<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-36498
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 11, 2000
PROSPECTUS SUPPLEMENT DATED SEPTEMBER , 2000
(TO PROSPECTUS DATED MAY 25, 2000)
12,000,000 Shares
[PARKER DRILLING LOGO]
PARKER DRILLING COMPANY
COMMON STOCK
--------------------------------------------------------------------------------
We are offering 12,000,000 shares of our common stock. Our common stock is
listed on The New York Stock Exchange under the symbol "PKD." The last sale
price of our common stock on The New York Stock Exchange on September 8, 2000
was $7.0625 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 IN THE ACCOMPANYING PROSPECTUS.
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- ------------
<S> <C> <C>
Initial price to public..................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Parker........................ $ $
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The underwriters may, under certain circumstances, purchase up to an additional
1,800,000 shares of common stock from us at the initial price to public less the
underwriting discount.
--------------------------------------------------------------------------------
Lehman Brothers, on behalf of the underwriters, expects to deliver the common
stock on or about September , 2000.
LEHMAN BROTHERS
JEFFERIES & COMPANY, INC.
RBC DOMINION SECURITIES
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT
RELY ON ANY OTHER REPRESENTATIONS. OUR AFFAIRS MAY CHANGE AFTER THIS PROSPECTUS
SUPPLEMENT IS DISTRIBUTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THIS DOCUMENT.
------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................... S-3
Price Range of Common Stock and
Dividends........................... S-5
Use of Proceeds....................... S-5
Selected Consolidated Financial
Data................................ S-6
Certain United States Federal Tax
Consequences to Non-U.S. Holders of
Common Stock........................ S-7
Underwriting.......................... S-10
Legal Matters......................... S-12
Independent Accountants............... S-12
Forward-Looking Statements............ S-12
PROSPECTUS
About this Prospectus................. 2
Where You Can Find More Information... 2
Forward-Looking Statements............ 3
The Company........................... 4
Risk Factors.......................... 4
Use of Proceeds....................... 7
Ratios of Earnings to Fixed Charges
and Earnings to Fixed Charges plus
Dividends........................... 7
Description of Debt Securities........ 8
Description of Capital Stock.......... 20
Depositary Shares..................... 24
Description of Warrants............... 26
Plan of Distribution.................. 26
Legal Matters......................... 28
Experts............................... 28
</TABLE>
S-2
<PAGE> 3
SUMMARY
The following summary contains basic information about us and our common
stock. It does not contain all the information that is important to you. You
should read the following summary together with the more detailed information
and financial statements and notes to the financial statements appearing
elsewhere in this prospectus supplement or incorporated by reference in the
attached prospectus. Unless we say otherwise, we assume in this prospectus
supplement that the underwriters will not exercise their over-allotment option
with respect to the common stock offering.
THE COMPANY
We are 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 the Caspian Sea, and
on land in Alaska and international oil and gas producing regions. Historically,
we operated exclusively on land, specializing in deep, difficult wells and
drilling in remote areas. In the last four years we have diversified into the
offshore drilling business through the acquisition of 26 barge rigs and seven
jackup rigs operating in the Gulf of Mexico and Nigeria and into the rental tool
business through the acquisition of a rental tool company. During 1999 we sold
13 lower-48 domestic land rigs pursuant to our strategic plan to focus on
offshore and international land markets where margins are typically higher. We
received $40,000,000 in cash and 1,000,000 shares of common stock of Unit
Corporation as consideration for this sale. Earlier this month, we sold these
1,000,000 shares for $15,000,000, resulting in a pre-tax gain of approximately
$7,400,000.
Our current marketable rig fleet consists of 27 barge drilling and workover
rigs, seven jackup rigs, four platform rigs, 41 international land rigs and one
land rig in Alaska. Our barge drilling and workover fleet is dedicated to the
transition zone waters, which are generally defined as coastal waters to depths
of up to 25 feet. Our jackup and platform rig fleets currently operate in the
Gulf of Mexico market. Our international land rig fleet consists of 41 drilling
rigs. Of these rigs, 17 are helicopter rigs and 36 are capable of drilling to
depths of 15,000 feet or more. The diversity of our rig fleet, both in terms of
geographic location and asset class, enables us to provide a broad range of
services to oil and gas operators around the world.
Demand for our services is highly dependent on the level of spending by oil
and gas companies on the exploration and production of oil and gas, which in
turn is dependent on current oil and gas prices as well as future price
expectations. Historically, oil and gas prices have been principally dependent
upon demand, the level of production of the major oil producing countries and
weather conditions.
The outlook for the oil and gas industry has improved significantly during
2000. Oil prices have rebounded to their highest levels in over nine years, due
in part to production limits imposed by OPEC during a period of increasing
demand, which has resulted in reduced oil inventories. Natural gas prices in
North America have also strengthened considerably, and the average of the next
12-month natural gas forward contracts reached $4.68 per MMBtu as of September
8, 2000. In response to higher commodity prices, operators have increased
spending on exploration and production in 2000 compared to 1999, and we
anticipate they will further increase their exploration and production budgets
for 2001.
Our domestic operations are favorably impacted by increased levels of
natural gas demand that have pushed natural gas prices to their highest levels
since June 1996. Demand for natural gas is expected to grow over the next
several years due primarily to growth in the U.S. economy and newly constructed
natural gas-fired power generation plants. Natural gas supply has declined due
to depletion of reservoirs and reduced drilling over the last two years, leaving
natural gas storage at levels that are significantly lower than in recent years.
We believe that the current higher prices and increased demand, if sustained,
will lead to further increases in natural gas drilling domestically,
particularly in the Gulf of Mexico.
International land drilling markets have been slow to react to the increase
in crude oil prices over the past 18 months. We currently have 15 of our 41
international land rigs working. Our international land rig utilization began to
improve early this year and we anticipate this trend will continue based on
contracts we have in hand and the number of inquiries we are receiving for new
projects. Based on the continuation of these trends, we anticipate increased
earnings from our international segment.
S-3
<PAGE> 4
After being on standby since December 1999, our four Nigerian barge rigs
are currently operating at full contract dayrates. Our Caspian Sea barge rig is
currently testing the first well on the Kashagan structure and is scheduled to
move to a second location in the near future. Based on announced test results,
we believe there will be substantial continuing work for this rig.
The following table presents as of the dates indicated the average dayrates
and rig utilization percentages for our rigs.
<TABLE>
<CAPTION>
AVERAGE DAYRATE AVERAGE UTILIZATION
------------------------------------- ---------------------------
SEPTEMBER 1, SEPTEMBER 1, PERCENT SEPTEMBER 1, SEPTEMBER 1,
2000 1999 CHANGE 2000 1999
------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Domestic Jackups....................... $25,604 $14,500 77% 86% 43%
Domestic Barges........................ 14,969 13,475 11% 82% 68%
Deep Drilling........................ 18,380 16,740 10% 100% 100%
Intermediate Drilling................ 14,500 12,167 19% 100% 60%
Workover............................. 9,980 7,928 26% 56% 44%
International Barges................... 40,576 34,633 17% 100% 100%
Platform Rigs.......................... 13,500 13,935 -3% 50% 75%
International Land Rigs................ 16,279 17,893 -9% 39% 34%
PARKER RIG FLEET.................. 19,434 17,359 12% 59% 49%
</TABLE>
BUSINESS STRATEGY
Our business strategy is to capitalize on improving conditions in the
oilfield service industry and enhance profitability by:
(1) maximizing our returns on our assets in the Gulf of Mexico where
improving utilization and dayrates are providing increasing
earnings and cash flow;
(2) leveraging our international presence where our experience and
long-standing presence position us well to serve customers' needs;
(3) expanding and diversifying our operations by pursuing acquisitions
of complementary assets and businesses; and
(4) reducing our long-term debt.
THE OFFERING
Common stock offered............ 12,000,000 shares(1)
Common stock outstanding after
the offering.................... 89,670,100 shares(1)
Use of proceeds................. We estimate that we will receive net proceeds
from the common stock offering of
$ .
We intend to use the net proceeds of the
offering to acquire, upgrade and refurbish
certain offshore and land drilling rigs and
for general corporate purposes, including
repayment of debt and working capital.
Net proceeds will be invested in short-term
investments until they are used.
NYSE symbol..................... PKD
---------------
(1) The common stock outstanding after the offering is based on shares
outstanding as of July 31, 2000 and excludes 11,371,020 shares of common
stock reserved for issuance upon conversion of our outstanding convertible
notes and 9,967,820 shares of common stock issuable upon exercise of
outstanding stock options under our stock option plans.
S-4
<PAGE> 5
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed on the NYSE under the symbol "PKD." The
following table sets forth the quarterly high and low sales prices for our
common stock as reported on the NYSE Composite Tape for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1998:
Quarter Ended March 31, 1998.............................. $13.187 $ 8.875
Quarter Ended June 30, 1998............................... 11.125 6.625
Quarter Ended September 30, 1998.......................... 7.312 3.875
Quarter Ended December 31, 1998........................... 6.312 2.812
1999:
Quarter Ended March 31, 1999.............................. 4.688 2.250
Quarter Ended June 30, 1999............................... 4.375 3.000
Quarter Ended September 30, 1999.......................... 5.625 3.312
Quarter Ended December 31, 1999........................... 4.750 3.000
2000:
Quarter Ended March 31, 2000.............................. 5.125 3.000
Quarter Ended June 30, 2000............................... 6.875 3.750
Quarter Ending September 30, 2000 (through September 8,
2000).................................................. 7.437 4.875
</TABLE>
We have paid no dividends on our common stock since February 1987.
Restrictions contained in our Revolving Credit Facility prohibit the payment of
cash dividends, and the indenture for our 9 3/4% Senior Notes restricts the
payment of such dividends. We have no present intention to pay dividends on our
common stock in the foreseeable future and anticipate that future earnings will
be retained to finance future operations and expansion.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the offering of
approximately $ million ($ million if the underwriters' over-allotment
option is exercised in full) after deducting the underwriting discounts and
commissions and estimated fees and expenses of the offering. We intend to use
the net proceeds of the offering to acquire, upgrade and refurbish certain
offshore and land drilling rigs and for general corporate purposes, including
repayment of debt and working capital.
Net proceeds will be invested in short-term investments until they are
used.
S-5
<PAGE> 6
SELECTED CONSOLIDATED FINANCIAL DATA
The historical financial data presented in the table below as of and for
each of the years ended August 31, 1997 and 1998, the four months ended December
31, 1998 and the year ended December 31, 1999 are derived from our consolidated
financial statements audited by PricewaterhouseCoopers LLP, independent
accountants. The historical financial data presented in the table below as of
and for each of the six-month periods ended June 30, 1999 and 2000 are derived
from our unaudited consolidated financial statements. In the opinion of
management of our company, such unaudited consolidated financial statements
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the financial data for such periods. The results for
the six months ended June 30, 2000 are not necessarily indicative of the results
to be achieved for the full year.
The data presented below should be read in conjunction with our
consolidated financial statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference in this prospectus supplement and the
attached prospectus.
<TABLE>
<CAPTION>
FOUR SIX SIX
YEAR YEAR MONTHS YEAR MONTHS MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1997 1998 1998 1999 1999 2000
----------- ----------- ------------ ------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Drilling................................. $ 283,598 $ 446,565 $ 125,896 $ 296,623 $ 155,040 $ 143,553
Rental................................... 25,457 32,723 10,245 27,656 13,555 17,356
Other.................................... 2,589 1,935 582 274 245 4
---------- ---------- ----------- ----------- ----------- -----------
Total revenues....................... 311,644 481,223 136,723 324,553 168,840 160,913
---------- ---------- ----------- ----------- ----------- -----------
Operating Expenses:
Drilling................................. 189,979 295,602 94,648 226,425 118,129 109,274
Rental................................... 8,549 13,749 4,416 10,910 5,375 7,130
Other.................................... 4,722 2,365 932 1,899 108 2
Depreciation, depletion and
amortization........................... 46,256 68,574 26,529 82,170 40,302 42,029
General and administrative............... 14,414 17,273 5,904 16,312 8,195 9,447
Restructuring charges.................... -- -- -- 3,000 3,000 --
Provision for reduction in carrying value
of certain assets...................... -- -- 4,055 10,607 5,250 --
---------- ---------- ----------- ----------- ----------- -----------
Total operating expenses............. 263,920 397,563 136,484 351,323 180,359 167,882
---------- ---------- ----------- ----------- ----------- -----------
Operating income (loss).................... 47,724 83,660 239 (26,770) (11,519) (6,969)
---------- ---------- ----------- ----------- ----------- -----------
Other income (expense):
Interest income (expense) -- net......... (27,484) (43,657) (16,808) (54,203) (25,978) (27,397)
Other.................................... 3,316 4,524 301 40,396 5,220 3,824
---------- ---------- ----------- ----------- ----------- -----------
Total other income (expense)......... (24,168) (39,133) (16,507) (13,807) (20,758) (23,573)
---------- ---------- ----------- ----------- ----------- -----------
Income (loss) before income taxes.......... 23,556 44,527 (16,268) (40,577) (32,277) (30,542)
Income tax expense (benefit)............... 7,241 16,435 (1,635) (2,680) (6,408) (6,184)
---------- ---------- ----------- ----------- ----------- -----------
Net income (loss).................... $ 16,315 $ 28,092 $ (14,633) $ (37,897) $ (25,869) $ (24,358)
========== ========== =========== =========== =========== ===========
Earnings (loss) per share (fully
diluted)................................. $ .23 $ .36 $ (.19) $ (.49) $ (.34) $ (.31)
========== ========== =========== =========== =========== ===========
Weighted average shares outstanding (fully
diluted)................................. 71,760,543 77,789,390 76,828,879 77,159,461 77,039,523 77,518,230
========== ========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA(1).................................. $ 93,980 $ 152,234 $ 30,823 $ 66,007 $ 34,033 $ 35,060
Capital expenditures:
Maintenance.............................. 14,702 36,796 19,054 12,484 8,691 7,723
Other.................................... 72,724 159,282 33,657 36,662 27,176 17,911
BALANCE SHEET DATA (END OF PERIOD):
Cash, cash equivalents and other short-term
investments.............................. $ 212,789 $ 55,253 $ 24,314 $ 46,278 $ 19,343 $ 25,687
Property, plant and equipment, net......... 439,651 727,840 729,873 661,402 719,271 646,621
Total assets............................... 984,136 1,200,544 1,159,326 1,082,743 1,118,085 1,056,586
Total long-term debt, including current
portion.................................. 567,126 651,559 661,883 653,631 670,357 651,172
Total stockholders' equity................. 348,723 377,962 363,950 329,421 338,996 309,520
</TABLE>
---------------
(1) 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.
S-6
<PAGE> 7
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and disposition of
common stock by a Non-U.S. Holder. As used herein the term "Non-U.S. Holder"
means any person or entity that is not a U.S. Holder. A U.S. Holder is any
beneficial owner of common stock that is:
- a citizen or resident of the United States,
- a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision thereof,
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source,
- a trust, that (1) is subject to the supervision of a court within the
United States and the control of one or more United States persons as
described in section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended (the "Code") or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a United States
person.
If a partnership holds common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships that hold common stock should consult
their tax advisors as to the particular tax consequences to them.
This discussion does not address all aspects of United States federal
income and estate taxes and does not deal with foreign, state and local
consequences that may be relevant to such Non-U.S. Holders in light of their
personal circumstances. Furthermore, this discussion is based on provisions of
the Code, existing and proposed regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change. EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS
ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK AS WELL AS ANY
TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY U.S. STATE, MUNICIPALITY
OR OTHER TAXING JURISDICTION.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of United States federal income tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. However,
dividends that are effectively connected with the conduct of a trade or business
by the Non-U.S. Holder within the United States and, where a tax treaty applies,
are attributable to a United States permanent establishment of the Non-U.S.
Holder, are not subject to the withholding tax, but instead are subject to
United States federal income tax on a net income basis at applicable graduated
individual or corporate rates. Certain certification and disclosure requirements
must be complied with in order for effectively connected income to be exempt
from withholding. Any such effectively connected dividends received by a foreign
corporation may be subject to an additional "branch profits tax" at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty.
On or before December 31, 2000, dividends paid to an address outside the
United States are presumed to be paid to a resident of such country (unless the
payer has knowledge to the contrary) for purposes of the withholding tax
discussed above and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty rate.
However, United States Treasury regulations (the "Final Regulations") provide
that a Non-U.S. Holder of common stock who wishes to claim the benefit of an
applicable treaty rate (and avoid back-up withholding as discussed below) for
dividends paid after December 31, 2000, will be required to satisfy applicable
certification and other requirements.
S-7
<PAGE> 8
A Non-U.S. Holder of common stock eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty may obtain a refund of
any excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service (the "IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of
common stock unless:
(1) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States, and, where a tax treaty applies, is
attributable to a United States permanent establishment of the Non-U.S. Holder,
(2) in the case of a Non-U.S. Holder who is an individual and holds the
common stock as a capital asset, such holder is present in the United States for
183 or more days in the taxable year of the sale or other disposition and
certain other conditions are met,
(3) the Non-U.S. Holder is subject to tax pursuant to the provisions of the
U.S. tax law applicable to certain U.S. expatriates, or
(4) we are or have been a "U.S. real property holding corporation" for
United States federal income tax purposes.
An individual Non-U.S. Holder described in clause (1) above will be subject
to tax on the net gain derived from the sale under regular graduated United
States federal income tax rates. An individual Non-U.S. Holder described in
clause (2) above will be subject to a flat 30% tax on the gain derived from the
sale, which may be offset by United States source capital losses (even though
the individual is not considered a resident of the United States). If a Non-U.S.
Holder that is a foreign corporation falls under clause (1) above, it will be
subject to tax on its gain under regular graduated United States federal income
tax rates and, in addition, may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits (within the meaning of the
Code) for the taxable year, as adjusted for certain items, unless it qualifies
for a lower rate or exemption under an applicable income tax treaty.
We do not believe that we are a "U.S. real property holding corporation"
for U.S. federal income tax purposes. However, if we are or become a "U.S. real
property holding corporation," so long as our common stock is and continues to
be regularly traded on an established securities market, only a Non-U.S. Holder
who, actually and constructively, holds or held (at any time during the shorter
of the five year period preceding the date of disposition or the holder's
holding period) more than five percent of our common stock will be subject to
U.S. federal income tax on the disposition of our common stock.
U.S. FEDERAL ESTATE TAX
Common stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for United States federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the IRS and to each Non-U.S. Holder the amount
of any dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
Under current law, backup withholding at the rate of 31% (as opposed to the
general withholding tax rate of 30% described above) generally will not apply to
dividends paid to a Non-U.S. Holder at an address outside the United States
(unless the payer has knowledge that the payee is a U.S. person).
S-8
<PAGE> 9
Under the Final Regulations, however, a Non-U.S. Holder will be subject to
backup withholding unless applicable certification requirements are met.
Payment of the proceeds of a sale of common stock within the United States
or conducted through certain U.S. related financial intermediaries is subject to
both backup withholding and information reporting unless the beneficial owner
certifies under penalties of perjury that it is a Non-U.S. Holder (and the payer
does not have actual knowledge that the beneficial owner is a United States
person) or the holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
Special rules may apply to certain Non-U.S. Holders, such as foreign
insurance companies, "controlled foreign corporations," "passive foreign
investment companies," "foreign personal holding companies," and companies that
accumulate earnings for the purpose of avoiding tax, that are subject to special
treatment under the Code. Such entities should consult their own tax advisors to
determine the United States federal, state, local and other tax consequences
that may be relevant to them.
S-9
<PAGE> 10
UNDERWRITING
Under the underwriting agreement dated the date of this prospectus
supplement, each of the underwriters named below, for whom Lehman Brothers Inc.,
Jefferies & Company, Inc., and RBC Dominion Securities Corporation are acting as
representatives, has severally agreed to purchase from us the respective number
of shares of common stock shown opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Lehman Brothers Inc. .......................................
Jefferies & Company, Inc. ..................................
RBC Dominion Securities Corporation.........................
Fidelity Capital Markets
a division of National Financial Services LLC ............
----------
Total............................................. 12,000,000
==========
</TABLE>
The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement. It also provides that if any of the
shares of common stock are purchased by the underwriters under the underwriting
agreement, all of the shares of common stock that the underwriters have agreed
to purchase under the underwriting agreement must be purchased. The conditions
contained in the underwriting agreement include the conditions that:
- the representations and warranties made by us to the underwriters are
true;
- there is no material change in our condition or the financial markets;
and
- we deliver to the underwriters customary closing documents.
The representatives have advised us that they propose to offer the shares
of common stock directly to the public at the public offering price set forth on
the cover page of this prospectus supplement, and to dealers, who may include
the underwriters, at the public offering price less a selling concession not in
excess of $ per share. The underwriters may allow, and the dealers may
reallow, a concession not in excess of $ per share to brokers and dealers.
After completion of the offering, the underwriters may change the offering price
and other selling terms.
We have granted the underwriters an option to purchase up to 1,800,000
additional shares of common stock, exercisable solely to cover over-allotments,
if any, at the public offering price less the underwriting discount shown on the
cover page of this prospectus supplement. The underwriters may exercise this
option at any time until 30 days after the date of the underwriting agreement.
If this option is exercised, each underwriter will be committed, so long as the
conditions of the underwriting agreement are satisfied, to purchase a number of
additional shares of common stock proportionate to the underwriter's initial
commitment as indicated in the table above, and we will be obligated, under the
over-allotment option, to sell the shares of common stock to the underwriters.
Subject to certain exceptions, we have agreed not to, without the prior
consent of Lehman Brothers Inc., directly or indirectly, offer, sell or
otherwise dispose of any shares of common stock or any securities which may be
converted into or exchanged for any such shares of common stock for a period of
90 days from the date of this prospectus supplement. All of our executive
officers and directors have agreed under lock-up agreements that, without the
prior written consent of Lehman Brothers Inc., they will not, directly or
indirectly, offer, sell or otherwise dispose of any shares of common stock or
any
S-10
<PAGE> 11
securities which may be converted into or exchanged for any such shares for the
period ending 90 days after the date of this prospectus supplement.
The underwriting discount is equal to the public offering price per share
of common stock less the amount paid by the underwriters to us per share of
common stock. The underwriting discount is % of the public offering price. We
have agreed to pay the underwriters the following total amount, assuming either
no exercise or full exercise by the underwriters of their over-allotment option:
<TABLE>
<CAPTION>
TOTAL FEES
----------------------------------------
WITHOUT EXERCISE OF WITH FULL EXERCISE
OVER-ALLOTMENT OF OVER-ALLOTMENT
FEE PER SHARE OPTION OPTION
------------- ------------------- ------------------
<S> <C> <C> <C>
Underwriting discount paid by Parker........... $ $ $
</TABLE>
We estimate that the total expenses payable by us in connection with this
offering, excluding underwriting discounts and commissions, will be
approximately $500,000.
Our common stock is listed on the New York Stock Exchange under the symbol
"PKD."
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the underwriters may be required to make for these liabilities.
The underwriters may purchase and sell shares of common stock in the open
market. These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase additional shares from the
issuer in the offering. The underwriters may close out any covered short
position by either exercising their option to purchase additional shares or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the common stock in the open market after pricing that could adversely
affect investors who purchase in the offering. Stabilizing transactions consist
of various bids for or purchases of common stock made by the underwriters in the
open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the other underwriters have repurchased shares
sold by or for the account of such underwriter in stabilizing or short covering
transactions.
Similar to other purchase transactions, the underwriters' purchases to
cover the syndicate short sales may have the effect of raising or maintaining
the market price of the common stock or preventing or retarding a decline in the
market price of the common stock. As a result, the price of the common stock may
be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the underwriters
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.
Some of the underwriters or their affiliates have from time to time
provided investment banking and financial advisory services to us and our
affiliates in the ordinary course of business, for which they have received
customary fees, and they may continue to do so.
S-11
<PAGE> 12
Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
the sale is made.
Purchasers of the shares of common stock offered in this prospectus
supplement may be required to pay stamp taxes and other charges under the laws
and practices of the country of purchase, in addition to the offering price
listed on the cover of this prospectus supplement.
Fidelity Capital Markets, a division of National Financial Services LLC, is
acting as an underwriter of this offering and will be facilitating electronic
distribution through the Internet.
LEGAL MATTERS
Certain legal matters with respect to the common stock will be passed upon
for us by Vinson & Elkins L.L.P., Houston, Texas and for the underwriters by
Baker Botts L.L.P., Houston, Texas.
INDEPENDENT ACCOUNTANTS
The financial statements incorporated by reference from the Annual Report
on Form 10-K of Parker Drilling Company for the year ended December 31, 1999,
have been so incorporated in reliance upon the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
With respect to the unaudited financial information of Parker Drilling
Company for the three-month periods ended March 31, 2000 and 1999 and the three-
and six-month periods ended June 30, 2000 and 1999 included in the Forms 10-Q
for the quarters ended March 31 and June 30, 2000, incorporated by reference in
this prospectus, PricewaterhouseCoopers LLP reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports dated April 25 and July 27,
2000 incorporated by reference herein, state that they did not and they do not
express an opinion on that unaudited 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.
PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their report on the unaudited financial
information because that report is not a "report" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Act.
FORWARD-LOOKING STATEMENTS
Statements in this prospectus supplement and the attached prospectus,
including the documents we incorporate by reference, regarding our management's
intentions, beliefs or expectations for the future are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933.
Such statements may be affected by various factors and are subject to numerous
risks summarized under "Forward-Looking Statements" in the attached prospectus.
Actual results and developments may differ materially from those expressed or
implied in this prospectus supplement and in the attached prospectus, including
the documents we incorporate by reference.
S-12
<PAGE> 13
PROSPECTUS
PARKER DRILLING COMPANY
8 EAST THIRD STREET
TULSA, OKLAHOMA 74103
(918) 585-8221
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
--------------------------------------------------------------------------------
We may offer and sell the securities listed above with an aggregate offering
price up to $250 million in connection with this prospectus. We will provide
specific terms of these offerings and securities in supplements to this
prospectus, including whether the debt securities are guaranteed by all of our
subsidiaries.
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT TO THIS PROSPECTUS CAREFULLY
BEFORE YOU INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 4 OF THIS
PROSPECTUS.
--------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
This prospectus may not be used to consummate sales of securities unless
accompanied by a prospectus supplement.
THIS PROSPECTUS IS DATED MAY 25, 2000.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<S> <C>
About this Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-looking Statements.................................. 3
The Company................................................. 4
Risk Factors................................................ 4
Use of Proceeds............................................. 7
Ratios of Earnings to Fixed Charges and Earnings to Fixed
Charges plus Dividends.................................... 7
Description of Debt Securities.............................. 8
Description of Capital Stock................................ 20
Depositary Shares........................................... 24
Description of Warrants..................................... 26
Plan of Distribution........................................ 26
Legal Matters............................................... 28
Experts..................................................... 28
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration
process. Under this shelf registration process, we may sell any combination of
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $250 million. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities we will
provide a prospectus supplement that will contain specific information about the
terms of the offering and the offered securities. The prospectus supplement may
also add, update or change information contained in this prospectus. Any
statement that we make in this prospectus will be modified or superseded by any
inconsistent statement made by us in a prospectus supplement. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
7 World Trade Center, Suite 1300, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information
on the operation of the SEC's public reference room in Washington, D.C. by
calling the SEC at 1-800-SEC-0330. We also file such information with the New
York Stock Exchange. Such reports, proxy statements and other information may be
read and copied at 30 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any further filings made with the
SEC under Section 13(a), 13(c), 14 or
2
<PAGE> 15
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") until we sell
all of the securities or we terminate this offering:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- The description of our common stock contained in our Form 8-A dated June
16, 1969, including any amendment to that form that we may have filed in
the past, or may file in the future, for the purpose of updating the
description of our common stock; and
- The description of our preferred stock purchase rights contained in our
Form 8-A dated January 19, 1999.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Investor & Public Relations Department
Parker Drilling Company
8 East Third Street
Tulsa, Oklahoma 74103
(918) 631-1238
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporated by reference,
contains statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and
Section 21E of the Exchange Act. These statements appear in a number of places
in this prospectus and include statements regarding our plans, beliefs or
current expectations, including those plans, beliefs and expectations of our
officers and directors with respect to, among other things:
- future operating results,
- future cost savings,
- future capital expenditures and investments in the acquisition and
refurbishment of rigs and other equipment,
- issuance or repayment of debt,
- trends affecting our future financial condition or results of operations,
and
- our business strategy regarding future operations.
Any such forward-looking statements are not assurances of future
performance and involve risks and uncertainties, many of which are outside our
control. Actual results may differ materially from anticipated results for a
number of reasons, including:
- general economic and business conditions,
- fluctuations in the market prices of oil and gas,
- foreign exchange and currency fluctuations,
- acquisitions and other business opportunities that may be presented to
and pursued by us,
3
<PAGE> 16
- the availability of capital resources, and
- changes in laws and regulations affecting the drilling business.
The information contained in this prospectus, including the information set
forth under the heading "Risk Factors," identifies additional factors that could
affect our operating results and performance. We urge you to carefully consider
those factors.
All forward-looking statements attributable to us are expressly qualified
in their entirety by this cautionary statement.
THE COMPANY
We are a leading worldwide provider of contract drilling and drilling
related services, operating in the transition zones of the Gulf of Mexico and
Nigeria, the offshore waters of the Gulf of Mexico and the Caspian Sea and on
land in international oil and gas producing regions and Alaska.
Our principal executive offices are located at 8 East Third Street, Tulsa,
Oklahoma 74103, and our telephone number there is (918) 585-8221.
Additional information concerning us and our subsidiaries is included in
our reports and other documents incorporated by reference in this prospectus.
See "Where You Can Find More Information."
RISK FACTORS
You should carefully consider and evaluate all of the information in this
prospectus, including the risk factors set forth below and any additional risk
factors contained in a prospectus supplement, before investing.
RISK FACTORS RELATING TO OUR BUSINESS
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF LOWER OIL AND GAS PRICES DECREASE
DEMAND FOR OUR SERVICES.
Our business and operations depend upon exploration and development
spending by oil and gas companies. An actual decline, or the perceived risk of a
decline, in oil and gas prices could cause oil and gas companies to reduce their
overall level of spending. As a result, demand for our services may decrease and
our business may be adversely affected.
OUR HIGH LEVERAGE COULD ADVERSELY AFFECT OUR FUTURE PERFORMANCE AND OUR ABILITY
TO SATISFY OUR DEBT OBLIGATIONS.
Our business requires substantial capital. We now have, and will continue
to have in the foreseeable future, relatively high amounts of debt under our
credit facilities and debt securities in relation to our stockholders' equity.
As of June 30, 2000, we had $651.2 million of long-debt outstanding and
stockholders' equity of $309.5 million.
Our ability to meet our debt service obligations depends on our future
performance. Our future performance is influenced by general economic conditions
and by financial, business and other factors affecting our operations, many of
which are beyond our control. If we are unable to service our debt, we may have
to:
- delay the acquisition of additional rigs and other assets;
- sell our equity securities;
- sell our assets; or
- restructure or refinance our debt.
4
<PAGE> 17
We cannot give you any assurances that, if we are unable to service our
debt, we will be able to sell our equity securities, sell our assets or
restructure or refinance our debt.
Our substantial debt could have important consequences to you. For example,
it could:
- make it more difficult for us to obtain additional financing in the
future for our operations and potential acquisitions;
- require us to dedicate a substantial portion of our cash flows from
operations to the repayment of our debt and the interest associated with
our debt;
- limit our operating flexibility due to financial and other restrictive
covenants, including restrictions on incurring additional debt, creating
liens on our properties and paying dividends on our equity securities;
- place us at a competitive disadvantage compared with our competitors that
have relatively less debt; and
- make us more vulnerable in the event of a downturn in our business.
UNPREDICTABLE CHANGES IN GOVERNMENTAL REGULATIONS COULD INCREASE OUR OPERATING
COSTS AND REDUCE DEMAND FOR OUR SERVICES.
Our operations are affected by a variety of laws and regulations, including
laws and regulations relating to:
- the protection of the environment;
- safety; and
- permitting or licensing requirements for drilling activities and for oil
and gas exploration and development activities.
We and our clients are required to invest financial and managerial
resources to comply with these laws and regulations. Because these laws and our
business change from time to time, we cannot predict the future costs of
complying with these laws, and our expenditures could be material in the future.
Modification of existing laws or regulations or adoption of new laws or
regulations limiting exploration or production activities by oil and gas
companies or imposing more stringent restrictions on drilling operations could
adversely affect us by reducing the demand for, or increasing the cost of, our
services.
WE OPERATE IN INTERNATIONAL MARKETS, SO WE HAVE EXPOSURE TO RISKS INHERENT IN
DOING BUSINESS ABROAD.
A significant portion of our revenue is derived from operations outside the
United States and is subject in varying degrees to risks inherent in doing
business abroad. These risks include:
- the possibility of unfavorable changes in tax or other laws;
- partial or total expropriation;
- currency exchange rate fluctuations, devaluations and restrictions on
currency repatriation;
- the disruption of operations from labor and political disturbances;
- insurrection or war;
- disruption or delay of licensing or permitting activities; and
- requirements of partial local ownership of operations.
5
<PAGE> 18
WE ARE SUBJECT TO HAZARDS CUSTOMARY FOR DRILLING OPERATIONS.
Substantially all of our operations are subject to hazards that are
customary for oil and gas drilling operations, including blowouts, reservoir
damage, loss of well control, cratering and oil and gas well fires. Our offshore
operations also are subject to hazards inherent in marine operations, such as
capsizing, grounding, collision and damage from severe weather conditions. Any
of these risks could result in damage to or destruction of drilling equipment,
personal injury and property damage, suspension of operations or environmental
damage.
BECAUSE WE DO NOT HAVE CUSTOMER INDEMNITIES OR INSURANCE TO COVER SOME OPERATING
RISKS, OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED IF ONE OF THOSE
RISKS OCCURRED.
We cannot always obtain customer indemnities or insurance for our operating
risks. Although we carry insurance against the destruction of or damage to our
drilling equipment in amounts that we consider adequate, such insurance may not
always be available at acceptable rates in the future for all risks and all
geographic areas.
IF WE CANNOT KEEP OUR RIGS UTILIZED, OUR OPERATING RESULTS WILL BE ADVERSELY
IMPACTED.
Our business is capital intensive and generally requires significant
investments in drilling equipment. As a result, we incur relatively high fixed
costs in our operations. If we cannot keep our rigs utilized, our operating
results will be adversely impacted.
OUR DEBT AGREEMENTS MAY LIMIT OUR FLEXIBILITY IN RESPONDING TO CHANGING MARKET
CONDITIONS OR IN PURSUING BUSINESS OPPORTUNITIES.
Our debt agreements contain restrictions and requirements relating to,
among other things:
- the issuance of additional indebtedness;
- the maintenance of financial ratios;
- the encumbrance of assets;
- the sale of assets;
- the payment of dividends on our equity securities; and
- mergers.
These restrictions and requirements may limit our flexibility in responding
to changing market conditions or in pursuing business opportunities that we
believe would have a positive effect on our business.
RISK FACTORS RELATING TO OUR EQUITY SECURITIES
MARKET PRICES OF OUR EQUITY SECURITIES COULD CHANGE SIGNIFICANTLY.
The market prices of our common stock, preferred stock or warrants may
change significantly in response to various factors and events, including the
following:
- the other risk factors described in this prospectus, including changes in
oil and gas prices;
- a shortfall in rig utilization, operating revenue or net income from that
expected by securities analysts and investors;
- changes in securities analysts' estimates of the financial performance of
ourself or our competitors or the financial performance of companies in
the oilfield service industry generally;
- changes in actual or market expectations with respect to the amounts of
exploration and development spending by oil and gas companies;
6
<PAGE> 19
- general conditions in the oil and gas or oilfield service industries; and
- general conditions in the securities markets.
Most of these factors are beyond our control.
A HOSTILE TAKEOVER OF OUR COMPANY WOULD BE DIFFICULT.
We have adopted a stockholders' rights plan. Some of the provisions of our
Restated Certificate of Incorporation and of the Delaware General Corporation
Law may make it difficult for a hostile suitor to acquire control of our company
and to replace our incumbent management. For example, our Restated Certificate
of Incorporation provides for a staggered Board of Directors and permits the
Board of Directors, without stockholder approval, to issue additional shares of
common stock or a new series of preferred stock.
RISK FACTORS RELATING TO OUR DEBT SECURITIES
WE ARE A HOLDING COMPANY AND DEPEND ON OUR SUBSIDIARIES FOR FUNDS.
Our subsidiary companies conduct substantially all of our business. Our
holding company structure results in two principal risks:
- our subsidiaries may be restricted by contractual provisions or
applicable laws from providing us the cash that we need to pay parent
company debt service obligations, including payments on any debt
securities we offer under this prospectus; and
- in any liquidation, reorganization or insolvency proceeding involving us,
your claim as a holder of any debt securities we offer under this
prospectus will be effectively junior to the claims of holders of any
indebtedness or preferred stock of our subsidiaries.
USE OF PROCEEDS
Unless otherwise provided in a prospectus supplement, we will use the net
proceeds from the sale of the securities offered by this prospectus and any
prospectus supplement for our general corporate purposes, which may include
repayment of indebtedness, additions to our working capital and capital
expenditures.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO FIXED CHARGES PLUS DIVIDENDS
The following table contains our consolidated ratios of earnings to fixed
charges and earnings to fixed charges plus dividends for the periods indicated.
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED ENDED YEAR ENDED AUGUST 31,
DECEMBER 31, DECEMBER 31, ---------------------------
1999 1998 1998 1997 1996 1995
------------ ------------ ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges...... .26 .05 1.78 1.71 64.46 81.68
Ratio of earnings to fixed charges plus
dividends............................. .26 .05 1.78 1.71 64.46 81.68
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges plus dividends:
(1) earnings consist of income before provision for income taxes plus
fixed charges (excluding capitalized interest) and
7
<PAGE> 20
(2) "fixed charges" consist of interest expensed and capitalized,
amortization of debt discount and expense relating to indebtedness and the
portion of rental expense representative of the interest factor
attributable to leases for rental property.
There were no dividends paid or accrued during the periods presented above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be either our senior debt securities ("Senior Debt
Securities") or our subordinated debt securities ("Subordinated Debt
Securities"). The Senior Debt Securities and the Subordinated Debt Securities
will be issued under separate Indentures among us, our subsidiaries, if our
subsidiaries are guarantors of the Debt Securities, and a U.S. banking
institution (a "Trustee"). Senior Debt Securities will be issued under a "Senior
Indenture" and Subordinated Debt Securities will be issued under a "Subordinated
Indenture." Together the Senior Indenture and the Subordinated Indenture are
called "Indentures."
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series which are offered by a prospectus supplement
will be described in the prospectus supplement.
We have summarized selected provisions of the Indentures below. The summary
is not complete. The form of each Indenture will be filed with the SEC via a
Current Report on Form 8-K prior to our initial offering of Debt Securities
under that Indenture and you should read the Indenture for provisions that may
be important to you. In the summary below we have included references to section
numbers of the applicable Indentures so that you can easily locate these
provisions. Whenever we refer in this prospectus or in the prospectus supplement
to particular sections or defined terms of the Indenture, such sections or
defined terms are incorporated by reference herein or therein, as applicable.
Capitalized terms used in the summary have the meanings specified in the
Indentures.
GENERAL
The Indentures provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate principal
amount. We may specify a maximum aggregate principal amount for the Debt
Securities of any series. (Section 301) We will determine the terms and
conditions of the Debt Securities, including the maturity, principal and
interest, but those terms must be consistent with the Indenture. The Debt
Securities will be our unsecured obligations.
The Subordinated Debt Securities will be subordinated in right of payment
to the prior payment in full of all of our Senior Debt (as defined) as described
under "-- Subordination of Subordinated Debt Securities" and in the prospectus
supplement applicable to any Subordinated Debt Securities. If the prospectus
supplement so indicates, the Subordinated Debt Securities will be convertible
into our common stock as described under "-- Conversion of Subordinated Debt
Securities."
If specified in the prospectus supplement, our subsidiaries (the
"Subsidiary Guarantors") will unconditionally guarantee (the "Subsidiary
Guarantees") on a joint and several basis the Debt Securities as described under
"-- Subsidiary Guarantees" and in the prospectus supplement. The Subsidiary
Guarantees will be unsecured obligations of each Subsidiary Guarantor.
Subsidiary Guarantees of Subordinated Debt Securities will be subordinated to
the Senior Debt of the Subsidiary Guarantors on the same basis as the
Subordinated Debt Securities are subordinated to our Senior Debt.
The applicable prospectus supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities:
(1) the title of the Debt Securities;
(2) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities and, if Subordinated Debt Securities, the
related subordination terms;
8
<PAGE> 21
(3) whether the Subsidiary Guarantors will provide Subsidiary
Guarantees of the Debt Securities;
(4) any limit on the aggregate principal amount of the Debt
Securities;
(5) the dates on which the principal of the Debt Securities will be
payable;
(6) the interest rate which the Debt Securities will bear and the
interest payment dates for the Debt Securities;
(7) the places where payments on the Debt Securities will be payable;
(8) any terms upon which the Debt Securities may be redeemed, in whole
or in part, at our option;
(9) any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the Debt Securities;
(10) the portion of the principal amount, if less than all, of the
Debt Securities that will be payable upon declaration of acceleration of
the Maturity of the Debt Securities;
(11) whether the Debt Securities are defeasible;
(12) any addition to or change in the Events of Default;
(13) whether the Debt Securities that constitute Subordinated Debt
Securities are convertible into our common stock and, if so, the terms and
conditions upon which conversion will be effected, including the initial
conversion price or conversion rate ("the Conversion Price") and any
adjustments thereto in addition to or different from those described in
this prospectus, the conversion period and other conversion provisions in
addition to or in lieu of those described in this prospectus;
(14) any addition to or change in the covenants in the Indenture
applicable to any of the Debt Securities; and
(15) any other terms of the Debt Securities not inconsistent with the
provisions of the Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Special United States
federal income tax considerations applicable to Debt Securities sold at an
original issue discount may be described in the applicable prospectus
supplement. In addition, special United States federal income tax or other
considerations applicable to any Debt Securities that are denominated in a
currency or currency unit other than United States dollars may be described in
the applicable prospectus supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The indebtedness evidenced by the Subordinated Debt Securities will, to the
extent set forth in the Subordinated Indenture with respect to each series of
Subordinated Debt Securities, be subordinate in right of payment to the prior
payment in full of all of our Senior Debt, including the Senior Debt Securities,
and it may also be senior in right of payment to all of our Subordinated Debt.
The prospectus supplement relating to any Subordinated Debt Securities will
summarize the subordination provisions of the Subordinated Indenture applicable
to that series including:
- the applicability and effect of such provisions upon any payment or
distribution of our assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors or marshaling of assets or any bankruptcy, insolvency or
similar proceedings;
- the applicability and effect of such provisions in the event of specified
defaults with respect to any Senior Debt, including the circumstances
under which and the periods in which we will be prohibited from making
payments on the Subordinated Debt Securities; and
9
<PAGE> 22
- the definition of Senior Debt applicable to the Subordinated Debt
Securities of that series and, if the series is issued on a senior
subordinated basis, the definition of Subordinated Debt applicable to
that series.
The prospectus supplement will also describe as of a recent date the approximate
amount of Senior Debt to which the Subordinated Debt Securities of that series
will be subordinated.
The failure to make any payment on any of the Subordinated Debt Securities
by reason of the subordination provisions of the Subordinated Indenture
described in the prospectus supplement will not be construed as preventing the
occurrence of an Event of Default with respect to the Subordinated Debt
Securities arising from any such failure to make payment.
The subordination provisions described above will not be applicable to
payments in respect of the Subordinated Debt Securities from a defeasance trust
established in connection with any defeasance or covenant defeasance of the
Subordinated Debt Securities as described under "-- Defeasance and Covenant
Defeasance."
CONVERSION OF SUBORDINATED DEBT SECURITIES
The Subordinated Indenture may provide for a right of conversion of
Subordinated Debt Securities into our common stock (or cash in lieu thereof).
(Sections 301 and 1701 of the Subordinated Indenture) The following provisions
will apply to Debt Securities that are convertible Subordinated Debt Securities
unless otherwise provided in the prospectus supplement for such Debt Securities.
The Holder of any convertible Subordinated Debt Securities will have the
right exercisable at any time prior to the close of business on the second
Business Day prior to their Stated Maturity, unless previously redeemed or
otherwise purchased by us, to convert such Subordinated Debt Securities into
shares of common stock at the Conversion Price set forth in the prospectus
supplement, subject to adjustment. (Section 1702 of the Subordinated Indenture)
The Holder of convertible Subordinated Debt Securities may convert any portion
thereof which is $1,000 in principal amount or any multiple thereof. (Section
1702 of the Subordinated Indenture)
In certain events, the Conversion Price will be subject to adjustment as
set forth in the Subordinated Indenture. Such events include:
(a) any payment of a dividend (or other distribution) payable in
common stock on any class of our Capital Stock,
(b) any subdivision, combination or reclassification of common stock,
(c) any issuance to all holders of common stock of rights, options or
warrants entitling them to subscribe for or purchase common stock at less
than the then current market price (as determined in accordance with the
Subordinated Indenture) of common stock; provided, however, that if such
rights, options or warrants are only exercisable upon the occurrence of
certain triggering events relating to control and provided for in
shareholders' rights plans, then the Conversion Price will not be adjusted
until such triggering events occur,
(d) any distribution to all holders of common stock of evidences of
indebtedness, shares of our Capital Stock other than common stock, cash or
other assets (including securities, but excluding those dividends and
distributions referred to above for which an adjustment must be made and
excluding regular dividends and distributions paid exclusively in cash),
(e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed
upon a merger or consolidation to which the third succeeding paragraph
applies) to all holders of common stock in an aggregate amount that,
combined together with (1) all other such all-cash distributions made
within the then preceding 12 months in respect of which no adjustment has
been made and (2) any cash and the fair market value of other consideration
paid or payable in respect of any tender offer by us or any of our
Subsidiaries for
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common stock concluded within the preceding 12 months in respect of which
no adjustment has been made, exceeds 15% of our company's market
capitalization (defined as being the product of the then current market
price of the common stock times the number of shares of common stock then
outstanding) on the record date of such distribution, and
(f) the completion of a tender or exchange offer made by us or any of
our Subsidiaries for common stock that involves an aggregate consideration
that, together with (1) any cash and the fair market value of other
consideration payable in a tender or exchange offer by us or any of our
Subsidiaries for common stock expiring within the 12 months preceding the
expiration of such tender or exchange offer in respect of which no
adjustment has been made and (2) the aggregate amount of any such all-cash
distributions referred to in (e) above to all holders of common stock
within the 12 months preceding the expiration of such tender or exchange
offer in respect of which no adjustments have been made, exceeds 15% of our
market capitalization on the expiration of such tender offer.
No adjustment of the Conversion Price will be required to be made until the
cumulative adjustments amount to 1.0% or more of the Conversion Price as last
adjusted. We reserve the right to make such reductions in the Conversion Price
in addition to those required in the preceding provisions as we consider to be
advisable in order that any event treated for federal income tax purposes as a
dividend of a stock or stock rights will not be taxable to the recipients.
Should we elect to make such a reduction in the Conversion Price, we will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder if and to the extent that such laws
and regulations are applicable in connection with the reduction of the
Conversion Price. (Section 1704 of the Subordinated Indenture)
If we distribute rights or warrants (other than those referred to in (c) in
the preceding paragraph) pro rata to holders of common stock, so long as any
such rights or warrants have not expired or been redeemed by us, the Holder of
any convertible Subordinated Debt Security surrendered for conversion will be
entitled to receive upon such conversion, in addition to the shares of common
stock issuable upon such conversion (the "Conversion Shares"), a number of
rights or warrants to be determined as follows:
(1) if such conversion occurs on or prior to the date for the
distribution to the holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same
number of rights or warrants to which a holder of a number of shares of
common stock equal to the number of Conversion Shares is entitled at the
time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and
(2) if such conversion occurs after such Distribution Date, the number
of rights or warrants to which a holder of the number of shares of common
stock into which such Subordinated Debt Security was convertible
immediately prior to such Distribution Date would have been entitled on
such Distribution Date in accordance with the terms and provisions of and
applicable to the rights or warrants.
The Conversion Price will not be subject to adjustment on account of any
declaration, distribution or exercise of such rights or warrants. (Section 1704
of the Subordinated Indenture)
Fractional shares of common stock will not be issued upon conversion, but,
instead, we will pay a cash adjustment based on the then current market price
for the common stock. (Section 1703 of the Subordinated Indenture) Upon
conversion, no adjustments will be made for accrued interest or dividends, and
therefore convertible Subordinated Debt Securities surrendered for conversion
between the record date for an interest payment and the Interest Payment Date
(except convertible Subordinated Debt Securities called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the interest thereon which the Holder is to receive. (Sections 1704 and
1702 of the Subordinated Indenture)
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In the case of any reclassification of the Conversion Shares, consolidation
or merger of our company with or into another Person or any merger of another
Person with or into us (with certain exceptions), or in case of any transfer or
other disposition of all or substantially all of our assets, each convertible
Subordinated Debt Security then outstanding will, without the consent of any
Holder, become convertible only into the kind and amount of securities, cash and
other property receivable upon such reclassification, consolidation, merger,
conveyance, transfer or lease by a holder of the number of shares of common
stock into which such Subordinated Debt Security was convertible immediately
prior thereto, after giving effect to any adjustment event, who failed to
exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares. (Section 1705 of the
Subordinated Indenture)
SUBSIDIARY GUARANTEES
If specified in the prospectus supplement, the Subsidiary Guarantors will
guarantee the Debt Securities of a series. Unless otherwise indicated in the
prospectus supplement, the following provisions will apply to the Subsidiary
Guarantees of the Subsidiary Guarantors.
Subject to the limitations described below and in the prospectus
supplement, the Subsidiary Guarantors will, jointly and severally,
unconditionally guarantee the punctual payment when due, whether at Stated
Maturity, by acceleration or otherwise, of all our obligations under the
Indentures and the Debt Securities of a series, whether for principal of,
premium, if any, or interest on the Debt Securities or otherwise (all such
obligations guaranteed by a Subsidiary Guarantor being herein called the
"Guaranteed Obligations"). The Subsidiary Guarantors will also pay all expenses
(including reasonable counsel fees and expenses) incurred by the applicable
Trustee in enforcing any rights under a Subsidiary Guarantee with respect to a
Subsidiary Guarantor.
In the case of Subordinated Debt Securities, a Subsidiary Guarantor's
Subsidiary Guarantee will be subordinated in right of payment to the Senior Debt
of such Subsidiary Guarantor on the same basis as the Subordinated Debt
Securities are subordinated to our Senior Debt. No payment will be made by any
Subsidiary Guarantor under its Subsidiary Guarantee during any period in which
payments by us on the Subordinated Debt Securities are suspended by the
subordination provisions of the Subordinated Indenture. (Article Fourteen of the
Subordinated Indenture)
Each Subsidiary Guarantee will be limited in amount to an amount not to
exceed the maximum amount that can be guaranteed by the relevant Subsidiary
Guarantor without rendering such Subsidiary Guarantee voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Each Subsidiary Guarantee will be a continuing guarantee and will:
(1) remain in full force and effect until either (a) payment in full
of all the Guaranteed Obligations (or the applicable Debt Securities are
defeased and discharged in accordance with the defeasance provisions of the
Indentures) or (b) released as described in the following paragraph,
(2) be binding upon each Subsidiary Guarantor and
(3) inure to the benefit of and be enforceable by the applicable
Trustee, the Holders and their successors, transferees and assigns.
In the event that a Subsidiary Guarantor ceases to be a Subsidiary, whether
as a result of a disposition of all or substantially all of the assets or all of
the Capital Stock of such Subsidiary Guarantor, by way of sale, merger,
consolidation or otherwise, such Subsidiary Guarantor will be deemed released
and relieved of its obligations under its Subsidiary Guarantee without any
further action required on the part of the Trustee or any Holder, and no other
person acquiring or owning the assets or Capital Stock of such Subsidiary
Guarantor will be required to enter into a Subsidiary Guarantee; provided, in
each case, that the transaction or transactions resulting in such Subsidiary
Guarantor's ceasing to be a Subsidiary are carried out pursuant to and in
compliance with all of the applicable covenants in the Indenture. In
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addition, the prospectus supplement may specify additional circumstances under
which a Subsidiary Guarantor can be released from its Subsidiary Guarantee.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable prospectus supplement, only in denominations of $1,000 and integral
multiples thereof. (Section 302)
At the option of the Holder, subject to the terms of the applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series will be exchangeable for other Debt Securities of the same series
of any authorized denomination and of a like tenor and aggregate principal
amount. (Section 305)
Subject to the terms of the applicable Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for exchange
as provided above or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by us for such
purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but we may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Security Registrar and any
other transfer agent initially designated by us for any Debt Securities will be
named in the applicable prospectus supplement. (Section 305) We may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that we will be required to maintain a transfer agent in each Place of
Payment for the Debt Securities of each series. (Section 1002).
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, we will not be required to (i) issue, register the
transfer of or exchange any Debt Security of that series (or of that series and
specified terms, as the case may be) during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
Debt Security that may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
any Debt Security so selected for redemption, in whole or in part, except the
unredeemed portion of any such Debt Security being redeemed in part. (Section
305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or its nominee
identified in the applicable prospectus supplement, will be deposited with such
Depositary or nominee or its custodian and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to below
and any such other matters as may be provided for pursuant to the applicable
Indenture.
Notwithstanding any provision of the Indentures or any Debt Security
described in this prospectus, no Global Security may be exchanged in whole or in
part for Debt Securities registered, and no transfer of a Global Security in
whole or in part may be registered, in the name of any person other than the
Depositary for such Global Security or any nominee of such Depositary unless:
(1) the Depositary has notified us that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be
qualified to act as such as required by the applicable Indenture,
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(2) an Event of Default with respect to the Debt Securities
represented by such Global Security has occurred and is continuing and the
Security Registrar has received a written request from the Depositary to
issue certificated Debt Securities, or
(3) other circumstances exist, in addition to or in lieu of those
described above, as may be described in the applicable prospectus
supplement.
All Debt Securities issued in exchange for a Global Security or any portion
thereof will be registered in such names as the Depositary may direct. (Sections
205 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities that it represents for all purposes under the Debt Securities and the
applicable Indenture. Except in the limited circumstances referred to above,
owners of beneficial interests in a Global Security will not be entitled to have
such Global Security or any Debt Securities that it represents registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities that is
represents for any purpose under the Debt Securities or the applicable
Indenture. All payments on a Global Security will be made to the Depositary or
its nominee, as the case may be, as the Holder of the security. The laws of some
jurisdictions require that some purchasers of Debt Securities take physical
delivery of such Debt Securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. None of us, the Subsidiary Guarantors, the
Trustees or the agents of ourself, the Subsidiary Guarantors or the Trustees
will have any responsibility or liability for any aspect of the Depositary's or
any participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable prospectus supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as we
may designate for such purpose from time to time, except that at our option
payment of any interest may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security Register. Unless
otherwise indicated in the applicable prospectus supplement, the corporate trust
office of the Trustee under the Senior Indenture in The City of New York will be
designated as sole Paying Agent for payments with respect to Senior Debt
Securities of each series, and the corporate trust office of the Trustee under
the Subordinated Indenture in The City of New York will be designated as the
sole Paying Agent for payment with respect to Subordinated Debt Securities of
each series. Any other Paying Agents initially designated by us for the Debt
Securities of a particular series will
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be named in the applicable prospectus supplement. We may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
we will be required to maintain a Paying Agent in each Place of Payment for the
Debt Securities of a particular series. (Section 1002)
All moneys paid by us to a Paying Agent for the payment of the principal of
or any premium or interest on any Debt Security which remain unclaimed at the
end of two years after such principal, premium or interest has become due and
payable will be repaid to us, and the Holder of such Debt Security thereafter
may look only to us for payment thereof. (Section 1003)
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into, or transfer, lease or otherwise
dispose of all or substantially all of our assets to, any Person (a "successor
Person"), and may not permit any Person to consolidate with or merge into us,
unless:
(1) the successor Person (if any) is a corporation, partnership, trust
or other entity organized and validly existing under the laws of any
domestic jurisdiction and assumes our obligations on the Debt Securities
and under the Indentures,
(2) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing and
(3) several other conditions, including any additional conditions with
respect to any particular Debt Securities specified in the applicable
prospectus supplement, are met. (Section 801)
EVENTS OF DEFAULT
Unless otherwise specified in the prospectus supplement, each of the
following will constitute an Event of Default under the applicable Indenture
with respect to Debt Securities of any series:
(1) failure to pay principal of or any premium on any Debt Security of
that series when due, whether or not, in the case of Subordinated Debt
Securities, such payment is prohibited by the subordination provisions of
the Subordinated Indenture;
(2) failure to pay any interest on any Debt Securities of that series
when due, continued for 30 days, whether or not, in the case of
Subordinated Debt Securities, such payment is prohibited by the
subordination provisions of the Subordinated Indenture;
(3) failure to deposit any sinking fund payment, when due, in respect
of any Debt Security of that series, whether or not, in the case of
Subordinated Debt Securities, such deposit is prohibited by the
subordination provisions of the Subordinated Indenture;
(4) failure to perform or comply with the provisions described under
"Consolidation, Merger and Sale of Assets";
(5) failure to perform any of our other covenants in such Indenture
(other than a covenant included in such Indenture solely for the benefit of
a series other than that series), continued for 60 days after written
notice has been given by the applicable Trustee, or the Holders of at least
25% in principal amount of the Outstanding Debt Securities of that series,
as provided in such Indenture;
(6) certain events of bankruptcy, insolvency or reorganization
affecting us, any Significant Subsidiary or any group of Subsidiaries that
together would constitute a Significant Subsidiary; and
(7) in the case of Debt Securities guaranteed by any Subsidiary
Guarantor, the Subsidiary Guarantee of any Subsidiary Guarantor is held by
a final non-appealable order or judgment of a court of competent
jurisdiction to be unenforceable or invalid or ceases for any reason to be
in full force and effect (other than in accordance with the terms of the
applicable Indenture) or any Subsidiary
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Guarantor or any Person acting on behalf of any Subsidiary Guarantor denies
or disaffirms such Subsidiary Guarantor's obligations under its Subsidiary
Guarantee (other than by reason of a release of such Subsidiary Guarantor
from its Subsidiary Guarantee in accordance with the terms of the
applicable Indenture). (Section 501)
If an Event of Default (other than an Event of Default described in clause
(6) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the applicable Trustee or the
Holders of at least 25% in principal amount of the Outstanding Debt Securities
of that series by notice as provided in the Indenture may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Debt Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt Security, or such other amount in lieu of such principal amount, as
may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (6) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Security or other Debt Security, such specified
amount) will automatically, and without any action by the applicable Trustee or
any Holder, become immediately due and payable. After any such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal (or other specified
amount), have been cured or waived as provided in the applicable Indenture.
(Section 502) For information as to waiver of defaults, see "-- Modification and
Waiver" below.
Subject to the provisions of the Indentures relating to the duties of the
Trustees in case an Event of Default shall occur and be continuing, each Trustee
will be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to such Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless:
(1) such Holder has previously given to the Trustee under the
applicable Indenture written notice of a continuing Event of Default with
respect to the Debt Securities of that series,
(2) the Holders of at least 25% in principal amount of the Outstanding
Debt Securities of that series have made written request, and such Holder
or Holders have offered reasonable indemnity, to the Trustee to institute
such proceeding as trustee and
(3) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series a direction inconsistent with
such request, within 60 days after such notice, request and offer. (Section
507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security or, if applicable, to convert such Debt Security. (Section
508)
We will be required to furnish to each Trustee annually a statement by
certain of our officers as to whether or not we, to their knowledge, are in
default in the performance or observance of any of the terms, provisions and
conditions of the applicable Indenture and, if so, specifying all such known
defaults. (Section 1004)
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MODIFICATION AND WAIVER
Modifications and amendments of an Indenture may be made by us, the
Subsidiary Guarantors and the applicable Trustee with the consent of the Holders
of a majority in principal amount of the Outstanding Debt Securities of each
series affected by such modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Debt Security,
(2) reduce the principal amount of, or any premium or interest on, any
Debt Security,
(3) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the
Maturity thereof,
(4) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security,
(5) impair the right to institute suit for the enforcement of any
payment on or any conversion right with respect to any Debt Security,
(6) in the case of Subordinated Debt Securities, modify the
subordination or conversion provisions in a manner adverse to the Holders
of the Subordinated Debt Securities,
(7) except as provided in the applicable Indenture, release the
Subsidiary Guarantee of a Subsidiary Guarantor,
(8) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture,
(9) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults or
(10) modify such provisions with respect to modification and waiver.
(Section 902)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by us with certain restrictive
provisions of the applicable Indenture.(Section 1009) The Holders of a majority
in principal amount of the Outstanding Debt Securities of any series may waive
any past default under the applicable Indenture, except a default in the payment
of principal, premium or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. (Section 513)
The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under such
Indenture as of any date,
(1) the principal amount of an Original Issue Discount Security that
will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of
the Maturity thereof to such date,
(2) if, as of such date, the principal amount payable at the Stated
Maturity of a Debt Security is not determinable (for example, because it is
based on an index), the principal amount of such Debt Security deemed to be
Outstanding as of such date will be an amount determined in the manner
prescribed for such Debt Security and
(3) the principal amount of a Debt Security denominated in one or more
foreign currencies or currency units that will be deemed to be Outstanding
will be the U.S. dollar equivalent, determined as of such date in the
manner prescribed for such Debt Security, of the principal amount of such
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Debt Security (or, in the case of a Debt Security described in clause (1)
or (2) above, of the amount described in such clause).
Certain Debt Securities, including those for whose payment or redemption money
has been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1502, will not be deemed to be
Outstanding. (Section 101)
Except in certain limited circumstances, we will be entitled to set any day
as a record date for the purpose of determining the Holders of Outstanding Debt
Securities of any series entitled to give or take any direction, notice,
consent, waiver or other action under the applicable Indenture, in the manner
and subject to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Debt Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other period as may
be specified by us (or the Trustee, if it set the record date), and may be
shortened or lengthened (but not beyond 180 days) from time to time. (Section
104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable prospectus supplement, we
may elect, at our option at any time, to have the provisions of Section 1502,
relating to defeasance and discharge of indebtedness, or Section 1503, relating
to defeasance of certain restrictive covenants applied to the Debt Securities of
any series, or to any specified part of a series. (Section 1501)
Defeasance and Discharge. The Indentures provide that, upon our exercise of
our option (if any) to have Section 1502 applied to any Debt Securities, we and,
if applicable, each Subsidiary Guarantor will be discharged from all our
obligations, and, if such Debt Securities are Subordinated Debt Securities, the
provisions of the Subordinated Indenture relating to subordination (but not to
conversion, if applicable) will cease to be effective, with respect to such Debt
Securities (except for certain obligations to exchange or register the transfer
of Debt Securities, to replace stolen, lost or mutilated Debt Securities, to
maintain paying agencies and to hold moneys for payment in trust) upon the
deposit in trust for the benefit of the Holders of such Debt Securities of money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the applicable Indenture and such Debt Securities.
Such defeasance or discharge may occur only if, among other things,
(1) we have delivered to the applicable Trustee an Opinion of Counsel
to the effect that we have received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a
change in tax law, in either case to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject
to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge were not to occur;
(2) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have
occurred and be continuing;
(3) such deposit, defeasance and discharge will not result in a breach
or violation of, or constitute a default under, any agreement or instrument
to which we are a party or by which we are bound;
(4) in the case of Subordinated Debt Securities, at the time of such
deposit, no default in the payment of all or a portion of principal of (or
premium, if any) or interest on any of our Senior Debt
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shall have occurred and be continuing, no event of default shall have
resulted in the acceleration of any of our Senior Debt and no other event
of default with respect to any of our Senior Debt shall have occurred and
be continuing permitting after notice or the lapse of time, or both, the
acceleration thereof; and
(5) we have delivered to the Trustee an Opinion of Counsel to the
effect that such deposit shall not cause the Trustee or the trust so
created to be subject to the Investment Company Act of 1940. (Sections 1502
and 1504)
Defeasance of Certain Covenants. The Indentures provide that, upon our
exercise of our option (if any) to have Section 1503 applied to any Debt
Securities, we may omit to comply with certain restrictive covenants, including
those that may be described in the applicable prospectus supplement, the
occurrence of certain Events of Default, which are described above in clause (5)
(with respect to such restrictive covenants) and clauses (6) and (7) under
"Events of Default" and any that may be described in the applicable prospectus
supplement, will not be deemed to either be or result in an Event of Default
and, if such Debt Securities are Subordinated Debt Securities, the provisions of
the Subordinated Indenture relating to subordination (but not to conversion, if
applicable) will cease to be effective, in each case with respect to such Debt
Securities. In order to exercise such option, we must deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such Debt
Securities on the respective Stated Maturities in accordance with the terms of
the applicable Indenture and such Debt Securities. Such covenant defeasance may
occur only if we have delivered to the applicable Trustee an Opinion of Counsel
that in effect says that Holders of such Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance were not to occur, and the requirements set
forth in clauses (2), (3), (4) and (5) above are satisfied. If we exercise this
option with respect to any Debt Securities and such Debt Securities were
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on such Debt Securities at the time of their
respective Stated Maturities but may not be sufficient to pay amounts due on
such Debt Securities upon any acceleration resulting from such Event of Default.
In such case, we would remain liable for such payments. (Sections 1503 and 1504)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register. (Sections
101 and 106)
TITLE
We, the Subsidiary Guarantors, the Trustees and any agent of us, the
Subsidiary Guarantors or a Trustee may treat the Person in whose name a Debt
Security is registered as the absolute owner of the Debt Security (whether or
not such Debt Security may be overdue) for the purpose of making payment and for
all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the law of the State of New York. (Section 112)
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DESCRIPTION OF CAPITAL STOCK
As of January 31, 2000, our authorized capital stock was 121,942,000
shares. Those shares consisted of: (a) 1,942,000 shares of preferred stock, par
value $1.00 per share, none of which were outstanding; and (b) 120,000,000
shares of common stock, par value $.16 2/3 per share, of which 77,885,693 shares
were outstanding.
Holders of capital stock may not cumulate their votes in elections of
directors, and holders have no preemptive rights to acquire any shares of our
capital stock or any securities convertible into or exchangeable for any such
shares.
COMMON STOCK
Holders of common stock may vote one vote for each share held on all
matters voted upon by our stockholders, including the election of our directors.
Subject to the rights of any then outstanding shares of preferred stock, the
holders of common stock may receive such dividends as our Board of Directors may
declare in its discretion out of legally available funds. Holders of common
stock will share equally in our assets upon liquidation after payment or
provision for all liabilities and any preferential liquidation rights of any
preferred stock then outstanding. Shares of common stock are not subject to any
redemption provisions and are not convertible into any of our other securities.
All outstanding shares of common stock are fully paid and non-assessable. Any
additional common stock we issue will also be fully paid and non-assessable.
PREFERRED STOCK
The prospectus supplement will specify any terms of any series of preferred
stock offered by it including:
- the series, the number of shares offered and the liquidation value of the
preferred stock,
- the price at which the preferred stock will be issued,
- the dividend rate, the dates on which the dividends will be payable and
other terms relating to the payment of dividends on the preferred stock,
- the liquidation preference of the preferred stock,
- whether the preferred stock is redeemable or subject to a sinking fund,
and the terms of any such redemption or sinking fund,
- whether the preferred stock is convertible into or exchangeable for any
other securities, and the terms of any such conversion or exchange, and
- any additional rights, preferences, qualifications, limitations or
restrictions of the preferred stock.
The description of the terms of the preferred stock to be set forth in an
applicable prospectus supplement will not be complete and will be subject to and
qualified in its entirety by reference to the statement of resolution relating
to the applicable series of preferred stock. The registration statement of which
this prospectus forms a part will include the statement of resolution as an
exhibit or incorporate it by reference.
We may issue preferred stock from time to time in one or more series.
Subject to the provisions of our Restated Certificate of Incorporation and
limitations prescribed by law, our Board of Directors may adopt resolutions to
issue the shares of preferred stock constituting any series, to fix the number
of shares of the series and to establish the designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including dividend rights (including
whether dividends are cumulative), dividend rates, terms of redemption
(including sinking fund provisions), redemption prices, conversion or exchange
rights and liquidation preferences of the shares of the series, in each case
without any further action or vote by our stockholders.
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Generally, holders of preferred stock may vote one vote for each share held
on all matters voted upon by our stockholders, including the election of our
directors, and holders of all series of preferred stock will vote together with
holders of common stock as one class. If dividends on preferred stock are in
arrears for six quarters or a sinking fund obligation with respect to the
preferred stock has been in default for one year, then, at any ensuing annual
meeting of our stockholders, holders of preferred stock, voting separately as a
class without regard to series, may elect two directors. This special voting
right will continue until all dividend arrearages and sinking fund defaults have
been cured, and while this special voting right persists, holders of preferred
stock will be entitled to participate with holders of common stock in the
election of any other directors.
A vote of the holders of at least two-thirds of the preferred stock then
outstanding, acting as a class without regard to series, is required to approve
any amendment to our Restated Certificate of Incorporation altering materially
any existing provision of the preferred stock.
Undesignated preferred stock may enable our Board of Directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. The issuance of shares of a new series of
preferred stock may adversely affect the rights of the holders of our common
stock. For example, any new series of preferred stock issued will rank prior to
our common stock as to dividend rights, liquidation preference or both and may
be convertible into shares of common stock. As a result, the issuance of shares
of a new series of preferred stock may discourage bids for our common stock or
may otherwise adversely affect the market price of our common stock.
ANTI-TAKEOVER PROVISIONS
Certain provisions in our Restated Certificate of Incorporation and By-Laws
and our stockholders' rights plan may encourage persons considering unsolicited
tender offers or other unilateral takeover proposals to negotiate with our Board
of Directors rather than pursue non-negotiated takeover attempts.
Classified Board of Directors and Limitations on Stockholder Actions. Our
Board of Directors is divided into three classes. The directors of each class
are elected for three-year terms, and the terms of the three classes are
staggered so that directors from a single class are elected at each annual
meeting of stockholders. Any stockholder wishing to submit a nomination to the
Board of Directors must follow certain procedures outlined in our By-Laws. In
addition, our By-Laws require written application by the holders of 75% of our
outstanding voting stock to call a special stockholders' meeting.
Business Combinations under Delaware Law. We are a Delaware corporation and
are subject to Section 203 of the Delaware General Corporation Law. Generally,
Section 203 prevents a person who owns 15% or more of our outstanding voting
stock (an "interested stockholder") from engaging in a merger or other specified
business combination with us for three years following the date that the person
became an interested stockholder. These restrictions do not apply if:
- before the person became an interested stockholder, our Board of
Directors approved either the transaction in which the interested
stockholder became an interested stockholder or the business combination;
- upon completion of the transaction that resulted in the interested
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of our voting stock that was outstanding
at the time the transaction commenced; or
- following the transaction in which the person became an interested
stockholder, the business combination is approved by both our Board of
Directors and the holders of at least two-thirds of our outstanding
voting stock that is not owned by the interested stockholder.
Stockholders' Rights Plan. Our Board of Directors has adopted a
stockholders' rights plan (the "Rights Plan"). Under the Rights Plan, each Right
entitles the registered holder under the circumstances described below to
purchase from us one one-thousandth of a share of our Junior Participating
Preferred
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Stock (the "Preferred Shares") at a price of $30 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The following is
a summary of certain terms of the Rights Plan. The Rights Plan is filed as an
exhibit to the registration statement of which this prospectus is a part and
this summary is qualified by reference to the specific terms of the Rights Plan.
Until the Distribution Date (as defined below), the Rights attach to all
common stock certificates representing outstanding shares. No separate
certificates evidencing the Rights ("Rights Certificates") will be distributed.
A Right is issued for each share of common stock issued. The Rights will
separate from the common stock and a Distribution Date will occur upon the
earlier of
- 10 business days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of our outstanding Voting Shares (as
defined in the Rights Agreement), or
- 10 business days following the commencement or announcement of an
intention to commence a tender offer or exchange offer the consummation
of which would result in the person or group beneficially owning 15% or
more of our outstanding Voting Shares.
Until the Distribution Date or the earlier of redemption or expiration of
the Rights, the Rights are evidenced by the certificates representing the common
stock. As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the common stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date. The rights will
expire on June 30, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged.
If a person or group acquires 15% or more of our Voting Shares, each Right
then outstanding (other than Rights beneficially owned by the Acquiring Persons
which would become null and void) becomes a right to buy that number of shares
of common stock (or under certain circumstances, the equivalent number of one
one-thousandths of a Preferred Share) that at the time of such acquisition has a
market value of two times the Purchase Price of the Right.
If we are acquired in a merger or other business combination transaction or
assets constituting more than 50% of our consolidated assets or producing more
than 50% of our earning power or cash flow are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise of the Right at the then current Purchase Price of the Right,
that number of shares of common stock of the acquiring company which at the time
of such transaction has a market value of two times the Purchase Price of the
Right.
The dividend and liquidation rights, and the non-redemption feature, of the
Preferred Shares are designed so that the value of one one-thousandth of a
Preferred Share purchasable upon exercise of each Right will approximate the
value of one share of common stock. The Preferred Shares issuable upon exercise
of the Rights will be non-redeemable and rank junior to all other series of our
preferred stock. Each whole Preferred Share will be entitled to receive a
quarterly preferential dividend in an amount per share equal to the greater of
(a) $1.00 in cash, or (b) in the aggregate, 1,000 times the dividend declared on
the common stock. In the event of liquidation, the holders of Preferred Shares
may receive a preferential liquidation payment equal to the greater of (a)
$1,000 per share, or (b) in the aggregate, 1,000 times the payment made on the
shares of common stock. In the event of any merger, consolidation or other
transaction in which the shares of common stock are exchanged for or changed
into other stock or securities, cash or other property, each whole Preferred
Share will be entitled to receive 1,000 times the amount received per share of
common stock. Each whole Preferred Share will be entitled to 1,000 votes on all
matters submitted to a vote of our stockholders, and Preferred Shares will
generally vote together as one class with the common stock and any other capital
stock on all matters submitted to a vote of our stockholders.
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The number of outstanding Rights and the number of one one-thousandths of a
Preferred Share or other securities or property issuable upon exercise of the
Rights, and the Purchase Price payable, may be adjusted from time to time to
prevent dilution.
At any time after a person or group of affiliated or associated persons
acquires beneficial ownership of 15% or more of our outstanding Voting Shares
and before a person or group acquires beneficial ownership of 50% or more of our
outstanding Voting Shares, our Board of Directors may, at its option, issue
common stock in mandatory redemption of, and in exchange for, all or part of the
then outstanding and exercisable Rights (other than Rights owned by such person
or group which would become null and void) at an exchange ratio of one share of
common stock (or one one-thousandth of a Preferred Share) for each Right,
subject to adjustment.
At any time prior to the first public announcement that a person or group
has become the beneficial owner of 15% or more of the outstanding Voting Shares,
our Board of Directors may redeem all but not less than all the then outstanding
Rights at a price of $0.01 per Right (the "Redemption Price"). The Redemption of
the rights may be made effective at such time, on such basis and with such
conditions as our Board of Directors in its sole discretion may establish.
Immediately upon the action of our Board of Directors ordering Redemption of the
rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
LIMITATION OF LIABILITY OF DIRECTORS
Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed business judgment based on all material information reasonably
available to them. Absent the limitations authorized by Delaware law, directors
are accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission.
Our Restated Certificate of Incorporation eliminates the liability of our
directors to us and our stockholders to the fullest extent permitted by Delaware
law. This means that each of our directors will not be personally liable for
monetary damages for breach of a director's fiduciary duty, except for liability
- for any breach of the director's duty of loyalty to us or our
stockholders,
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation law, or
- for any transaction from which the director derived an improper personal
benefit.
The inclusion of this provision in our Restated Certificate of
Incorporation may reduce the likelihood of derivative litigation against our
directors, and may discourage or deter stockholders from bringing a lawsuit
against our directors for breach of their duty of care, even though such an
action, if successful, might have otherwise benefitted us and our stockholders.
However, this provision does not alter the liability of our directors under
federal securities laws and does not affect the right to sue (or to recover
monetary damages) for violations of federal securities laws.
TRANSFER AGENT AND REGISTRAR
Our transfer agent and registrar of the common stock, as well as the rights
agent under our Rights Plan, is Norwest Bank Minnesota, N.A.
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DEPOSITARY SHARES
GENERAL
We may offer fractional shares of preferred stock, rather than full shares
of preferred stock. If we decide to offer fractional shares of preferred stock,
we will issue receipts for depositary shares. Each depositary share will
represent a fraction of a share of a particular series of preferred stock. The
prospectus supplement will indicate that fraction. The shares of preferred stock
represented by depositary shares will be deposited under a depositary agreement
between us and a bank or trust company that meets certain requirements and is
selected by us (the "Bank Depositary"). Each owner of a depositary share will be
entitled to all the rights and preferences of the preferred stock represented by
the depositary share. The depositary shares will be evidenced by depositary
receipts issued pursuant to the depositary agreement. Depositary receipts will
be distributed to those persons purchasing the fractional shares of preferred
stock in accordance with the terms of the offering.
We have summarized selected provisions of a depositary agreement and the
related depositary receipts. The summary is not complete. The forms of the
deposit agreement and the depositary receipts relating to any particular issue
of depositary shares will be filed with the SEC via a Current Report on form 8-K
prior to our offering of the depositary shares, and you should read such
documents for provisions that may be important to you.
DIVIDENDS AND OTHER DISTRIBUTIONS
If we pay a cash distribution or dividend on a series of preferred stock
represented by depositary shares, the Bank Depositary will distribute such
dividends to the record holders of such depositary shares. If the distributions
are in property other than cash, the Bank Depositary will distribute the
property to the record holders of the depositary shares. However, if the Bank
Depositary determines that it is not feasible to make the distribution of
property, the Bank Depositary may, with our approval, sell such property and
distribute the net proceeds from such sale to the record holders of the
depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If we redeem a series of preferred stock represented by depositary shares,
the Bank Depositary will redeem the depositary shares from the proceeds received
by the Bank Depositary in connection with the redemption. The redemption price
per depositary share will equal the applicable fraction of the redemption price
per share of the preferred stock. If fewer than all the depositary shares are
redeemed, the depositary shares to be redeemed will be selected by lot or pro
rata as the Bank Depositary may determine.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock represented by depositary shares are entitled to vote, the Bank Depositary
will mail the notice to the record holders of the depositary shares relating to
such preferred stock. Each record holder of these depositary shares on the
record date (which will be the same date as the record date for the preferred
stock) may instruct the Bank Depositary as to how to vote the preferred stock
represented by such holder's depositary shares. The Bank Depositary will
endeavor, insofar as practicable, to vote the amount of the preferred stock
represented by such depositary shares in accordance with such instructions, and
we will take all action which the Bank Depositary deems necessary in order to
enable the Bank Depositary to do so. The Bank Depositary will abstain from
voting shares of the preferred stock to the extent it does not receive specific
instructions from the holders of depositary shares representing such preferred
stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the depositary agreement may be amended by agreement between the
Bank Depositary and us. However, any amendment that materially and adversely
alters the rights of the holders of depositary shares will not be effective
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unless such amendment has been approved by the holders of at least a majority of
the depositary shares then outstanding. The depositary agreement may be
terminated by the Bank Depositary or us only if (i) all outstanding depositary
shares have been redeemed or (ii) there has been a final distribution in respect
of the preferred stock in connection with any liquidation, dissolution or
winding up of our company and such distribution has been distributed to the
holders of depositary receipts.
CHARGES OF BANK DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the Bank Depositary in connection with the initial deposit of the preferred
stock and any redemption of the preferred stock. Holders of depositary receipts
will pay other transfer and other taxes and governmental charges and any other
charges, including a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided in the depositary
agreement to be for their accounts.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of depositary receipts at the principal office of the Bank
Depositary, subject to the terms of the depositary agreement, the owner of the
depositary shares may demand delivery of the number of whole shares of preferred
stock and all money and other property, if any, represented by those depositary
shares. Partial shares of preferred stock will not be issued. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of whole
shares of preferred stock to be withdrawn, the Bank Depositary will deliver to
such holder at the same time a new depositary receipt evidencing the excess
number of depositary shares. Holders of preferred stock thus withdrawn may not
thereafter deposit those shares under the depositary agreement or receive
depositary receipts evidencing depositary shares therefor.
MISCELLANEOUS
The Bank Depositary will forward to holders of depositary receipts all
reports and communications from us that are delivered to the Bank Depositary and
that we are required to furnish to the holders of the preferred stock.
Neither the Bank Depositary nor we will be liable if we are prevented or
delayed by law or any circumstance beyond our control in performing our
obligations under the depositary agreement. The obligations of the Bank
Depositary and us under the depositary agreement will be limited to performance
in good faith of our duties thereunder, and we will not be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting preferred stock for deposit, holders of depositary receipts
or other persons believed to be competent and on documents believed to be
genuine.
RESIGNATION AND REMOVAL OF BANK DEPOSITARY
The Bank Depositary may resign at any time by delivering to us notice of
its election to do so, and we may at any time remove the Bank Depositary. Any
such resignation or removal will take effect upon the appointment of a successor
Bank Depositary and its acceptance of such appointment. Such successor Bank
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
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DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of our common stock. Warrants may be
issued independently or together with Debt Securities, preferred stock or common
stock offered by any prospectus supplement and may be attached to or separate
from any such offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent, all as set forth in the prospectus supplement
relating to the particular issue of warrants. The warrant agent will act solely
as our agent in connection with the warrants and will not assume any obligation
or relationship of agency or trust for or with any holders of warrants or
beneficial owners of warrants. The following summary of certain provisions of
the warrants does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all provisions of the warrant agreements.
You should refer to the prospectus supplement relating to a particular
issue of warrants for the terms of and information relating to the warrants,
including, where applicable:
(1) the number of shares of common stock purchasable upon exercise of
the warrants and the price at which such number of shares of common stock
may be purchased upon exercise of the warrants;
(2) the date on which the right to exercise the warrants shall
commence and the date on which such right shall expire (the "Expiration
Date");
(3) United States Federal income tax consequences applicable to the
warrants;
(4) the amount of the warrants outstanding as of the most recent
practicable date; and
(5) any other terms of the warrants.
Warrants will be offered and exercisable for U.S. dollars only. Warrants
will be issued in registered form only. Each warrant will entitle its holder to
purchase such number of shares of common stock at such exercise price as shall
in each case be set forth in, or calculable from, the prospectus supplement
relating to the warrants. The exercise price may be subject to adjustment upon
the occurrence of events described in such prospectus supplement. After the
close of business on the Expiration Date (or such later date to which we may
extend such Expiration Date), unexercised warrants will become void. The place
or places where, and the manner in which, warrants may be exercised will be
specified in the prospectus supplement relating to such warrants.
Prior to the exercise of any warrants, holders of the warrants will not
have any of the rights of holders of common stock, including the right to
receive payments of any dividends on the common stock purchasable upon exercise
of the warrants, or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
We may sell securities pursuant to this prospectus in or outside the United
States (a) through underwriters or dealers, (b) through agents or (c) directly
to one or more purchasers, including our existing stockholders in a rights
offering. The prospectus supplement relating to any offering of securities will
include the following information:
- the terms of the offering
- the names of any underwriters, dealers or agents
- the name or names of any managing underwriter or underwriters
- the purchase price of the securities from us
- the net proceeds to us from the sale of the securities
- any delayed delivery arrangements
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- any underwriting discounts, commissions and other items constituting
underwriters' compensation
- any initial public offering price
- any discounts or concessions allowed or reallowed or paid to dealers
- any commissions paid to agents
SALE THROUGH UNDERWRITERS OR DEALERS
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that selling concessions
allowed to syndicate members or other broker-dealers for the offered securities
sold for their account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered securities, which may be higher than the price that
might otherwise prevail in the open market. If commenced, the underwriters may
discontinue these activities at any time.
If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the securities directly. In this case, no underwriters or
agents would be involved. We may sell securities upon the exercise of rights
that we may issue to our securityholders. We may also sell the securities
directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any sale
of those securities.
We may sell the securities through agents we designate from time to time.
Unless we inform you otherwise in the prospectus supplement, any agent will
agree to use its reasonable best efforts to solicit purchases for the period of
its appointment.
DELAYED DELIVERY CONTRACTS
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The prospectus supplement will describe
the commission payable for solicitation of those contracts.
GENERAL INFORMATION
We may have agreements with the agents, dealers and underwriters to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments that the agents,
dealers or underwriters may be required to make. Agents, dealers and
underwriters may be
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<PAGE> 40
customers of, engage in transactions with or perform services for us in the
ordinary course of their business.
LEGAL MATTERS
Our legal counsel, Vinson & Elkins L.L.P., Houston, Texas, will pass upon
certain legal matters in connection with the offered securities. Any
underwriters will be advised about other issues relating to any offering by
their own legal counsel.
EXPERTS
The financial statements incorporated by reference to the Annual Report on
Form 10-K of Parker Drilling Company for the year ended December 31, 1999, have
been so incorporated in reliance upon the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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<PAGE> 41
12,000,000 SHARES
[PARKER DRILLING LOGO]
PARKER DRILLING COMPANY
COMMON STOCK
----------------------------
PROSPECTUS SUPPLEMENT
SEPTEMBER , 2000
----------------------------
LEHMAN BROTHERS
JEFFERIES & COMPANY, INC.
RBC DOMINION SECURITIES
[MAP]
