transfer
Facility, to the Company and deliver all accompanying evidences of transfer and
authenticity, and (ii) present such Old Notes for transfer on the books of the
Company and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer. The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the Exchange Notes issuable upon the exchange of
such tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the "SEC"),
including Exxon Capital Holdings Corporation, SEC No-Action Letter (available
April 13, 1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (available June
5, 1991) (the "Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC
No-Action Letter (available June 5, 1991), that the Exchange Notes issued in
exchange for the Series C Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by holders thereof (other than (i)
a broker-dealer who purchased Series C Notes exchanged for such Exchange Notes
directly from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holders' business and such holders are not
participating in, and have no arrangement with any person to participate in, the
distribution of such Exchange Notes. The undersigned specifically represent(s)
to the Company that (i) any Exchange Notes acquired in exchange for Series C
Notes tendered hereby are being acquired in the ordinary course of business of
the person receiving such Exchange Notes, whether or not the undersigned, (ii)
the undersigned is not participating in, and has no arrangement with any person
to participate in, the distribution of such Exchange Notes, and (iii) neither
the undersigned nor any such other person is an "affiliate" (as defined in Rule
405 under the Securities Act) of the Company or a broker-dealer tendering Series
C Notes acquired directly from the Company for its own account.
If the undersigned or the person receiving the Exchange Notes is a
broker-dealer that is receiving Exchange Notes in exchange for Series C Notes
for its own account pursuant to the Exchange Offer, the undersigned acknowledges
that it or such other person will deliver a prospectus in connection with any
resale of such Exchange Notes. The undersigned acknowledges that if the
undersigned is participating in the Exchange Offer for the purpose of
distributing the Exchange Notes received in exchange for the Series C Notes (i)
the undersigned cannot rely on the position of the staff of the SEC in the
Morgan Stanley Letter and similar SEC no-action letters, and, in the absence of
an exemption therefrom, must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of such Exchange Notes, in which case the registration
statement must contain the selling security holder information required by Item
507 or Item 508, as applicable, of Regulation S-K of the SEC, and (ii) a broker-
dealer that delivers such a prospectus to purchasers in connection with such
resales will be subject to certain of the civil liability provisions under the
Securities Act and will be bound by the provisions of the Registration Rights
Agreement (including certain indemnification rights and obligations).
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Old Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Old
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer -- Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
<PAGE> 4
Unless otherwise indicated under "Special Issuance Instructions," please
issue the Exchange Notes issued in exchange for the Old Notes accepted for
exchange and return any Old Notes not tendered or not exchanged, in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail or deliver the Exchange Notes issued in
exchange for the Old Notes accepted for exchange and any Old Notes not tendered
or not exchanged (and accompanying documents, as appropriate) to the undersigned
at the address shown below the undersigned's signature(s). In the event that
both "Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the Exchange Notes issued in exchange for the Old Notes
accepted for exchange in the name(s) of, and return any Old Notes not tendered
or not exchanged to, the person(s) so indicated. The undersigned recognizes that
the Company has no obligation pursuant to the "Special Issuance Instructions"
and "Special Delivery Instructions" to transfer any Old Notes from the name of
the registered holder(s) thereof if the Company does not accept for exchange any
of the Old Notes so tendered for exchange.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old Notes in a principal amount not tendered,
or Exchange Notes issued in exchange for Old Notes accepted for exchange, are
to be issued in the name of someone other than the undersigned, or (ii) if Old
Notes tendered by book-entry transfer which are not exchanged are to be
returned by credit to an account maintained at the Book-Entry Transfer
Facility. Issue Exchange Notes and/or Old Notes to:
Name:
..............................................................................
(Please Type or Print)
...............................................................................
Address:......................................................................
..............................................................................
(include Zip Code)
..............................................................................
(Tax Identification or Social Security No.)
(Complete Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Old Notes in the principal amount not tendered, or
Exchange Notes issued in exchange for Old Notes accepted for exchange, are to
be mailed or delivered to someone other than the undersigned, or to the
undersigned at an address other than that shown below the undersigned's
signature.
Mail or deliver Exchange Notes and/or Old Notes to:
Name:
..............................................................................
(Please Type or Print)
..............................................................................
Address:......................................................................
...............................................................................
(include Zip Code)
..............................................................................
(Tax Identification or Social Security No.)
- -------------------------------------------------------------------------------
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
Book-Entry Transfer Facility Account Number:
<PAGE> 5
------------------------------------------------------------
IMPORTANT
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 on Reverse Side)
X...........................................................
X...........................................................
(Signature(s) of Registered Holders of Old Notes)
Dated:......................................., 1998
(The above lines must be signed by the registered holder(s)
of Old Notes as name(s) appear(s) on the Old Notes or on a
security position listing, or by person(s) authorized to
become registered holder(s) by a properly completed bond
power from the registered holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Old Notes to
which this Letter of Transmittal relate are held of record
by two or more joint holders, then all such holders must
sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity, then such
person must (i) set forth his or her full title below and
(ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to
act. See Instruction 5 regarding the completion of this
Letter of Transmittal, printed below.)
Name(s):....................................................
(Please Type or Print)
Capacity:...................................................
Address:....................................................
............................................................
(Include Zip Code)
Area Code and Telephone Number:.............................
------------------------------------------------------------
------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible
Institution.
Signature(s) Guaranteed by an Eligible Institution:.........
(Authorized Signature)
............................................................
(Title)
............................................................
(Name of Firm)
............................................................
(Address, Include Zip Code)
............................................................
(Area Code and Telephone Number)
Dated:................................................, 1998
------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE
OFFER
1. Delivery of this Letter of Transmittal and Old Notes or Book-Entry
Confirmations. All physically delivered Old Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Old Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Old Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Old Notes should be sent to the Company.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes and whose Old Notes are not immediately available or who cannot deliver
their Old Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date or who cannot complete
the procedure for book-entry transfer on a timely basis, must tender their Old
Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through a firm which is a member of a registered national securities exchange or
of the National Association of Securities Dealers Inc., a commercial bank or a
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution"); (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder of the Old Notes, the registration number(s) of such Old Notes and the
total principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five business days after the
Expiration Date, this Letter of Transmittal (or facsimile hereof) together with
the Old Notes in proper form for transfer (or a Book-Entry Confirmation) and any
other documents required hereby, must be deposited by the Eligible Institution
with the Exchange Agent within five business days after the Expiration Date; and
(iii) the certificates for all physically tendered shares of Old Notes, in
proper form for transfer (or Book-Entry Confirmation, as the case may be) and
all other documents required hereby are received by the Exchange Agent within
five business days after the Expiration Date.
Any holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial holder of Old Notes who is not the
registered holder and who wishes to tender should arrange with the registered
holder to execute and deliver this Letter of Transmittal on his behalf or must,
prior to completing and executing this Letter of Transmittal and delivering his
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed bond power from the
registered holder.
4. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering holder should fill in the principal amount tendered
in the third column of the box entitled "Description of Old Notes Tendered"
above. The entire principal amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered
<PAGE> 7
unless otherwise indicated. If the entire principal amount of all Old Notes is
not tendered, then Old Notes for the principal amount of Old Notes not tendered
and Exchange Notes issued in exchange for any Old Notes accepted will be sent to
the holder at his or her registered address, unless a different address is
provided in the appropriate box on this Letter of Transmittal, promptly after
the Old Notes are accepted for exchange.
5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever. If this Letter
of Transmittal (or facsimile hereof) is signed by a participant in the
Book-Entry Transfer Facility, the signature must correspond with the name as it
appears on the security position listing as the holder of the Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes listed and tendered hereby and the
Exchange Notes issued in exchange therefor are to be issued (or any untendered
principal amount of Old Notes is to be reissued) to the registered holder, the
said holder need not and should not endorse any tendered Old Notes, nor provide
a separate bond power. In any other case, such holder must either properly
endorse the Old Notes tendered or transmit a properly completed separate bond
power with this Letter of Transmittal, with the signatures on the endorsement or
bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered holder or holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers, in each case
signed as the name of the registered holder or holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal (or
facsimile hereof) is signed by the registered holder(s) of the Old Notes
tendered herein (or by a participant in the Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of the tendered Old
Notes) and the Exchange Notes are to be issued directly to such registered
holder(s) (or, if signed by a participant in the Book-Entry Transfer Facility,
deposited to such participant's account at such Book-Entry Transfer Facility)
and neither the box entitled "Special Delivery Instructions" nor the box
entitled "Special Registration Instructions" has been completed, or (ii) such
Old Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on this Letter of Transmittal (or facsimile hereof) must
be guaranteed by an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address (or account at
the Book-Entry Transfer Facility) to which Exchange Notes or substitute Old
Notes for principal amounts not tendered or not accepted for exchange are to be
issued or sent, if different from the name and address of the person signing
this Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered hereby, or if tendered Old Notes are registered in the name of any
person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
<PAGE> 8
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law requires that a holder
of any Old Notes which are accepted for exchange must provide the Company (as
payor) with its correct taxpayer identification number ("TIN"), which, in the
case of a holder who is an individual is his or her social security number. If
the Company is not provided with the correct TIN, the holder may be subject to a
$50 penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligations regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any conditions
of the Exchange Offer or defects or irregularities in tenders as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (includes this Letter of Transmittal and the instructions hereto)
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with regard to tenders of Old Notes nor shall any of them incur
any liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to waive,
in whole or part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Old Notes on transmittal of this Letter of Transmittal will
be accepted.
12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
<PAGE> 9
14. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE OLD NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL
HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO THE
EXPIRATION TIME.
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYER'S NAME: PARKER DRILLING COMPANY
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Social Security Number
OR Employer Identification
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN Number
IN THE BOX AT RIGHT AND CERTIFY
FORM W-9 BY SIGNING AND DATING BELOW. ---------------------------------------
-------------------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of perjury, I
certify that:
DEPARTMENT OF THE TREASURY (1) The number shown on this form is my correct
INTERNAL REVENUE SERVICE Taxpayer Identification Number (or I am waiting for
a number to be issued to me) and
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding either because
I have not been notified by the Internal Revenue PART 3 --
Service ("IRS") that I am subject to backup
withholding as a result of failure to report all Awaiting TIN [ ]
interest Please complete the
or dividends, or the IRS has notified me that I am Certificate of Awaiting
Taxpayer Identification
no Number below.
longer subject to backup withholding.
-------------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) in Part 2 above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another
notification from the IRS stating that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE DATE ___________________________, 1998
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 10
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
================================================================================
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b)I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
----------------------------- --------------------------, 1998
Signature Date
================================================================================
================================================================================
CERTIFICATE FOR FOREIGN RECORD HOLDERS
Under penalties of perjury, I certify that I am not a United States citizen or
resident (or I am signing for a foreign corporation, partnership, estate or
trust).
----------------------------- --------------------------, 1998
Signature Date
================================================================================
<PAGE> 11
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES B
AND ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES C
IN EXCHANGE FOR
9.75% SENIOR NOTES DUE 2006, SERIES D
This form, or one substantially equivalent hereto, must be used by a holder
to accept the Exchange Offer of Parker Drilling Company, a Delaware corporation
(the "Company"), and to tender 9.75% Senior Notes due 2006, Series B and 9.75%
Senior Notes due 2006 Series C (collectively the "Old Notes") to the Exchange
Agent pursuant to the guaranteed delivery procedures described in "The Exchange
Offer -- Guaranteed Delivery Procedures" of the Company's Prospectus, dated
(the "Prospectus") and in Instruction 2 to the related Letter of
Transmittal. Any holder who wishes to tender Old Notes pursuant to such
guaranteed delivery procedures must ensure that the Exchange Agent receives this
Notice of Guaranteed Delivery prior to the Expiration Date (as defined below) of
the Exchange Offer. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN
THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
Chase Bank of Texas, National Association Chase Bank of Texas, National Association
ATTN: Frank Ivins -- Registered Bond Events -- ATTN: Frank Ivins -- Registered Bond Events --
Personal and Confidential Personal and Confidential
1201 Main Street, 18th Floor P.O. Box 2320
Dallas, TX 75202 Dallas, TX 75221-2320
</TABLE>
By Facsimile:
(214) 672-5746
Confirm by Telephone:
(800) 275-2048
---------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED BOX ON THE
LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 12
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
AGGREGATE
CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD NOTES OR PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
------------------------------------------------ ------------------ -------------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Names of Record Holders: Signatures:
---------------------------- ----------------------------------------------
Addresses: ----------------------------------------------
------------------------------------------
- ----------------------------------------------------- Dated: --------------------------------, 1998
Area Code and Telephone Numbers:
--------------------
- -----------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as their name(s) appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 13
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Old Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility described in
the Prospectus under the caption "The Exchange Offer -- Book-Entry Transfer" and
in the Letter of Transmittal) and any other required documents, all by 5:00
p.m., New York City time, within five business days following the Expiration
Date.
<TABLE>
<S> <C>
Name of Firm:
-------------------------------------- --------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
-------------------------------------------
(INCLUDE ZIP CODE) Name: ---------------------------------------------
Area Code and Tel. Number: Title:
--------------------------------------------
(PLEASE TYPE OR PRINT)
- ----------------------------------------------------
Date: , 1998
---------------------------------------
</TABLE>
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE
MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
<PAGE> 14
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Old Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Old Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
4
<PAGE> 15
PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE
TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION
DATE.
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK
ENTRY TRANSFER PARTICIPANT
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
(the "Prospectus") of Parker Drilling Company, a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer") to exchange its 9.75% Senior Notes due 2006, Series D (the "Exchange
Notes"), for all of its outstanding 9.75% Senior Notes due 2006, Series B and
all its outstanding 9.75% Senior Notes due 2006, Series C (collectively the "Old
Notes"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (FILL IN AMOUNT):
$________________________ of the 9.75% Senior Notes due 2006, Series B.
$________________________of the 9.75% Senior Notes due 2006, Series C.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] To TENDER the following Old Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED) (IF
ANY): $________________________.
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
Exchange Notes acquired in exchange for Series C Notes pursuant to the Exchange
Offer are being acquired in the ordinary course of business of the person
receiving such Exchange Notes, whether or not undersigned, (ii) the undersigned
is not participating in, and has no arrangement with any person to participate
in, the distribution within the meaning of the Securities Act of Exchange Notes
received in exchange for Series C Notes, and (iii) neither the undersigned nor
any such other person is an "affiliate" (within the meaning of Rule 405 under
the Securities Act) of the Company or a broker-dealer tendering Series C Notes
acquired directly from the Company. If the undersigned is a broker-dealer that
will receive Exchange Notes in exchange for Series C Notes for its own account,
it acknowledges that it will deliver a prospectus in connection with any resale
of such Exchange Notes.
SIGN HERE
Name of beneficial owner(s): _________________________________________________
Signature(s): ________________________________________________________________
Name(s) (please print): ______________________________________________________
Address: _____________________________________________________________________
Telephone Number: ____________________________________________________________
Taxpayer Identification or Social Security Number: ___________________________
Date: ________________________________________________________________________
5
<PAGE> 16
PARKER DRILLING COMPANY
LETTER TO REGISTERED HOLDERS AND
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES B
AND ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES C
IN EXCHANGE FOR
9.75% SENIOR NOTES DUE 2006, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Parker Drilling Company, a Delaware corporation (the "Company"), to exchange
its 9.75% Senior Notes due 2006, Series D (the "Exchange Notes"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of its issued and outstanding 9.75% Senior
Notes due 2006, Series B and 9.75% Senior Notes due 2006, Series C
(collectively, the "Old Notes") upon the terms and subject to the conditions set
forth in the Company's Prospectus, dated , and the related Letter
of Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated ;
2. Letter of Transmittal (together with accompanying Substitute Form
W-9 Guidelines);
3. Notice of Guaranteed Delivery;
4. Letter which may be sent to your clients for whose account you hold
Old Notes in your name or in the name of your nominee; and
5. Letter which may be sent from your clients to you with such
client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the Exchange Notes acquired in exchange for
Series C Notes pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
the holder, (ii) the holder is not participating in, and has no arrangement with
any person to participate in, the distribution of Exchange Notes received in
exchange for Series C Notes within the meaning of the Securities Act, and (iii)
neither the holder nor any such other person is an "affiliate" (within the
meaning of Rule 405 under the Securities Act) of the Company or a broker-dealer
tendering Series C Notes acquired directly from the Company. If the holder is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Series C Notes, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
<PAGE> 17
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Series C Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
2
<PAGE> 18
PARKER DRILLING COMPANY
LETTER TO CLIENTS
FOR
TENDER OF ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES B
AND ALL OUTSTANDING 9.75% SENIOR NOTES DUE 2006, SERIES C
IN EXCHANGE FOR
9.75% SENIOR NOTES DUE 2006, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated , of Parker
Drilling Company, a Delaware corporation (the "Company") and a related Letter of
Transmittal, which together constitute (the "Exchange Offer") relating to the
offer by the Company, to exchange its 9.75% Senior Notes due 2006, Series D (the
"Exchange Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act") for a like principal amount of its issued and
outstanding 9.75% Senior Notes due 2006, Series B and 9.75% Senior Notes due
2006, Series C (collectively the "Old Notes"), upon the terms and subject to the
conditions set forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
We are the holder of record of Old Notes held by us for your own account. A
tender of such Old Notes can be made only by us as the record holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations and warranties contained in the Letter of Transmittal.
Very truly yours,
