<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1994
REGISTRATION NO. 33-54495
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT
No. 1
To
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NOBLE DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1381 73-0374541
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
JAMES C. DAY
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
NOBLE DRILLING CORPORATION
10370 RICHMOND AVENUE, SUITE 400 10370 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77042 HOUSTON, TEXAS 77042
(713) 974-3131 (713) 974-3131
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area code, and telephone number, including
of registrant's principal executive offices) area code, of agent for service)
</TABLE>
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Copies to:
<TABLE>
<S> <C>
ROBERT D. CAMPBELL KEITH R. FULLENWEIDER
THOMPSON & KNIGHT, VINSON & ELKINS L.L.P.
A PROFESSIONAL CORPORATION 2500 FIRST CITY TOWER
1700 PACIFIC AVENUE, SUITE 3300 1001 FANNIN
DALLAS, TEXAS 75201 HOUSTON, TEXAS 77002-6760
(214) 969-1700 (713) 758-2222
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the
effective date of the Merger described in this Registration Statement.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 8(A) OF THE SECURITIES ACT OF 1933.
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<PAGE> 2
NOBLE DRILLING CORPORATION
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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ITEM
NO. ITEM IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
- ---- ------------------------------------------------------ ---------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus.............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................ Available Information; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information..................................... Outside Front Cover Page;
Summary; Investment
Considerations
4. Terms of the Transaction.............................. Summary; The Merger; Certain
Provisions of the Merger
Agreement
5. Pro Forma Financial Information....................... Summary; Unaudited Pro Forma
Combined Financial Statements
6. Material Contacts With the Company Being Acquired..... Investment Considerations; The
Merger
7. Additional Information Required For Reoffering by
Persons and Parties Deemed to be Underwriters......... Not applicable
8. Interests of Named Experts and Counsel................ Not applicable
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities........................ Not applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3 Registrants........... Incorporation of Certain
Documents by Reference;
The Companies
11. Incorporation of Certain Information by Reference..... Incorporation of Certain
Documents by Reference
12. Information With Respect to S-2 or S-3 Registrants.... Not applicable
13. Incorporation of Certain Information by Reference..... Not applicable
14. Information With Respect to Registrants Other than
S-3 or S-2 Registrants................................ Not applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3 Companies............. Incorporation of Certain
Documents by Reference;
The Companies
16. Information With Respect to S-2 or S-3 Companies...... Not applicable
17. Information With Respect to Companies Other than
S-3 or S-2 Companies.................................. Not applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM
NO. ITEM IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
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<S> <C> <C>
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations Are
to be Solicited....................................... Notice of Meetings; Outside Front
Cover Page; Summary; The
Meetings; The Merger; Certain
Provisions of the Merger
Agreement; Comparison of
Stockholder Rights
19. Information if Proxies, Consents or Authorizations Are
Not to be Solicited or in an Exchange Offer........... Not applicable
</TABLE>
<PAGE> 4
NOBLE DRILLING CORPORATION
(LOGO)
10370 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77042
August 16, 1994
To Our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders of
Noble Drilling Corporation ("Noble") at The Doubletree Hotel, 2001 Post Oak
Boulevard, Houston, Texas, on Thursday, September 15, 1994, at 10:00 a.m., local
time.
At the Special Meeting, stockholders will be asked to approve a merger
proposal (the "Merger Proposal"). The Merger Proposal includes approval of a
merger agreement pursuant to which Chiles Offshore Corporation ("Chiles") would
merge into a newly formed, wholly owned subsidiary of Noble. The merger
agreement provides that, upon consummation of the merger, each issued and
outstanding share of common stock of Chiles would be converted into the right to
receive 0.75 of a share of Noble common stock and each issued and outstanding
share of $1.50 convertible preferred stock of Chiles would be converted into the
right to receive one share of a new series of $1.50 convertible preferred stock
of Noble. The new series of Noble preferred stock will have substantially the
same rights, privileges, preferences and voting power as the Chiles preferred
stock.
Noble does not currently have available enough authorized shares of common
stock to permit it to consummate the merger. Thus, the merger cannot be
consummated unless Noble's certificate of incorporation is amended to increase
the authorized shares of Noble common stock. At the Special Meeting,
stockholders will also be asked to approve a proposal to amend Noble's
certificate of incorporation to increase the number of authorized shares of
Noble common stock from 75,000,000 to 200,000,000. The Merger Proposal and the
proposed charter amendment are described more fully in the accompanying Joint
Proxy Statement/Prospectus.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE MERGER PROPOSAL AND THE PROPOSED
CHARTER AMENDMENT, WHICH WERE APPROVED UNANIMOUSLY BY THE BOARD, ARE IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF NOBLE AND RECOMMENDS THAT YOU VOTE FOR THE
MERGER PROPOSAL AND CHARTER AMENDMENT. In addition, the Board of Directors has
received the opinion of Simmons & Company International, financial advisor to
Noble, that the consideration to be paid by Noble in the merger is fair from a
financial point of view to the holders of Noble common stock and $2.25
convertible exchangeable preferred stock. A copy of the opinion is included in
the Joint Proxy Statement/Prospectus as Appendix II thereto. Approval of the
Merger Proposal requires the affirmative vote of the holders of a majority of
the outstanding shares of Noble common stock present and entitled to vote
thereon at the Special Meeting. Approval of the Merger Proposal will constitute
approval of the merger agreement and the issuance of shares of Noble common
stock and the new series of Noble preferred stock pursuant to the merger.
Approval of the proposed charter amendment requires the affirmative vote of the
holders of a majority of the shares of Noble common stock outstanding and
entitled to vote at the meeting.
At the Special Meeting, stockholders will also be asked to approve a
proposal to amend the Noble Drilling Corporation 1991 Stock Option and
Restricted Stock Plan to increase from 1,900,000 to 5,200,000 the number of
shares of Noble common stock available for issuance thereunder and to make
certain amendments to conform with recent changes in federal tax laws. Approval
of the proposed stock option plan amendments requires the affirmative vote of
the holders of a majority of the outstanding shares of Noble common stock
present and entitled to vote thereon at the meeting.
You are urged to read carefully the Joint Proxy Statement/Prospectus and
the Appendices thereto in their entirety for a complete description of the
Merger Proposal and the proposed charter and stock option plan amendments.
Whether or not you plan to be at the Special Meeting, please be sure to sign,
date and return the enclosed proxy or voting instruction card in the enclosed
envelope as promptly as possible so that your shares may be represented at the
Special Meeting and voted in accordance with your wishes. Your vote is important
regardless of the number of shares you own.
Sincerely,
/S/ JAMES C. DAY
_______________________________
JAMES C. DAY
Chairman, President and Chief
Executive Officer
<PAGE> 5
CHILES OFFSHORE CORPORATION
(LOGO)
1400 BROADFIELD BLVD.
SUITE 400
HOUSTON, TEXAS 77084-5133
August 16, 1994
Dear Chiles Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders to be
held at 10:00 a.m., local time, on September 15, 1994, at 1400 Broadfield Blvd.,
Suite 400, Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to authorize, approve and adopt an Agreement and Plan of Merger (the
"Merger Agreement") providing for the merger (the "Merger") of Chiles Offshore
Corporation ("Chiles") with and into a wholly owned subsidiary of Noble Drilling
Corporation ("Noble"). Under the terms of the Merger Agreement, (i) each
outstanding share of Chiles common stock, $.01 par value per share ("Chiles
Common Stock"), will be converted into the right to receive 0.75 of a share of
Noble common stock, $.10 par value per share, and (ii) each outstanding share of
Chiles $1.50 Convertible Preferred Stock, $1.00 par value per share ("Chiles
Preferred Stock"), will be converted into the right to receive one share of
$1.50 Convertible Preferred Stock, $1.00 par value per share, of Noble having
substantially the same rights, privileges, preferences and voting power as the
Chiles Preferred Stock.
The Board of Directors of Chiles has retained Salomon Brothers Inc to
advise it with respect to the fairness of the consideration to be received by
the stockholders of Chiles in the Merger. Salomon Brothers Inc has advised the
Board that, in its opinion, the consideration to be received by the Chiles
common and preferred stockholders pursuant to the Merger Agreement is fair to
such holders from a financial point of view. A copy of the opinion of Salomon
Brothers Inc is included in the enclosed Joint Proxy Statement/Prospectus as
Appendix III thereto.
THE BOARD OF DIRECTORS OF CHILES BELIEVES THAT THE MERGER IS FAIR TO AND IN
THE BEST INTERESTS OF CHILES AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS
THAT THE HOLDERS OF CHILES COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
A description of the basic terms and conditions of the Merger and financial
and other information concerning the business of Noble are included in the
enclosed Joint Proxy Statement/Prospectus. Please review the Joint Proxy
Statement/Prospectus carefully.
Your vote is important. The affirmative vote of the holders of a majority
of the outstanding shares of Chiles Common Stock is required to approve the
Merger, so failure to vote will have the same effect as a vote against the
Merger. Accordingly, we urge you to complete, sign and date the enclosed proxy
card and return it promptly in the enclosed return envelope, whether or not you
plan to attend the meeting. If you do attend the meeting, you may withdraw your
proxy and vote in person if you wish to do so.
Sincerely,
/s/ C. RAY BEARDEN
_____________________________
C. RAY BEARDEN
President
<PAGE> 6
NOBLE DRILLING CORPORATION
(LOGO)
10370 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77042
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 15, 1994
To the Stockholders of
Noble Drilling Corporation:
A special meeting of stockholders of Noble Drilling Corporation, a Delaware
corporation ("Noble"), will be held on Thursday, September 15, 1994, at 10:00
a.m., local time, at The Doubletree Hotel, 2001 Post Oak Boulevard, Houston,
Texas, for the following purposes:
1. To consider and vote upon, as a single proposal, (a) the approval
of the Agreement and Plan of Merger (the "Merger Agreement") attached as
Appendix I to the accompanying Joint Proxy Statement/Prospectus, pursuant
to which, among other things, (i) Chiles Offshore Corporation ("Chiles")
would merge with and into a newly formed, wholly owned subsidiary of Noble
(the "Merger") and (ii) each issued and outstanding share of Common Stock
of Chiles would be converted in the Merger into the right to receive 0.75
of a share of Common Stock of Noble and each issued and outstanding share
of $1.50 Convertible Preferred Stock of Chiles would be converted in the
Merger into the right to receive one share of a new series of $1.50
Convertible Preferred Stock of Noble, subject to and in accordance with the
terms and conditions of the Merger Agreement, and (b) the approval of the
issuance of shares of Common Stock of Noble and the new series of $1.50
Convertible Preferred Stock of Noble pursuant to the Merger Agreement;
2. To consider and vote upon a proposal to amend Noble's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of Noble from 75,000,000 to 200,000,000;
3. To consider and vote upon a proposal to amend the Noble Drilling
Corporation 1991 Stock Option and Restricted Stock Plan to (a) increase
from 1,900,000 to 5,200,000 the aggregate number of shares of Common Stock
of Noble available for issuance thereunder, (b) limit to 1,500,000 the
total number of shares of Common Stock of Noble that may be made subject to
grants of options or stock appreciation rights or awards of restricted
stock under the Plan to any one person during any five-year period, and (c)
provide for administration of the Plan by directors who are "outside"
directors within the meaning of federal tax laws; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Regardless of whether the stockholders of Noble approve the Merger, the
Merger cannot be consummated unless the stockholders also adopt the proposal to
amend Noble's Restated Certificate of Incorporation.
The Board of Directors has fixed the close of business on August 9, 1994 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting or any adjournment thereof. Only holders of record of
shares of Common Stock of Noble at the close of business on the record date are
entitled to notice of and to vote at the meeting. A complete list of such
stockholders will be available for examination at the offices of Noble in
Houston, Texas during normal business hours by any Noble stockholder, for any
purpose germane to the special meeting, for a period of 10 days prior to the
meeting. Stockholders of Noble are not entitled to any appraisal or dissenter's
rights under the Delaware General Corporation Law in respect of the Merger.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED. If a stockholder who has returned a proxy
attends the meeting in person, such stockholder may revoke the proxy and vote in
person on all matters submitted at the meeting.
By Order of the Board of Directors
JULIE J. ROBERTSON
Secretary
Houston, Texas
August 16, 1994
<PAGE> 7
CHILES OFFSHORE CORPORATION
(LOGO)
1400 BROADFIELD BLVD.
SUITE 400
HOUSTON, TEXAS 77084-5133
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of
Chiles Offshore Corporation:
Notice is hereby given that a special meeting of the stockholders of Chiles
Offshore Corporation (the "Special Meeting") will be held at 1400 Broadfield
Blvd., Suite 400, Houston, Texas, at 10:00 a.m., local time, on Thursday,
September 15, 1994, for the following purposes:
1. To consider and vote upon a proposal to authorize, approve and
adopt an Agreement and Plan of Merger, dated as of June 13, 1994 (the
"Merger Agreement"), relating to the merger of Chiles Offshore Corporation
("Chiles") with and into a wholly owned subsidiary of Noble Drilling
Corporation ("Noble") pursuant to which (i) each outstanding share of
Chiles common stock, $.01 par value per share ("Chiles Common Stock"), will
be converted into the right to receive 0.75 of a share of Noble common
stock, $.10 par value per share, and (ii) each outstanding share of $1.50
Convertible Preferred Stock, $1.00 par value per share, of Chiles will be
converted into the right to receive one share of a new series of $1.50
Convertible Preferred Stock, $1.00 par value per share, of Noble having
substantially the same rights, privileges, preferences and voting power as
the Chiles $1.50 Convertible Preferred Stock, all as more fully set forth
in the accompanying Joint Proxy Statement/Prospectus and in the Merger
Agreement, a copy of which is included as Appendix I thereto; and
2. To transact such other business as may properly come before the
Special Meeting.
Only holders of record of Chiles Common Stock at the close of business on
August 9, 1994 are entitled to notice of and to vote at the Special Meeting. A
complete list of such stockholders will be available for examination at the
offices of Chiles in Houston, Texas during normal business hours by any Chiles
stockholder for any purpose germane to the Special Meeting for a period of 10
days prior to the meeting. Stockholders of Chiles are not entitled to any
appraisal or dissenter's rights under the Delaware General Corporation Law in
respect of the proposed merger.
Your vote is important. The affirmative vote of the holders of a majority
of the outstanding shares of Chiles Common Stock is required for approval of the
Merger Agreement. Even if you plan to attend the meeting in person, we request
that you sign and return the enclosed proxy card and thus ensure that your
shares will be represented at the meeting if you are unable to attend. If you do
attend the meeting and wish to vote in person, you may withdraw your proxy and
vote in person.
By order of the Board of Directors,
ROBERT F. FULTON
Secretary
Houston, Texas
August 16, 1994
<PAGE> 8
NOBLE DRILLING CORPORATION
CHILES OFFSHORE CORPORATION
JOINT PROXY STATEMENT/PROSPECTUS
---------------------
This Joint Proxy Statement/Prospectus relates to the proposed merger (the
"Merger") of Chiles Offshore Corporation ("Chiles"), a Delaware corporation,
with and into Noble Offshore Corporation ("Noble Sub"), a Delaware corporation
and a wholly owned subsidiary of Noble Drilling Corporation ("Noble"), a
Delaware corporation, pursuant to an Agreement and Plan of Merger among Noble,
Noble Sub and Chiles dated June 13, 1994 (the "Merger Agreement"). As a result
of the Merger, (i) the separate corporate existence of Chiles will cease and all
of the properties, rights, privileges, powers and franchises of Chiles will vest
in Noble Sub, which will be the surviving corporation in the Merger, and all of
the debts, liabilities and duties of Chiles will attach to Noble Sub, (ii) each
share of Common Stock of Chiles, par value $.01 per share ("Chiles Common
Stock"), outstanding immediately prior to the effective time of the Merger will
be converted into the right to receive 0.75 of a share of Common Stock of Noble,
par value $.10 per share ("Noble Common Stock"), and (iii) each share of $1.50
Convertible Preferred Stock of Chiles, par value $1.00 per share ("Chiles
Preferred Stock"), outstanding immediately prior to the effective time of the
Merger will be converted into the right to receive one share of a new series of
$1.50 Convertible Preferred Stock of Noble, par value $1.00 per share ("$1.50
Noble Preferred Stock"), having substantially the same rights, privileges,
preferences and voting power as the Chiles Preferred Stock.
This Joint Proxy Statement/Prospectus is being furnished to holders of
Noble Common Stock and holders of Chiles Common Stock in connection with the
solicitation of proxies by the respective Boards of Directors of Noble and
Chiles for use at the special meetings of the stockholders of each company to be
held on September 15, 1994. This Joint Proxy Statement/Prospectus and the
accompanying forms of proxy or voting instruction card are first being mailed to
stockholders of Noble and Chiles on or about August 16, 1994.
At the Noble special meeting, holders of Noble Common Stock will be asked
to vote on (i) a proposal to approve the Merger Agreement and the issuance of
shares of Noble Common Stock and $1.50 Noble Preferred Stock pursuant thereto
(the "Merger Proposal"), (ii) a proposal to amend the Restated Certificate of
Incorporation of Noble to increase the number of authorized shares of Noble
Common Stock from 75,000,000 to 200,000,000 (the "Noble Charter Amendment") and
(iii) a proposal to amend the Noble Drilling Corporation 1991 Stock Option and
Restricted Stock Plan to (a) increase from 1,900,000 to 5,200,000 the aggregate
number of shares of Noble Common Stock available for issuance thereunder, (b)
limit to 1,500,000 the total number of shares of Common Stock of Noble that may
be made subject to grants of options or stock appreciation rights or awards of
restricted stock under the Plan to any one person during any five-year period
and (c) provide for administration of the Plan by directors who are "outside"
directors within the meaning of federal tax laws (the "Noble Plan Amendment").
At the Chiles special meeting, holders of Chiles Common Stock will be asked to
authorize, approve and adopt the Merger Agreement.
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Noble with respect to (i) up to 28,844,280 shares of Noble Common Stock to be
issued pursuant to the Merger in exchange for Chiles Common Stock, (ii) up to
4,025,000 shares of $1.50 Noble Preferred Stock to be issued pursuant to the
Merger in exchange for Chiles Preferred Stock and an indeterminable number of
shares of Noble Common Stock issuable from time to time upon the conversion of
such $1.50 Noble Preferred Stock and (iii) up to 480,000 shares of Noble Common
Stock to be issued pursuant to the Merger Agreement in exchange for and upon the
cancellation of options to purchase Chiles Common Stock ("Chiles Options"), in
the event that each holder of Chiles Options approves such cancellation and
exchange. Noble Common Stock is currently listed for trading in the NASDAQ
National Market System. The shares of $1.50 Noble Preferred Stock to be issued
upon consummation of the Merger have been approved for inclusion in the NASDAQ
National Market System, subject to official notice of issuance.
On August 11, 1994, the last sale prices of Noble Common Stock and Chiles
Common Stock, as reported in the NASDAQ National Market System and on the
American Stock Exchange, respectively, were $6.625 and $4.75 per share,
respectively. Based on such prices, the consideration to be received by holders
of Chiles Common Stock pursuant to the Merger would be equivalent to $4.969 per
share of Chiles Common Stock.
FOR A DISCUSSION OF CERTAIN CONSIDERATIONS REGARDING THE BUSINESS AND
OPERATIONS OF NOBLE AND CHILES THAT SHOULD BE EVALUATED BEFORE VOTING ON THE
PROPOSALS HEREIN AT THE NOBLE SPECIAL MEETING OR THE CHILES SPECIAL MEETING, SEE
"INVESTMENT CONSIDERATIONS."
---------------------
THE SECURITIES TO WHICH THIS JOINT PROXY STATEMENT/PROSPECTUS RELATES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is August 12, 1994.
<PAGE> 9
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NOBLE OR
CHILES. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES, OR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY
SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF NOBLE OR CHILES SINCE THE DATE HEREOF OR THAT THE INFORMATION SET
FORTH OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
AVAILABLE INFORMATION
Noble and Chiles are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
other information may be inspected and copied or obtained by mail upon the
payment of the Commission's prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington D.C. 20549, and at the following Regional Offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, 13th floor, New York, New York
10048. Copies of such material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, reports, proxy statements and other
information filed by Noble can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, Washington, D.C. 20006,
and reports, proxy statements and other information filed by Chiles can be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006-1881.
Noble has filed with the Commission a registration statement on Form S-4
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Noble Common Stock and $1.50
Noble Preferred Stock to be issued pursuant to the Merger Agreement, as well as
the Noble Common Stock subject to issuance upon conversion of the $1.50 Noble
Preferred Stock. Except as provided in the Merger Agreement, the information
contained herein with respect to Noble and its subsidiaries, including Noble
Sub, has been provided by Noble and the information with respect to Chiles and
its subsidiaries has been provided by Chiles. This Joint Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement and any
amendments thereto, including exhibits filed as a part thereof, are available
for inspection and copying as set forth above. Statements contained in this
Joint Proxy Statement/Prospectus or in any document incorporated in this Joint
Proxy Statement/Prospectus by reference as to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are incorporated herein by reference:
1. Noble's Annual Report on Form 10-K for its fiscal year ended
December 31, 1993, as amended by Amendment No. 1 to such Annual Report on
Form 10-K/A dated June 28, 1994.
2. Noble's Quarterly Reports on Form 10-Q for the periods ended March
31, 1994 and June 30, 1994.
i
<PAGE> 10
3. Noble's Current Report on Form 8-K dated April 22, 1994, as amended
by Amendment No. 1 to such Current Report on Form 8-K/A dated June 30,
1994.
4. Noble's Current Report on Form 8-K dated June 13, 1994.
5. The description of the Noble Common Stock contained in the
Registration Statement on Form 10 of Noble heretofore filed with the
Commission, including any amendments or reports filed for the purpose of
updating such description.
6. Chiles' Annual Report on Form 10-K for its fiscal year ended
December 31, 1993.
7. Chiles' Quarterly Reports on Form 10-Q for the periods ended March
31, 1994, as amended by Amendment No. 1 to such Quarterly Report on Form
10-Q/A dated August 11, 1994, and June 30, 1994.
8. Chiles' Current Report on Form 8-K dated June 13, 1994.
All documents and reports filed by Noble or Chiles pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the special meetings of the
stockholders of each company shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective dates of filing of such
documents or reports. All information appearing in this Joint Proxy
Statement/Prospectus or in any document incorporated herein by reference is not
necessarily complete and is qualified in its entirety by the information and
financial statements (including notes thereto) appearing in the documents
incorporated herein by reference and should be read together with such
information and documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Joint Proxy Statement/Prospectus to the extent
that a statement contained herein (or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Joint Proxy Statement/Prospectus
except as so modified or superseded.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. NOBLE AND CHILES
EACH UNDERTAKE TO PROVIDE COPIES OF SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE),
WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS
JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO,
IN THE CASE OF DOCUMENTS RELATING TO NOBLE, JULIE J. ROBERTSON, CORPORATE
SECRETARY, NOBLE DRILLING CORPORATION, 10370 RICHMOND AVENUE, SUITE 400,
HOUSTON, TEXAS 77042 (TELEPHONE NUMBER 713/974-3131), AND IN THE CASE OF
DOCUMENTS RELATING TO CHILES, ROBERT F. FULTON, CORPORATE SECRETARY, CHILES
OFFSHORE CORPORATION, 1400 BROADFIELD BOULEVARD, SUITE 400, HOUSTON, TEXAS
77084-5133 (TELEPHONE NUMBER 713/647-0100). IN ORDER TO ENSURE TIMELY DELIVERY
OF THESE DOCUMENTS PRIOR TO THE SPECIAL MEETINGS OF STOCKHOLDERS, ANY REQUEST
SHOULD BE MADE BY SEPTEMBER 8, 1994.
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TABLE OF CONTENTS
<TABLE>
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SUMMARY.............................................................................. 1
The Companies...................................................................... 1
The Meetings....................................................................... 1
The Merger and the Merger Agreement................................................ 3
Investment Considerations.......................................................... 8
Noble Charter Amendment............................................................ 8
Noble Plan Amendment............................................................... 8
Summary Historical Financial Data.................................................. 9
Summary Pro Forma Combined Financial Data.......................................... 11
Comparative Per Share Data......................................................... 12
THE COMPANIES........................................................................ 13
Noble Drilling Corporation......................................................... 13
Chiles Offshore Corporation........................................................ 14
THE MEETINGS......................................................................... 14
Matters to be Considered at the Meetings........................................... 14
Recommendations of the Boards of Directors......................................... 14
Voting at Meetings; Record Dates................................................... 14
Security Ownership of Management and Certain Other Persons......................... 15
Proxies............................................................................ 16
Solicitation of Proxies............................................................ 17
THE MERGER........................................................................... 17
Effects of the Merger.............................................................. 17
Background of the Merger........................................................... 18
Reasons for the Merger............................................................. 21
Opinions of Financial Advisors..................................................... 22
Certain Federal Income Tax Consequences............................................ 30
Anticipated Accounting Treatment................................................... 32
Regulatory Approvals............................................................... 32
Limitations on Resales; Registration Rights........................................ 33
Listing in NASDAQ National Market System........................................... 34
No Appraisal Rights................................................................ 34
Interests of Certain Persons in the Merger......................................... 34
CERTAIN PROVISIONS OF THE MERGER AGREEMENT........................................... 36
General............................................................................ 36
Effective Time of the Merger; Closing.............................................. 36
Conversion of Shares; Procedure for Exchange of Certificates; Fractional Shares.... 36
Representations and Warranties..................................................... 37
Conduct of Business Prior to Effective Time........................................ 37
Solicitation of Third Party Offers................................................. 38
Chiles Options..................................................................... 39
</TABLE>
<TABLE>
<S> <C>
NASDAQ National Market System Listing.............................................. 39
Indemnification.................................................................... 40
Chiles Employee Benefits........................................................... 40
Registration Rights Agreement...................................................... 40
Certain Conditions to Consummation of the Merger................................... 40
Termination........................................................................ 41
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
INVESTMENT CONSIDERATIONS............................................................ 42
Intense Competition; Industry Conditions........................................... 42
Losses from Operations............................................................. 42
Substantial International Operations; Disruption of Nigerian Market................ 42
Concentration of Operations in Certain Markets..................................... 43
Absence of Dividends on Noble Common Stock; Dividend Restrictions.................. 43
Restrictions on Foreign Ownership.................................................. 44
Operational Risks and Insurance.................................................... 44
Governmental Regulation and Environmental Matters.................................. 44
Limitation on Use of Net Operating Loss Carryforwards.............................. 45
PROPOSAL TO ADOPT NOBLE CHARTER AMENDMENT............................................ 45
Background and Reasons............................................................. 45
Proposed Noble Charter Amendment................................................... 46
Recommendation and Required Affirmative Vote....................................... 46
PROPOSAL TO APPROVE NOBLE PLAN AMENDMENT............................................. 46
General............................................................................ 46
Reasons and Principal Effects of the Proposal...................................... 47
Description of Plan as Currently in Effect......................................... 47
United States Federal Income Tax Consequences...................................... 49
Recommendation and Required Affirmative Vote....................................... 50
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS.................................... 51
DESCRIPTION OF NOBLE CAPITAL STOCK................................................... 58
Noble Common Stock................................................................. 58
$2.25 Noble Preferred Stock........................................................ 58
$1.50 Noble Preferred Stock........................................................ 60
Federal Income Tax Considerations Regarding $1.50 Noble Preferred Stock............ 67
Restrictions on Dividends.......................................................... 70
Foreign Ownership.................................................................. 72
Certain Corporate Governance Provisions............................................ 72
COMPARISON OF STOCKHOLDER RIGHTS..................................................... 74
General............................................................................ 74
Authorized Capital................................................................. 75
Removal of Directors............................................................... 75
Power of Stockholders to Call Special Meeting...................................... 75
Classified Board and Fair Price Provision.......................................... 75
MANAGEMENT AND OTHER INFORMATION..................................................... 75
LEGAL MATTERS........................................................................ 76
EXPERTS.............................................................................. 76
STOCKHOLDER PROPOSALS................................................................ 76
APPENDIX I -- Agreement and Plan of Merger dated June 13, 1994
APPENDIX II -- Opinion of Simmons & Company International
APPENDIX III -- Opinion of Salomon Brothers Inc
</TABLE>
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<PAGE> 13
SUMMARY
The following is a summary of certain information contained elsewhere in
this Joint Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained in or
incorporated by reference in this Joint Proxy Statement/Prospectus and the
Appendices hereto. Stockholders are urged to carefully read this Joint Proxy
Statement/Prospectus and the Appendices hereto in their entirety. As used in
this Joint Proxy Statement/Prospectus, unless otherwise required by the context,
the term "Noble" means Noble Drilling Corporation and its consolidated
subsidiaries and the term "Chiles" means Chiles Offshore Corporation and its
consolidated subsidiaries.
THE COMPANIES
Noble and Noble Sub. Noble is a leading provider of contract drilling
services for the oil and gas industry worldwide. Noble Sub is a wholly owned
subsidiary of Noble recently incorporated in Delaware for the sole purpose of
effecting the Merger pursuant to the Merger Agreement. The principal executive
offices of Noble are located at 10370 Richmond Avenue, Suite 400, Houston, Texas
77042, and Noble's telephone number at such offices is (713) 974-3131.
Chiles. Chiles is engaged in providing offshore oil and gas drilling
services on a contract basis in the Gulf of Mexico and West Africa. The
principal executive offices of Chiles are located at 1400 Broadfield Boulevard,
Suite 400, Houston, Texas 77084-5133, and Chiles' telephone number at such
offices is (713) 647-0100.
For additional information concerning Noble and Chiles, see "The
Companies."
THE MEETINGS
DATE, TIME AND PLACE
Noble. The Special Meeting of Stockholders of Noble (the "Noble Special
Meeting") will be held on Thursday, September 15, 1994, at The Doubletree Hotel,
2001 Post Oak Boulevard, Houston, Texas, commencing at 10:00 a.m., local time.
Chiles. The Special Meeting of Stockholders of Chiles (the "Chiles Special
Meeting") will be held on Thursday, September 15, 1994, at 1400 Broadfield
Blvd., Suite 400, Houston, Texas, commencing at 10:00 a.m., local time.
PURPOSES OF THE MEETINGS
Noble. The purpose of the Noble Special Meeting is to consider and vote
upon (i) the Merger Proposal, which includes the approval of the Merger
Agreement and the approval of the issuance of shares of Noble Common Stock and
$1.50 Noble Preferred Stock pursuant to the Merger Agreement, (ii) a proposal to
adopt the Noble Charter Amendment, (iii) a proposal to approve the Noble Plan
Amendment and (iv) such other matters as may properly be brought before the
Noble Special Meeting.
Chiles. The purpose of the Chiles Special Meeting is to consider and vote
upon (i) a proposal to authorize, approve and adopt the Merger Agreement and
(ii) such other matters as may properly be brought before the Chiles Special
Meeting.
RECORD DATES; SHARES ENTITLED TO VOTE
Noble. Only holders of record of shares of Noble Common Stock at the close
of business on August 9, 1994 are entitled to notice of and to vote at the Noble
Special Meeting. On such date, there were 48,606,871 shares of Noble Common
Stock outstanding, each of which will be entitled to one vote on each matter to
be acted upon at the Noble Special Meeting.
Chiles. Only holders of record of shares of Chiles Common Stock at the
close of business on August 9, 1994 are entitled to notice of and to vote at the
Chiles Special Meeting. On such date, there were
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<PAGE> 14
38,131,780 shares of Chiles Common Stock outstanding, each of which will be
entitled to one vote on each matter to be acted upon at the Chiles Special
Meeting.
QUORUM; VOTE REQUIRED
Noble. The presence, in person or by proxy, at the Noble Special Meeting of
the holders of a majority of the shares of Noble Common Stock outstanding and
entitled to vote at the Noble Special Meeting is necessary to constitute a
quorum at the meeting. The affirmative vote of the holders of a majority of the
outstanding shares of Noble Common Stock present and entitled to vote thereon at
the Noble Special Meeting is required to approve the Merger Proposal and the
Noble Plan Amendment. Adoption of the Noble Charter Amendment requires the
affirmative vote of the holders of a majority of the shares of Noble Common
Stock outstanding and entitled to vote at the meeting.
The respective obligations of Noble and Chiles to consummate the Merger are
subject to, among other conditions, the approval by the stockholders of Noble of
both the Merger Proposal and the Noble Charter Amendment. Thus, if the Noble
Charter Amendment is not adopted by the requisite vote of stockholders of Noble,
then the Merger cannot be consummated, notwithstanding that the Merger Proposal
may have been approved by the stockholders of Noble. The Noble Charter Amendment
will be effected if it is adopted by the stockholders of Noble irrespective of
whether such stockholders approve the Merger Proposal. Approval by the
stockholders of Noble of the Noble Plan Amendment is not a condition to
consummation of the Merger.
Chiles. The presence, in person or by proxy, at the Chiles Special Meeting
of the holders of a majority of the shares of Chiles Common Stock outstanding
and entitled to vote at the Chiles Special Meeting is necessary to constitute a
quorum at the meeting. The affirmative vote of the holders of a majority of the
shares of Chiles Common Stock outstanding and entitled to vote at the meeting is
required to authorize, approve and adopt the Merger Agreement.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER PERSONS
Noble. As of the record date for the Noble Special Meeting, the directors
and executive officers of Noble and their affiliates (excluding shares owned by
The Samuel Roberts Noble Foundation, Inc. (the "Foundation")) owned beneficially
approximately 1.2 percent of the outstanding shares of Noble Common Stock. Each
of the directors and executive officers has advised Noble that he intends to
vote or direct the vote of all shares of Noble Common Stock of which he has
beneficial ownership in favor of the approval and adoption of the Merger
Proposal, the Noble Charter Amendment and the Noble Plan Amendment. The
Foundation held, as of the record date, 5,459,537 shares of Noble Common Stock
(approximately 11.2 percent of the outstanding shares of Noble Common Stock).
Two directors of Noble serve on the nine-member board of trustees of the
Foundation. The voting of the shares held by the Foundation requires a majority
vote of its trustees at a meeting at which a quorum of trustees is present.
Accordingly, neither of the two directors of Noble, individually, nor both of
them acting together, represent sufficient voting power on the Foundation's
board of trustees to determine voting decisions with respect to shares held by
the Foundation.
Chiles. As of the record date for the Chiles Special Meeting, the
directors, executive officers and two principal stockholders of Chiles, P.A.J.W.
Corporation ("P.A.J.W.") and OMI Investments, Inc. ("OMI"), held an aggregate of
14,916,342 shares of Chiles Common Stock (approximately 39.1 percent of the
outstanding shares of Chiles Common Stock). Such persons are not obligated to
vote their shares in favor of approval and adoption of the Merger Agreement, but
each of them or their representatives has advised Chiles that they presently
intend to vote their shares in favor of approval and adoption of the Merger
Agreement.
For additional information concerning the special meetings, see "The
Meetings."
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<PAGE> 15
THE MERGER AND THE MERGER AGREEMENT
EFFECTS OF THE MERGER
Subject to the terms and conditions of the Merger Agreement, at the
effective time of the Merger Chiles will merge with and into Noble Sub, with
Noble Sub being the surviving corporation, and all of the assets of Chiles will
vest in Noble Sub and all of the liabilities and obligations of Chiles will
attach to Noble Sub. By virtue of the Merger, each share of Chiles Common Stock
outstanding immediately prior to the effective time of the Merger will be
converted into the right to receive 0.75 of a share of Noble Common Stock and
each share of Chiles Preferred Stock outstanding immediately prior to the
effective time of the Merger will be converted into the right to receive one
share of $1.50 Noble Preferred Stock. Based on the capitalization of Noble and
Chiles as of the record date for the special meetings, and assuming the
cancellation of the Chiles Options in exchange for 480,000 shares of Noble
Common Stock, pursuant to the Merger Agreement (i) approximately 29,078,835
shares of Noble Common Stock will be issued, which represents approximately 37.4
percent of the number of shares of Noble Common Stock that would be outstanding
immediately after the Merger, and (ii) 4,025,000 shares of $1.50 Noble Preferred
Stock will be issued. See "The Merger -- Effects of the Merger."
EFFECTIVE TIME OF THE MERGER
It is anticipated that the Merger will become effective (the "Effective
Time") as promptly as practicable after the requisite stockholder approvals have
been obtained and all other conditions to the Merger have been satisfied or
waived. See "Certain Provisions of the Merger Agreement -- Effective Time of the
Merger; Closing."
PROCEDURE FOR EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Time, each holder of a
certificate that prior thereto represented shares of Chiles Common Stock or
Chiles Preferred Stock will be entitled, upon surrender of such certificate to
Noble's transfer agent, Liberty Bank and Trust Company of Oklahoma City, N.A.,
to receive in exchange therefor, as applicable, (i) a certificate(s)
representing the number of whole shares of Noble Common Stock into which such
shares of Chiles Common Stock were converted pursuant to the Merger or (ii) a
certificate(s) representing the number of shares of $1.50 Noble Preferred Stock
into which such shares of Chiles Preferred Stock were converted pursuant to the
Merger, in each case, in such denominations and registered in such names as the
holder may request. CHILES STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK
CERTIFICATES AT THIS TIME. Following the Effective Time, Noble's transfer agent
will mail to each former holder of Chiles Common Stock or Chiles Preferred Stock
a letter describing how certificates representing Chiles Common Stock or Chiles
Preferred Stock should be presented for exchange.
No fractional shares of Noble Common Stock will be issued in the Merger;
instead, cash will be paid in lieu thereof based on the market price of a share
of Noble Common Stock as of a specified date prior to the Effective Time. See
"Certain Provisions of the Merger Agreement -- Conversion of Shares; Procedure
for Exchange of Certificates; Fractional Shares."
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
THE BOARDS OF DIRECTORS OF NOBLE AND CHILES BELIEVE THAT THE MERGER IS FAIR
TO AND IN THE BEST INTERESTS OF THEIR RESPECTIVE STOCKHOLDERS, AND EACH BOARD
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE RELATED TRANSACTIONS. THE
BOARD OF DIRECTORS OF NOBLE UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF
NOBLE APPROVE AND ADOPT THE MERGER PROPOSAL, THE NOBLE CHARTER AMENDMENT AND THE
NOBLE PLAN AMENDMENT. THE BOARD OF DIRECTORS OF CHILES UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS OF CHILES APPROVE AND ADOPT THE MERGER AGREEMENT. See "The
Meetings -- Recommendations of the Boards of Directors," and "The
Merger -- Background of the Merger" and "-- Reasons for the Merger."
In considering the recommendation of the Board of Directors of Chiles in
favor of the Merger, stockholders of Chiles should be aware that certain
executive officers and directors of Chiles have direct or
3
<PAGE> 16
indirect interests in recommending the Merger Agreement, apart from their
interests as stockholders of Chiles. See "The Merger -- Interests of Certain
Persons in the Merger."
OPINIONS OF FINANCIAL ADVISORS
Simmons & Company International ("Simmons") has delivered its written
opinion dated June 13, 1994, and confirmed in writing as of August 12, 1994, to
the Board of Directors of Noble that, as of the respective dates thereof, the
consideration to be paid by Noble in the Merger was fair from a financial point
of view to the holders of Noble Common Stock and Noble $2.25 convertible
exchangeable preferred stock.
Salomon Brothers Inc ("Salomon") has delivered its written opinions to the
Board of Directors of Chiles dated June 13, 1994 and August 12, 1994, that, as
of the respective dates thereof, the consideration to be received by the holders
of Chiles Common Stock and Chiles Preferred Stock in the Merger was fair from a
financial point of view to such stockholders.
For information regarding the opinions of Simmons and Salomon, including
the assumptions made, matters considered and limits of such opinions, see "The
Merger -- Opinions of Financial Advisors." Stockholders are urged to read in
their entirety the opinions of Simmons and Salomon, attached as Appendices II
and III, respectively, to this Joint Proxy Statement/Prospectus.
CERTAIN CONDITIONS TO THE CONSUMMATION OF THE MERGER
The respective obligations of Noble and Chiles to consummate the Merger are
subject to the satisfaction of certain conditions, including the following: (i)
approval of the Merger Proposal and adoption of the Noble Charter Amendment by
the stockholders of Noble, and approval and adoption of the Merger Agreement by
the stockholders of Chiles; (ii) expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"); (iii) the absence of any order restraining or
preventing consummation of the Merger; (iv) all material required consents to
consummation of the Merger having been obtained; (v) the shares of Noble Common
Stock and $1.50 Noble Preferred Stock to be issued in connection with the Merger
having been approved for listing in the NASDAQ National Market System; (vi)
Noble and Chiles having been advised in writing by Arthur Andersen & Co. that
the Merger should qualify for treatment as a "pooling of interests" for
accounting purposes; and (vii) the fairness opinion of such party's financial
advisor having not been withdrawn.
The shares of Noble Common Stock and $1.50 Noble Preferred Stock to be
issued upon consummation of the Merger have been approved for listing in the
NASDAQ National Market System, subject to official notice of issuance. Noble and
Chiles anticipate that all of the other conditions described above (other than
obtaining the required approvals of the stockholders of Noble and Chiles) will
be satisfied prior to the Noble Special Meeting and the Chiles Special Meeting.
Either Noble or Chiles may extend the time for performance of any of the
obligations of the other party or may waive compliance with those obligations at
their discretion. See "Certain Provisions of the Merger Agreement -- Certain
Conditions to Consummation of the Merger."
GOVERNMENTAL APPROVALS
On July 18, 1994, Noble, Chiles and a stockholder of Chiles each filed a
notification and report, together with requests for early termination of the
waiting period, under the HSR Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice in respect of the Merger.
Expiration or early termination of the applicable waiting period under the HSR
Act is a condition to the obligations of Noble and Chiles to consummate the
Merger. The waiting period will expire on August 17, 1994 unless a request for
additional information is received before such date. See "The
Merger -- Regulatory Approvals." Neither Noble nor Chiles is aware of any other
governmental or regulatory approval required for consummation of the Merger,
other than compliance with applicable securities laws.
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NO SOLICITATION
The Merger Agreement provides that Chiles will not, directly or indirectly,
solicit or knowingly encourage the initiation of any inquiries or proposals
regarding (i) any merger, tender offer, sale of shares of capital stock or
similar business combination transaction involving Chiles that would have the
effect of causing the holders of Chiles Common Stock immediately prior to the
effectiveness of such proposed transaction to own in the aggregate less than 50
percent of the shares of the surviving or resulting entity entitled to vote
generally for the election of directors of the surviving or resulting entity, or
(ii) any sale of all or substantially all the assets of Chiles (collectively, a
"Chiles Acquisition Transaction"). Notwithstanding the foregoing, nothing in the
Merger Agreement prevents the members of the Board of Directors of Chiles, in
the exercise of their fiduciary duties and after consulting with independent
counsel, from considering, negotiating and approving an unsolicited bona fide
proposal that the Board determines in good faith, after consultation with its
financial advisors, may result in a transaction more favorable to the
stockholders of Chiles than the Merger. Further, the Board of Directors of
Chiles may elect not to convene the Chiles Special Meeting if it has received an
acquisition proposal it deems more favorable to the stockholders of Chiles. See
"Certain Provisions of the Merger Agreement -- Solicitation of Third Party
Offers."
TERMINATION OF THE MERGER AGREEMENT
By Either Party. The Merger Agreement may be terminated prior to the
Effective Time (i) by mutual consent of Noble and Chiles, or (ii) by either
party if (a) the Merger has not been consummated on or before January 31, 1995,
(b) any court or governmental entity shall have prohibited consummation of the
Merger Agreement or the transactions contemplated in connection therewith or (c)
the required approvals of the stockholders of Noble or Chiles are not received
at the applicable meeting of stockholders.
By Noble. Noble may terminate the Merger Agreement if (i) the fairness
opinion of Simmons is withdrawn, (ii) since the date of the Merger Agreement
there has been a material adverse change in the results of operations, financial
condition or business of Chiles, (iii) there has been a material breach of any
representation, warranty or covenant set forth in the Merger Agreement by Chiles
and such breach has not been cured within five business days following receipt
by Chiles of notice thereof or (iv) the Board of Directors of Chiles exercises
its right not to convene the Chiles Special Meeting on the grounds that the
Chiles Board has determined that another proposal for the acquisition of Chiles
is more favorable to the stockholders of Chiles than the Merger.
By Chiles. Chiles may terminate the Merger Agreement if (i) the fairness
opinion of Salomon is withdrawn, (ii) since the date of the Merger Agreement
there has been a material adverse change in the results of operations, financial
condition or business of Noble or (iii) there has been a material breach of any
representation, warranty or covenant set forth in the Merger Agreement by Noble
and such breach has not been cured within five business days following receipt
by Noble of notice thereof.
See "Certain Provisions of the Merger Agreement -- Termination."
TERMINATION FEES AND REIMBURSEMENT OF EXPENSES
If either Noble or Chiles terminates the Merger Agreement for certain of
the reasons described above in "Termination of the Merger Agreement" and (i) the
Merger Agreement either has not been submitted to the stockholders of Chiles or
the stockholders of Chiles have declined to approve the Merger Agreement by the
requisite vote, (ii) after the date of the Merger Agreement but prior to the
time the Merger Agreement is terminated there shall have been a Chiles
Acquisition Transaction proposed in writing to Chiles and (iii) any Chiles
Acquisition Transaction (whether the same or different from the one referenced
in clause (ii)) is consummated at any time within one year after the date of the
Merger Agreement, then Chiles will be required to pay Noble the sum of
$6,000,000.
In addition, if either Noble or Chiles terminates the Merger Agreement
because of the failure of the stockholders of the other to approve the Merger,
then the party whose stockholders have failed to approve the Merger will be
required to pay to the other party $1,000,000 as reimbursement for an agreed
upon estimate of
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the terminating party's out-of-pocket fees and expenses incurred in connection
with the Merger; provided, however, that if Chiles is obligated to pay to Noble
the $6,000,000 termination fee described in the preceding paragraph, then Chiles
may offset from the amount of such termination fee any amount paid to Noble as a
reimbursement for out-of-pocket fees and expenses incurred in connection with
the Merger. See "Certain Provisions of the Merger Agreement -- Termination."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended, and should, therefore,
constitute a non-taxable transaction for holders of Chiles Common Stock and
holders of Chiles Preferred Stock, except to the extent of cash received, if
any, in lieu of fractional shares of Noble Common Stock. For a discussion of
these and other federal income tax considerations in connection with the Merger,
see "The Merger -- Certain Federal Income Tax Consequences" and "Description of
Noble Capital Stock -- Federal Income Tax Considerations Regarding $1.50 Noble
Preferred Stock."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests" for
accounting and financial reporting purposes. See "The Merger -- Anticipated
Accounting Treatment."
NO APPRAISAL RIGHTS
Under Delaware law, neither Noble's nor Chiles' stockholders will be
entitled to any appraisal or dissenter's rights in connection with the Merger.
See "The Merger -- No Appraisal Rights."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of Chiles with
respect to the Merger, Chiles' stockholders should be aware that (i) two
executive officers of Chiles who are also directors of Chiles will receive
certain bonus payments upon consummation of the Merger pursuant to pre-existing
agreements with Chiles, (ii) two directors of Chiles are affiliates of a major
stockholder of Chiles that will enter into a registration rights agreement with
Noble, subject to consummation of the Merger, (iii) two of the executive
officers of Chiles who are also directors of Chiles have severance agreements
with Chiles that provide that should their employment be terminated by Noble
within one year of consummation of the Merger, under certain circumstances such
persons would be entitled to certain benefits, (iv) six of the directors of
Chiles and the family of a deceased director hold (or are entitled to exercise
in the case of the deceased director's family) Chiles Options that will either
be exchanged for shares of Noble Common Stock or converted into options to
purchase Noble Common Stock upon consummation of the Merger and (v) two
designees of Chiles, including a current director of Chiles, will be elected to
the Board of Directors of Noble effective at the Effective Time. See "The
Merger -- Interests of Certain Persons in the Merger."
$1.50 NOBLE PREFERRED STOCK
The $1.50 Noble Preferred Stock will have substantially the same rights,
preferences, privileges and voting power as the Chiles Preferred Stock. The
$1.50 Noble Preferred Stock will rank senior to the Noble Common Stock, and on a
parity with the outstanding $2.25 Convertible Exchangeable Preferred Stock of
Noble, par value $1.00 per share ("$2.25 Noble Preferred Stock"), with respect
to the payment of dividends and upon liquidation, dissolution or winding up of
Noble. See "Description of Noble Capital Stock -- $2.25 Noble Preferred Stock,"
"-- $1.50 Noble Preferred Stock" and " -- Federal Income Tax Considerations
Regarding $1.50 Noble Preferred Stock." The ability of Noble to pay dividends on
the $1.50 Noble Preferred Stock may be subject to certain contractual
limitations pursuant to the indenture governing the 9 1/4% Senior Notes Due 2003
of Noble and Noble's bank credit agreement. The $1.50 Noble Preferred Stock will
rank on a parity with the $2.25 Noble Preferred Stock with respect to the
payment of dividends, which means that no
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dividends may be paid on the $2.25 Noble Preferred Stock unless accrued
dividends on the $1.50 Noble Preferred Stock are also paid. See "Description of
Noble Capital Stock -- Restrictions on Dividends."
CHILES OPTIONS
Pursuant to the Merger Agreement, all outstanding Chiles Options will be
either cancelled and exchanged for Noble Common Stock or converted into options
to purchase Noble Common Stock. Chiles has agreed to use its best efforts to
take all action necessary to provide for the exchange of all outstanding Chiles
Options for shares of Noble Common Stock. Such exchange will be consummated at
the Effective Time, provided that each holder of Chiles Options has consented
thereto. If such consents are obtained, based on the number of Chiles Options
currently outstanding, the Chiles Options will be cancelled effective at the
Effective Time in exchange for an aggregate of 480,000 shares of Noble Common
Stock. Pursuant to such exchange and subject to rounding to avoid the issuance
of fractional shares, each vested or unvested Chiles Option with an exercise
price of $1.94 will be exchanged for 0.5231 of a share of Noble Common Stock,
each vested or unvested Chiles Option with an exercise price of $4.00 will be
exchanged for 0.4316 of a share of Noble Common Stock, each vested or unvested
Chiles Option with an exercise price of $4.94 will be exchanged for 0.4056 of a
share of Noble Common Stock, and each vested or unvested Chiles Option with an
exercise price of $5.50 will be exchanged for 0.3851 of a share of Noble Common
Stock.
If such consents have not been obtained by Chiles prior to the consummation
of the Merger, then the Chiles Options will not be exchanged for Noble Common
Stock and Noble will take all action necessary to assume, effective at the
Effective Time, all Chiles Options that remain as of such time unexercised in
whole or in part. Each Chiles Option will thereafter entitle the holder to
purchase that number of shares of Noble Common Stock equal to the product of the
number of shares of Chiles Common Stock subject to the Chiles Option multiplied
by 0.75. The exercise price per share of Noble Common Stock under such assumed
option will be equal to the exercise price per share under the Chiles Option
divided by 0.75. See "Certain Provisions of the Merger Agreement -- Chiles
Options."
LISTING OF SHARES; MARKET AND MARKET PRICES
Noble Common Stock and the $2.25 Noble Preferred Stock are traded in the
NASDAQ National Market System under the symbols "NDCO" and "NDCOP,"
respectively. The shares of $1.50 Noble Preferred Stock to be issued upon
consummation of the Merger have been approved for inclusion in the NASDAQ
National Market System, subject to official notice of issuance. Chiles Common
Stock and Chiles Preferred Stock are traded on the American Stock Exchange under
the symbols "CHC" and "CHCpr," respectively.
The following table sets forth the closing sale prices per share of Noble
Common Stock and $2.25 Noble Preferred Stock as reported in the NASDAQ National
Market System, the closing sale prices per share of Chiles Common Stock and
Chiles Preferred Stock on the American Stock Exchange and the equivalent per
share price (as explained below) of Chiles Common Stock on June 10, 1994, the
business day preceding public announcement of the Merger, and on August 11,
1994, the last full trading day for which prices were available prior to the
date of this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
EQUIVALENT
PER SHARE
PRICE OF
NOBLE $2.25 NOBLE CHILES CHILES CHILES
COMMON PREFERRED COMMON PREFERRED COMMON
MARKET PRICE PER SHARE AT: STOCK STOCK STOCK STOCK STOCK
- -------------------------------------------- ------ ----------- ------ --------- ----------
<S> <C> <C> <C> <C> <C>
June 10, 1994............................... $7.00 $ 40.75 $5.00 $ 22.25 $ 5.25
August 11, 1994............................. $6.625 $ 36.75 $4.75 $ 22.25 $ 4.97
</TABLE>
The equivalent per share price of a share of Chiles Common Stock represents
the closing sale price of a share of Noble Common Stock on such date multiplied
by the Merger exchange ratio of 0.75 of a share of Noble Common Stock for each
share of Chiles Common Stock.
7
<PAGE> 20
Stockholders are advised to obtain current market quotations for Noble
Common Stock, Chiles Common Stock and Chiles Preferred Stock. No assurance can
be given as to the market price of Noble Common Stock, Chiles Common Stock or
Chiles Preferred Stock at, or in the case of Noble Common Stock and $1.50 Noble
Preferred Stock after, the Effective Time.
INVESTMENT CONSIDERATIONS
For a discussion of certain considerations with respect to the business and
operations of Noble and Chiles that should be evaluated by an investor before
determining how to vote at the respective special meetings, see "Investment
Considerations."
NOBLE CHARTER AMENDMENT
At the Noble Special Meeting, the holders of Noble Common Stock will also
be asked to adopt a proposal to amend the Restated Certificate of Incorporation
of Noble to increase the number of authorized shares of Noble Common Stock from
75,000,000 to 200,000,000. The Board of Directors of Noble has determined that
it is in the best interests of Noble and its stockholders to effect the Noble
Charter Amendment in order to permit Noble to consummate the Merger and to
provide Noble the flexibility to issue Noble Common Stock in future transactions
without further stockholder action. The obligations of Chiles and Noble to
consummate the Merger are conditioned upon receiving the approval and adoption
by the stockholders of Noble of the Merger Proposal and the Noble Charter
Amendment. The Noble Charter Amendment will be effected if it is adopted by the
stockholders of Noble irrespective of whether the Merger Proposal is approved.
See "Proposal to Adopt Noble Charter Amendment."
NOBLE PLAN AMENDMENT
At the Noble Special Meeting, the holders of Noble Common Stock will also
be asked to approve an amendment to the Noble Drilling Corporation 1991 Stock
Option and Restricted Stock Plan in order to increase from 1,900,000 to
5,200,000 the number of shares of Noble Common Stock available for issuance
thereunder and to make certain amendments to conform with recent changes in
federal tax laws. The Board of Directors of Noble has determined that such
amendments are in the best interests of Noble and its stockholders because they
will permit the continuation of a compensation plan that assists Noble in
attracting and retaining key employees. If the Noble Plan Amendment is approved
by the Noble stockholders, the amendments will be effected whether or not the
Merger Proposal or the Noble Charter Amendment is approved or adopted by the
stockholders of Noble. See "Proposal to Approve Noble Plan Amendment." Approval
of the Noble Plan Amendment is not a condition to consummation of the Merger.
8
<PAGE> 21
SUMMARY HISTORICAL FINANCIAL DATA
The following tables set forth summary historical financial data of Noble
and Chiles for each of the five fiscal years in the period ended December 31,
1993 and for the six months ended June 30, 1994 and 1993, and of Triton
Engineering Services Company, a wholly owned subsidiary of Noble ("Triton"), for
the year ended December 31, 1993 and the three months ended March 31, 1994.
Noble acquired all of the issued and outstanding stock of Triton in April 1994.
For information regarding the acquisition by Noble of Triton (the "Triton
Acquisition"), see "The Companies -- Noble Drilling Corporation -- Triton
Acquisition." The data presented below have been derived from and should be read
in conjunction with the consolidated financial statements of Noble, Triton and
Chiles and the related notes thereto included in the documents incorporated by
reference in this Joint Proxy Statement/Prospectus. Results for the interim
periods are not necessarily indicative of results for the full year.
NOBLE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993(A) 1993(A) 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
STATEMENT OF OPERATIONS DATA:
Operating revenues(B)....... $130,841 $ 91,655 $194,942 $139,713 $177,378 $131,353 $102,476
Income (loss) from
continuing
operations(C)............ 8,436 7,489 19,146 (8,085) (13,360) (8,752) (10,082)
Preferred stock dividends... 3,364 3,364 6,728 6,728 721
Income (loss) from
continuing operations
applicable to common
shares................... 5,072 4,125 12,418 (14,813) (14,081) (8,752) (10,082)
Income (loss) from
continuing operations per
common share(D).......... 0.10 0.12 0.32 (0.43) (0.42) (0.35) (0.48)
Weighted average common
shares outstanding....... 48,538 34,905 38,366 34,014 33,656 26,796 22,509
Ratio of earnings to fixed
charges and preferred
dividends(E)............. 1.62 1.81 2.05
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital(B).......... $ 80,980 $ 30,587 $ 74,409 $ 23,734 $ 46,353 $ 42,741 $ 18,576
Total assets(B)............. 539,245 297,582 499,717 310,139 376,979 271,416 176,554
Long-term debt(B)........... 126,871 36,161 127,144 41,255 71,166 59,471 20,047
Shareholders' equity(B)..... 340,007 217,110 328,953 211,728 230,307 169,461 118,656
</TABLE>
- ---------------
(A) Effective during the quarter ended March 31, 1993, Noble's international
subsidiaries began reporting their financial results on a current rather
than a month-lag basis. This change resulted in the inclusion of the
December 1992 operating results of such international subsidiaries in the
operating results of Noble for the first quarter of 1993. Revenues and
income from continuing operations for this additional one-month period were
$7,687,000 and $140,000, respectively, and are not considered material to
Noble's overall results of operations.
(B) Includes the effect of the Trition Acquisition and the October 7, 1993
acquisition of nine offshore rigs and associated assets (the "Western
Acquisition") from The Western Company of North America for $150,000,000 in
cash. Noble financed the Western Acquisition through public offerings of
12,041,000 shares of Noble Common Stock at $8.375 per share and $125,000,000
principal amount of Noble's 9 1/4% Senior Notes Due 2003.
(C) Includes a charge for restructuring costs of $6,134,000 in 1991.
(D) Includes the effect of accretion on stock subject to put option prior to
December 31, 1991, which is charged to retained earnings and not reflected
in the amount of net loss applicable to common shares for each applicable
period. The amount of the accretion was $92,000, $591,000 and $776,000 for
the years ended December 31, 1991, 1990 and 1989, respectively.
(E) For the purposes of computing the ratio, "earnings" represents income (loss)
from continuing operations before income taxes plus fixed charges exclusive
of capitalized interest, and "fixed charges" consists of interest, whether
expensed or capitalized, amortization of debt expense and an estimated
portion of rentals representing interest costs. Preferred dividends have
been grossed-up using the effective tax rate of the appropriate period. As a
result of the losses incurred in 1992, 1991, 1990 and 1989, earnings did not
cover fixed charges by $12,572,000, $13,060,000, $8,155,000 and $9,286,000,
respectively.
9
<PAGE> 22
CHILES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
STATEMENT OF OPERATIONS DATA(A):
Operating revenues................... $ 35,675 $ 28,135 $ 69,589 $ 44,453 $ 52,773 $ 50,478 $ 27,228
Income (loss) from continuing
operations(B)(C)................... 12,083 (4,935) 1,936 (31,893) (25,814) (2,762) (10,531)
Preferred stock dividends............ 3,019 1,208
Income (loss) from continuing
operations applicable to common
shares............................. 9,064 (4,935) 728 (31,893) (25,814) (2,762) (10,531)
Income (loss) from continuing
operations per common share........ 0.24 (0.13) 0.02 (1.74) (1.63) (0.21) (5.52)
Weighted average common shares
outstanding........................ 38,112 38,057 38,076 18,330 15,864 13,410 1,907
Ratio of earnings to fixed charges
and preferred dividends(D)......... 3.97 1.22
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficit)(E)(F)...... $ 52,391 $ 16,251 $ 76,126 $ 19,259 $(49,592) $ 11,446 $ 12,524
Total assets......................... 210,109 142,132 196,836 146,390 184,008 203,015 62,065
Long-term debt(E)(F)................. 44,262 46,025 1,979 67,537 17,496
Shareholders' equity(F).............. 197,045 85,636 187,817 89,906 94,060 119,874 38,217
</TABLE>
- ---------------
(A) Between 1989 and 1991, Chiles' rig fleet changed substantially due to a
series of acquisitions and dispositions. Such changes had a material effect
on Chiles' capacity to generate revenue and the costs of its operations and
should be considered carefully when examining the operating data included
herein.
(B) Includes provisions which were made to reduce rig carrying values to their
estimated recoverable values in 1992 and 1991 of $21,120,000 and
$5,000,000, respectively.
(C) Includes a gain of $7,968,000 for the six months ended June 30, 1994 related
to the sale of a Chiles drilling rig completed in April 1994.
(D) For the purposes of computing the ratio, "earnings" represents income (loss)
from continuing operations before income taxes plus fixed charges exclusive
of capitalized interest, and "fixed charges" consists of interest, whether
expensed or capitalized, amortization of debt expense and an estimated
portion of rentals representing interest costs. Preferred dividends have
been grossed-up using the effective tax rate of the appropriate period. As
a result of the losses incurred in the first six months of 1993, and the
years of 1992, 1991, 1990 and 1989, earnings did not cover fixed charges by
$4,448,000, $30,738,000, $25,472,000, $3,064,000 and $10,531,000,
respectively.
(E) As of December 31, 1991, Chiles reclassified $50,500,000 of its outstanding
indebtedness from long-term to current liabilities. This reclassification
was made because as of such date Chiles anticipated not being able to
remain in compliance, and subsequently was not able to remain in
compliance, with all of the terms of its debt agreements.
(F) Chiles completed a public offering of Chiles Preferred Stock during October
1993 which resulted in net proceeds of $96,500,000. Chiles used
approximately $45,226,000 of such proceeds to repay all of its outstanding
indebtedness, including prepayments of principal of $44,255,000. The
remaining net proceeds were invested in cash and cash equivalents and
marketable securities as of December 31, 1993. As of June 30, 1994,
$30,531,000 of the remaining net proceeds were invested in long-term debt
securities.
TRITON
<TABLE>
<CAPTION>
THREE
MONTHS YEAR
ENDED ENDED
MARCH DECEMBER
31, 31,
1994(A) 1993
------- --------
<S> <C> <C>
(IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Operating revenues........................................................ $26,188 $123,834
Income (loss) from continuing operations.................................. (2,491)(B) 1,506
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital........................................................... $14,153 $ 17,472
Total assets.............................................................. 61,035 72,171
Shareholders' equity...................................................... 12,918 15,157
</TABLE>
- ---------------
(A) The historical financial data for Triton for the three months ended June 30,
1994 are included in the historical financial data of Noble for the six
months ended June 30, 1994 presented above.
(B) Includes the write-off of $2,220,000 of notes receivable from a partnership
that was not part of the Triton Acquisition.
10
<PAGE> 23
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
The following summary unaudited pro forma combined financial data assume
(i) the consummation of the Merger and (ii) the consummation of both the Merger
and the Triton Acquisition. The Merger is accounted for as a "pooling of
interests" as if the Merger had been in effect for all periods presented. The
Triton Acquisition is accounted for as a "purchase" transaction as if it had
occurred on January 1, 1993. The following pro forma statement of operations
data do not purport to be indicative of the results that would actually have
been obtained if the combinations had been in effect as of the dates indicated
or that may be obtained in the future. The following summary pro forma combined
financial data are derived from the unaudited pro forma combined financial
statements and notes thereto appearing elsewhere in this Joint Proxy
Statement/Prospectus and should be read in conjunction with such financial
statements and notes.
NOBLE AND CHILES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------
1994 1993 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
STATEMENT OF OPERATIONS DATA:
Operating revenues.............................. $166,516 $119,790 $264,531 $184,166 $230,151
Income (loss) from continuing operations........ 20,519 2,554 21,082 (39,978) (39,174)
Preferred stock dividends....................... 6,383 3,364 7,936 6,728 721
Income (loss) from continuing operations
applicable
to common shares.............................. 14,136 (810) 13,146 (46,706) (39,895)
Income (loss) from continuing operations per
common share.................................. 0.18 (0.01) 0.20 (0.98) (0.88)
Pro forma weighted average common shares
outstanding................................... 77,122 63,448 66,923 47,762 45,554
Ratio of earnings to fixed charges and preferred
dividends(A).................................. 2.19 0.85 1.85
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficit)....................... $133,371 $ 46,838 $150,535 $ 42,993 $ (3,239)
Total assets.................................... 749,354 439,714 696,553 456,529 560,987
Long-term debt.................................. 126,871 80,423 127,144 87,280 73,145
Shareholders' equity............................ 537,052 302,746 516,770 301,634 324,367
</TABLE>
- ---------------
(A) For the purposes of computing the ratio, "earnings" represents income (loss)
from continuing operations before income taxes plus fixed charges exclusive
of capitalized interest, and "fixed charges" consists of interest, whether
expensed or capitalized, amortization of debt expense and an estimated
portion of rentals representing interest costs. Preferred dividends have
been grossed-up using the effective tax rate of the appropriate period. As a
result of the losses incurred in fiscal years 1992 and 1991, earnings did
not cover fixed charges by $43,310,000 and $38,532,000, respectively.
NOBLE, CHILES AND TRITON
<TABLE>
<CAPTION>
SIX YEAR
MONTHS ENDED
ENDED DECEMBER
JUNE 30, 31,
1994 1993
-------- --------
<S> <C> <C>
(IN THOUSANDS, EXCEPT
PER SHARE
AMOUNTS AND RATIOS)
STATEMENT OF OPERATIONS DATA(A):
Operating revenues...................................................... $192,651 $428,284
Income from continuing operations....................................... 20,613 17,192
Preferred stock dividends............................................... 6,383 7,936
Income from continuing operations applicable to
common shares......................................................... 14,230 9,256
Income from continuing operations per common share...................... 0.18 0.12
Pro forma weighted average common shares outstanding.................... 77,716 76,910
Ratio of earnings to fixed charges and preferred dividends(B)........... 2.21 1.46
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital......................................................... $133,371 $159,922
Total assets............................................................ 749,354 762,736
Long-term debt.......................................................... 126,871 127,144
Shareholders' equity.................................................... 537,052 521,939
</TABLE>
- ---------------
(A) Noble historical amounts were adjusted to include the effects of the Western
Acquisition as if it had occurred on January 1, 1993.
(B) For the purposes of computing the ratio, "earnings" represents income (loss)
from continuing operations before income taxes plus fixed charges exclusive
of capitalized interest, and "fixed charges" consists of interest, whether
expensed or capitalized, amortization of debt expense and an estimated
portion of rentals representing interest costs. Preferred dividends have
been grossed-up using the effective tax rate of the appropriate period.
11
<PAGE> 24
COMPARATIVE PER SHARE DATA
The following tables present comparative per share information (a) for each
of Noble and Chiles on a historical basis, (b) for Noble and Chiles on a pro
forma combined basis assuming the Merger had been in effect for the periods
presented and (c) for Noble, Chiles and Triton on a pro forma combined basis
assuming the Merger and the Triton Acquisition had been in effect for the
periods presented. The pro forma information has been prepared giving effect to
the Merger as a "pooling of interests" and to the Triton Acquisition as a
"purchase" transaction. Equivalent pro forma information for Chiles Common Stock
has been calculated based on the Merger exchange ratio of 0.75 of a share of
Noble Common Stock for each share of Chiles Common Stock. No cash dividends were
paid by Noble, Chiles or Triton on their respective common shares during any of
the periods presented.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ---------------------------
1994 1993 1993 1992 1991
----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
Noble -- Historical
Income (loss) from continuing operations
applicable to common shares............... $0.10 $ 0.12 $0.32 $(0.43) $(0.42)
Book value per common share.................. 5.47 4.11 5.32 3.96 4.58
Chiles -- Historical
Income (loss) from continuing operations
applicable to common shares............... $0.24(B) $(0.13) $0.02 $(1.74) $(1.63)
Book value per common share.................. 2.53 2.25 2.29 2.36 5.93
Noble and Chiles -- Pro Forma
Income (loss) from continuing operations
applicable to common shares............... $0.18(B) $(0.01) $0.20 $(0.98) $(0.88)
Book value per common share.................. 4.69 3.61 4.47 3.60 5.44
Noble and Chiles -- Equivalent Pro Forma Per
Chiles(A)
Income (loss) from continuing operations
applicable to common shares............... $0.14(B) $(0.01) $0.15 $(0.73) $(0.66)
Book value per common share.................. 3.53 2.71 3.36 2.70 4.09
Noble, Chiles and Triton -- Pro Forma
Income from continuing operations applicable
to common shares.......................... $0.18(B) $0.12
Book value per common share.................. 4.69 4.49
</TABLE>
- ---------------
(A) Computed on an equivalent pro forma combined basis assuming Chiles was the
issuing company.
(B) Includes a gain of $0.21 per common share related to the sale of a Chiles
drilling rig completed in April 1994.
12
<PAGE> 25
THE COMPANIES
NOBLE DRILLING CORPORATION
Noble is a leading provider of diversified contract drilling services for
the oil and gas industry worldwide. Noble's activities include offshore and land
drilling services and engineering and production management services. Noble's
drilling fleet is broadly diversified, allowing it to work in a variety of
operating conditions.
Noble's business strategy has been to expand actively its international and
offshore capabilities through acquisitions and to position itself in
geologically promising areas. Noble attempts to balance its revenues between
international and domestic operations.
Noble was organized as a Delaware corporation in 1939. Noble and its
predecessors have been engaged in the contract drilling of oil and gas wells for
others domestically since 1921 and internationally during various periods since
1939.
Offshore Drilling Operations. Noble's offshore drilling operations are
conducted worldwide. Principal regions of operations currently include the Gulf
of Mexico, West Africa, Venezuela and, to a lesser extent, India. The offshore
fleet consists of 33 rigs, composed of 19 jackup drilling rigs, eight
submersible rigs, four posted barges and two platform rigs. The average age of
the offshore fleet is 11 years, with 23 of the 33 offshore rigs having been
built or rebuilt since 1980. The offshore fleet is currently diversified
geographically as follows: U.S. Gulf -- 20 rigs; Mexican Gulf -- two rigs;
Nigeria and West Africa -- six rigs; Venezuela -- four rigs; and India -- one
rig.
Noble's offshore operations also include labor contracts for drilling and
workover activities covering 15 rigs operating in the U.K. North Sea. These rigs
are not owned or leased by Noble. Under these labor contracts, Noble provides
its customers with field personnel and manages the drilling operations.
Land Operations. Noble's land drilling operations are conducted principally
in Western Canada, Texas and Louisiana. Eighteen of Noble's 47 land rigs are
being or can be actively bid by Noble. As of August 1, 1994, 13 of the 47 rigs
were operating under contract, five were available for bidding and 29 were not
being actively marketed. These 29 rigs are stacked and can be reactivated and
placed into operation in the near term should economically viable drilling
contracts for such rigs be obtained. The 18 active rigs have an average age of
14 years. The domestic land drilling operations of Noble are expected to
diminish in significance as Noble continues to emphasize offshore and
international operations.
Engineering and Production Management Services. Noble provides, through its
wholly owned subsidiary, Noble Engineering Services Ltd., engineering services
relating primarily to the design of drilling equipment for offshore development
and production services. Noble Engineering works, on a contract basis, with
operators and prime construction contractors of drilling and production
platforms in the design of drilling equipment configurations aimed at optimizing
the operational efficiency of developmental drilling by maximizing platform
space utilization and load capability.
Triton Acquisition. On April 22, 1994, Noble acquired all of the issued and
outstanding stock of Triton pursuant to a Stock Purchase Agreement among Noble,
Triton and the former stockholders of Triton (the "Triton Agreement"). Triton is
engaged in providing engineering, consulting and turnkey drilling services, and
manufacturing and rental of oil field equipment, for the oil and gas industry.
In consideration for the stock of Triton, Noble delivered to the former owners
of Triton (i) 751,864 shares of Noble Common Stock, (ii) $4,084,506 in cash and
(iii) promissory notes in the aggregate principal amount of $4,000,000, which
promissory notes mature on October 21, 1994. In addition, Noble has a contingent
obligation to pay to the former owners of Triton at the end of two years after
the closing date of the Triton Acquisition additional consideration, including
up to 254,551 shares of Noble Common Stock, subject to reduction depending on
the collection of certain contingent assets of Triton and the payment of certain
contingent liabilities of Triton, as well as an indeterminable number of
additional shares of Noble Common Stock in the event Triton achieves certain
operating results for the year ending December 31, 1994.
13
<PAGE> 26
CHILES OFFSHORE CORPORATION
Chiles is engaged in the drilling and workover of offshore oil and gas
wells on a contract basis for major and independent oil and gas companies.
Chiles' fleet consists of 13 jackup drilling rigs, 11 of which are located in
the U.S. Gulf of Mexico and two of which are located offshore Nigeria. Chiles'
two rigs operating offshore Nigeria are under contract until November 1994.
Eight Chiles rigs are currently operating under well-to-well contracts in the
U.S. Gulf of Mexico. One rig is stacked and actively being marketed in the U.S.
Gulf of Mexico. Chiles' two remaining rigs are not currently being marketed and
are stacked in the U.S. Gulf of Mexico.
During the second quarter of 1994, Chiles entered into commitments for
capital expenditures of approximately $10.6 million in connection with the
fabrication and construction of an extended reach cantilever for one of its
three Marathon LeTourneau slot rigs, the WASP. The WASP is currently operating
in the U.S. Gulf of Mexico on a well-to-well basis. Construction of the extended
reach cantilever is currently underway and Chiles estimates that the WASP will
be removed from service in late August 1994 and will be available to return to
active service after completion of the upgrade in mid-October 1994.
THE MEETINGS
MATTERS TO BE CONSIDERED AT THE MEETINGS
Noble Special Meeting. At the Noble Special Meeting, holders of Noble
Common Stock will be asked to consider and vote upon:
(1) The Merger Proposal, which includes, as a single proposal, (a) the
approval of the Merger Agreement, pursuant to which, among other things,
(i) Chiles would merge with and into Noble Sub and (ii) each issued and
outstanding share of Chiles Common Stock would be converted in the Merger
into the right to receive 0.75 of a share of Noble Common Stock and each
issued and outstanding share of Chiles Preferred Stock would be converted
in the Merger into the right to receive one share of $1.50 Noble Preferred
Stock, subject to and in accordance with the terms and conditions of the
Merger Agreement, and (b) the approval of the issuance of shares of Noble
Common Stock and $1.50 Noble Preferred Stock pursuant to the Merger
Agreement;
(2) a proposal to adopt the Noble Charter Amendment;
(3) a proposal to approve the Noble Plan Amendment; and
(4) such other matters as may properly be brought before the Noble
Special Meeting.
Chiles Special Meeting. At the Chiles Special Meeting, holders of Chiles
Common Stock will be asked to consider and vote upon the authorization, approval
and adoption of the Merger Agreement and such other matters as may properly be
brought before the Chiles Special Meeting.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
Noble. The Board of Directors of Noble has unanimously approved (i) the
Merger, the Merger Agreement and the issuance of shares of Noble Common Stock
and $1.50 Noble Preferred Stock pursuant to the Merger Agreement, (ii) the Noble
Charter Amendment and (iii) the Noble Plan Amendment, and unanimously recommends
that the stockholders of Noble vote FOR approval and adoption of each such
matter.
Chiles. The Board of Directors of Chiles has unanimously approved the
Merger and the Merger Agreement and unanimously recommends that the stockholders
of Chiles vote FOR authorization, approval and adoption of the Merger Agreement.
14
<PAGE> 27
VOTING AT MEETINGS; RECORD DATES
Noble. Noble has established August 9, 1994, as the record date for the
determination of stockholders entitled to notice of and to vote at the Noble
Special Meeting. Only holders of record of Noble Common Stock at the close of
business on such date are entitled to notice of and to vote at the Noble Special
Meeting. On the record date for the Noble Special Meeting, there were 48,606,871
shares of Noble Common Stock outstanding and entitled to be voted at the Noble
Special Meeting. A majority of such shares, present in person or represented by
proxy, is necessary to constitute a quorum at the Noble Special Meeting. Each
share of Noble Common Stock is entitled to one vote with respect to the approval
of the Merger Proposal, the adoption of the Noble Charter Amendment and the
approval of the Noble Plan Amendment. Holders of $2.25 Noble Preferred Stock are
not entitled as such to vote at the Noble Special Meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Noble Common Stock present and entitled to vote thereon at the Noble Special
Meeting is required to approve the Merger Proposal. Approval of the Merger
Proposal will constitute approval of each aspect of the Merger Proposal.
Approval of the Merger Proposal by the holders of Noble Common Stock is required
by the rules of the National Association of Securities Dealers, Inc. for
companies, like Noble, with securities listed in the NASDAQ National Market
System and is a condition to the consummation of the Merger.
Adoption of the Noble Charter Amendment requires the affirmative vote of
the holders of a majority of the shares of Noble Common Stock outstanding and
entitled to vote at the meeting. Approval of the Noble Plan Amendment requires
the affirmative vote of the holders of a majority of the outstanding shares of
Noble Common Stock present and entitled to vote thereon at the Noble Special
Meeting.
The respective obligations of Noble and Chiles to consummate the Merger are
subject to, among other conditions, the approval and adoption by the
stockholders of Noble of both the Merger Proposal and the Noble Charter
Amendment. Thus, notwithstanding the approval of the Merger Proposal at the
Noble Special Meeting, if the Noble Charter Amendment is not adopted by the
requisite vote of the stockholders of Noble, the Merger will not be consummated.
If the Noble Charter Amendment is adopted by stockholders, it will be effected
regardless of whether the Merger Proposal is approved. Approval by the
stockholders of Noble of the Noble Plan Amendment is not a condition to
consummation of the Merger.
Chiles. Chiles has established August 9, 1994, as the record date for the
determination of stockholders entitled to notice of and to vote at the Chiles
Special Meeting. Only holders of record of Chiles Common Stock at the close of
business on such date are entitled to notice of and to vote at the Chiles
Special Meeting. On the record date for the Chiles Special Meeting, there were
38,131,780 shares of Chiles Common Stock outstanding and entitled to be voted at
the Chiles Special Meeting. A majority of such shares, present in person or
represented by proxy, is necessary to constitute a quorum at the Chiles Special
Meeting. Each share of Chiles Common Stock is entitled to one vote with respect
to the approval and adoption of the Merger Agreement. The affirmative vote of
the holders of a majority of the shares of Chiles Common Stock outstanding and
entitled to vote at the meeting is required to authorize, approve and adopt the
Merger Agreement. Holders of Chiles Preferred Stock are not entitled as such to
vote on the Merger at the Chiles Special Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER PERSONS
Noble. As of the record date for the Noble Special Meeting, the directors
and executive officers of Noble and their affiliates (excluding shares owned by
the Foundation) owned beneficially approximately 1.2 percent of the outstanding
shares of Noble Common Stock. Each of the directors and executive officers of
Noble has advised Noble that he intends to vote or direct the vote of all shares
of Noble Common Stock of which he has beneficial ownership in favor of the
approval and adoption of the Merger Proposal, the Noble Charter Amendment and
the Noble Plan Amendment. The Foundation held, as of the record date for the
Noble Special Meeting, 5,459,537 shares of Noble Common Stock (approximately
11.2 percent of the outstanding shares). Two directors of Noble serve on the
nine-member board of trustees of the Foundation. The voting of the shares held
by the Foundation requires a majority vote of its trustees at a meeting at which
a quorum of trustees is present. Accordingly, neither of the two directors of
Noble, individually, nor both of
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them, acting together, represent sufficient voting power on the Foundation's
board of trustees to determine voting decisions with respect to shares held by
the Foundation.
Chiles. As of the record date for the Chiles Special Meeting, the
directors, executive officers and two principal stockholders of Chiles, P.A.J.W.
and OMI, held an aggregate of 14,916,342 shares of Chiles Common Stock
(approximately 39.1 percent of the outstanding shares). Such persons are not
obligated to vote their shares in favor of approval and adoption of the Merger
Agreement, but each of them or their representatives has advised Chiles that
they presently intend to vote their shares in favor of approval and adoption of
the Merger Agreement.
PROXIES
Noble. Shares of Noble Common Stock represented by a proxy in the form
enclosed, duly executed and returned to Noble prior to or at the Noble Special
Meeting, and not revoked, will be voted at the Noble Special Meeting in
accordance with the voting instructions contained therein. Shares of Noble
Common Stock represented by proxies for which no voting instructions are given
will be voted FOR approval and adoption of the Merger Proposal, the Noble
Charter Amendment and the Noble Plan Amendment.
Holders of Noble Common Stock are requested to complete, sign, date and
return promptly the enclosed proxy card in the postage paid envelope provided
for this purpose in order to insure that their shares are voted at the Noble
Special Meeting. A proxy may be revoked at any time prior to the exercise of the
authority granted thereunder. Revocation may be accomplished by (i) the
execution and delivery of a later-dated proxy with respect to the same shares,
(ii) giving notice thereof in writing to the Secretary of Noble at any time
prior to the vote on the matters to be considered at the Noble Special Meeting
or (iii) attending the Noble Special Meeting and voting in person. Attendance at
the Noble Special Meeting by a stockholder who signed a proxy will not in itself
revoke the proxy.
If a holder of Noble Common Stock does not return a signed proxy card (and
does not vote in person at the Noble Special Meeting), his or her shares will
not be voted at the Noble Special Meeting. Such failure to vote will have the
effect of a vote against the adoption of the Noble Charter Amendment, and thus
effectively a vote against the Merger. Abstentions and broker non-votes with
respect to the Noble Charter Amendment will also have the effect of a vote
against the adoption of the Noble Charter Amendment, and thus effectively a vote
against the Merger. Abstentions and broker non-votes with respect to the Merger
and the Plan Amendment will have the effect of reducing the number of shares
that must be voted in favor of such proposals in order for them to be approved.
If a voting instruction card is enclosed, it serves as a voting instruction
to the trustee of the Noble Drilling Corporation Thrift Plan, as amended (the
"Thrift Plan"), from the plan participant. The trustee under the Thrift Plan
will vote the shares of Noble Common Stock credited to Thrift Plan participants'
accounts in accordance with such participants' instructions. If no such voting
instructions are received from a participant, then, according to the terms of
the Thrift Plan, the trustee under the Thrift Plan will vote the shares in such
participant's account in its absolute discretion.
The Board of Directors of Noble knows of no matters to be presented at the
Noble Special Meeting other than those described in this Joint Proxy
Statement/Prospectus. If other matters are properly brought before the Noble
Special Meeting, it is the intention of the persons named as proxies to vote
with respect to such matters in accordance with their judgment.
Chiles. Shares of Chiles Common Stock represented by a proxy in the form
enclosed, duly executed and returned to Chiles prior to or at the Chiles Special
Meeting, and not revoked, will be voted at the Chiles Special Meeting in
accordance with the voting instructions contained therein. Shares of Chiles
Common Stock represented by proxies for which no voting instructions are given
will be voted FOR approval and adoption of the Merger Agreement.
Holders of Chiles Common Stock are requested to complete, sign, date and
return promptly the enclosed proxy card in the postage paid envelope provided
for this purpose in order to insure that their shares are voted at the Chiles
Special Meeting. A proxy may be revoked at any time prior to the exercise of the
authority
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granted thereunder. Revocation may be accomplished by (i) the execution and
delivery of a later dated proxy with respect to the same shares, (ii) giving
notice thereof in writing to the Secretary of Chiles at any time prior to the
vote on the matters to be considered at the Chiles Special Meeting or (iii)
attending the Chiles Special Meeting and voting in person. Attendance at the
Chiles Special Meeting by a stockholder who signed a proxy will not in itself
revoke the proxy.
If a holder of Chiles Common Stock does not return a signed proxy card (and
does not vote in person at the Chiles Special Meeting), his or her shares will
not be voted at the Chiles Special Meeting. Such failure to vote will have the
effect of a vote against the approval and adoption of the Merger Agreement.
Abstentions and broker non-votes with respect to shares of Chiles Common Stock
will also have the effect of a vote against the approval and adoption of the
Merger Agreement.
The Board of Directors of Chiles knows of no matters to be presented at the
Chiles Special Meeting other than the matter described in this Joint Proxy
Statement/Prospectus. If other matters are properly brought before the Chiles
Special Meeting, it is the intention of the persons named as proxies to vote
with respect to such matters in accordance with their judgment.
SOLICITATION OF PROXIES
Solicitation of proxies for use at the Noble Special Meeting and the Chiles
Special Meeting may be made in person or by mail, telephone, telecopy or
telegram. Noble and Chiles will each bear the cost of the solicitation of
proxies from their respective stockholders, except that Noble and Chiles will
share equally the expenses incurred in connection with printing and mailing this
Joint Proxy Statement/Prospectus. Noble has employed Beacon Hill Partners, Inc.
to solicit proxies on behalf of Noble for use at the Noble Special Meeting for a
fee of $6,500 plus certain out-of-pocket expenses. In addition, officers and
employees of Noble and Chiles, who will receive no compensation in excess of
their regular salaries for their services, may solicit proxies from the
stockholders of Noble and Chiles, respectively, in person or by mail, telephone,
telecopy or telegram. Noble and Chiles have requested banking institutions,
brokerage firms, custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of Noble Common Stock and Chiles
Common Stock held of record by such entities, and Noble and Chiles will, upon
the request of such record holders, reimburse reasonable forwarding expenses.
THE MERGER
The detailed terms and conditions to the consummation of the Merger are
contained in the Merger Agreement, a copy of which is filed as an exhibit to the
Registration Statement and incorporated herein by reference. A copy of the
Merger Agreement excluding the exhibits thereto is also attached hereto as
Appendix I. The following discussion sets forth a description of certain
material terms and conditions of the Merger Agreement. The description in this
Joint Proxy Statement/Prospectus of the terms and conditions to the consummation
of the Merger is qualified by, and made subject to, the more complete
information set forth in the Merger Agreement.
EFFECTS OF THE MERGER
Pursuant to the Merger Agreement, at the Effective Time, Chiles will merge
with and into Noble Sub and each share of capital stock of Chiles issued and
outstanding immediately prior to the Effective Time (other than shares of
capital stock of Chiles owned by Chiles as treasury stock, which will be
cancelled without any conversion thereof) will be converted into the right to
receive shares of capital stock of Noble as follows:
(i) Chiles Common Stock. Each share of Chiles Common Stock will be
converted into the right to receive 0.75 of a share of Noble Common Stock.
(ii) Chiles Preferred Stock. Each share of Chiles Preferred Stock will
be converted into the right to receive one share of $1.50 Noble Preferred
Stock having substantially the same rights, privileges, preferences and
voting power as the Chiles Preferred Stock.
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As a result of the Merger, the separate corporate existence of Chiles will
cease and all of the properties, rights, privileges, powers and franchises of
Chiles will vest in Noble Sub, which will be the surviving corporation in the
Merger, and all of the debts, liabilities and duties of Chiles will attach to
Noble Sub.
Assuming no change in the number of shares of Chiles Common Stock
outstanding at the Effective Time from the number outstanding on the record date
for the Chiles Special Meeting, the number of shares of Noble Common Stock
subject to issuance in the Merger in exchange for shares of Chiles Common Stock
is approximately 28,598,835. Assuming no change in the number of shares of
Chiles Preferred Stock outstanding at the Effective Time from the number
outstanding on the record date for the Chiles Special Meeting, a total of
4,025,000 shares of $1.50 Noble Preferred Stock are subject to issuance in the
Merger in exchange for shares of Chiles Preferred Stock.
A total of 480,000 additional shares of Noble Common Stock are issuable
upon consummation of the Merger in exchange for and upon the cancellation of
Chiles Options then outstanding, in the event that each holder of Chiles Options
approves such cancellation and exchange. See "Certain Provisions of the Merger
Agreement -- Chiles Options."
Based on the capitalization of Noble and Chiles as of the record date for
the special meetings, and assuming the cancellation of the Chiles Options in
exchange for 480,000 shares of Noble Common Stock, immediately after the
Effective Time, the former holders of Chiles Common Stock and Chiles Options
will hold approximately 37.4 percent of the then outstanding Noble Common Stock.
Noble does not own any shares of Chiles Common Stock or Chiles Preferred Stock.
BACKGROUND OF THE MERGER
The drilling industry has historically been highly competitive, due mainly
to a large number of participants and a substantial oversupply of drilling
equipment. As worldwide drilling activity has declined over the past decade, the
industry has experienced substantial financial losses. During this period,
drilling operations in the U.S. Gulf of Mexico have been particularly volatile
and have been characterized by the movement of drilling rigs into and away from
the Gulf in response to changes in demand.
In response to these conditions, and in an effort to protect and enhance
stockholder value, Noble established certain objectives in 1985 to expand its
offshore and international operations. Since that time Noble has been active in
acquiring entities and assets in furtherance of those objectives, most recently
with the acquisition of Triton in April 1994. In October 1993, Noble acquired
nine offshore jackup drilling rigs and associated drilling assets from The
Western Company of North America, as well as two submersible offshore drilling
rigs from Portal Rig Corporation. In 1991, Noble acquired 12 offshore drilling
rigs (five jackup and seven submersible rigs) and certain related assets from
Transworld Drilling Company, a wholly owned subsidiary of Kerr-McGee
Corporation. In 1988, Noble purchased Peter Bawden Drilling Ltd. (now named
Noble Drilling (Canada) Ltd.) and its subsidiaries, which had established
operations in the U.K. North Sea, Africa, the Far East and Canada. Also in 1988,
Noble purchased six offshore and 20 land rigs and certain related assets from
General Electric Capital Corporation.
As a continuation of such efforts, and while maintaining its focus on
enhancing stockholder value, Noble has from time to time explored several
possible acquisitions that management believed could help Noble meet its
objectives. Analyses prepared by Noble management demonstrated that, among
others, Chiles met Noble's criteria.
During 1993, Chiles accomplished several significant operational and
financial goals that enabled it to reassess the company's long-term business
strategy. Higher dayrates and utilization for the company's rigs, together with
significant operating and administrative cost reductions undertaken beginning in
the second half of 1992, resulted in Chiles reporting an operating profit for
the first time in its history. Additionally, the offering of the Chiles
Preferred Stock in October 1993 permitted Chiles to prepay all of its
outstanding bank debt. Chiles ended 1993 with net working capital of $76.1
million and a fleet of 12 jackup rigs in the Gulf of Mexico and two jackup rigs
offshore Nigeria. Chiles sold one of its rigs in April 1994.
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Having made significant improvements in Chiles' cost structure and
eliminated its debt, the Board of Directors of Chiles undertook the process of
reevaluating Chiles' long-term strategic objectives in late 1993. As part of
this analysis, the Chiles Board came to the conclusion that future success in
the offshore drilling business would require industry consolidation, access to
multiple core offshore oil and gas regions internationally in addition to the
Gulf of Mexico and the capability to provide customers with a broader range of
drilling services and equipment. The Chiles Board believed that the long-term
prospects of Chiles' stockholders would best be served if these strategic
objectives could be achieved as soon as possible. In addition, the Board
concluded that its fleet was not large enough to establish a presence in
multiple markets without increasing its fixed costs to unacceptable levels. The
Board directed management to explore Chiles' opportunities for expansion through
selected rig acquisitions or a business combination.
Management of Chiles explored the prospects for selected rig acquisitions
early in 1994. Chiles focused on premium jackup rigs capable of operating in
markets outside the U.S. as well as in relatively deep water in the Gulf of
Mexico. Chiles found few premium jackup drilling rigs available in the market at
prices upon which it could reasonably expect to earn an acceptable return for
its stockholders. As a result, management advised the Board that its strategic
objectives could best be addressed through one or more business combinations.
In January 1994, Chiles engaged Salomon to serve as its financial advisor
in connection with a review of Chiles' strategic alternatives. At the Board's
request, Salomon undertook a review of possible business combination candidates,
including offshore drilling contractors (including Noble) and other energy
service companies. Salomon presented the results of its initial analysis to the
Board at a meeting on February 8, 1994. At the conclusion of this meeting, the
Board directed management to focus its efforts on reviewing certain potential
business combination transactions that fit Chiles' strategic objectives as
discussed above.
During February-April 1994, Chiles' management engaged in exploratory
discussions with several offshore drilling contractors. The Chiles Board met by
telephone with representatives of Salomon on March 7, 1994 to continue
discussions regarding the status of potential candidates for a combination
transaction. With the exception of Noble and one other company, as noted below,
these conversations were exploratory in nature and did not lead to any proposals
from Chiles or any other party.
On February 17, 1994, representatives of Marine Drilling Company ("Marine")
contacted Mr. Winthrop A. Wyman, who was chairman of the Board of Chiles on such
date, regarding Marine's interest in a business combination with Chiles. Mr.
Wyman met with Marine's representatives and informed the other members of the
Chiles Board of Marine's interest in discussing a business combination with
Chiles. Marine is a publicly traded offshore drilling contractor with 11 jackup
drilling rigs all located in the Gulf of Mexico. Representatives of Marine and
Chiles had engaged in similar discussions on various occasions in the past. Such
discussions had been exploratory in nature. On March 4, 1994, Mr. Wyman,
together with Mr. C. Ray Bearden, President of Chiles, and Mr. Robert F. Fulton,
Senior Vice President and Chief Financial Officer of Chiles, met with
representatives of Marine to discuss the terms of a possible combination. By
letters dated April 9, 1994 and April 26, 1994, the Chairman of the Board and
President of Marine wrote to Mr. Bearden suggesting certain terms of a merger
with Chiles. Representatives of Chiles responded to Marine that the Chiles Board
would consider Marine's expression of interest as part of its review of Chiles'
various strategic alternatives but indicated that Chiles had significant
strategic concerns that would not be addressed by a combination with a
contractor whose operations historically have been focused on the Gulf of
Mexico.
During March 1994, as part of its review of Chiles' strategic alternatives,
representatives of Chiles asked Salomon to contact Noble regarding its interest
in a possible business combination with Chiles. Salomon previously had prepared
a review of Noble's operations, assets and financial condition for the Chiles
Board meeting on February 8, 1994. On March 31, 1994, representatives of Salomon
contacted James C. Day, President, Chairman of the Board and Chief Executive
Officer of Noble, to schedule a meeting for April 10, 1994. The purpose of this
meeting was to discuss areas of mutual interest between Noble and Chiles.
On April 6, 1994, Mr. Day met with representatives of Simmons to prepare
for the upcoming discussions with Chiles. Noble engaged Simmons to develop an
analysis of various acquisition opportunities, including Chiles, for subsequent
presentation to the Board of Directors of Noble.
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On April 10, 1994, Mr. Day met with representatives of Salomon and
discussed Noble's interest in pursuing discussions with representatives of
Chiles concerning a merger or similar acquisition transaction.
In response to Mr. Day's discussion with Salomon, Mr. Bearden met with Mr.
Day on April 22, 1994, and discussed the various business advantages that would
result from the combination of the two companies. They agreed on the importance
of consolidation within the drilling industry, as well as the potential
operational benefits of such a combination and the potential for enhancement of
long-term stockholder value for both companies.
On April 28, 1994 and May 3, 1994, Mr. Bearden and Mr. Day met again and
discussed generally Chiles' operations and its fleet and the potential
operational benefits of a business combination.
On May 4, 1994, Noble management met with representatives of Simmons to
discuss the preliminary information that had been developed by Simmons relative
to acquisition opportunities. On May 10, 1994, management of Noble met again
with representatives of Simmons to review the various analyses that had been
performed relating to several different acquisition opportunities.
On May 13, 1994, the Board of Directors of Noble held a telephonic meeting
to review the financial analyses which had been developed by Simmons. After
thorough review of all the acquisition opportunities, the Board instructed Mr.
Day to contact Mr. Bearden and express Noble's interest in proceeding with
discussions with Chiles regarding a possible acquisition. Mr. Day forwarded a
letter to Mr. Bearden to indicate formally Noble's interest in commencing
discussions with Chiles regarding a merger of the two companies.
On May 16, 1994, Mr. Day met with Mr. Bearden, Mr. Wyman and John Slayton,
a member of the Chiles Board, to discuss further various issues concerning a
potential business combination of Noble and Chiles. The Chiles Board met later
on May 16, 1994, together with representatives of Salomon, to discuss the
indications of interest from Noble and Marine, as well as Chiles' other
alternatives for achieving its strategic goals. On May 17, 1994, Mr. Day met
with Marc Leland and Charles Dallara, two members of the Chiles Board.
Discussions generally centered on the potential synergies that could result from
the combination of the companies and the anticipated enhancement of stockholder
value. The Chiles Board met later on May 17, 1994 to discuss the proposed
transactions, and directed management to continue discussions with Noble
regarding a possible transaction. At this meeting Mr. Leland was elected
Chairman of the Board of Chiles replacing Mr. Wyman.
Mr. Bearden responded in writing to Noble's indication of interest on May
18, 1994, proposing certain business terms and the execution of confidentiality
agreements. The letter further suggested a schedule for conducting due diligence
review. Chiles and Noble entered into mutual confidentiality agreements on May
19, 1994, and commenced a period of mutual due diligence. Mr. Day and Mr.
Bearden met again on May 24 and May 31, 1994, to review the progress of their
due diligence efforts.
On June 1, 1994, the Chiles Board held a telephonic meeting during which
Mr. Bearden and Mr. Fulton reported to the Board on the preliminary results of
their due diligence regarding Noble. Mr. Bearden and Mr. Fulton recommended
proceeding with discussions to resolve the basic business terms of the proposed
merger, and the Board approved their continued discussions. Discussions
continued between Mr. Day and Mr. Bearden on June 2 and 3, 1994.
On June 6, 1994, Mr. Day met with Mr. Leland in Washington D.C. to discuss
various business issues relating to the proposed merger.
On June 9, 1994, a meeting of the Board of Directors of Noble was held in
Houston, Texas to review the results of the due diligence process. At that time
an internal analysis developed by Noble management was presented to the Board
for discussion. Representatives of Simmons presented information relative to
Simmons' analysis of Chiles. Simmons gave the Noble Board its oral opinion that
the consideration proposed to be paid by Noble to the stockholders of Chiles was
fair, as of such date, from a financial point of view to the stockholders of
Noble. After deliberation and discussion, the Board voted unanimously to (i)
approve the Merger and the proposed form of merger agreement, and (ii) approve
Merger exchange ratios of 0.75 of a share of Noble Common Stock for each share
of Chiles Common Stock and one share of $1.50 Noble
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Preferred Stock for each share of Chiles Preferred Stock. The Board directed
Noble management to proceed with negotiating and resolving the remaining open
business issues and finalizing a definitive merger agreement. Mr. Day contacted
Mr. Bearden, informed him of the decision by the Noble Board of Directors and
provided him additional information regarding certain business terms.
The Chiles Board met by telephone on Friday, June 10, 1994 to review the
discussions with Noble during the preceding week and the status of open business
issues regarding the transaction. Mr. Bearden and Mr. Fulton advised the Board
of the results of the Noble Board meeting the previous day as well as the status
of due diligence and negotiations. The Board authorized Mr. Bearden and Mr.
Fulton to seek to finalize the remaining open issues over the weekend. Mr.
Leland called Mr. Day to inform him of the Chiles Board's decision.
Negotiations continued on Saturday and Sunday, June 11 and 12, 1994, during
which time representatives of Noble and Chiles resolved the remaining issues
relating to the proposed merger. On Sunday afternoon, June 12, 1994, the Chiles
Board met again by telephone. Salomon made a presentation to the Chiles Board
concerning the terms of the proposed transaction and gave the Board its oral
opinion that the proposed consideration was fair, as of such date, to the Chiles
stockholders from a financial point of view. The Chiles Board unanimously
approved the proposed merger agreement. The Merger Agreement was executed as of
June 13, 1994.
REASONS FOR THE MERGER
Noble and Chiles. The Boards of Directors of Noble and Chiles considered
certain common factors in determining that the Merger is in the best interests
of the stockholders of Noble and Chiles, respectively, including the following:
- the business and financial prospects of a Noble/Chiles combination,
including the size of the combined fleet, the potential operational
benefits in the Gulf of Mexico and West Africa and the outlook for the
respective fleets;
- the geographic diversification of a combined Noble/Chiles drilling rig
fleet consisting of 44 mobile offshore units with significant operational
bases in the Gulf of Mexico, West Africa and Venezuela and the prospects
for expansion into other significant oil and gas regions;
- the balance sheet strength of a Noble/Chiles combination and the modest
debt levels relative to the combined equity of the two companies;
- the outlook for the offshore drilling industry internationally and in the
Gulf of Mexico and other economic and market conditions, including oil
and natural gas prices;
- the structure of the Merger, the terms of the Merger Agreement and the
exchange ratios, which were the result of arms'-length negotiations
between Noble and Chiles;
- the financial analyses and opinions of their financial advisors; and
- the expectation that the Merger would be a non-taxable transaction for
U.S. federal income tax purposes.
In addition, the Boards of Directors of Noble and Chiles considered certain
other factors discussed below.
Noble. The Board of Directors of Noble has determined that the consummation
of the Merger is in the best interests of Noble and its stockholders. The Noble
Board believes that the combination is a continuation of Noble's objective of
expansion of its offshore drilling rig fleet and should help consolidate the
highly-fragmented offshore drilling industry. Following the Merger, the addition
of Chiles' 13 jackup drilling rigs will increase the size of Noble's fleet to a
total of 44 mobile offshore units, including 32 jackup drilling rigs. The Merger
will also enhance Noble's balance sheet and provide Noble with increased
flexibility and liquidity, thereby improving Noble's ability to expand its
international operations and to better manage both stronger and weaker offshore
drilling markets. The Noble Board believes that the expansion of Noble's
offshore drilling fleet, the enhancement of Noble's balance sheet and the
possible positive impact on Noble's earnings that
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could result from any consolidation savings realized in the Merger will enhance
Noble's long-term growth potential. As a result, the Noble Board believes that
the Merger should, over time, be significantly positive for Noble and its
stockholders.
Chiles. The Board of Directors of Chiles believes that the terms of the
Merger are fair to and in the best interests of Chiles and its stockholders and
has unanimously approved the Merger Agreement and recommends approval and
adoption of the Merger Agreement by the holders of Chiles Common Stock.
In reaching its conclusion, the Chiles Board considered the common factors
set forth above and the following additional factors:
- the fact that the exchange ratio for the Chiles Common Stock represented
a premium over the market prices for Chiles Common Stock during the
recent period prior to execution of the Merger Agreement;
- the fact that shares of Chiles Preferred Stock would be converted into
shares of $1.50 Noble Preferred Stock having substantially the same
rights, privileges, preferences and voting power as the Chiles Preferred
Stock;
- Noble's commitment to providing integrated drilling services to its
customers, including turnkey drilling services, as demonstrated by
Noble's recent acquisition of Triton; and
- the proposed composition of the Board of Directors of Noble after the
Merger, which would include two members designated by Chiles.
In determining that the Merger was fair to and in the best interests of Chiles
and its stockholders, the Board considered these factors, together with the
common factors described above, collectively and did not assign specific or
relative weights to any of such factors.
The Board of Directors of Chiles determined that a merger with Noble was
the best option for achieving the strategic goals of Chiles. The size of the
combined fleet enhances the prospects for the combined company to have multiple
rig operations in new drilling markets not presently served by either company.
In addition, the combination has the immediate advantage of linking Chiles'
fleet to significant operations in Venezuela and increasing the base of its
operations in West Africa. See "Investment Considerations -- Substantial
International Operations; Disruption of Nigerian Market," however, for a
discussion of recent civil unrest and related adverse economic conditions in
Nigeria. The Board believes that contractors with multiple rigs in a given
region will be in a superior competitive position because of the fixed costs
associated with establishing a base of operations and the mobilization costs
associated with moving rigs between markets. Accordingly, the Board believes
that the size and geographic diversity of the combined fleet will permit the
combined companies to compete more effectively for drilling contracts around the
world and to achieve higher dayrates and utilization for its rigs. In addition,
the Board believes that Noble's recent acquisition of Triton and its well
established North Sea platform management operations demonstrate Noble's
commitment to providing integrated drilling services to its clients. As a
result, the Chiles Board believes that the Merger represents an opportunity for
Chiles' stockholders to participate in a combined enterprise with significantly
greater operational resources and, accordingly, greater long-term growth
potential than Chiles would have as a stand alone company or on the basis of the
other transactions considered by the Chiles Board.
OPINIONS OF FINANCIAL ADVISORS
Noble. Noble retained Simmons to act as its financial advisor and to render
a fairness opinion in connection with the Merger. Simmons rendered its oral
opinion to the Board of Directors of Noble at a meeting on June 9, 1994 that, as
of such date, the consideration to be paid by Noble in the Merger was fair from
a financial point of view to the holders of Noble Common Stock and $2.25 Noble
Preferred Stock. Subsequently, Simmons confirmed this opinion in writing as of
June 13, 1994. The exchange ratios and the other terms of the Merger Agreement
were determined pursuant to arms'-length negotiations between Noble and Chiles.
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The full text of Simmons' fairness opinion, dated June 13, 1994, and of
Simmons' confirmation thereof dated August 12, 1994, which set forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, are attached to this Joint Proxy Statement/Prospectus as
Appendix II and are incorporated herein by reference. Simmons' opinion is
directed only to the fairness, from a financial point of view, to the holders of
Noble Common Stock and $2.25 Noble Preferred Stock of the consideration to be
paid by Noble in the Merger and does not constitute a recommendation to any
holder of Noble Common Stock as to how such stockholder should vote on the
Merger Proposal. The summary of Simmons' opinion set forth below is qualified in
its entirety by reference to the full text of such opinion attached as Appendix
II. STOCKHOLDERS OF NOBLE ARE URGED TO READ THE OPINION OF SIMMONS IN ITS
ENTIRETY.
In connection with rendering its opinion, Simmons reviewed, analyzed and
relied upon, among other things, the following: (i) the Merger Agreement; (ii)
certain publicly available informational and financial reports of Noble and
Chiles filed with the Commission, including Annual Reports on Form 10-K for each
of the years in the three-year period ended December 31, 1993, Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1994 and June 30, 1994, recent
current reports on Form 8-K and recent prospectuses; (iii) certain near-term
forecasts and other internal information, primarily financial in nature,
concerning the business and operations of Noble, including recent acquisitions,
furnished by Noble for the purpose of Simmons' analysis; (iv) certain near-term
forecasts and other internal information, primarily financial in nature,
concerning the business and operations of Chiles furnished by Chiles for the
purpose of Simmons' analysis; (v) certain publicly available information
concerning the price and trading activity for Noble Common Stock, $2.25 Noble
Preferred Stock, Chiles Common Stock and Chiles Preferred Stock; (vi) certain
publicly available information with respect to certain other publicly traded
offshore drilling companies that Simmons considers to be comparable to Noble or
Chiles ("Comparable Companies") and the trading markets for the Comparable
Companies' securities; (vii) certain publicly available estimates of the future
operating and financial performance of Noble, Chiles and the Comparable
Companies prepared by industry experts unaffiliated with either Noble or Chiles
("Analysts' Estimates"); and (viii) certain publicly available information
regarding the nature and terms of certain other transactions that Simmons
considered relevant to its inquiry. In addition, Simmons discussed the foregoing
and other matters Simmons deemed relevant to its inquiry with certain officers
and employees of Noble and Chiles.
In performing its analysis and arriving at its opinion, Simmons assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided by Noble and Chiles or publicly available, including
without limitation, information with respect to asset conditions, tax positions,
liability reserves and insurance coverages. Simmons did not independently verify
any of such information. Simmons did not conduct a physical inspection of any of
the properties, equipment or facilities of Noble or Chiles, nor did it make or
obtain any independent valuations or appraisals of such properties, equipment or
facilities, other than Analysts' Estimates. Furthermore, Simmons assumed that
the new series of $1.50 Noble Preferred Stock would have substantially the same
rights, privileges, preferences and voting power as the Chiles Preferred Stock
and that the Merger would be treated as a "pooling of interests" in accordance
with generally accepted accounting principles.
In conducting its analysis and arriving at its opinion, Simmons considered
such financial and other factors that it deemed appropriate under the
circumstances including, among others, the following: (i) the historical and
current financial position and operating results of Noble and Chiles; (ii) the
business prospects of Noble and Chiles; (iii) the financial performance and
historical and current market for the equity securities of Noble, Chiles and
Comparable Companies; (iv) the relative value of the assets of Noble and Chiles,
based upon Analysts' Estimates and each company's balance sheet; and (v) the
nature and terms of certain other transactions that Simmons considered relevant.
Simmons' analyses reflected recent acquisitions and current capitalization
structures of Noble and Chiles. Simmons also took into account its assessment of
general economic, market and financial conditions, and its experience in
connection with similar transactions and securities valuation generally.
Simmons' opinion necessarily was based upon conditions as they existed and could
be evaluated on, and on the information made available at, the date of such
opinion.
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<PAGE> 36
In connection with its presentation to the Noble Board on June 9, 1994,
Simmons advised the Noble Board that in evaluating the consideration to be paid
in the Merger by Noble, Simmons performed a variety of financial and comparative
analyses with respect to Noble and Chiles, including those described below:
Exchange Ratio Profile. Simmons performed an analysis of the ratio of the
market price of Chiles Common Stock to the market price of Noble Common Stock
during the period from the first of January 1991 through the end of May 1994.
Simmons calculated the ratio of the Chiles Common Stock closing price for the
last trading day of each week during that period to the Noble Common Stock
closing price for such day. This analysis implied an exchange ratio ranging from
a high of 1.43 shares of Noble Common Stock for each share of Chiles Common
Stock to a low of 0.21 shares of Noble Common Stock for each share of Chiles
Common Stock, with an average during the period of 0.69 shares of Noble Common
Stock for each share of Chiles Common Stock. Simmons also calculated the ratio
of the Chiles Common Stock closing price on May 27, 1994 ($4.9375 per share) to
the Noble Common Stock closing price on such day ($7.25 per share). This implied
an exchange ratio of 0.68 shares of Noble Common Stock for each share of Chiles
Common Stock.
Premium Analysis. Simmons calculated the premium to holders of Chiles
Common Stock of the "Implied Consideration" (obtained by multiplying the closing
stock price for Noble Common Stock on May 27, 1994 by the Merger exchange ratio
of 0.75) to the closing stock prices for Chiles Common Stock on such date and on
the dates one month, three months and 12 months prior thereto as well as to the
weekly average closing price for Chiles Common Stock during the latest 12 months
and to each of the 52-week high and low closing prices for Chiles Common Stock.
Based on the closing stock price for Noble Common Stock of $7.25 on May 27,
1994, Simmons calculated premiums to holders of Chiles Common Stock equal to
10.1 percent of the closing stock price for Chiles Common Stock of $4.9375 on
May 27, 1994; 24.3 percent of the closing stock price for Chiles Common Stock of
$4.375 one month earlier; 1.2 percent of the closing stock price for Chiles
Common Stock of $5.375 three months earlier; 27.9 percent of the closing stock
price for Chiles Common Stock of $4.25 12 months earlier; 2.9 percent of the
weekly average closing price for Chiles Common Stock during the latest 12 months
of $5.28; and a negative 23.7 percent and a positive 50.0 percent of the 52-week
high and low closing prices for Chiles Common Stock of $7.125 and $3.625,
respectively.
Simmons also analyzed average acquisition premiums for acquisitions of
certain comparable public companies in the years 1987 through 1994. The average
premium to last closing price prior to announcement of such transactions for the
transactions occurring during any year ranged from a low of 24.0 percent to a
high of 41.6 percent, with the weighted average being 31.5 percent as compared
with the premium for the merger of 10.1 percent, based on a closing price of
$4.9375 per share for Chiles Common Stock and $7.25 per share for Noble Common
Stock on May 27, 1994.
Relative Contribution Analysis. Simmons analyzed the relative contributions
of Noble and Chiles to, among other things, the combined pro forma historical
and projected revenues, earnings before depreciation and amortization, interest
and taxes ("EBDIT"), net income, total assets and shareholders' equity of the
two companies. The analysis assumes a full period of financial results for
recent acquisitions, completion of the Merger and, in some cases, a certain
level of combination savings. Based on results for the trailing 12 months ended
March 31, 1994 ("TTM"), Simmons calculated contributions by Chiles of
approximately 18 percent of combined revenues, 28 percent of combined EBDIT, 39
percent of combined net income, 26 percent of total assets, 35 percent of
shareholders' equity and 21 percent of "Adjusted Total Book Capitalization" (the
total book capitalization less cash balances in excess of five percent of
operating revenues). Based on the mean of Analysts' Estimates, Simmons
calculated contributions by Chiles of approximately 37 percent of projected
fiscal 1994 net income and 30 percent of projected fiscal 1995 net income.
Based on the Implied Consideration, Simmons calculated contributions by
Chiles of approximately 37 percent of the market value of common equity, 39
percent of the market value of common and preferred equity, 33 percent of the
total market capitalization and 29 percent of the "Adjusted Total Market
Capitalization" (the total market capitalization less cash balances in excess of
five percent of operating revenues).
Valuation Multiple Analysis. Simmons calculated multiples of the $4.9375
closing price per share of Chiles Common Stock and the Implied Consideration to
Chiles' 1993, TTM and estimated 1994 earnings per
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<PAGE> 37
share (based on both developed assumptions and Analysts' Estimates). Simmons
also calculated multiples of Chiles' Adjusted Total Market Capitalization, using
the $4.9375 closing price and the Implied Consideration, to Adjusted Total Book
Capitalization and 1993, TTM and estimated 1994 revenues and EBDIT.
These calculations resulted in multiples of the $4.9375 closing price and
the Implied Consideration, respectively, to 1993 earnings per share of 39.5x and
43.5x, respectively, and to estimated 1994 earnings per share (based on the mean
of Analysts' Estimates) of 17.6x and 19.4x, respectively. Calculated multiples
of Chiles' Adjusted Total Market Capitalization, using the $4.9375 closing price
and the Implied Consideration, to 1993 revenues are 3.0x and 3.4x, respectively;
to 1993 EBDIT are 10.9x and 12.3x, respectively; and to Adjusted Total Book
Capitalization are 1.8x and 2.1x, respectively.
The same multiples were also calculated for Noble at the $7.25 closing
price and for the combined company of Noble and Chiles assuming the $7.25
closing price for Noble, the Implied Consideration for Chiles and, in some
cases, a certain level of combination savings. These calculations resulted in
multiples of Noble and the combined company, respectively, to 1993 earnings per
share of 31.5x and 31.2x, respectively, and to estimated 1994 earnings per share
(based on the mean of Analysts' Estimates) of 18.1x and 17.6x, respectively.
Calculated multiples of Noble and the combined company's Adjusted Total Market
Capitalization, using the $7.25 closing price for Noble and the Implied
Consideration, to 1993 revenues are 1.7x and 2.0x, respectively; to 1993 EBDIT
are 9.2x and 9.7x, respectively; and to Adjusted Total Book Capitalization are
1.3x and 1.5x, respectively.
Analysis of Selected Publicly-Traded Comparable Companies. Simmons reviewed
certain publicly available financial, operating and stock market information as
of May 27, 1994 for Noble, Chiles and the Comparable Companies. For Noble,
Chiles and the Comparable Companies, Simmons calculated, among other things,
multiples of market stock price to TTM earnings per share and to estimated 1994
and 1995 earnings per share (derived from Analysts' Estimates) and multiples of
Adjusted Total Market Capitalization to TTM revenues, to TTM EBDIT and to
Adjusted Total Book Capitalization.
An analysis of the multiples of market stock price to TTM earnings per
share, to estimated 1994 earnings per share and to estimated 1995 earnings per
share yielded 20.6x, 17.6x and 10.1x, respectively, for Chiles (22.7x, 19.4x and
11.1x, respectively, at the Implied Consideration), 24.1x, 18.1x and 10.5x for
Noble, and means of 20.5x, 20.2x and 17.3x for the Comparable Companies. An
analysis of the multiples of Adjusted Total Market Capitalization to TTM
revenues yielded 2.7x for Chiles (3.1x at the Implied Consideration), 1.7x for
Noble and a mean of 2.6x for the Comparable Companies. An analysis of the
multiples of Adjusted Total Market Capitalization to TTM EBDIT yielded 8.8x for
Chiles (10.0x at the Implied Consideration), 8.9x for Noble and a mean of 10.9x
for the Comparable Companies. An analysis of the multiples of Adjusted Total
Market Capitalization to Adjusted Total Book Capitalization yielded 1.8x for
Chiles (2.1x at the Implied Consideration), 1.3x for Noble and a mean of 1.6x
for the Comparable Companies.
Analysis of Selected Comparable Transactions. Simmons reviewed several
transactions involving the acquisition of oil service companies. Simmons
calculated multiples of acquisition price, or transaction value, to the EBDIT
generated in the 12 months prior to acquisition, and to the Adjusted Total Book
Capitalization of such companies. These calculations yielded a range of
acquisition price to EBDIT of 6.8x to 17.3x, with a mean excluding the high and
the low value of 8.9x, and a range of acquisition price to Adjusted Total Book
Capitalization of 0.8x to 2.8x, with a mean excluding the high and low value of
1.9x. The average transaction EBDIT multiple of 8.9x (excluding the high and low
value) compares to an 8.8x TTM EBDIT multiple for Chiles (10.0x at the Implied
Consideration) and an 8.9x multiple for Noble. The average transaction Adjusted
Total Book Capitalization multiple of 1.9x (excluding the high and low value)
compares to a 1.8x multiple for Chiles (2.1x at the Implied Consideration) and a
1.3x multiple for Noble.
In addition to reviewing company acquisitions, Simmons analyzed recent
purchases of a similar class of jackup drilling rigs as owned by Noble and
Chiles. Simmons calculated the purchase price paid per jackup in each
transaction. These calculations yielded an average price per jackup of $16.7
million. The consideration paid in the majority of the transactions reviewed was
in the form of cash. Assuming the Implied Consideration and after making working
capital adjustments, the effective average price per jackup that Noble is paying
for
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the Chiles rigs is approximately three percent higher than the average
transaction price, with the consideration paid in stock.
Discounted Cash Flow Analysis. Simmons performed various discounted cash
flow valuations of Noble and Chiles. Net present values were based on projected
future free cash flows of the companies for five years and a terminal value
calculated assuming the perpetuity method and an inflationary growth rate after
the five-year period of three percent per year. Recently acquired Triton was
excluded from the cash flows analyses and its purchase price was added to
Noble's value. The sums of future cash flows in perpetuity were then discounted
to present values by examining discount rates ranging from 11 percent to 15
percent and by applying discount rates ranging from 12 percent to 14 percent.
Based on these calculations, Simmons then derived ranges of present values per
share for Noble Common Stock and Chiles Common Stock.
The purpose of the analysis was to determine the value of each entity, both
on a stand-alone basis and relative to the other. Combination savings were not
incorporated into the analysis. Due to the many variables, the discounted cash
flow analysis yielded a fairly wide range of results. For Chiles, the $4.9375
closing price and the Implied Consideration were within or below the share price
ranges implied by the majority of the cases. For Noble, the $7.25 closing price
was also within or below the share price ranges implied by the majority of the
cases.
Simmons has advised the Noble Board that in connection with the
confirmation, as of August 12, 1994, of its June 13, 1994 opinion, Simmons
performed procedures to update certain of its analyses made in connection with
its June 13, 1994 opinion and reviewed the assumptions on which such analyses
were based and the factors considered in connection therewith. Simmons
considered, among other things, Noble's and Chiles' recent financial
performance, including their respective results of operations for the six months
ended June 30, 1994, and recent market conditions and developments.
The foregoing summary does not purport to be a complete description of the
analyses performed by Simmons or of its presentations to the Noble Board. The
preparation of financial analyses and fairness opinions is a complex process and
is not necessarily susceptible to partial analysis or summary description.
Simmons believes that its analyses (and the summary set forth above) must be
considered as a whole, and that selecting portions of such analyses and of the
factors considered by Simmons, without considering all of such analyses and
factors, could create an incomplete view of the processes underlying the
analyses conducted by Simmons and its opinion. Simmons made no attempt to assign
specific weights to particular analyses. Any estimates contained in Simmons'
analyses are not necessarily indicative of actual values, which may be
significantly more or less favorable than as set forth therein. Estimates of
values of companies do not purport to be appraisals or necessarily reflect the
prices at which companies may actually be sold. Because such estimates are
inherently subject to uncertainty, Simmons does not assume responsibility for
their accuracy.
Simmons is a specialized energy-related investment banking firm engaged in,
among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, the management and underwriting of
sales of equity and debt to the public and private placements of equity and
debt. Noble selected Simmons to act as its financial advisor in connection with
the Merger on the basis of Simmons' expertise in the oil and gas service and
equipment industry.
Pursuant to an engagement letter with Simmons, Noble has agreed to pay
Simmons a transaction fee, payable on the consummation of the Merger, of
$1,350,000. Noble has also agreed to reimburse Simmons for certain expenses
incurred in connection with its engagement and to indemnify Simmons and certain
related persons against certain liabilities and expenses relating to or arising
out of its engagement, including certain liabilities under the federal
securities laws.
Simmons has in the past rendered investment banking services to Noble,
including acting as advisor in connection with certain acquisitions and as an
underwriter of Noble's 1993 public offerings of Noble Common Stock and 9 1/4%
Senior Notes Due 2003, and has received customary compensation for such
services. In addition, in the ordinary course of business, Simmons may actively
trade the securities of Noble and Chiles for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
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Chiles. Chiles retained Salomon to act as financial advisor and render a
fairness opinion in connection with the Merger. Salomon rendered an oral opinion
to the Chiles Board of Directors on June 12, 1994, and written opinions to the
Chiles Board on June 13, 1994 and August 12, 1994, in each case that the
consideration to be received by the holders of Chiles Common Stock and Chiles
Preferred Stock pursuant to the Merger Agreement was fair to such holders from a
financial point of view.
The full text of Salomon's fairness opinion, dated August 12, 1994, which
sets forth the assumptions made, general procedures followed, matters considered
and limits on the review undertaken, is attached as Appendix III to this Joint
Proxy Statement/Prospectus. The June 13, 1994 opinion of Salomon was
substantially the same as the opinion attached hereto. Salomon's opinion is
directed only to the fairness, from a financial point of view, to the holders of
Chiles Common Stock and Chiles Preferred Stock of the consideration to be
received by such holders in the Merger, and does not constitute a recommendation
to any holder of Chiles Common Stock as to how such stockholder should vote on
the Merger Agreement. The summary of Salomon's opinion set forth below is
qualified in its entirety by reference to the full text of such opinion attached
as Appendix III hereto. STOCKHOLDERS ARE URGED TO READ SALOMON'S OPINION IN ITS
ENTIRETY.
In connection with rendering its opinion, Salomon reviewed, analyzed and
relied upon material relating to the financial and operating condition of Chiles
and Noble, including, among other things, the following: (i) the Merger
Agreement; (ii) certain publicly available information concerning Chiles,
including the Annual Reports on Form 10-K of Chiles for each of the three years
in the three-year period ended December 31, 1993 and the Quarterly Reports on
Form 10-Q of Chiles for the quarters ended March 31, 1994 and June 30, 1994;
(iii) certain internal information, primarily historical financial in nature,
concerning the business and operations of Chiles furnished by Chiles to Salomon
for the purposes of its analysis; (iv) certain publicly available information
concerning the trading of, and the trading market for, Chiles Common Stock; (v)
certain publicly available information concerning Noble, including the Annual
Reports on Form 10-K of Noble for each of the three years in the three-year
period ended December 31, 1993 and the Quarterly Reports on Form 10-Q of Noble
for the quarters ended March 31, 1994 and June 30, 1994; (vi) certain internal
information, primarily historical financial in nature, concerning the business
and operations of Noble furnished by Noble to Salomon for the purposes of its
analysis; (vii) certain publicly available information concerning the trading
of, and the trading market for, Noble Common Stock; (viii) certain publicly
available information with respect to certain other companies that Salomon
believes to be comparable to Chiles or Noble and the trading markets for certain
of such other companies' securities; and (ix) certain publicly available
information concerning the nature and terms of certain other transactions that
Salomon considered relevant to its inquiry. Salomon also met with certain
officers and employees of Chiles and Noble to discuss the foregoing as well as
other matters Salomon deemed relevant to its inquiries.
In its review and analysis and in arriving at its opinion, Salomon assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to it or publicly available, and did not attempt
independently to verify any of such information. Salomon did not conduct a
physical inspection of any of the properties or facilities of Chiles or Noble,
nor did it make or obtain any independent appraisals of any of such properties
or facilities. Salomon assumed that the $1.50 Noble Preferred Stock will have
substantially identical rights, privileges, preferences and voting power as
those of the Chiles Preferred Stock, that the Merger will not be taxable for the
holders of Chiles Common Stock and Chiles Preferred Stock and that the Merger
will be accounted for as a "pooling of interests."
In conducting its analysis and arriving at its opinion, Salomon considered
such financial and other factors as it deemed appropriate under the
circumstances including, among others, the following: (i) the historical and
current financial position and results of operations of Chiles and Noble; (ii)
the business prospects of Chiles and Noble; (iii) the historical and current
trading market for Chiles Common Stock, for Noble Common Stock and for the
equity securities of certain other companies that Salomon believed to be
comparable to Chiles and Noble; and (iv) the nature and terms of certain other
acquisition transactions that Salomon believed to be relevant. Salomon also took
into account its assessment of general economic, market and financial conditions
and its experience in connection with similar transactions and securities
valuation generally. Salomon's opinion necessarily was based on conditions as
they existed and could be evaluated on the date of its opinion.
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In connection with its presentation to the Board of Directors of Chiles on
June 12, 1994, Salomon advised the Board that, in evaluating the consideration
to be received in the Merger by the holders of Chiles Common Stock and Chiles
Preferred Stock, Salomon performed a variety of financial analyses with respect
to Chiles and Noble.
Exchange Ratio Profile. Salomon performed an analysis of the historical
ratio of the market price of Chiles Common Stock to the market price of Noble
Common Stock during the period from January 1, 1993 through June 9, 1994.
Salomon calculated the ratio of the Chiles Common Stock closing price for each
trading day during that period to the Noble Common Stock closing price for such
day. This analysis implied an exchange ratio ranging from a low of 0.28 of a
share of Noble Common Stock to each share of Chiles Common Stock to a high of
0.81 of a share of Noble Common Stock to each share of Chiles Common Stock, with
an average during the period of 0.59 of a share of Noble Common Stock to each
share of Chiles Common Stock. Salomon performed the same analysis for the period
from June 10, 1993 through June 9, 1994, which implied an exchange ratio ranging
from a low of 0.48 of a share of Noble Common Stock to each share of Chiles
Common Stock to a high of 0.81 of a share of Noble Common Stock to each share of
Chiles Common Stock, with an average during the period of 0.64 of a share of
Noble Common Stock to each share of Chiles Common Stock; for the period from
January 1, 1994 through June 9, 1994, which implied an exchange ratio ranging
from a low of 0.50 of a share of Noble Common Stock to each share of Chiles
Common Stock to a high of 0.81 of a share of Noble Common Stock to each share of
Chiles Common Stock, with an average during the period of 0.65 of a share of
Noble Common Stock to each share of Chiles Common Stock; and for the period from
May 10, 1994 through June 9, 1994, which implied an exchange ratio ranging from
a low of 0.59 of a share of Noble Common Stock to each share of Chiles Common
Stock to a high of 0.74 of a share of Noble Common Stock to each share of Chiles
Common Stock, with an average during the period of 0.67 of a share of Noble
Common Stock to each share of Chiles Common Stock. Salomon also calculated the
ratio of the Chiles Common Stock price on June 9, 1994 ($5.00 per share) to the
Noble Common Stock price on such day ($7.125 per share). This implied an
exchange ratio of 0.70 of a share of Noble Common Stock to each share of Chiles
Common Stock.
Premium Analysis. Salomon calculated the premium to holders of Chiles
Common Stock of the "Implied Consideration" (represented by multiplying the
closing stock price for Noble Common Stock on June 9, 1994 by the Merger
exchange ratio of 0.75) to the closing stock prices for Chiles Common Stock on
such date and on the date one month prior thereto, as well as to the average
closing stock price for Chiles Common Stock during the one month period ending
on June 9, 1994 and to each of the 52 week high and low closing prices for
Chiles Common Stock. Based upon the closing stock price for Noble Common Stock
of $7.125 on June 9, 1994, Salomon calculated premiums to holders of Chiles
Common Stock equal to seven percent of the closing stock price for Chiles Common
Stock of $5.00 on June 9, 1994; 26 percent of the closing stock price for Chiles
Common Stock of $4.25 one month earlier; 14 percent of the average closing stock
price for Chiles Common Stock for the one-month period ending on June 9, 1994;
and (25 percent) and 47 percent of the 52 week high and low closing prices,
respectively, for Chiles Common Stock.
Salomon also calculated multiples of Chiles' "Implied Firm Value" (defined
as the aggregate offer price for the common equity, calculated using the Implied
Consideration, plus liquidation value of Chiles Preferred Stock and book values
of total debt and minority interest, less cash and cash equivalents) to its
latest 12 months ("LTM") revenues, its LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA") and its latest quarter annualized
EBITDA; and of the Implied Consideration to estimated Chiles earnings per share
and cash flow per share for calendar years 1994 and 1995 (based on the median of
published estimates reported by oil service industry research analysts). The
results of these calculations were as follows: Implied Firm Value to LTM
Revenues of 3.0x, to LTM EBITDA of 9.4x and to latest quarter annualized EBITDA
of 9.7x, and Implied Consideration to estimated 1994 earnings per share of
21.4x, to estimated 1995 earnings per share of 10.7x, to estimated 1994 cash
flow per share of 10.7x, and to estimated 1995 cash flow per share of 7.1x.
Financial Performance Analysis. Salomon analyzed the relative contributions
of Chiles and Noble to, among other financial measures, the combined revenues,
EBITDA, net income and cash flow of the two companies based on 1993 results; the
total assets, total debt and stockholders' equity as of March 31, 1994
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<PAGE> 41
of the two companies; and the estimated 1994 and 1995 net income and cash flow
(based on the median of published estimates reported by oil service industry
research analysts) of the two companies, assuming completion of the Merger
(without giving effect to any transaction adjustments). Salomon calculated
contributions by Chiles of approximately 17 percent of combined 1993 revenues;
23 percent of combined 1993 EBITDA; 30 percent of combined 1993 net income; 24
percent of combined 1993 cash flow; 27 percent of combined total assets; 0
percent of combined total debt; 37 percent of combined stockholders' equity; 39
percent of combined estimated 1994 net income; 38 percent of combined estimated
1995 net income; 31 percent of combined estimated 1994 cash flow; and 32 percent
of combined estimated 1995 cash flow. Salomon also calculated the percentage
(using the Merger exchange ratio of 0.75 and assuming completion of the Merger)
of the combined companies' equity that would be held by former Chiles
stockholders assuming no conversion of the $2.25 Noble Preferred Stock into
Noble Common Stock, assuming full conversion of the $2.25 Noble Preferred Stock
into Noble Common Stock and assuming full conversion of both the $2.25 Noble
Preferred Stock and the Chiles Preferred Stock into Noble Common Stock at 37
percent, 31 percent and 37 percent, respectively, and compared such percentages
with the foregoing contribution percentages.
Analysis of Selected Publicly-Traded Comparable Companies. Salomon reviewed
certain publicly available financial, operating and stock market information as
of June 9, 1994 for Chiles and Noble, and for certain selected publicly traded
offshore drilling companies ("Comparable Companies"). For each of Chiles and
Noble and each of the Comparable Companies, Salomon calculated, among other
things, multiples of "Firm Value" (defined as the aggregate market value of the
common equity, plus liquidation value of preferred stock and book values of
total debt and minority interest, less cash and cash equivalents) to LTM EBITDA
and to latest quarter annualized EBITDA, and multiples of market price to
estimated 1994 and 1995 earnings per share and cash flow per share (based on the
median of published estimates reported by oil service industry research
analysts). An analysis of the multiples of Firm Value to LTM EBITDA yielded 8.9x
for Chiles (9.4x at the Implied Consideration) and 8.7x for Noble, with a median
for the Comparable Companies of 9.5x. An analysis of the multiples of Firm Value
to latest quarter annualized EBITDA yielded 9.1x for Chiles (9.7x at the Implied
Consideration) and 9.6x for Noble, with a median for the Comparable Companies of
9.3x. An analysis of the multiples of market price to estimated 1994 earnings
per share yielded 20.0x for Chiles (21.4x at the Implied Consideration) and
19.3x for Noble, with a median for the Comparable Companies of 27.5x. An
analysis of the multiples of market price to estimated 1995 earnings per share
yielded 10.0x for Chiles (10.7x at the Implied Consideration) and 11.5x for
Noble, with a median for the Comparable Companies of 17.0x. An analysis of the
multiples of market price to estimated 1994 cash flow per share yielded 10.0x
for Chiles (10.7x at the Implied Consideration) and 8.2x for Noble, with a
median for the Comparable Companies of 9.7x. An analysis of the multiples of
market price to estimated 1995 cash flow per share yielded 6.7x for Chiles (7.1x
at the Implied Consideration) and 6.4x for Noble, with a median for the
Comparable Companies of 7.4x.
Analysis of Selected Comparable Acquisition Transactions. Salomon also
reviewed 22 transactions involving the acquisition or proposed acquisition of
all or part of certain oil field service companies. Salomon calculated the
multiples of Firm Value to EBITDA and revenues.
The calculations yielded a range of Firm Value to LTM EBITDA of 4.1x to
15.0x with a median of 8.6x, and a range of Firm Value to LTM revenues of 0.6x
to 3.1x with a median of 1.5x. Salomon then compared the results of these
calculations to multiples calculated using the Implied Firm Value; 9.4x Implied
Firm Value to Chiles' LTM EBITDA and 3.0x Implied Firm Value to Chiles' LTM
revenues.
Discounted Cash Flow Analyses. Salomon performed discounted cash flow
analyses of Chiles and Noble, based on projections of future performance
developed by Salomon, employing two methodologies: the first based on free cash
flow to the entire firm and an estimated terminal value derived as a multiple of
EBITDA ("Firm Value Approach"); the second based on free cash flow to equity and
an estimated terminal value derived as a multiple of net income ("Equity Value
Approach").
The Firm Value Approach applied terminal value multiples ranging from 3.5x
to 5.5x EBITDA. The sums of future cash flows to the firm and the range of such
related terminal value multiples were then discounted to present value by
applying discount rates ranging from 12 percent to 14 percent. Based on these
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calculations, Salomon then derived present values per share ranging from $4.69
to $6.46 for Chiles Common Stock and $5.79 to $8.78 for Noble Common Stock.
The Equity Value Approach applied terminal value multiples ranging from
6.0x to 10.0x net income. The sums of future cash flows to equity and the range
of such related terminal values were then discounted to present values by
applying discount rates ranging from 13 percent to 15 percent. Based on these
calculations, Salomon then derived present values per share ranging from $4.55
to $6.61 for Chiles Common Stock, and ranging from $6.81 to $9.78 for Noble
Common Stock.
Salomon has advised the Chiles Board that in connection with rendering its
opinion dated August 12, 1994, it performed procedures to update certain of its
analyses made in connection with its June 13, 1994 opinion and reviewed the
assumptions on which such analyses were based and the factors considered in
connection therewith. Salomon considered, among other things, Noble's and
Chiles' recent financial performance, including their respective results of
operations for the six months ended June 30, 1994, and recent market conditions
and developments.
The foregoing summary does not purport to be a complete description of the
analyses performed by Salomon or of its presentations to the Chiles Board. The
preparation of financial analyses and fairness opinions is a complex process and
is not necessarily susceptible to partial analysis or summary description.
Salomon believes that its analyses (and the summary set forth above) must be
considered as a whole and that selection of sections of such analyses and of the
factors considered by Salomon, without considering all of such analyses and
factors, could create an incomplete view of the processes underlying the
analyses conducted by Salomon and its opinion. Salomon made no attempt to assign
specific weights to particular analyses. Any estimates contained in Salomon's
analyses are not necessarily indicative of actual values, which may be
significantly more or less favorable than as set forth therein. Estimates of
values of companies do not purport to be appraisals or necessarily to reflect
the prices at which companies may actually be sold. Because such estimates are
inherently subject to uncertainty, Salomon does not assume responsibility for
their accuracy.
Salomon is an internationally recognized investment banking firm engaged,
among other things, in the valuation of businesses and their securities in
connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. Salomon has previously rendered certain investment
banking and financial advisory services to Chiles and to Noble, including as
lead manager for the public offerings of Chiles Common Stock in November 1992
and Chiles Preferred Stock in October 1993 and as lead manager for the public
offerings of Noble Common Stock and Noble's 9 1/4% Senior Notes Due 2003 in
October 1993, in each case for which it received customary compensation. In
addition, in the ordinary course of its business, Salomon may actively trade the
securities of Chiles and Noble for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Pursuant to an engagement letter with Salomon, Chiles has agreed to pay
Salomon a fee for its services in connection with the Merger, based on the value
of the Merger (defined as the value of consideration paid to stockholders and
employees of Chiles in connection with such transaction, including stock options
and employee bonuses). The fee will be an amount equal to 1.2 percent of the
first $100 million of the value of such transaction, and 0.75 percent of the
value over $100 million. In addition, Chiles has agreed to reimburse Salomon for
certain expenses incurred in connection with its engagement and to indemnify
Salomon and certain related persons against certain liabilities and expenses
relating to or arising out of its engagement, including certain liabilities
under the federal securities laws.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Noble has received from its counsel, Thompson & Knight, A Professional
Corporation ("Counsel"), an opinion to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
that Noble, Noble Sub and Chiles will each be a party to the reorganization
within the meaning of Section 368(b) of the Code, and that Noble, Noble Sub and
Chiles will not recognize any gain or loss for federal income tax
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purposes as a result of the Merger. It is a condition to the obligation of Noble
to consummate the Merger that the opinion of Counsel will not have been
withdrawn or modified in any material respect. Chiles has received from its
counsel, Vinson & Elkins L.L.P., an opinion to the effect that the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, that Noble, Noble Sub and Chiles will
each be a party to the reorganization within the meaning of Section 368(b) of
the Code, and that stockholders of Chiles will not recognize any gain or loss
for federal income tax purposes as a result of the Merger, except to the extent
they receive cash in lieu of a fractional share of Noble Common Stock. It is a
condition to the obligation of Chiles to consummate the Merger that such opinion
shall not have been withdrawn or modified in any material respect. The opinions
of counsel to Noble and Chiles are subject to certain assumptions and are based
on certain representations of Noble, Noble Sub, Chiles and affiliates of Chiles.
Stockholders of Chiles should be aware that such opinions will not be binding
upon the Internal Revenue Service (the "IRS"), nor will the IRS be precluded
from adopting a contrary position.
Set forth below is a summary of the material federal income tax
consequences which are expected to result from the Merger. For a discussion of
certain federal income tax consequences regarding the $1.50 Noble Preferred
Stock, see "Description of Noble Capital Stock -- Federal Income Tax
Considerations Regarding $1.50 Noble Preferred Stock." Unless noted otherwise,
statements of legal conclusions set forth in this section and herein under
"Description of Noble Capital Stock -- Federal Income Tax Considerations
Regarding $1.50 Noble Preferred Stock" constitute the opinion of Counsel.
It is impractical to comment on all aspects of federal, state, local and
foreign laws that may affect the tax consequences of the transactions
contemplated by the Merger Agreement as they relate to the particular
circumstances of each stockholder or potential stockholder. The federal income
tax consequences to any particular stockholder may be affected by matters not
discussed below. For example, certain types of holders (including foreign
persons, life insurance companies, tax exempt organizations and taxpayers who
may be subject to the alternative minimum tax) may be subject to special rules
not addressed herein. Furthermore, the discussions may not be applicable with
respect to shares received pursuant to the exercise of employee stock options or
otherwise as compensation. Each stockholder or prospective stockholder should
consult his or her own tax advisor with respect to his or her own particular
circumstances.
This summary is based on the current provisions of the Code, existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to changes that may or may not be
retroactively applied. Many of the provisions of the Code which have been
recently enacted or amended have not been interpreted by the courts or the IRS.
No ruling has been requested from the IRS with respect to any of the
matters discussed herein and thus no assurance can be provided that the opinions
and statements set forth herein (which do not bind the IRS or the courts) will
not be challenged by the IRS or would be sustained by a court if so challenged.
THE DISCUSSION SET FORTH BELOW ADDRESSES THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF GENERAL APPLICATION WHICH ARE EXPECTED TO RESULT FROM THE
MERGER. STOCKHOLDERS OF CHILES SHOULD CONSULT THEIR TAX ADVISORS TO DETERMINE
THE TAX CONSEQUENCES OF THE MERGER AND THE ACQUISITION, HOLDING AND DISPOSITION
OF THE SECURITIES OFFERED HEREBY, INCLUDING THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS WITH RESPECT TO
THEIR OWN PARTICULAR CIRCUMSTANCES.
Merger. Based on certain factual representations by Noble and Chiles and
certain factual assumptions set forth in its opinion included as an exhibit to
the Registration Statement, Counsel is of the opinion that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code,
that no gain or loss will be recognized for federal income tax purposes by
stockholders of Chiles upon the exchange of their shares of Chiles Common Stock
and Chiles Preferred Stock for shares of Noble Common Stock and $1.50 Noble
Preferred Stock pursuant to the terms of the Merger Agreement (except for gain
on cash received in lieu of fractional shares as discussed below) and that no
gain or loss will be recognized for federal income tax purposes by Chiles, Noble
or Noble Sub as a result of the Merger. The aggregate basis of the shares of
Noble Common Stock and $1.50 Noble Preferred Stock received by stockholders of
Chiles pursuant to the Merger
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will be the same as the aggregate basis of the shares of Chiles Common Stock or
Chiles Preferred Stock exchanged therefor (less basis attributable to fractional
shares surrendered for cash), and the holding period of such Noble capital stock
will include the period during which such shares of Chiles Common Stock or
Chiles Preferred Stock exchanged therefor were held, provided such shares of
Chiles Common Stock or Chiles Preferred Stock were held as a capital asset at
the time of the Merger.
Receipt of Cash in Lieu of Fractional Shares. Chiles stockholders receiving
cash in lieu of fractional shares will be treated as if such fractional shares
had been received in the Merger and redeemed by Noble for cash. Unless the
redemption is found to be essentially equivalent to a dividend, the stockholder
will recognize gain or loss measured by the difference between the stockholder's
basis in the fractional share surrendered and the amount of cash received.
Tax Consequences to Holders of the Chiles Options. If each holder of the
Chiles Options consents to the exchange of such options for shares of Noble
Common Stock, then such holders will recognize ordinary income equal to the fair
market value of the Noble Common Stock received. If the Chiles Options are not
exchanged pursuant to the Merger Agreement, Noble will assume all outstanding
Chiles Options and substitute options to acquire Noble Common Stock on the same
terms and conditions as the Chiles Options. The foregoing assumption and
substitution of options to acquire Noble Common Stock should not cause the
recognition of income, gain or loss to the option holders. See "Certain
Provisions of the Merger Agreement -- Chiles Options."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests" for
accounting and financial reporting purposes. Under the pooling of interests
method of accounting, the recorded assets and liabilities of Noble and Chiles
will be carried forward to Noble's consolidated financial statements at their
recorded amounts, the consolidated earnings of Noble will include earnings of
Noble and Chiles for the entire fiscal year in which the Merger occurs and the
reported operating results and financial position of Noble and Chiles for prior
periods will be combined and restated as if both the companies had been merged
during all periods presented. See "Unaudited Pro Forma Combined Financial
Statements" and "Certain Provisions of the Merger Agreement -- Certain
Conditions to Consummation of the Merger."
Noble and Chiles have been preliminarily advised by their independent
public accountant, Arthur Andersen & Co., that the Merger should qualify for
treatment as a "pooling of interests" in accordance with generally accepted
accounting principles based on the understanding of Arthur Andersen & Co. of the
terms and conditions of the Merger Agreement. Consummation of the Merger is
conditioned upon the written confirmation of such advice at the closing of the
Merger. See "Certain Provisions of the Merger Agreement -- Certain Conditions to
Consummation of the Merger." Also, such advice contemplates that each person who
may be deemed an affiliate of Chiles or Noble will enter into an agreement with
Noble at or before the Effective Time not to sell or otherwise transfer any
shares of Noble Common Stock prior to the date that Noble first publishes
financial statements reflecting at least 30 days of combined operations of Noble
and Chiles. Noble, Noble Sub and Chiles have agreed that none of them shall
knowingly take any action that would jeopardize the treatment of Chiles'
combination with Noble Sub as a "pooling of interests" for accounting purposes.
REGULATORY APPROVALS
Under the HSR Act, and the rules promulgated thereunder by the Federal
Trade Commission (the "FTC"), the Merger may not be consummated until
notifications have been given and certain information has been furnished to the
FTC and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and specified waiting period requirements have been satisfied. Noble,
Chiles and a stockholder of Chiles filed notification and report forms, together
with requests for early termination of the waiting period, under the HSR Act
with the FTC and the Antitrust Division on July 18, 1994. The respective
obligations of Noble and Chiles to consummate the Merger are conditioned upon
all waiting periods (and any extensions thereof) applicable to the consummation
of the Merger under the HSR Act having expired or been terminated. The
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waiting period will expire on August 17, 1994 unless a request for additional
information is received before such date. See "Certain Provisions of the Merger
Agreement -- Certain Conditions to Consummation of the Merger."
At any time before or after consummation of the Merger, and notwithstanding
that the HSR Act waiting period has expired or terminated, the FTC or the
Antitrust Division or any state could take such action under federal or state
antitrust laws as it deems necessary or desirable in the public interest. Such
action could include seeking to enjoin the consummation of the Merger or seeking
divestiture of Chiles or businesses of Noble or Chiles. Private parties may also
seek to take legal action under the antitrust laws under certain circumstances.
Based on information available to them, Noble and Chiles believe that the
Merger can be effected in compliance with federal and state antitrust laws.
However, there can be no assurance that a challenge to the consummation of the
Merger on antitrust grounds will not be made or that, if such a challenge were
made, Noble and Chiles would prevail or would not be required to accept certain
conditions, possibly including certain conditions to consummation of the Merger.
LIMITATIONS ON RESALES; REGISTRATION RIGHTS
Resales by Affiliates. The shares of Noble Common Stock and $1.50 Noble
Preferred Stock to be issued to the stockholders of Chiles, and shares of Noble
Common Stock to be issued to holders of Chiles Options upon cancellation
thereof, pursuant to the Merger Agreement are being registered under the
Securities Act pursuant to the Registration Statement and may generally be
resold freely without further registration. However, because some of such
persons are "affiliates" of Chiles (as such term is defined in Rule 144 under
the Securities Act), such persons will not be able to resell the Noble Common
Stock or $1.50 Noble Preferred Stock received by them in connection with the
Merger unless such shares are registered for resale under the Securities Act,
are sold in compliance with an exemption from the registration requirements of
the Securities Act or are sold in compliance with Rule 145 under the Securities
Act (or, in the case of persons who become affiliates of Noble, Rule 144 under
the Securities Act). Noble will not be required to maintain the effectiveness of
the Registration Statement for the purpose of such resales.
Pursuant to Rule 145, the sale of Noble Common Stock or $1.50 Noble
Preferred Stock acquired by such persons pursuant to the Merger Agreement will
be subject to certain restrictions. Such persons may sell Noble Common Stock or
$1.50 Noble Preferred Stock under Rule 145 only if (i) Noble has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months, (ii) the Noble Common Stock or $1.50 Noble Preferred
Stock is sold in "brokers' transactions" or in transactions directly with a
"market maker," within the meanings thereof in Rule 144 under the Securities
Act, and (iii) such sale and all other sales made by such person within the
preceding three months do not collectively exceed the greater of (x) one percent
of the then outstanding shares of Noble Common Stock or $1.50 Noble Preferred
Stock, as the case may be, and (y) the average weekly trading volume of Noble
Common Stock or $1.50 Noble Preferred Stock, as the case may be, in the NASDAQ
National Market System during the four-week period preceding the sale.
Persons who may be deemed to be affiliates of Noble or Chiles generally
include individuals or entities that control, are controlled by or are under
common control with, such party and may include certain officers and directors
of such party as well as principal stockholders of such party. The Merger
Agreement requires Chiles to use its reasonable best efforts to cause each
person whom it believes may be an affiliate of Chiles for purposes of Rule 145
to deliver to Noble at or prior to the closing of the Merger a written agreement
to the effect that such person will not, among other things, offer or sell or
otherwise dispose of any shares of Noble Common Stock or $1.50 Noble Preferred
Stock issued to such person pursuant to the Merger in violation of the
Securities Act or the rules and regulations promulgated thereunder by the
Commission. See "Certain Provisions of the Merger Agreement -- Certain
Conditions to Consummation of the Merger."
Registration Rights of P.A.J.W. As of the record date for the Chiles
Special Meeting, P.A.J.W. owned 11,535,587 shares of Chiles Common Stock or
approximately 30 percent of the outstanding shares of such stock. Based on the
capitalization of Noble and Chiles as of such record date, upon consummation of
the
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Merger, P.A.J.W. will own approximately 11.1 percent of the then outstanding
shares of Noble Common Stock. The Merger Agreement provides that Noble and
P.A.J.W., of which Marc E. Leland and John Slayton, each a director of Chiles,
and Lawrence Chazen, whom Chiles has proposed as a designee for election to the
Noble Board of Directors upon consummaiton of the Merger (see "-- Interests of
Certain Persons in the Merger -- Representation on Board of Directors"), are
affiliates, will enter into a Registration Rights Agreement pursuant to which
P.A.J.W. will be entitled to require Noble to register for sale under the
Securities Act the shares of Noble Common Stock received by P.A.J.W. in
connection with the Merger. In addition, P.A.J.W. will have certain rights to
include such shares in any registration effected by Noble with respect to Noble
Common Stock. The Registration Rights Agreement will have a five-year term, and,
subject to certain limitations, will entitle P.A.J.W. to two "demand"
registrations and unlimited "piggyback" registrations as described above.
Generally, the Registration Rights Agreement will provide that expenses incurred
in connection with a "demand" registration will be borne by P.A.J.W., and
expenses incurred in connection with a "piggyback" registration, other than
underwriting discounts or commissions applicable to shares sold by P.A.J.W.,
will be borne by Noble.
LISTING IN NASDAQ NATIONAL MARKET SYSTEM
Noble Common Stock is currently listed for trading in the NASDAQ National
Market System and it is anticipated that such stock will continue to be traded
thereon immediately following consummation of the Merger. Noble has filed a
notice with the National Association of Securities Dealers, Inc. (the "NASD")
with respect to the listing of additional shares of Noble Common Stock to be
issued pursuant to the Merger Agreement, as well as the shares of Noble Common
Stock issuable upon conversion of the $1.50 Noble Preferred Stock and the shares
of Noble Common Stock to be reserved for issuance upon the exercise of Chiles
Options to be assumed by Noble in the Merger, if any. The shares of $1.50 Noble
Preferred Stock to be issued upon consummation of the Merger have been approved
for inclusion in the NASDAQ National Market System, subject to official notice
of issuance.
NO APPRAISAL RIGHTS
Stockholders of Chiles are not entitled to any appraisal or dissenter's
rights under Delaware law in connection with the Merger. Stockholders of Noble
are not entitled to any appraisal or dissenter's rights under Delaware law in
connection with the Merger or the other matters to be considered at the Noble
Special Meeting.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of Chiles with
respect to the Merger, stockholders of Chiles should be aware that certain
persons may have direct or indirect interests in the Merger separate from those
of the stockholders of Chiles generally, including those discussed below.
Representation on Board of Directors. The Merger Agreement provides that
the number of directors comprising Noble's Board of Directors at the Effective
Time will be increased from seven to nine and that Noble will cause Marc E.
Leland, a director of Chiles and P.A.J.W., to be elected to the Board of
Directors effective as of the Effective Time. The Merger Agreement further
provides that, subject to the approval of the nominating committee of the Board
of Directors of Noble, Noble will cause Lawrence Chazen, an affiliate of
P.A.J.W., or another designee of Chiles, to be elected to the Board of Directors
effective as of the Effective Time. The nominating committee has not, as of the
date hereof, met with Mr. Chazen to consider approval of his designation by
Chiles, although it is scheduled to do so in late August 1994. Mr. Leland will
be elected to serve until Noble's 1997 annual meeting of stockholders, and the
other designee of Chiles will be elected to serve until Noble's 1996 annual
meeting of stockholders.
Marc E. Leland is Chairman of the Board of Directors of Chiles, and has
been a director of Chiles since December 1989. Since 1984, Mr. Leland has served
as President of Marc E. Leland & Associates, Inc., a company engaged in the
business of providing financial advisory services to Gordon P. Getty and certain
Getty family trusts. Mr. Leland is also a director of Caterair International
Corporation. He is the President and sole director of P.A.J.W.
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Lawrence Chazen has served as Chief Executive Officer of Lawrence J.
Chazen, Inc., a California registered investment adviser, since 1977, and has
provided financial advisory services to Gordon P. Getty, the Gordon P. Getty
Family Trust and other clients since 1977.
In order to comply with the Bylaws of Noble, which require that each class
of directors be as nearly equal in number as possible, one of the current
members of the Board of Directors of Noble in the class whose term expires at
the 1997 annual meeting of stockholders will become a member of the class whose
term expires at the 1995 annual meeting.
Executive Bonus Arrangements. Pursuant to resolutions adopted by the
Compensation Committee of the Board of Directors of Chiles in May 1993, C. Ray
Bearden, President and a director of Chiles, and Robert F. Fulton, Senior Vice
President and a director of Chiles, will each be entitled to a cash bonus of
$100,000 upon completion of the Merger or another specified business
combination.
Executive Severance Agreements. On July 1, 1993, Chiles entered into
Severance Agreements with C. Ray Bearden and Robert F. Fulton. The Severance
Agreements provide that, in the event of a "Termination Event" with respect to
the employee within one year following a specified change in control of Chiles
(which would include the Merger), Chiles will (i) pay to the employee a lump sum
payment equal to one year's annual base salary plus one month's base salary for
each year of service the employee had with Chiles, not to exceed a maximum lump
sum payment of two years' annual base pay, (ii) continue the employee's medical,
disability and life insurance coverage for up to two years or until
substantially similar insurance coverage is provided by a subsequent employer
and (iii) accelerate the vesting of the employee's unvested employee stock
options by up to 30 percent. A "Termination Event" is defined to include (a) a
termination of employment other than for cause (as defined), (b) a material
diminution in the scope or nature of the employee's duties (subject to certain
limitations), (c) a reduction in the employee's base salary of more than 10
percent (with certain exceptions), (d) a diminution in the employee's ability to
participate in employee incentive or benefit plans, or (e) a required relocation
of employee of more than 50 miles from the employee's then current location.
Exchange of Options. Pursuant to the Merger Agreement, all outstanding
Chiles Options will be exchanged at the Effective Time for an aggregate of
480,000 shares of Noble Common Stock (subject to adjustment and to the consent
of all holders of such Chiles Options on or prior to the Effective Time). See
"Certain Provisions of the Merger Agreement -- Chiles Options." Pursuant to such
exchange, Messrs. C. Ray Bearden, Robert F. Fulton, Marc E. Leland, Winthrop A.
Wyman, Edward L. Morse and John Slayton, each a director of Chiles, will receive
90,821, 63,575, 13,623, 13,623, 13,623 and 13,623 shares of Noble Common Stock,
respectively, and the family of Jack Hilder, a deceased Chiles director, will
receive 13,623 shares of Noble Common Stock. If the consent of all holders of
the Chiles Options to the exchange described above is not obtained prior to the
closing of the Merger, then Noble will take all necessary action to assume such
Chiles Options, substituting Noble Common Stock for the Chiles Common Stock
purchasable thereunder and making other appropriate adjustments as described
under "Certain Provisions of the Merger Agreement -- Chiles Options."
Registration Rights. P.A.J.W. will enter into an agreement with Noble
providing P.A.J.W. certain rights to require Noble to register for sale under
the Securities Act the shares of Noble Common Stock P.A.J.W. receives pursuant
to the Merger. See "-- Limitations on Resale; Registration Rights."
Indemnification. The Merger Agreement provides for broad indemnification of
the officers and directors of Chiles, and obligates Noble to continue for six
years Chiles' directors' and officers' liability insurance. See "Certain
Provisions of the Merger Agreement -- Indemnification."
Employee Benefit Plans. See "Certain Provisions of the Merger
Agreement -- Chiles Employee Benefits" for a discussion of post-Merger
arrangements regarding Chiles employee benefit plans.
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT
GENERAL
The Merger Agreement provides that, subject to the terms and conditions set
forth therein, Chiles will be merged with and into Noble Sub, and the separate
existence of Chiles will cease, with Noble Sub continuing in existence as the
surviving corporation and succeeding to all rights, properties and obligations
of Chiles. Following the Merger, Noble Sub will remain a wholly owned subsidiary
of Noble.
EFFECTIVE TIME OF THE MERGER; CLOSING
The Merger shall become effective immediately when a certificate of merger,
prepared and executed in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware ("DGCL"), is filed with the Secretary
of State of Delaware or at such time thereafter (not to exceed 90 days from the
date the certificate is filed) as is provided in the certificate of merger
pursuant to the mutual agreement of Noble and Chiles. The filing of the
certificate of merger shall be made as soon as practicable on the Closing Date
(as defined below). The closing of the Merger (the "Closing") shall take place
on a date (the "Closing Date") to be specified by the parties, which shall be as
soon as practicable after the satisfaction or waiver of the conditions to the
consummation of the Merger, unless another date is agreed to by the parties. If
the requisite approvals of the stockholders of Noble and Chiles are obtained at
their respective special meetings on September 15, 1994, Noble and Chiles
anticipate that the Effective Time will occur on September 15, 1994 or as soon
thereafter as practicable.
CONVERSION OF SHARES; PROCEDURE FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Subject to the terms and conditions of the Merger Agreement, at the
Effective Time, by virtue of the Merger and without any action on the part of
Noble, Chiles, Noble Sub or their respective stockholders, (i) each share of
Chiles Common Stock issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.75 of a share of Noble Common
Stock and (ii) each share of Chiles Preferred Stock issued and outstanding
immediately prior to the Effective Time (together with the shares of Chiles
Common Stock issued and outstanding immediately prior to the Effective Time, the
"Shares") will be converted into the right to receive one share of $1.50 Noble
Preferred Stock.
As soon as practicable after the Effective Time, each holder of a
certificate that prior thereto represented Shares will be entitled, upon
surrender thereof to Noble or its transfer agent, to receive in exchange
therefor, as applicable (i) a certificate or certificates representing the
number of whole shares of Noble Common Stock into which the shares of Chiles
Common Stock so surrendered shall have been converted in such denominations and
registered in such names as such holder may request, together with cash in lieu
of any fraction of a share as described below, or (ii) a certificate or
certificates representing the number of shares of $1.50 Noble Preferred Stock
into which the shares of Chiles Preferred Stock so surrendered shall have been
converted in such denominations and registered in such names as such holder may
request. Following the Effective Time, Noble will cause to be mailed to each
holder of certificates that represented Shares immediately prior to the
Effective Time, at such holder's address as it appears on Chile's stock transfer
records, a letter of transmittal and other information, advising such holder of
the consummation of the Merger along with instructions to enable such holder to
effect the exchange of stock certificates as contemplated by the Merger
Agreement. CHILES STOCKHOLDERS SHOULD NOT FORWARD CERTIFICATES REPRESENTING
CHILES COMMON STOCK OR CHILES PREFERRED STOCK TO NOBLE OR ITS TRANSFER AGENT
UNTIL THEY HAVE RECEIVED INSTRUCTIONS AS TO THE MANNER OF SURRENDER. CHILES
STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THEIR PROXIES.
Until so surrendered and exchanged, each certificate that prior to the
Effective Time represented Shares shall represent solely the right to receive
Noble Common Stock (and cash in lieu of fractional shares as described below, if
any) or $1.50 Noble Preferred Stock, as the case may be. Unless and until any
such certificates shall be so surrendered and exchanged, no dividends or other
distributions payable to the holders of Noble Common Stock or $1.50 Noble
Preferred Stock, as of any time on or after the Effective Time, shall be paid to
the holders of such certificates that prior to the Effective Time represented
Shares; provided, however,
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that, upon any such surrender and exchange of such outstanding certificates,
there shall be paid to the record holders of the certificates issued and
exchanged therefor the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore were declared and became payable on or
after the Effective Time with respect to the number of whole shares of Noble
Common Stock or $1.50 Noble Preferred Stock, as the case may be, issued to such
holder. Assuming an Effective Time on or prior to September 20, 1994, the
initial quarterly cash dividend on shares of $1.50 Noble Preferred Stock issued
upon consummation of the Merger will be payable on September 30, 1994 to holders
of record of such shares at the Effective Time in respect of the full quarterly
dividend period commencing on July 1, 1994 and ending on and including September
30, 1994. In such event, no dividend would be payable by Chiles on Chiles
Preferred Stock in respect of such dividend period.
All shares of Noble Common Stock and $1.50 Noble Preferred Stock issued
upon the surrender for exchange of certificates that prior to the Effective Time
represented Shares in accordance with the terms of the Merger Agreement
(including any cash paid in lieu of fractional shares, as described below) shall
be deemed to have been issued in full satisfaction of all rights pertaining to
such Shares. At and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of Noble Sub of the Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates that prior to the Effective Time represented Shares
are presented to Noble Sub for any reason, they shall be cancelled and exchanged
as provided in the Merger Agreement.
No fractional shares of Noble Common Stock will be issued, and each holder
of Chiles Common Stock who would otherwise be entitled to a fraction of a share
of Noble Common Stock will, upon surrender of the certificates representing
Chiles Common Stock held by such holder to Noble, be paid an amount in cash
equal to the value of such fraction of a share based upon the closing sales
price of Noble Common Stock, as reported on the NASDAQ National Market System,
on the last day on which there is a reported trade in the Noble Common Stock
prior to the date on which the Effective Time occurs. No interest will be paid
on such amount.
If any certificate for shares of Noble Common Stock or $1.50 Noble
Preferred Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so surrendered is
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange has paid to Noble or its transfer agent any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Noble Common Stock or $1.50 Noble Preferred Stock in any name other than that of
the registered holder of the certificate surrendered, or has established to the
satisfaction of Noble or its transfer agent that such tax has been paid or is
not payable.
REPRESENTATIONS AND WARRANTIES
Pursuant to the Merger Agreement, Noble and Chiles each made various
customary representations and warranties as to, among other things, their
respective corporate organization and compliance with law, their respective
capitalization, the authorization and validity of the Merger Agreement, their
respective businesses and financial condition, required approvals or conflicts,
their Commission filings and financial statements, litigation, employee benefit
matters, tax matters and environmental matters.
CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME
Chiles. Under the Merger Agreement, Chiles has agreed, from the date of the
Merger Agreement until the Effective Time, unless Noble shall otherwise agree in
writing or as otherwise contemplated by the Merger Agreement or as disclosed to
Noble, that, among other things: (a) the business of Chiles shall be conducted
only in the ordinary course of business and consistent with past practice, and
Chiles will not (i) enter any new drilling contracts with respect to any of
Chiles' drilling rigs unless such contracts may reasonably be expected to have a
duration of 90 days or less, or amend in any material respect adverse to Chiles
or Noble any drilling contract or other material contract or agreement, without
giving prior written notice to Noble, or (ii) mobilize any of Chiles' drilling
rigs from the Gulf of Mexico or from the West African coast without giving prior
written notice to Noble; (b) Chiles will not directly or indirectly take any of
a number of specific actions,
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including (i) the issuance of additional capital stock, (ii) the amendment of
its charter or bylaws, (iii) the splitting, combining or reclassifying of any
outstanding capital stock, (iv) the declaration, setting aside or payment of any
dividend with respect to its capital stock (except for regular quarterly cash
dividends on the Chiles Preferred Stock), (v) the redemption, purchase or
acquisition of its capital stock or (vi) making any of a number of specified
increases or changes in Chiles' bonus, compensation or employee benefit plans or
arrangements; (c) Chiles will use its reasonable efforts to preserve its
business organizations, any authorizations or similar rights, the services of
its current officers and key employees, the goodwill of those having business
relationships with Chiles, its properties and its levels of insurance coverage;
and (d) Chiles will not make or agree to make capital expenditures that in the
aggregate exceed $500,000 (other than planned capital expenditures previously
disclosed to Noble).
Noble. Under the Merger Agreement, Noble has agreed, from the date of the
Merger Agreement until the Effective Time, unless Chiles shall otherwise agree
in writing or as otherwise contemplated by the Merger Agreement or as disclosed
to Chiles, that, among other things: (a) the business of Noble shall be
conducted only in the ordinary course of business and consistent with past
practice; (b) Noble will not directly or indirectly take any of a number of
specific actions, including (i) the issuance of additional capital stock, with
certain exceptions, (ii) the amendment of its charter or bylaws, (iii) the
splitting, combining or reclassifying of any outstanding capital stock, (iv) the
declaration, setting aside or payment of any dividend with respect to its
capital stock (except for regular quarterly cash dividends on the $2.25 Noble
Preferred Stock), (v) the redemption, purchase or acquisition of its capital
stock or (vi) the making of any of a number of specified increases or changes in
Noble's bonus, compensation or employee benefit plans or arrangements; (c) Noble
will use its reasonable efforts to preserve its business organizations, any
authorizations or similar rights, the services of its current officers and key
employees, the goodwill of those having business relationships with Noble, its
properties and its levels of insurance coverage; and (d) Noble will not make or
agree to make capital expenditures other than as previously disclosed to Chiles
or those made in the ordinary course of business and consistent with past
practice.
SOLICITATION OF THIRD PARTY OFFERS
The Merger Agreement provides that Chiles will not, directly or indirectly,
through any officer, director, employee, representative or agent of Chiles or
any of its subsidiaries, solicit or knowingly encourage, including by way of
furnishing information, the initiation of any inquiries or proposals regarding
(i) any merger, tender offer, sale of shares of capital stock or similar
business combination transaction involving Chiles or its subsidiaries that would
have the effect of causing the holders of Chiles Common Stock immediately prior
to the effectiveness of such proposed transaction to own in the aggregate less
than 50 percent of the shares of the surviving or resulting entity entitled to
vote generally for the election of directors of the surviving or resulting
entity, or (ii) any sale of all or substantially all the assets of Chiles and
its subsidiaries, taken as a whole (collectively, a "Chiles Acquisition
Transaction"). Notwithstanding the foregoing, nothing in the Merger Agreement
prevents the members of the Board of Directors of Chiles, in the exercise of
their fiduciary duties and after consulting with independent counsel, from
considering, negotiating and approving an unsolicited bona fide proposal that
the Board of Directors of Chiles determines in good faith, after consultation
with its financial advisors, may result in a transaction more favorable to
Chiles' stockholders than the transactions contemplated by the Merger Agreement.
If the Board of Directors of Chiles receives a request for confidential
information by a potential bidder for Chiles and the Board of Directors
determines, after consultation with independent counsel, that the Board of
Directors has a fiduciary obligation to provide such information to a potential
bidder, then Chiles may, subject to a confidentiality agreement substantially
similar to that previously executed by Noble, provide such potential bidder with
access to information regarding Chiles. Chiles will promptly notify Noble,
orally and in writing, if any such proposal or offer is made and will, in any
such notice, indicate the identity and terms and conditions of any proposal or
offer, or any such inquiry or contact. Chiles will keep Noble advised of the
progress and status of any such proposals or offers. The obligation of the Board
of Directors of Chiles to convene a meeting of its stockholders and to recommend
the adoption and approval of the Merger Agreement to the stockholders of Chiles
pursuant to the Merger Agreement will be subject to the fiduciary duties of the
directors, as determined by the directors after consultation with their
independent counsel, and nothing contained in the Merger Agreement will prevent
the
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Board of Directors of Chiles from approving or recommending to the stockholders
of Chiles any unsolicited offer or proposal by a third party if required in the
exercise of their fiduciary duties, as determined by the directors after
consultation with independent counsel.
CHILES OPTIONS
Chiles has agreed to use its best efforts to obtain the consent of each
holder of the Chiles Options to the exchange of such holder's options for shares
of Noble Common Stock as described below (and to take any other actions
necessary to permit such exchange). Subject to obtaining the consent of each
holder of the Chiles Options, and further subject to the consummation of the
Merger, at the Effective Time, all then outstanding Chiles Options will be
cancelled in exchange for an aggregate of 480,000 shares of Noble Common Stock
(subject to appropriate reductions if any Chiles Options outstanding on the date
of the Merger Agreement are exercised prior to the Effective Time). Pursuant to
such exchange and subject to rounding to avoid the issuance of fractional
shares, each vested or unvested Chiles Option with an exercise price of $1.94
will be exchanged for 0.5231 of a share of Noble Common Stock, each vested or
unvested Chiles Option with an exercise price of $4.00 will be exchanged for
0.4316 of a share of Noble Common Stock, each vested or unvested Chiles Option
with an exercise price of $4.94 will be exchanged for 0.4056 of a share of Noble
Common Stock and each vested or unvested Chiles Option with an exercise price of
$5.50 will be exchanged for 0.3851 of a share of Noble Common Stock.
If each of the holders of the Chiles Options has not consented to the
exchange of such Chiles Options prior to the Closing Date, then the Chiles
Options will not be exchanged as provided in the preceding paragraph, and
instead Noble will take such action as is necessary to assume, effective at the
Effective Time, each Chiles Option that remains as of such time unexercised in
whole or in part and to substitute shares of Noble Common Stock as purchasable
under each such assumed option ("Assumed Option"), with such assumption and
substitution to be effected as follows: (a) the Assumed Option will not give the
optionee additional benefits which he did not have under the Chiles Option
before such assumption and will be assumed on the same terms and conditions,
including, without limitation, the vesting schedule, as the Chiles Options being
assumed; (b) the number of shares of Noble Common Stock purchasable under the
Assumed Option will be equal to the number of shares of Noble Common Stock that
the holder of the Chiles Option being assumed would have received (without
regard to any vesting schedule) upon consummation of the Merger had such Chiles
Option been exercised in full immediately prior to consummation of the Merger;
and (c) the per share exercise price of such Assumed Option will be an amount
equal to the per share exercise price of the Chiles Option being assumed divided
by 0.75.
If any Chiles Options are assumed by Noble as described in the preceding
paragraph, Noble will take all corporate action necessary to reserve for
issuance a sufficient number of shares of Noble Common Stock for delivery upon
exercise of the Assumed Options, and, as soon as practicable after the Effective
Time, Noble will file a registration statement with the Commission on Form S-8
(or other appropriate form) with respect to the shares of Noble Common Stock
subject to the Assumed Options, and will use its best efforts to maintain the
effectiveness of such registration statement (and maintain the current status of
any prospectus contained therein) for so long as any of the Assumed Options
remain outstanding.
See "The Merger -- Certain Federal Income Tax Consequences" for a
discussion of certain consequences under the Code of the exchange of Chiles
Options for Noble Common Stock.
NASDAQ NATIONAL MARKET SYSTEM LISTING
The shares of Noble Common Stock and $1.50 Noble Preferred Stock to be
issued upon consummation of the Merger, the shares of Noble Common Stock to be
reserved for issuance upon the exercise of Chiles Options to be assumed by Noble
in the Merger, if any, and the shares of Noble Common Stock issuable upon
conversion of the $1.50 Noble Preferred Stock, have been approved for listing in
the NASDAQ National Market System, subject to official notice of issuance.
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INDEMNIFICATION
The Merger Agreement provides that, from and after the Effective Time,
Noble and Noble Sub, as the surviving corporation, will indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
of the Merger Agreement or who becomes prior to the Effective Time, an officer,
director or employee of Chiles or any of its subsidiaries against all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts that are
paid in settlement with the approval of the indemnifying party of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of Chiles or any of its
subsidiaries, whether pertaining to any matter existing or occurring at or prior
to the Effective Time and whether reasserted or claimed prior to, or at or
after, the Effective Time, including all indemnified liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to the
Merger Agreement or the transactions contemplated thereby.
The Merger Agreement provides that Noble Sub, as the surviving corporation,
will purchase and maintain for a period of six years after the Effective Time,
continuation coverage for Chiles' directors' and officers' liability insurance
policy as in effect on the date of the Merger Agreement, or obtain a directors'
and officers' insurance policy with comparable coverage.
CHILES EMPLOYEE BENEFITS
The Merger Agreement provides that after the Effective Time, Noble will
provide those employees of Chiles and its subsidiaries covered by the benefit
plans of Chiles and its subsidiaries with the same benefits in respect of future
service that accrue in respect of future services to the employees of Noble who
are employed in comparable positions, and any present employees of Chiles and
its subsidiaries will be credited for their service with Chiles for purposes of
eligibility, benefit entitlement and vesting in the plans provided by Noble
(other than for purposes of benefit accruals under any defined benefit pension
plan).
REGISTRATION RIGHTS AGREEMENT
The Merger Agreement provides that, on or prior to the Closing Date, Noble
will execute and deliver to P.A.J.W. a Registration Rights Agreement as
described under "The Merger -- Limitations on Resales; Registration Rights."
CERTAIN CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger are subject
to the fulfillment at or prior to the Closing Date of a number of conditions set
forth in the Merger Agreement, including: (a) the requisite approval by the
stockholders of Chiles and Noble with respect to the Merger Agreement, and the
requisite adoption by the stockholders of Noble with respect to the Noble
Charter Amendment; (b) the termination or expiration of the waiting period (and
any extension thereof) applicable to the consummation of the Merger under the
HSR Act; (c) the Registration Statement, and any amendments thereto, shall be
effective under the Securities Act as of the Closing Date; (d) no order shall
have been entered and remain in effect in any action or proceeding before any
foreign, federal or state court or governmental agency or other foreign, federal
or state regulatory or administrative agency or commission that would prevent or
make illegal the consummation of the Merger; (e) all material required consents
and approvals of governmental agencies or private persons or entities shall have
been obtained; (f) the shares of Noble Common Stock and $1.50 Noble Preferred
Stock issuable upon consummation of the Merger and the shares of Noble Common
Stock issuable upon conversion of the $1.50 Noble Preferred Stock or upon
exercise of any Assumed Options have been approved for listing on the NASDAQ
National Market System; and (g) Noble and Chiles shall be advised in writing on
the Closing Date by Arthur Andersen & Co. that, in accordance with generally
accepted accounting principles, the Merger should qualify for treatment as a
"pooling of interests" for accounting purposes.
The obligation of Noble to consummate the Merger is subject to the
fulfillment at or prior to the Closing Date of certain additional conditions,
including (a) the accuracy of the representations and warranties of Chiles and
the compliance by Chiles with all covenants made by it under the Merger
Agreement; (b) that
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there has not been any material adverse change in the business, operations or
financial condition of Chiles and its subsidiaries from the date of the Merger
Agreement through the Closing Date; (c) that the fairness opinion of Simmons has
not been withdrawn; (d) that Chiles shall have received certain agreements from
its affiliates relating to resales of Noble Common Stock to be received by such
persons in the Merger; (e) that Noble shall have received an opinion from Vinson
& Elkins L.L.P., counsel to Chiles, with respect to certain legal matters; (f)
that the opinion received by Noble from Thompson & Knight, A Professional
Corporation with respect to certain tax aspects of the Merger shall not have
been withdrawn or modified in any material respect; (g) that the Shareholder
Voting Agreement dated April 23, 1990, as amended on May 24, 1991, among
P.A.J.W., OMI, AWILCO Shipping and WILCO A/S has been terminated or will
terminate by its terms as of the Effective Time; and (h) that certain
documentation to permit the export of the drilling rigs of Chiles that have been
imported by Chiles and its Nigerian agent into Nigeria shall have been executed
by Chiles and such agent.
The obligation of Chiles to effect the Merger is also subject to the
fulfillment at or prior to the Closing Date of certain additional conditions,
including (a) the accuracy of the representations and warranties of Noble and
the compliance by Noble with all covenants made by it under the Merger
Agreement; (b) the absence of any material adverse change in the business,
operations or financial condition of Noble from the date of the Merger Agreement
through the Closing Date; (c) that the fairness opinion of Salomon has not been
withdrawn; (d) that the Board of Directors of Noble has taken such action as may
be necessary to elect the persons designated by Chiles to the Noble Board of
Directors effective as of the Effective Time; (e) that Noble shall have received
certain agreements from its affiliates relating to resales of Noble Common
Stock; (f) that Chiles shall have received an opinion from Thompson & Knight, A
Professional Corporation, counsel to Noble, with respect to certain legal
matters; and (g) that the opinion received by Chiles from Vinson & Elkins L.L.P.
with respect to certain tax aspects of the Merger shall not have been withdrawn
or modified in any material respect.
TERMINATION
General. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated thereby may be abandoned, at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
Noble or the stockholders of Chiles, under the following circumstances: (a) by
the mutual consent of Noble and Chiles; (b) by either party if the Merger has
not been consummated by January 31, 1995; (c) by Noble if the fairness opinion
of Simmons has been withdrawn; (d) by Chiles if the fairness opinion of Salomon
has been withdrawn; (e) by either Noble or Chiles if a final, unappealable order
of a judicial or administrative authority of competent jurisdiction to restrain,
enjoin or otherwise prevent consummation of the Merger Agreement or the
transactions contemplated thereby shall have been entered; (f) by either party
if the required approval of the stockholders of the other party is not received
in a vote duly taken at their respective stockholders' meetings; (g) by Noble if
(i) since the date of the Merger Agreement there has been a material adverse
change in the business, operations or financial condition of Chiles and its
subsidiaries, taken as a whole, or (ii) there has been a material breach of any
representation, warranty or covenant by Chiles that is not remedied within five
business days of notice of such breach; (h) by Chiles if (i) since the date of
the Merger Agreement there has been a material adverse change in the business,
operations or financial condition of Noble and its subsidiaries, taken as a
whole, or (ii) there has been a material breach of any representation, warranty
or covenant by Noble that is not remedied within five business days of notice of
such breach; or (i) by Noble if the Board of Directors of Chiles exercises its
right not to convene a meeting of its stockholders pursuant to the provisions of
the Merger Agreement described above under "-- Solicitation of Third Party
Offers."
Termination Fee. In the event that either Noble or Chiles terminates the
Merger Agreement pursuant to clause (a), (b), (d), (f), (g)(ii) or (i) of the
preceding paragraph and (i) the Merger Agreement has either not been submitted
to the stockholders of Chiles or the stockholders of Chiles have declined to
approve the Merger Agreement by the requisite vote, (ii) after the date of the
Merger Agreement but at or before the time the Merger Agreement is terminated
there shall have been a Chiles Acquisition Transaction proposed in writing to
Chiles and (iii) any Chiles Acquisition Transaction (whether the same or
different from the one
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referenced in clause (ii)) is consummated at any time within one year after the
date of the Merger Agreement, then Chiles will promptly pay to Noble the sum of
$6,000,000.
Expense Reimbursement. If the Merger Agreement is terminated because of the
failure of the other party to secure the approval of its stockholders as
required under the Merger Agreement and certain conditions to Closing set forth
in the Merger Agreement have otherwise been satisfied, then the party whose
stockholders failed to make the required approval will pay to the other party an
amount equal to $1,000,000 as reimbursement for out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by the Merger
Agreement (subject, in the case of Chiles, to offset against any amount payable
to Noble under the provisions described above under "-- Termination Fee").
INVESTMENT CONSIDERATIONS
The following considerations should be evaluated by stockholders before
determining how to vote at the respective special meetings.
INTENSE COMPETITION; INDUSTRY CONDITIONS
The offshore contract drilling industry is a highly competitive and
cyclical business. It is characterized by high capital costs and numerous
industry participants, none of which has a significant market share but certain
of which may have greater financial resources than Noble. Noble's operations are
materially dependent upon the levels of activity in offshore oil and natural gas
exploration, development and production. Such activity levels are affected both
by short-term and long-term trends in oil and natural gas prices. In recent
years, oil and natural gas prices and, therefore, the level of offshore drilling
and exploration activity, have been extremely volatile. Worldwide military,
political and economic events, including initiatives by the Organization of
Petroleum Exporting Countries, have contributed to, and are likely to continue
to contribute to, price volatility. As events during recent years have
exhibited, any prolonged reduction in oil and natural gas prices would depress
the level of offshore exploration and development activity and result in a
corresponding decline in the demand for Noble's services and therefore have a
material adverse effect on Noble's revenues and profitability. Noble can predict
neither the future level of demand for its drilling services nor the future
conditions in the offshore contract drilling industry.
LOSSES FROM OPERATIONS
The historical financial data for Noble reflect net losses applicable to
common shares of $18,185,000, $10,918,000 and $8,751,000 for the years ended
December 31, 1992, 1991 and 1990, respectively. Noble had net income applicable
to common shares of $14,188,000 for the year ended December 31, 1993. Continued
profitability of Noble will be dependent upon the utilization of and rates for
its drilling rigs. Utilization levels and dayrates experienced in the Gulf of
Mexico during 1994 have been generally lower than those experienced in the
second half of 1993 as a result of rig migration from international markets and
reactivation of idle rigs. No assurance can be given that utilization levels or
dayrates will remain at current levels or that they will not deteriorate further
in the future.
SUBSTANTIAL INTERNATIONAL OPERATIONS; DISRUPTION OF NIGERIAN MARKET
A major portion of Noble's revenues has been attributable to international
operations. Revenues from international sources accounted for approximately 60
percent of Noble's operating revenues in 1993. Risks associated with Noble's
operations in international markets include risks of war and civil disturbances
or other risks that may limit or disrupt markets, expropriation,
nationalization, foreign exchange restrictions and currency fluctuations,
foreign taxation, changing political conditions and foreign and domestic
monetary policies. As described below, recent political instability in Nigeria
has curtailed drilling activity in that region. Additionally, the ability of
Noble to compete in the international drilling market may be adversely affected
by foreign governmental regulations that favor or require the awarding of
drilling contracts to local contractors, or by regulations requiring foreign
contractors to employ citizens of, or purchase supplies from, a particular
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jurisdiction. Furthermore, no predictions can be made as to what foreign
governmental regulations may be enacted in the future that could be applicable
to the contract drilling industry.
Both Noble and Chiles have significant operations in Nigeria. Since the
cancellation of presidential elections in June 1993, Nigeria has undergone a
period of political unrest. The reluctance of Nigeria's military-backed
government to proceed with a transition to civilian rule has resulted in a
series of strikes, protests and disruptions to the Nigerian economy. In July
1994, both of Nigeria's oil worker unions called for a strike to protest the
government's continued refusal to hand over power to the winner of the 1993
presidential election. During the first week of August, other national labor
unions joined in the oil worker's strike and tensions have increased causing
widespread civil unrest and severely curtailing commercial and economic activity
in Nigeria. Specifically, the strike has resulted in the suspension of drilling
activity in Nigeria by certain operators. There can be no assurance as to the
length or outcome of the unrest in Nigeria.
Currently, Noble has two offshore drilling rigs under contract and three
offshore drilling rigs stacked in Nigeria. Although operations have been
suspended on one of the rigs under contract, Noble is earning dayrates for both
rigs under contract. The contracts under which the two rigs are operating each
contain provisions permitting the operator to suspend operations in the event of
force majeure and to terminate the contract if the force majeure continues;
however, neither operator has elected to suspend operations pursuant to these
provisions. Noble maintains war and political risk and business interruption
insurance, subject in the case of certain coverages, to termination on seven
days' notice. Revenues from drilling activities in Nigeria accounted for
approximately 19 percent and 13 percent, respectively, of Noble's operating
revenues during 1993 and the first six months of 1994.
Two of Chiles' rigs are under contract in Nigeria until November 1994.
Although drilling activity has been suspended on one of the rigs, Chiles is
earning normal dayrates for the rigs under the drilling contracts. Both
contracts are subject to termination on 30 days' notice pursuant to force
majeure clauses. Chiles does not maintain war risk or business interruption
insurance. Revenues from drilling activities in Nigeria accounted for
approximately 45 percent and 24 percent, respectively, of Chiles' revenues
during 1993 and the first six months of 1994.
The current political instability may delay or jeopardize Noble's and
Chiles' ability to renew existing contracts or to secure new drilling contracts.
No assurance can be given that the civil and political climate in Nigeria will
improve.
CONCENTRATION OF OPERATIONS IN CERTAIN MARKETS
Currently, 20 of Noble's 31 mobile offshore drilling rigs are located in
the Gulf of Mexico and six are located off the coast of West Africa. Eleven of
Chiles' 13 drilling rigs currently are located in the Gulf of Mexico and two are
located off the coast of West Africa. Consequently, given the concentration of
such drilling rigs in those regions, a decrease in the demand for offshore
drilling rigs in the Gulf of Mexico, and to a lesser extent in West Africa,
could have a material adverse effect on the financial performance of Noble. See
"-- Substantial International Operations; Disruption of Nigerian Market."
ABSENCE OF DIVIDENDS ON NOBLE COMMON STOCK; DIVIDEND RESTRICTIONS
Noble has not paid any cash dividends on the Noble Common Stock since
becoming a publicly held corporation in October 1985 and does not anticipate
paying dividends on the Noble Common Stock at any time in the foreseeable
future. The $2.25 Noble Preferred Stock has, and the $1.50 Noble Preferred Stock
will have, priority as to dividends over Noble Common Stock, and no dividend
(other than dividends payable solely in Noble Common Stock) may be declared,
paid or set apart for payment on the Noble Common Stock unless all accrued and
unpaid dividends on the $2.25 Noble Preferred Stock and the $1.50 Noble
Preferred Stock have been paid or declared and set apart for payment.
Certain terms of the indenture governing the 9 1/4% Senior Notes Due 2003
of Noble may restrict Noble's ability to pay cash dividends on the Noble Common
Stock and the $1.50 Noble Preferred Stock. Because the $2.25 Noble Preferred
Stock will rank on a parity with the $1.50 Noble Preferred Stock with respect to
the payment of dividends, these restrictions may also limit Noble's ability to
pay dividends on the $2.25 Noble
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Preferred Stock. In addition, certain provisions of Noble's bank credit
agreement may restrict the payment of dividends on the Noble Common Stock, $1.50
Noble Preferred Stock and $2.25 Noble Preferred Stock. See "Description of Noble
Capital Stock -- Restrictions on Dividends."
RESTRICTIONS ON FOREIGN OWNERSHIP
The Restated Certificate of Incorporation of Noble contains limitations on
the percentage of outstanding Noble Common Stock and Noble preferred stock of
any series that can be owned by persons who are not United States citizens
within the meaning of certain U.S. statutes relating to ownership of U.S. flag
vessels. Applying the statutory requirements, the Restated Certificate of
Incorporation would currently prohibit more than 45 percent of the outstanding
Noble Common Stock and of all series of preferred stock of Noble combined from
being owned by non-U.S. citizens. As of August 9, 1994, approximately .01
percent of the outstanding Noble Common Stock and none of the outstanding $2.25
Noble Preferred Stock was held by record holders with registered addresses
outside the United States. The limitations imposed by Noble's Restated
Certificate of Incorporation may at times restrict the ability of Noble's
stockholders to transfer shares of their stock to non-U.S. citizens. See
"Description of Noble Capital Stock -- Foreign Ownership."
OPERATIONAL RISKS AND INSURANCE
Noble's operations are subject to the many hazards inherent in the drilling
business, including blowouts, cratering, fires and collisions or groundings of
offshore equipment, which could cause substantial damage to the environment, and
damage or loss from adverse weather and seas. These hazards could cause personal
injury and loss of life, suspend drilling operations or seriously damage or
destroy the property and equipment involved and, in addition to environmental
damage, could cause substantial damage to producing formations and surrounding
areas. Although Noble maintains insurance against many of these hazards, such
insurance is subject to substantial deductibles and provides for premium
adjustments based on claims. It also excludes certain matters from coverage,
such as loss of earnings on certain rigs. Also, while Noble generally obtains
indemnification from its customers for environmental damage with respect to
offshore drilling, such indemnification is generally only in excess of a
specified amount, which usually ranges from $100,000 to $250,000.
In the case of the turnkey drilling operations of Triton, Triton maintains
insurance against pollution and environmental damage in amounts ranging from $5
million to $50 million depending on location, subject to self-insured retentions
of $100,000 to $500,000. Under turnkey drilling contracts, Triton generally
assumes the risk of pollution and environmental damage, but on occasion receives
indemnification from the customer for environmental and pollution liabilities in
excess of Triton's pollution insurance coverage. Further, Triton is not insured
against certain drilling risks that could result in delays or nonperformance of
a turnkey drilling contract. Triton typically secures indemnities for pollution
arising from certain acts of the drilling contractors that provide the rigs for
Triton's turnkey drilling operations.
Notwithstanding the insurance and indemnity coverage provided to Noble, the
occurrence of a significant event not fully insured or indemnified against or
the failure of a customer to meet its indemnification obligations could
materially and adversely affect Noble's operations and financial condition.
Moreover, no assurance can be given that Noble will be able to maintain adequate
insurance in the future at rates it considers reasonable or that any particular
types of coverage will be available.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of Noble's operations are affected by domestic and foreign
political developments and are subject to numerous domestic and foreign
governmental regulations that may relate directly or indirectly to the contract
drilling industry. The regulations applicable to Noble's operations include
certain regulations controlling the discharge of materials into the environment,
requiring removal and cleanup under certain circumstances or otherwise relating
to the protection of the environment. Laws and regulations protecting the
environment have become more stringent in recent years, and may in certain
circumstances impose "strict liability," rendering a person liable for
environmental damage without regard to negligence or fault on the part
44
<PAGE> 57
of such person. Such laws and regulations may expose Noble to liability for the
conduct of, or conditions caused by, others, or for acts of Noble which were in
compliance with all applicable laws at the time such acts were performed. The
application of these requirements or the adoption of new requirements could have
a material adverse effect on Noble. In addition, the modification of existing
laws or regulations or the adoption of new laws or regulations curtailing
exploratory or development drilling for oil and gas for economic, environmental
or other reasons could have a material adverse effect on Noble's operations by
limiting drilling opportunities.
Noble's operations in the Gulf of Mexico are subject to the U.S. Oil
Pollution Act of 1990 (the "OPA") and the regulations promulgated pursuant
thereto. Noble generally seeks to obtain indemnity agreements whenever possible
from Noble's customers requiring such customers to hold Noble harmless from
liability for pollution that originates below the water surface (including,
where applicable, liability under the OPA) and maintains marine liability
insurance and contingent operators extra expense insurance, all of which affords
Noble limited protection. When obtained, such contractual indemnification
protection may not in all cases be supported by adequate insurance maintained by
the customer. There is no assurance that any such insurance or contractual
indemnity protection will be sufficient or effective under all circumstances.
LIMITATION ON USE OF NET OPERATING LOSS CARRYFORWARDS
If a corporation undergoes an "ownership change" within the meaning of
Section 382 of the Code, the corporation's right to use its then-existing net
operating loss carryforwards ("NOLs") (and certain other tax attributes), for
both regular tax and alternative minimum tax purposes, during each future year
is limited to a percentage (currently approximately six percent) of the fair
market value of such corporation's stock immediately before the ownership change
(the "Section 382 Limitation"). In general, there is an "ownership change" under
Section 382 if over a three-year period certain stockholders increase their
percentage ownership of a corporation (with NOLs) by more than 50 percentage
points. To the extent that taxable income exceeds the Section 382 Limitation in
any year subsequent to the ownership change, such excess income may not be
offset by NOLs from years prior to the ownership change. To the extent the
amount of taxable income in any subsequent year is less than the Section 382
Limitation for such year, the Section 382 Limitation for future years is
correspondingly increased. There is generally no restriction on the use of NOLs
arising after the ownership change, although Section 382 applies anew each time
there in an ownership change.
As of December 31, 1993, Noble had approximately $91,468,000 of NOLs, a
significant portion of which may be subject to a Section 382 Limitation
resulting from ownership changes in years prior to the year of the Merger. Noble
believes that another ownership change with respect to Noble may occur as a
result of the Merger. The resulting Section 382 Limitation may limit Noble's
ability to use its NOLs in future years, although the actual effect, if any, of
such limitation will depend on Noble's profitability in future years. Noble does
not believe that any Section 382 Limitation resulting from the Merger or from
any prior ownership changes will have a material adverse effect on Noble's
ability to utilize its NOLs.
As of December 31, 1993, Chiles had approximately $69,600,000 of NOLs.
Chiles believes that an ownership change with respect to Chiles will occur as a
result of the Merger. The resulting Section 382 Limitation may limit Noble's
ability to use Chiles' NOLs in future years, although the actual effect, if any,
of such limitation will depend on Noble Sub's profitability in future years.
Chiles does not believe that any Section 382 Limitation resulting from the
Merger will have a material adverse effect on Noble's ability to utilize Chiles'
NOLs.
PROPOSAL TO ADOPT NOBLE CHARTER AMENDMENT
BACKGROUND AND REASONS
As of May 31, 1994, there were issued and outstanding 48,390,873 shares of
Noble Common Stock, and an aggregate of 19,755,352 shares of Noble Common Stock
were reserved for issuance and issuable (i) pursuant to certain Noble employee
benefit plans, (ii) upon the exercise of outstanding employee or non-
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<PAGE> 58
employee director stock options or (iii) upon the conversion of the $2.25 Noble
Preferred Stock. In addition, an indeterminate number of shares of Noble Common
Stock (of up to at least 254,551 shares) were reserved for issuance pursuant to
the Triton Agreement.
The authorized capital stock of Noble currently consists of 75,000,000
shares of Noble Common Stock and 15,000,000 shares of preferred stock.
Consequently, there are not a sufficient number of shares of Noble Common Stock
available to permit Noble to consummate the Merger. In order to permit Noble to
consummate the Merger and to provide Noble the flexibility to issue Noble Common
Stock in future transactions should the Board of Directors of Noble determine it
is appropriate, the Board is proposing that the Restated Certificate of
Incorporation of Noble be amended to increase the number of authorized shares of
Noble Common Stock by 125,000,000 shares (referred to herein as the "Noble
Charter Amendment"). If the Noble Charter Amendment is adopted, the additional
shares of Noble Common Stock would be available for future issuance at the
discretion of the Noble Board without further action by the stockholders of
Noble and, depending on the circumstances of any such issuance, could result in
dilution of existing stockholders' interests. There are no pending or proposed
transactions, financings or other uses currently contemplated by the Board of
Directors of Noble for the issuance of the additional shares of Noble Common
Stock other than as described in this Joint Proxy Statement/Prospectus with
respect to the Merger.
PROPOSED NOBLE CHARTER AMENDMENT
The Board of Directors of Noble has declared it advisable and has adopted,
and recommends that the holders of Noble Common Stock adopt, the Noble Charter
Amendment to revise Article IV, Section 1 of Noble's Restated Certificate of
Incorporation by deleting such section in its entirety and substituting therefor
the following:
Section 1. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 215,000,000 consisting of
(1) 15,000,000 shares of Preferred Stock, par value $1.00 per share
("Preferred Stock"), and (2) 200,000,000 shares of Common Stock, par value
$.10 per share ("Common Stock").
RECOMMENDATION AND REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of a majority of the shares of Noble
Common Stock outstanding and entitled to vote at the Noble Special Meeting is
required to adopt the Noble Charter Amendment. The Board of Directors of Noble
has declared the Noble Charter Amendment advisable and believes it is in the
best interests of Noble and its stockholders. Accordingly, the Board of
Directors of Noble unanimously recommends that its stockholders vote FOR the
Noble Charter Amendment. If the Noble Charter Amendment is not adopted, the
Merger cannot be consummated, regardless of whether the Merger Proposal is
adopted by the stockholders of Noble. Noble intends to effect the Noble Charter
Amendment, if adopted by stockholders, irrespective of whether the Merger
Proposal is approved.
PROPOSAL TO APPROVE NOBLE PLAN AMENDMENT
GENERAL
The Noble Drilling Corporation 1991 Stock Option and Restricted Stock Plan
(the "Plan") was adopted by the Board of Directors of Noble in 1991 and approved
by the stockholders of Noble at the 1991 annual meeting of stockholders. At
meetings of the Noble Board of Directors in June and July 1994, the Board
adopted a proposal to amend the Plan to (i) increase from 1,900,000 to 5,200,000
the aggregate number of shares of Noble Common Stock available for issuance
under the Plan and (ii) make certain changes to the Plan to preserve for federal
income tax purposes the deductibility of compensation paid under the Plan in the
form of nonqualified stock options (collectively, the "Noble Plan Amendment").
The proposal to amend the Plan is subject to the approval of the holders of
Noble Common Stock. The material features of the Plan as currently in effect are
described below.
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<PAGE> 59
The number of options or shares of restricted stock that may be granted
under the Plan (as amended in accordance with the Noble Plan Amendment) to any
person entitled to participate in the Plan are not currently determinable.
In January 1994, options to purchase an aggregate of 578,000 shares of
Noble Common Stock at an exercise price of $7.38 per share were granted under
the Plan. In July 1994, options to purchase an aggregate of 136,000 shares of
Noble Common Stock at an exercise price of $7.31 per share were granted under
the Plan. All such options were granted at the average of the reported high and
low sale prices of a share of Noble Common Stock on the date of grant. The last
sale price of the Noble Common Stock reported on the NASDAQ National Market
System on August 11, 1994 was $6.625 per share.
REASONS AND PRINCIPAL EFFECTS OF THE PROPOSAL
Increase in Shares of Noble Common Stock Issuable Under the Plan. As of
August 9, 1994, there were outstanding stock options covering 1,836,122 shares
of Noble Common Stock held by 223 persons and only 352,637 shares of Noble
Common Stock remained available for future awards under the Plan. The purpose of
the Noble Plan Amendment is to continue the Plan by increasing by 3,300,000
shares the aggregate number of shares of Noble Common Stock that may be issued
under the Plan. This increase in the number of shares issuable under the Plan
could be particularly important if the Merger is consummated and the number of
employees who may become eligible to participate in the Plan is thereby
increased. If the Noble Plan Amendment is approved, the employees of Noble who
are eligible to participate in the Plan could receive more benefits under the
Plan than they could if the Noble Plan Amendment is not approved.
Limitation on Number of Shares Covered by Plan Grants and Awards;
Administration by Outside Directors. Pursuant to recently enacted changes to the
Code, the amount of compensation payments to certain highly compensated officers
that employers may deduct from income for federal income tax purposes has been
limited to $1,000,000 per person per year. Compensation recognized by employees
in connection with the exercise of options and stock appreciation rights
("SARs") granted under the Plan may, however, be exempt from the $1,000,000
limitation if certain requirements are satisfied, including the requirements
that (i) the Plan state the maximum number of shares for which options or SARs
may be granted during a specified period to any employee and (ii) the Plan be
administered by a committee comprised solely of two or more "outside" directors
within the meaning of the regulations promulgated under the Code.
Currently, the Plan does not limit the total number of shares of Noble
Common Stock for which options may be granted, or which may be awarded as
restricted stock, to a person under the Plan. In addition, the Plan is
administered by a committee of "disinterested" directors within the meaning of
Rule 16b-3 under the Exchange Act who are not necessarily outside directors
within the meaning of the regulations promulgated under the Code. In order to
ensure the deductibility of compensation recognized by employees in connection
with the exercise of options and SARs granted under the Plan, the Board of
Directors of Noble has proposed to amend the Plan to (i) limit to 1,500,000 the
total number of shares of Noble Common Stock that may be made subject to grants
of options or SARs or awards of restricted stock under the Plan to any one
person during any five-year period, and (ii) provide for administration of the
Plan by a committee comprised solely of "outside" directors who are also
disinterested directors.
DESCRIPTION OF PLAN AS CURRENTLY IN EFFECT
Under the Plan, shares of Noble Common Stock may be subject to grants of
options and SARs or awards of restricted stock to officers and other employees
of Noble and its affiliates. Options and any SARs that relate to such options
may be granted, and restricted stock may be awarded, until the maximum number of
shares issuable under the Plan has been exhausted or the Plan has been
terminated, except that no incentive option and any SARs that relate to such
option shall be granted after January 31, 2001. Options granted under the Plan
may be either incentive options (which satisfy the requirements of Section
422(b) of the Code or nonqualified options (which do not satisfy such
requirements), and may be with or without SARs. Shares of Noble Common Stock
covered by an option that expires or terminates prior to exercise and shares of
restricted stock returned to Noble are again available for grant of options and
awards of restricted stock. The option price
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<PAGE> 60
may not be less than the greater of the par value or 100 percent of the fair
market value of the Noble Common Stock at the time of grant, in the case of an
incentive option, and may not be less than the greater of the par value or 50
percent of the fair market value of the Noble Common Stock at the time of grant,
in the case of a nonqualified option.
The Plan is administered by the stock option committee (the "Committee") of
the Board of Directors of Noble. The Committee must consist of two or more
directors of Noble, all of whom must be disinterested persons as defined in Rule
16b-3 under the Exchange Act. The Committee determines the grants of options and
awards of restricted stock, the terms and provisions of the respective
agreements covering such grants or awards and all other decisions concerning the
Plan. It is impracticable to estimate the total number of employees eligible to
participate in the Plan. The Plan provides that the determination of the
Committee is binding with respect to all questions of interpretation and
application of the Plan and of options granted or awards of restricted stock
made thereunder.
The Committee may from time to time grant SARs in conjunction with all or
any portion of an option either at the time of the initial option grant or, with
respect to a nonqualified option, at any time after the initial option grant
while the nonqualified option is outstanding. SARs generally will be subject to
the same terms and conditions and exercisable to the same extent as stock
options, as described above. SARs entitle an optionee to receive without payment
to Noble (except for applicable withholding taxes) the excess of the aggregate
fair market value per share with respect to which the SAR is then being
exercised (determined as of the date of such exercise) over the aggregate
purchase price of such shares as provided in the related option.
Options will be exercisable at such time or times not more than 10 years
from the date of grant as may be provided by their terms. The Committee may,
however, accelerate the time at which an option is exercisable without regard to
its terms. Generally, all rights to exercise an option will terminate within
three months after the date the optionee ceases to be an employee of Noble or an
affiliate of Noble for any reason other than death or becoming disabled (as
defined). In the event of an optionee's death or his becoming disabled, the
option will terminate 12 months thereafter, or, if earlier, at the expiration of
the option period. Any optionee may be required to remain in the employment of
Noble or an affiliate of Noble for a stated period of time before the option may
be exercised. If the employment of the optionee is terminated on account of
fraud, dishonesty or other acts detrimental to the interests of Noble or one or
more of its affiliates, the option shall thereafter be null and void for all
purposes.
No option or any SARs that relate to such option are transferable except by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order; and during the lifetime of the optionee, the option and any
SARs that relate to such option may be exercised only by the optionee or his
guardian or legal representative. The exercise price of options may be paid in
cash, by certified check or cashier's check or, with the consent of the
Committee, by delivery of shares of Noble Common Stock, including actual or
deemed multiple exchanges of shares. In addition, the Committee is authorized by
the Plan to selectively approve arrangements with a brokerage firm under which
it would, on behalf of an optionee, make payment in full to Noble of the option
price for the shares then being purchased, and Noble, pursuant to an irrevocable
notice in writing from the optionee, would deliver the certificate for the
appropriate number of shares to such brokerage firm. Noble may satisfy its tax
withholding obligations by retaining shares of the Noble Common Stock that would
otherwise be issuable on exercise by an optionee.
The Plan contains antidilution provisions applicable in the event of
increase or decrease in the number of outstanding shares of Noble, effected
without receipt of consideration therefor by Noble, through a stock dividend or
any recapitalization or merger or otherwise in which Noble is the surviving
corporation, resulting in a stock split-up, combination or exchange of shares of
Noble, in which event appropriate adjustments will be made in the maximum number
of shares subject to the Plan and the number of shares and option prices under
then outstanding options.
The Noble Board of Directors may at any time amend, suspend or terminate
the Plan except that it may not, without the approval of stockholders, (i)
increase the maximum number of shares subject thereto, or (ii) reduce the option
price for shares covered by options granted under the Plan below the price
currently specified therein.
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The Plan also provides that restricted stock may be awarded by the
Committee to such eligible recipients as it may determine from time to time. The
eligible recipients are those individuals who are eligible for option grants.
Restricted stock is Noble Common Stock that may not be sold, assigned,
transferred, discounted, exchanged, pledged or otherwise encumbered or disposed
of until the terms and conditions set by the Committee, which terms and
conditions may include, among other things, the achievement of specific goals,
have been satisfied (the "Restricted Period"). During the Restricted Period,
unless specifically provided otherwise in accordance with the terms of the Plan,
the recipient of restricted stock would be the record owner of such shares and
have all the rights of a stockholder with respect to such shares, including the
right to vote and the right to receive dividends or other distributions made or
paid with respect to such shares.
The Plan provides that the Committee has the authority to cancel all or any
portion of any outstanding restrictions prior to the expiration of the
Restricted Period with respect to any or all of the shares of restricted stock
awarded to an individual on such terms and conditions as the Committee may deem
appropriate. If during the Restricted Period an individual's continuous
employment terminates for any reason, any restricted stock remaining subject to
restrictions will be forfeited by the individual and transferred at no cost to
Noble; provided, however, that as noted above, the Committee has the authority
to cancel any or all outstanding restrictions prior to the end of the Restricted
Period, including the cancellation of restrictions in connection with certain
types of termination of employment.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Generally, an optionee will not recognize income for federal income tax
purposes upon the grant or the exercise of an incentive option, and any gain on
the subsequent disposition of the option stock is treated as a capital gain
provided the option stock is held for the required holding period, which is two
years from the date of grant of the option and one year from the transfer of the
shares to the optionee. Noble will not be entitled to any federal income tax
deduction upon the exercise of an incentive option.
If an optionee uses already owned shares of Noble Common Stock to pay the
exercise price for shares under an incentive option, the resulting tax
consequences will depend upon whether such already owned shares of Noble Common
Stock are "statutory option stock," and, if so, whether such statutory option
stock has been held by the optionee for the applicable holding period. If such
stock is statutory option stock with respect to which the applicable holding
period has been satisfied, no income will be recognized by the optionee upon the
transfer of such stock in payment of the exercise price of an incentive option.
If such stock is not statutory option stock, no income will be recognized by the
optionee upon the transfer of such stock unless such stock is not substantially
vested within the meaning of the Code (in which event it appears that the
optionee will recognize ordinary income upon the transfer equal to the amount by
which the fair market value of the transferred shares exceeds their basis). If
the stock used to pay the exercise price of an incentive option is statutory
option stock with respect to which the applicable holding period has not been
satisfied, the transfer of such stock will be a disqualifying disposition which
will result in the recognition of ordinary income by the optionee in an amount
equal to the excess of the fair market value of the statutory option stock at
the time the option covering such stock was exercised over the option price of
such stock.
No income will be recognized by an optionee for federal income tax purposes
upon the grant of a nonqualified option. Except as described below in the case
of an "insider" subject to Section 16(b) of the Exchange Act who exercises an
option less than six months from the date of grant, upon exercise of a
nonqualified option, the optionee will recognize ordinary income in an amount
equal to the excess of the fair market value of the option stock on the date of
exercise over the option price of such stock. In the absence of an election
pursuant to Section 83(b) of the Code, an "insider" subject to Section 16(b) of
the Exchange Act who exercises a nonqualified option less than six months from
the date the option was granted will recognize income on the date six months
after the date of grant. An optionee subject to Section 16(b) of the Exchange
Act can avoid such deferral by making an election, pursuant to Section 83(b) of
the Code. Executive officers, directors and more than 10 percent stockholders of
Noble will generally be deemed to be "insiders" for purposes of Section 16(b) of
the Exchange Act.
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Income recognized upon the exercise of nonqualified options will be
considered compensation subject to withholding at the time such income is
recognized, and therefore, Noble or an affiliate must make the necessary
arrangements with the optionee to ensure that the amount of the tax required to
be withheld is available for payment. Nonqualified options are designed to
ensure that Noble will be entitled to a deduction equal to the amount of
ordinary income recognized by the optionee at the time of such recognition by
the optionee.
If an optionee uses already owned shares of Noble Common Stock to pay the
exercise price for shares under a nonqualified option, the number of shares
received pursuant to the option which is equal to the number of shares delivered
in payment of the exercise price will be considered received in a nontaxable
exchange, and the fair market value of the remaining shares received by the
optionee upon such exercise will be taxable to the optionee as ordinary income.
The exercise of an SAR will result in the recognition of ordinary income by
the optionee on the date of exercise in an amount equal to the amount of cash
and the fair market value on that date of any shares acquired pursuant to the
exercise. Noble will be allowed a federal income tax deduction equal to the
amount of ordinary income recognized by the optionee at the time of such
recognition by the optionee.
The recipient of restricted stock will recognize income for federal income
tax purposes on restricted stock received by him at the first time the stock
becomes freely transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier. At such time, he will include in gross income the
excess of the then fair market value of the restricted stock (determined without
regard to any restriction other than a restriction which by its terms will never
lapse) over the amount, if any, paid for such stock. However, a recipient of
restricted stock can elect to include the restricted stock in his gross income
for the taxable year in which he first receives such stock by making an election
under Section 83(b) of the Code. Noble will be entitled to a federal income tax
deduction in the tax year in which the restricted stock becomes taxable to the
recipient in an amount equal to the amount the recipient is required to include
in income with respect to such shares.
RECOMMENDATION AND REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of record of a majority of the
outstanding shares of Noble Common Stock present in person or by proxy and
entitled to vote thereon at the Noble Special Meeting is required to approve the
Noble Plan Amendment. The Board of Directors of Noble unanimously recommends
that Noble's stockholders vote FOR the approval of the Noble Plan Amendment. If
the Noble Plan Amendment is approved by the Noble stockholders, it will be
effected, regardless of whether the Merger Proposal is approved or the Noble
Charter Amendment is adopted.
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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the consummation of (i) the Merger only and (ii) both the Merger and the
Triton Acquisition. The Merger is accounted for as a "pooling of interests" as
if the Merger had been in effect for all periods presented while the Triton
Acquisition is accounted for as a "purchase" transaction as if the Triton
Acquisition had occurred on January 1, 1993. The following unaudited pro forma
combined financial statements do not purport to be indicative of the results
that would actually have been obtained if the combinations had been in effect as
of the dates indicated or that may be obtained in the future. The statements are
based upon the consolidated financial statements of Noble, Triton and Chiles
that have been incorporated by reference into this Joint Proxy
Statement/Prospectus and should be read in conjunction with those financial
statements and the related notes.
In developing the pro forma financial statements referred to above, the
respective accounting policies and practices of Noble and Chiles were reviewed
in order to determine the need for inclusion of conforming pooling adjustments.
Certain differences exist between Noble and Chiles in the application of
accounting policy for depreciation of fixed assets. The effects of these
differences have been ascertained and, due to their immaterial impact on the
financial statements of the combined companies, have not been accounted for as
conforming adjustments in the financial statements as presented. Certain
reclassifications, however, have been made to Chiles' historical amounts for
consistency with the Noble presentation. The purchase adjustments for the Triton
Acquisition are based on estimates and are subject to change based on further
refinement.
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NOBLE AND CHILES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO
FORMA
NOBLE(A) CHILES COMBINED
-------- -------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................. $ 26,283 $ 41,535 $ 67,818
Restricted cash....................................... 1,819 1,819
Investment in marketable securities................... 31,536 8,264 39,800
Accounts receivable................................... 50,393 12,254 62,647
Costs of uncompleted contracts in excess of
billings........................................... 2,063 2,063
Other current assets.................................. 38,270 2,927 41,197
-------- -------- --------
Total current assets.......................... 150,364 64,980 215,344
-------- -------- --------
INVESTMENTS............................................. 30,531 30,531
-------- -------- --------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities..................... 632,455 153,309 785,764
Other................................................. 17,314 1,994 19,308
-------- -------- --------
649,769 155,303 805,072
Accumulated depreciation.............................. (275,676) (40,705) (316,381)
-------- -------- --------
374,093 114,598 488,691
-------- -------- --------
OTHER ASSETS............................................ 14,788 14,788
-------- -------- --------
$539,245 $210,109 $749,354
======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt....................................... $ 5,562 $ $ 5,562
Current installments of long-term debt................ 546 546
Accounts payable...................................... 9,508 8,886 18,394
Interest payable...................................... 2,815 2,815
Other current liabilities............................. 50,953 3,703 54,656
-------- -------- --------
Total current liabilities..................... 69,384 12,589 81,973
LONG-TERM DEBT.......................................... 126,871 126,871
OTHER LIABILITIES....................................... 1,174 475 1,649
MINORITY INTEREST....................................... 1,809 1,809
-------- -------- --------
199,238 13,064 212,302
-------- -------- --------
SHAREHOLDERS' EQUITY
Preferred stock....................................... 2,990 4,025 7,015
Common stock.......................................... 4,870 2,859(B) 7,729
Capital in excess of par value........................ 339,530 249,655(B) 589,185
Cumulative translation adjustment..................... (2,308) (2,308)
Retained earnings..................................... (3,325) (59,494) (62,819)
Treasury stock, at cost............................... (1,750) (1,750)
-------- -------- --------
340,007 197,045 537,052
-------- -------- --------
$539,245 $210,109 $749,354
======== ======== ========
</TABLE>
- ---------------
(A) Includes Triton at June 30, 1994.
(B) Reflects the change in par value for the conversion pursuant to the Merger
of Chiles Common Stock into Noble Common Stock.
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NOBLE, CHILES AND TRITON
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TRITON PRO
PURCHASE FORMA
NOBLE CHILES TRITON(A) ADJUSTMENTS COMBINED
-------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Contract drilling services........ $111,847 $35,675 $ $ $147,522
Turnkey drilling services......... 15,229 22,458 37,687
Engineering and consulting
services....................... 1,356 1,536 2,892
Other revenue..................... 2,409 2,194 (53)(B) 4,550
-------- ------- ------- ------- --------
130,841 35,675 26,188 (53) 192,651
-------- ------- ------- ------- --------
OPERATING COSTS AND EXPENSES
Contract drilling operations...... 72,979 23,334 96,313
Turnkey drilling operations....... 12,486 18,989 31,475
Engineering and consulting
operations..................... 966 756 1,722
Other expense..................... 1,645 1,376 (2)(B) 3,019
Depreciation and amortization..... 14,661 4,647 236 9(C) 19,553
Selling, general and
administrative................. 15,712 4,176 4,476 (1,070)(D) 23,294
Minority interest................. 239 493 732
-------- ------- ------- ------- --------
118,688 32,157 26,326 (1,063) 176,108
-------- ------- ------- ------- --------
OPERATING INCOME (LOSS)............. 12,153 3,518 (138) 1,010 16,543
OTHER INCOME (EXPENSE)
Interest expense.................. (6,114) (6,114)
Interest income................... 1,246 1,287 123 2,656
Gain on sale of drilling
equipment...................... 7,968 7,968
Other, net........................ 3,726 (2,361) 2,271(B)(E) 3,636
-------- ------- ------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES.... 11,011 12,773 (2,376) 3,281 24,689
INCOME TAX PROVISION................ (2,575) (690) (115) (696)(F) (4,076)
-------- ------- ------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS........................ 8,436 12,083 (2,491) 2,585 20,613
PREFERRED DIVIDENDS................. (3,364) (3,019) (6,383)
-------- ------- ------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS APPLICABLE TO COMMON
SHARES............................ $ 5,072 $ 9,064 $(2,491) $ 2,585 $ 14,230
======== ======= ======= ======= ========
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE....... $ 0.10 $ 0.32(G) $ 0.18
======== ======= ========
PRO-FORMA WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING................ 48,538 28,584(G) 594 77,716
</TABLE>
- ---------------
(A) Represents the historical operating results of Triton for the three month
period ended March 31, 1994.
(B) To reclassify the operating results of Triton's oil and gas activities, as
these activities are not an ongoing business line of Noble.
(C) To record amortization of $9,000 for goodwill associated with the Triton
Acquisition.
(D) To eliminate a nonrecurring stock options buyout effected by Triton in March
1994 in connection with the Triton Acquisition.
(E) To eliminate the write-off of $2,220,000 of notes receivable from a
partnership that was not part of the Triton Acquisition.
(F) To record the incremental tax effect of the Triton Acquisition adjustments.
(G) Reflects the conversion pursuant to the Merger of each share of Chiles
Common Stock into 0.75 of a share of Noble Common Stock.
53
<PAGE> 66
NOBLE, CHILES AND TRITON
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
TRITON
PURCHASE PRO FORMA
NOBLE CHILES TRITON ADJUSTMENTS COMBINED
--------- -------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............. $ 4,896 $ 64,281 $15,030 $ (4,085)(A) $ 80,122
Restricted cash....................... 1,793 1,793
Investment in marketable securities... 37,387 2,064 39,451
Accounts receivable................... 40,293 15,401 47,207 102,901
Costs of uncompleted contracts in
excess of billings................. 1,109 1,109
Other current assets.................. 32,329 3,288 4,241 39,858
--------- -------- ------- -------- ---------
Total current assets.......... 116,698 85,034 67,587 (4,085) 265,234
--------- -------- ------- -------- ---------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities..... 618,021 147,786 4,738 (3,237)(B) 767,308
Other................................. 13,836 1,965 3,133 (2,380)(B) 16,554
--------- -------- ------- -------- ---------
631,857 149,751 7,871 (5,617) 783,862
Accumulated depreciation.............. (261,630) (37,949) (5,352) 5,352(B) (299,579)
--------- -------- ------- -------- ---------
370,227 111,802 2,519 (265) 484,283
--------- -------- ------- -------- ---------
OTHER ASSETS............................ 12,792 2,065 (1,638)(C) 13,219
--------- -------- ------- -------- ---------
$ 499,717 $196,836 $72,171 $ (5,988) $ 762,736
========= ======== ======= ======== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt....................... $ $ $ 1,807 $ 4,000(A) $ 5,807
Current installments of long-term
debt............................... 546 546
Accounts payable...................... 9,110 4,549 33,309 46,968
Interest payable...................... 3,548 3,548
Other current liabilities............. 29,085 4,359 14,999 48,443
--------- -------- ------- -------- ---------
Total current liabilities..... 42,289 8,908 50,115 4,000 105,312
LONG-TERM DEBT.......................... 127,144 127,144
OTHER LIABILITIES....................... 1,175 111 1,286
MINORITY INTEREST....................... 156 6,899 7,055
--------- -------- ------- -------- ---------
170,764 9,019 57,014 4,000 240,797
--------- -------- ------- -------- ---------
SHAREHOLDERS' EQUITY
Preferred stock....................... 2,990 4,025 7,015
Common stock.......................... 4,780 2,857(E) 12 63(A)(D) 7,712
Capital in excess of par value........ 333,617 249,493(E) 5,094(A) 588,204
Cumulative translation adjustment..... (2,286) (2,286)
Retained earnings..................... (8,398) (68,558) 19,451 (19,451)(D) (76,956)
Treasury stock, at cost............... (1,750) (4,306) 4,306(D) (1,750)
--------- -------- ------- -------- ---------
328,953 187,817 15,157 (9,988) 521,939
--------- -------- ------- -------- ---------
$ 499,717 $196,836 $72,171 $ (5,988) $ 762,736
========= ======== ======= ======== =========
</TABLE>
- ---------------
(A) To record the purchase by Noble of all the outstanding shares of common
stock of Triton.
(B) To record the effect of Noble accounting for the fixed assets of Triton at
fair market value.
(C) To record goodwill of $336,000, which represents the excess of the purchase
price paid in the Triton Acquisition over net assets acquired in the Triton
Acquisition and to eliminate other assets of $1,974,000 that were not
included in the Triton Acquisition which assets primarily consist of an
investment of $1,293,000 in a partnership, a $198,000 receivable from a
stockholder and $574,000 of deferred income taxes.
(D) To eliminate Triton's equity pursuant to the Triton Agreement.
(E) Reflects the change in par value for the conversion pursuant to the Merger
of Chiles Common Stock into Noble Common Stock.
54
<PAGE> 67
NOBLE, CHILES AND TRITON
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PURCHASE ADJUSTMENTS PRO
------------------------ FORMA
NOBLE CHILES TRITON TRITON WESTERN(A) COMBINED
-------- ------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Contract drilling services............. $188,206 $69,589 $ $ $40,281 $298,076
Turnkey drilling services.............. 110,003 110,003
Engineering and consulting services.... 2,292 7,812 10,104
Other revenue.......................... 4,444 6,019 (362)(B) 10,101
-------- ------- -------- ------ ------- --------
194,942 69,589 123,834 (362) 40,281 428,284
-------- ------- -------- ------ ------- --------
OPERATING COSTS AND EXPENSES
Contract drilling operations........... 123,817 50,048 28,000 201,865
Turnkey drilling operations............ 89,456 89,456
Engineering and consulting
operations.......................... 2,083 3,518 5,601
Other expense.......................... 2,736 9,195 (59)(B) 11,872
Depreciation and amortization.......... 20,472 8,414 1,170 34(C) 7,709 37,799
Selling, general and administrative.... 22,405 5,879 12,163 1,168 41,615
Minority interest...................... (232) 4,767 4,535
-------- ------- -------- ------ ------- --------
171,281 64,341 120,269 (25) 36,877 392,743
-------- ------- -------- ------ ------- --------
OPERATING INCOME (LOSS).................. 23,661 5,248 3,565 (337) 3,404 35,541
OTHER INCOME (EXPENSE)
Interest expense....................... (5,406) (2,632) (336) (7,604)(D) (15,978)
Interest income........................ 1,628 869 293 2,790
Other, net............................. 1,737 (690) 206 397(B)(E) 1,650
-------- ------- -------- ------ ------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES.................... 21,620 2,795 3,728 60 (4,200) 24,003
INCOME TAX PROVISION..................... (2,474) (859) (2,222) (7)(F) (1,249) (6,811)
-------- ------- -------- ------ ------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON SHARES............ 19,146 1,936 1,506 53 (5,449) 17,192
PREFERRED DIVIDENDS...................... (6,728) (1,208) (7,936)
-------- ------- -------- ------ ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS............................. $ 12,418 $ 728 $ 1,506 $ 53 $(5,449) $ 9,256
======== ======= ======== ====== ======= ========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER COMMON SHARE....................... $ 0.32 $ 0.03(G) $ 0.12
======== ======= ========
PRO FORMA WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................ 38,366 28,557(G) 752 9,235(H) 76,910
</TABLE>
- ---------------
(A) Adjustments to include the effects of the Western Acquisition as if it
occurred on January 1, 1993.
(B) To reclassify the operating results of Triton's oil and gas activities, as
these activities are not an ongoing business line of Noble.
(C) To record amortization of $34,000 for goodwill associated with the Triton
Acquisition.
(D) Includes additional interest expense related to the Noble Senior Notes
issued to finance a portion of the Western Acquisition.
(E) To eliminate the net loss of $94,000 from an unconsolidated partnership that
was not part of the Triton Acquisition.
(F) To record the incremental tax effect of the Triton Acquisition adjustments.
(G) Reflects the conversion pursuant to the Merger of each share of Chiles
Common Stock into 0.75 of a share of Noble Common Stock.
(H) To record incremental weighted average shares outstanding related to the
1993 Noble Common Stock offering used to finance the remaining portion of
the Western Acquisition.
55
<PAGE> 68
NOBLE AND CHILES
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER
JUNE 30, 31,
1994 1993
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................... $ 67,818 $ 69,177
Restricted cash................................................. 1,819 1,793
Investment in marketable securities............................. 39,800 39,451
Accounts receivable............................................. 62,647 55,694
Costs of uncompleted contracts in excess of billings............ 2,063
Other current assets............................................ 41,197 35,617
--------- ---------
Total current assets.................................... 215,344 201,732
--------- ---------
INVESTMENTS....................................................... 30,531
--------- ---------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities............................... 785,764 765,807
Other........................................................... 19,308 15,801
--------- ---------
805,072 781,608
Accumulated depreciation........................................ (316,381) (299,579)
--------- ---------
488,691 482,029
--------- ---------
OTHER ASSETS...................................................... 14,788 12,792
--------- ---------
$ 749,354 $ 696,553
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt................................................. $ 5,562 $
Current installments of long-term debt.......................... 546 546
Accounts payable................................................ 18,394 13,659
Interest payable................................................ 2,815 3,548
Other current liabilities....................................... 54,656 33,444
--------- ---------
Total current liabilities............................... 81,973 51,197
LONG-TERM DEBT.................................................... 126,871 127,144
OTHER LIABILITIES................................................. 1,649 1,286
MINORITY INTEREST................................................. 1,809 156
--------- ---------
212,302 179,783
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock................................................. 7,015 7,015
Common stock(A)................................................. 7,729 7,637
Capital in excess of par value(A)............................... 589,185 583,110
Cumulative translation adjustment............................... (2,308) (2,286)
Retained earnings............................................... (62,819) (76,956)
Treasury stock, at cost......................................... (1,750) (1,750)
--------- ---------
537,052 516,770
--------- ---------
$ 749,354 $ 696,553
========= =========
</TABLE>
- ---------------
(A) Reflects the change in par value for the conversion pursuant to the Merger
of Chiles Common Stock into Noble Common Stock.
56
<PAGE> 69
NOBLE AND CHILES
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------
1994 1993 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Contract drilling services............ $147,522 $115,600 $257,795 $175,610 $217,065
Turnkey drilling services............. 15,229
Engineering and consulting services... 1,356 1,484 2,292 3,263 8,286
Other revenue......................... 2,409 2,706 4,444 5,293 4,800
-------- -------- -------- -------- --------
166,516 119,790 264,531 184,166 230,151
-------- -------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Contract drilling operations.......... 96,313 83,117 173,865 128,364 169,322
Turnkey drilling operations........... 12,486
Engineering and consulting
operations......................... 966 1,425 2,083 3,559 7,732
Other expense......................... 1,645 1,353 2,736 3,329 2,436
Depreciation and amortization......... 19,308 12,949 28,886 27,248 30,052
Selling, general and administrative... 19,888 13,312 28,284 30,716 32,684
Minority interest..................... 239 (81) (232) 89 78
Restructuring charges and rig
write downs........................ 21,120 11,134
-------- -------- -------- -------- --------
150,845 112,075 235,622 214,425 253,438
-------- -------- -------- -------- --------
OPERATING INCOME (LOSS)................. 15,671 7,715 28,909 (30,259) (23,287)
OTHER INCOME (EXPENSE)
Interest expense...................... (6,114) (3,525) (8,038) (13,274) (20,411)
Interest income....................... 2,533 1,010 2,497 3,276 2,155
Gain on sale of drilling equipment.... 7,968
Other, net............................ 3,726 (672) 1,047 3,675 4,786
-------- -------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES................... 23,784 4,528 24,415 (36,582) (36,757)
INCOME TAX PROVISION.................... (3,265) (1,974) (3,333) (3,396) (2,417)
-------- -------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS............................ 20,519 2,554 21,082 (39,978) (39,174)
PREFERRED DIVIDENDS..................... (6,383) (3,364) (7,936) (6,728) (721)
-------- -------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON SHARES........... $ 14,136 $ (810) $ 13,146 $(46,706) $(39,895)
======== ======== ======== ======== ========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER COMMON SHARE(A)................... $ 0.18 $ (0.01) $ 0.20 $ (0.98) $ (0.88)
======== ======== ======== ======== ========
PRO FORMA WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING(A)........................ 77,122 63,448 66,923 47,762 45,554
</TABLE>
- ---------------
(A) Reflects the conversion pursuant to the Merger of each share of Chiles
Common Stock into 0.75 of a share of Noble Common Stock.
57
<PAGE> 70
DESCRIPTION OF NOBLE CAPITAL STOCK
Noble has 90,000,000 authorized shares of stock, consisting of (i)
75,000,000 shares of Noble Common Stock and (ii) 15,000,000 shares of preferred
stock having a par value of $1.00 per share. As of August 9, 1994, there were
48,606,871 shares of Noble Common Stock outstanding. There is one series of
preferred stock designated, of which there are 2,990,000 shares of $2.25 Noble
Preferred Stock outstanding. In addition, as of August 9, 1994, Noble had
reserved for issuance (i) 2,916,964 shares of Noble Common Stock under Noble's
employee stock option plans, (ii) 325,000 shares of Noble Common Stock under
Noble's non-employee director stock option plan, (iii) 160,000 shares of Noble
Common Stock under certain non-employee director stock option agreements and
(iv) 16,204,185 shares of Noble Common Stock on conversion of the outstanding
$2.25 Noble Preferred Stock. In addition, an indeterminate number of shares of
Noble Common Stock (of up to at least 254,551 shares) have been reserved for
issuance in connection with certain contingent obligations under the Triton
Agreement.
If the Noble Charter Amendment is adopted by the stockholders of Noble at
the Noble Special Meeting, upon the filing of the amendment with the Delaware
Secretary of State, Noble will have 215,000,000 authorized shares of stock,
consisting of (i) 200,000,000 shares of Noble Common Stock and (ii) 15,000,000
shares of preferred stock. If the Merger Proposal is also approved at the Noble
Special Meeting and the Merger is consummated, up to 4,025,000 shares of
preferred stock of Noble will be designated and issued pursuant to the Merger as
$1.50 Noble Preferred Stock. See "The Merger" and "Proposal to Adopt Noble
Charter Amendment."
The following summary description of the capital stock of Noble is
qualified in its entirety by reference to the Restated Certificate of
Incorporation of Noble, as amended (including the Certificate of Designations
governing the $2.25 Noble Preferred Stock, the "Noble Certificate of
Incorporation"), and the form of Certificate of Designations which will govern
the $1.50 Noble Preferred Stock, copies of which have been filed or incorporated
by reference as exhibits to the Registration Statement.
NOBLE COMMON STOCK
Holders of Noble Common Stock are entitled to one vote per share on each
matter to be voted upon by the stockholders of Noble. Dividends may be paid to
the holders of Noble Common Stock when, as and if declared by the Noble Board of
Directors out of funds legally available for such purpose, subject to any
preferential cumulative dividend rights of any preferred stock of Noble,
including the $2.25 Noble Preferred Stock and, if the Merger is consummated, the
$1.50 Noble Preferred Stock, outstanding at the time. Holders of Noble Common
Stock have no conversion, redemption, cumulative voting or preemptive rights. In
the event of any liquidation, dissolution or winding up of Noble, after payment
or provision for payment of the debts and other liabilities of Noble and the
preferential amounts to which the holders of the $2.25 Noble Preferred Stock
and, if the Merger is consummated, the $1.50 Noble Preferred Stock, or any other
series or class of Noble's stock hereafter issued that ranks senior as to
liquidation rights to the Noble Common Stock are entitled, the holders of Noble
Common Stock will be entitled to share ratably in any remaining assets of Noble.
All outstanding shares of Noble Common Stock are, and the shares of Noble
Common Stock to be issued pursuant to the Merger Agreement and upon conversion
of the $1.50 Noble Preferred Stock will be, when issued, duly and validly
issued, fully paid and nonassessable.
The Noble Common Stock is quoted in the NASDAQ National Market System under
the symbol "NDCO."
The transfer agent and registrar for the Noble Common Stock is Liberty Bank
and Trust Company of Oklahoma City, N.A.
$2.25 NOBLE PREFERRED STOCK
The Board of Directors of Noble is authorized by the Noble Certificate of
Incorporation to issue preferred stock in one or more series and to fix for each
such series such designation, voting powers, if any, preferences
58
<PAGE> 71
and relative, participating, optional or other special rights, and such
qualifications, limitations and restrictions thereof, as are stated and adopted
by resolution of the Board without further stockholder approval. No shares of
preferred stock other than the $2.25 Noble Preferred Stock are currently issued
or outstanding.
Dividends. Holders of shares of the $2.25 Noble Preferred Stock are
entitled to receive, when, as and if declared by the Noble Board of Directors
out of funds at the time legally available therefor, cash dividends at an annual
rate of $2.25 per share, and no more, payable quarterly. The $2.25 Noble
Preferred Stock has priority as to dividends over the Noble Common Stock, and no
dividend (other than dividends payable solely in Noble Common Stock) may be
declared, paid or set apart for payment on Noble Common Stock unless all accrued
and unpaid dividends on the $2.25 Noble Preferred Stock have been paid or
declared and set apart for payment. The $2.25 Noble Preferred Stock will rank on
a parity with the $1.50 Noble Preferred Stock and no dividend on the $2.25 Noble
Preferred Stock may be declared, paid or set apart for payment unless full
cumulative dividends on the $1.50 Noble Preferred Stock have been or are
contemporaneously paid or declared and set apart for payment. See
"-- Restrictions on Dividends."
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of Noble, holders of shares of the $2.25 Noble Preferred Stock are entitled
to receive the liquidation preference of $25.00 per share, plus an amount equal
to any accrued and unpaid dividends to the payment date, and no more, before any
payment or distribution is made to the holders of Noble Common Stock. After
payment in full of the liquidation preference of the shares of $2.25 Noble
Preferred Stock, the holders of such shares will not be entitled to any further
participation in any distribution of assets by Noble. The $2.25 Noble Preferred
Stock will rank on a parity with the $1.50 Noble Preferred Stock and no payment
on account of any liquidation, dissolution or winding up of Noble may be made to
the holders of the $2.25 Noble Preferred Stock unless a proportionate amount is
paid at the same time to the holders of the $1.50 Noble Preferred Stock.
Voting Rights. The holders of the $2.25 Noble Preferred Stock have no
voting rights except as described below or as required by law. In exercising any
such vote, each outstanding share of the $2.25 Noble Preferred Stock is entitled
to one vote.
Whenever dividends on the $2.25 Noble Preferred Stock or the $1.50 Noble
Preferred Stock have not been paid in an aggregate amount equal to at least six
quarterly dividends on such shares (whether or not consecutive), the number of
directors of Noble will be increased by two, and the holders of the $2.25 Noble
Preferred Stock, voting separately as a class together with the holders of the
$1.50 Noble Preferred Stock, will be entitled to elect such two additional
directors to the Board of Directors at any meeting of stockholders of Noble at
which directors are to be elected held during the period such dividends remain
in arrears. Such voting right will terminate when all such dividends accrued and
in default have been paid in full or set apart for payment. The term of office
of all directors so elected will terminate immediately upon such payment or
setting apart for payment.
In addition, so long as any of the $2.25 Noble Preferred Stock is
outstanding, Noble shall not, without the affirmative vote or consent of the
holders of at least 66 2/3 percent of all outstanding shares of the $2.25 Noble
Preferred Stock, voting separately as a class, (i) amend, alter or repeal any
provision of the Noble Certificate of Incorporation or the Bylaws of Noble so as
to affect adversely the relative rights, preferences, qualifications,
limitations or restrictions of the $2.25 Noble Preferred Stock, (ii) authorize
or issue, or increase the authorized amount of, any additional class or series
of stock, or any security convertible into stock of such class or series,
ranking senior to the $2.25 Noble Preferred Stock as to dividends or upon
liquidation, dissolution or winding up of Noble or (iii) effect any
reclassification of the $2.25 Noble Preferred Stock.
59
<PAGE> 72
Redemption at Option of Noble. The $2.25 Noble Preferred Stock may not be
redeemed prior to December 31, 1994. The $2.25 Noble Preferred Stock otherwise
is redeemable for cash, in whole or in part, at any time at the option of Noble,
if redeemed during the 12-month period beginning December 31 of the year
specified below, at the following redemption prices:
<TABLE>
<CAPTION>
YEAR PRICE PER SHARE
- ---- ---------------
<S> <C>
1994.................... $26.575
1995.................... 26.350
1996.................... 26.125
1997.................... 25.900
</TABLE>
<TABLE>
<CAPTION>
YEAR PRICE PER SHARE
- ---- ---------------
<S> <C>
1998.................... $25.675
1999.................... 25.450
2000.................... 25.225
</TABLE>
and thereafter at $25.00 per share, plus in each case accrued and unpaid
dividends to the redemption date.
There is no mandatory redemption or sinking fund obligation with respect to
the $2.25 Noble Preferred Stock. In the event that Noble has failed to pay
accrued and unpaid dividends on the $2.25 Noble Preferred Stock, it may not
redeem any of the then outstanding shares of the $2.25 Noble Preferred Stock
until all such accrued and unpaid dividends and (except with respect to shares
to be redeemed) the then current quarterly dividend have been paid in full.
Conversion Rights. The holder of any shares of the $2.25 Noble Preferred
Stock has the right, at the holder's option, to convert any or all such shares
into Noble Common Stock at any time at a rate (subject to adjustment in the case
of certain dilutive events) of 5.41946 shares of Noble Common Stock for each
share of $2.25 Noble Preferred Stock (equivalent to a conversion price of $4.613
per share of Noble Common Stock).
Special Conversion Rights. Upon the occurrence of certain types of
significant corporate or ownership transactions, the holder of any shares of the
$2.25 Noble Preferred Stock will have a special conversion right designed to
provide limited loss protection, subject to the right of Noble to pay cash in
lieu of conversion securities. Such protection is accomplished by effectively
reducing the conversion price upon any such occurrence, but only to the extent
such reduction does not result in a conversion price that is less than $2.5834
per share of Noble Common Stock (subject to adjustment in the case of certain
dilutive events).
Exchange Provisions. The $2.25 Noble Preferred Stock may be exchanged at
the option of Noble, in whole but not in part, on any dividend payment date
commencing December 31, 1993, for convertible debentures of Noble at a rate of
$25.00 principal amount of debentures for each share of $2.25 Noble Preferred
Stock, provided that all accrued and unpaid dividends to the date of exchange
have been paid and certain other conditions have been met. The debentures would
be unsecured, subordinated obligations of Noble, would be limited in aggregate
principal amount to the aggregate liquidation preference of the $2.25 Noble
Preferred Stock for which the debentures are exchanged, and would mature on
December 31, 2016. Noble would pay interest on the debentures semiannually
following the issue thereof at the rate of nine percent per annum. The holder of
any debenture would have the right, at the holder's option, to convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$25.00) into shares of Noble Common Stock at any time prior to maturity.
The $2.25 Noble Preferred Stock is quoted in the NASDAQ National Market
System under the symbol "NDCOP." The transfer agent, conversion agent and
registrar for the $2.25 Noble Preferred Stock is Liberty Bank and Trust Company
of Oklahoma City, N.A.
$1.50 NOBLE PREFERRED STOCK
Upon consummation of the Merger, Noble will issue a new series of preferred
stock consisting of up to 4,025,000 shares and designated as the $1.50
Convertible Preferred Stock (referred to in this Joint Proxy
Statement/Prospectus as the "$1.50 Noble Preferred Stock"). The rights,
privileges, preferences and voting power of the $1.50 Noble Preferred Stock will
be substantially equivalent to those of the Chiles Preferred Stock. All shares
of $1.50 Noble Preferred Stock to be issued pursuant to the Merger Agreement
will be, when issued, duly and validly issued, fully paid and nonassessable.
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The holders of the $1.50 Noble Preferred Stock will have no preemptive
rights with respect to any shares of capital stock of Noble or any other
securities of Noble convertible into or carrying rights or options to purchase
any such shares. The $1.50 Noble Preferred Stock will not be subject to any
sinking fund or other obligation of Noble to redeem or retire the $1.50 Noble
Preferred Stock. It is a condition to the consummation of the Merger that the
$1.50 Noble Preferred Stock be listed on the NASDAQ National Market System. The
transfer agent, conversion agent and registrar for the $1.50 Noble Preferred
Stock will be Liberty Bank and Trust Company of Oklahoma City, N.A.
Ranking. The $1.50 Noble Preferred Stock will rank senior to the Noble
Common Stock, and on a parity with the $2.25 Noble Preferred Stock, with respect
to the payment of dividends and upon liquidation, dissolution or winding up of
Noble.
Dividends. Holders of the $1.50 Noble Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of Noble, out of the
funds of Noble legally available therefor, annual cash dividends at the rate of
$1.50 per share, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year, commencing September 30, 1994, or if such day is
not a business day, the next succeeding business day. Dividends on the $1.50
Noble Preferred Stock will be cumulative from July 1, 1994 (assuming an
Effective Time on or prior to September 20, 1994), and will be payable to
holders of record as they appear on the stock books of Noble on such record
dates, which shall be not more than 60 days nor less than 10 days preceding the
payment dates, as shall be fixed by the Noble Board of Directors, provided that
holders of shares of $1.50 Noble Preferred Stock called for redemption on a
redemption date falling between a dividend payment record date and the dividend
payment shall, in lieu of receiving such dividend on the dividend payment date
fixed therefor, receive such dividend payment together with all other accrued
and unpaid dividends on the date fixed for redemption (unless such holders
convert such shares in accordance with the Certificate of Designations).
Dividends payable per share of $1.50 Noble Preferred Stock for each quarterly
dividend period will be computed by dividing the annual dividend amount by four.
The amount of dividends payable for any period shorter or longer than a full
quarterly dividend period will be computed on the basis of a 360-day year of
twelve 30-day months. Holders of the $1.50 Noble Preferred Stock will not be
entitled to any dividends, whether payable in cash, property or securities, in
excess of the full cumulative dividends, as described above. No interest, or sum
of money in lieu of interest, will be payable in respect of any accrued and
unpaid dividends.
Assuming an Effective Time on or prior to September 20, 1994, the initial
quarterly cash dividend on shares of $1.50 Noble Preferred Stock issued upon
consummation of the Merger will be payable on September 30, 1994 to holders of
record of such shares at the Effective Time in respect of the full quarterly
dividend period commencing on July 1, 1994 and ending on and including September
30, 1994. In such event, no dividend would be payable by Chiles on Chiles
Preferred Stock in respect of such dividend period.
If dividends are not paid in full, or declared in full and sums set apart
for the payment thereof, upon the $1.50 Noble Preferred Stock and upon any other
capital stock ranking on a parity as to dividends with the $1.50 Noble Preferred
Stock (including the $2.25 Noble Preferred Stock), all dividends declared upon
shares of $1.50 Noble Preferred Stock and such other parity stock will be
declared and paid pro rata so that in all cases the amount of dividends declared
per share on the $1.50 Noble Preferred Stock and such other parity stock will
bear to each other the same ratio that accrued and unpaid dividends per share on
the shares of $1.50 Noble Preferred Stock and such other parity stock bear to
each other. Except as set forth above, unless full cumulative dividends on all
outstanding shares of the $1.50 Noble Preferred Stock have been paid or declared
and sums set aside for the payment thereof, dividends (other than dividends paid
in Noble Common Stock or other stock ranking junior to the $1.50 Noble Preferred
Stock as to dividends and upon liquidation, dissolution or winding up) may not
be declared or paid or set apart for payment, and other distributions may not be
made upon the Noble Common Stock or on any other stock of Noble ranking junior
to the $1.50 Noble Preferred Stock as to dividends, or upon liquidation,
dissolution or winding up, nor may any Noble Common Stock or any other stock of
Noble ranking junior to or on a parity with the $1.50 Noble Preferred Stock as
to dividends or upon liquidation, dissolution or winding up be redeemed,
purchased or otherwise acquired for any consideration by Noble (except by
conversion into or exchange for stock of Noble ranking junior to the $1.50 Noble
Preferred Stock as to dividends and upon liquidation, dissolution or winding
up).
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Under Delaware law, Noble may declare and pay dividends on its capital
stock only out of surplus, as defined in the DGCL or, in case there is no such
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Surplus under the DGCL is generally
defined to mean the excess, at any given time, of the net assets of a
corporation over the amount of the corporation's capital. No dividends or
distributions may be declared, paid or made if Noble is or would be rendered
insolvent by virtue of such dividend or distribution, or if such declaration,
payment or distribution would contravene the Certificate of Incorporation. See
"-- Restrictions on Dividends."
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of Noble, whether voluntary or involuntary, the holders of shares of $1.50
Noble Preferred Stock will be entitled to receive out of the assets of Noble
available for distribution to stockholders the liquidation preference of $25.00
per share plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid to the payment date before any payment or
distribution of assets is made to holders of Noble Common Stock or of any other
class of stock of Noble ranking junior to the $1.50 Noble Preferred Stock upon
liquidation, dissolution or winding up. If upon any liquidation, dissolution or
winding up of Noble, the amounts payable with respect to the $1.50 Noble
Preferred Stock and any other capital stock ranking as to any such distribution
on a parity with the $1.50 Noble Preferred Stock are not paid in full, the
holders of the $1.50 Noble Preferred Stock and of such other parity stock will
share ratably in any such distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. After payment of the
full amount of the liquidation preference to which they are entitled, the
holders of shares of $1.50 Noble Preferred Stock will not be entitled to any
further participation in any distribution of assets by Noble. Neither a
consolidation or merger of Noble with another corporation nor a sale, lease,
exchange or transfer of all or part of Noble's assets for cash, securities or
other property will be considered a liquidation, dissolution or winding up of
Noble for these purposes.
Conversion Rights. Shares of the $1.50 Noble Preferred Stock will be
convertible at any time at the option of the holder thereof at an initial
conversion rate of 2.4446 shares of Noble Common Stock for each share of $1.50
Noble Preferred Stock (equivalent to a conversion price of $10.23 per share of
Noble Common Stock), subject to adjustment as described below, except that, if
shares of $1.50 Noble Preferred Stock are called for redemption, the conversion
right will terminate at the close of business on the date fixed for redemption.
No fractional shares or securities representing fractional shares of Noble
Common Stock will be issued upon conversion; any fractional shares resulting
from conversion will be paid in cash based upon the last reported sales price of
the Noble Common Stock at the close of business on the first trading day
preceding the date of conversion.
In case Noble shall be a party to any transaction (including, without
limitation, a merger, consolidation, statutory share exchange, sale of all or
substantially all of its assets or recapitalization of the Noble Common Stock),
in each case as a result of which shares of Noble Common Stock shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of $1.50 Noble Preferred
Stock remaining outstanding shall thereafter be convertible into the kind and
amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such transaction by a holder of that
number of shares or fraction thereof of Noble Common Stock into which such share
of $1.50 Noble Preferred Stock was convertible immediately prior to such
transaction.
The conversion price is subject to adjustment upon certain events,
including: (i) the issuance of Noble Common Stock as a dividend or distribution
with respect to the outstanding Noble Common Stock, subdivisions, splits or
combinations of Noble Common Stock, or the issuance of any shares of capital
stock by reclassification of the Noble Common Stock; (ii) the issuance to all
holders of Noble Common Stock of rights or warrants to subscribe for or purchase
Noble Common Stock, in each case at less than the then current market price per
share of Noble Common Stock; and (iii) the payment of a dividend or making of a
distribution to holders of Noble Common Stock of shares of capital stock of
Noble or its subsidiaries (other than Noble Common Stock) or of evidences of its
indebtedness, or of assets, including securities, but excluding those rights,
warrants, dividends and distributions referred to above, dividends and
distributions in connection with the liquidation, dissolution or winding up of
Noble and regular periodic cash dividends payable out of surplus.
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<PAGE> 75
No adjustment in the conversion price will be required to be made in any
case until cumulative adjustments amount to one percent or more of the
conversion price as last adjusted, but any such adjustment that would otherwise
be required to be made shall be carried forward and taken into account in any
subsequent adjustment. Noble reserves the right, to the extent permitted by law,
to make such reductions in the conversion price in addition to those required in
the foregoing provisions as it, in its sole discretion, shall determine to be
advisable in order that certain stock-related distributions hereafter made by
Noble to its stockholders shall not be taxable to such stockholders.
Holders of shares of $1.50 Noble Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding dividend payment date (except that
holders of shares called for redemption on a redemption date falling between
such dividend payment record date and the dividend payment date shall, in lieu
of receiving such dividend on the dividend payment date fixed therefor, receive
such dividend payment together with all other accrued and unpaid dividends on
the date fixed for redemption, unless such holders convert such shares in
accordance with the Certificate of Designations) notwithstanding the conversion
thereof following such dividend payment record date and prior to such dividend
payment date. However, shares of $1.50 Noble Preferred Stock surrendered for
conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding dividend
payment date (except shares of $1.50 Noble Preferred Stock called for redemption
on a redemption date during such period) must be accompanied by payment of an
amount equal to the dividend payment with respect to such shares of $1.50 Noble
Preferred Stock presented for conversion on such dividend payment date. A holder
of shares of $1.50 Noble Preferred Stock on a dividend payment record date who
(or whose transferee) surrenders any such shares for conversion into shares of
Noble Common Stock on the corresponding dividend payment date will receive the
dividend payable by Noble on such shares of $1.50 Noble Preferred Stock on such
date, and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of $1.50 Noble Preferred Stock for conversion
on the dividend payment date. Except as provided above, Noble shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares of $1.50 Noble Preferred Stock or for dividends on the shares
of Noble Common Stock issued upon such conversion.
Noble will endeavor to comply with all federal and state securities laws
regulating the offer and delivery of shares of Noble Common Stock upon
conversion of the $1.50 Noble Preferred Stock and will endeavor to have approved
for listing, in the NASDAQ National Market System or on any national securities
exchange upon which the Noble Common Stock is listed, the shares of Noble Common
Stock deliverable upon conversion of the $1.50 Noble Preferred Stock.
Right of Redemption of Noble. Shares of the $1.50 Noble Preferred Stock
will not be redeemable prior to December 31, 1996. The shares of $1.50 Noble
Preferred Stock will be redeemable at the option of Noble, in whole or in part,
at any time or from time to time, out of funds legally available therefor, on or
after December 31, 1996, on not less than 30 nor more than 60 days' notice by
first-class mail at the redemption prices per share of $1.50 Noble Preferred
Stock set forth below during the 12-month periods beginning on December 31 of
the years shown below, plus in each case an amount equal to accrued and unpaid
dividends, if any, to (and including) the redemption date, whether or not earned
or declared (the "Redemption Price").
<TABLE>
<CAPTION>
YEAR PRICE PER SHARE
- ---- ---------------
<S> <C>
1996.................... $26.05
1997.................... 25.90
1998.................... 25.75
1999.................... 25.60
</TABLE>
<TABLE>
<CAPTION>
YEAR PRICE PER SHARE
- ---- ---------------
<S> <C>
2000.................... $25.45
2001.................... 25.30
2002.................... 25.15
2003 and thereafter..... 25.00
</TABLE>
If fewer than all of the outstanding shares of $1.50 Noble Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected by lot or pro
rata or in some other equitable manner determined by the Board of Directors of
Noble in its sole discretion. There is no mandatory redemption or sinking fund
obligation with respect to the $1.50 Noble Preferred Stock. In the event that
Noble has failed to pay accrued and unpaid dividends on the $1.50 Noble
Preferred Stock, it may not redeem less than all of the then outstanding shares
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of the $1.50 Noble Preferred Stock until all such accrued and unpaid dividends
and the then current quarterly dividends have been paid in full. After the date
fixed for redemption, unless Noble is in default in providing money for the
payment of the Redemption Price, dividends shall cease to accrue on the $1.50
Noble Preferred Stock called for redemption, such shares shall no longer be
deemed to be outstanding and all rights of the holders of such shares as
stockholders of Noble shall cease, except the right to receive the moneys
payable upon such redemption, without interest thereon, upon surrender of the
certificates evidencing such shares.
Voting Rights. The holders of the $1.50 Noble Preferred Stock will have no
voting rights, except as described below or as required by law. In exercising
any such vote, each outstanding share of $1.50 Noble Preferred Stock will be
entitled to one vote, excluding shares held by Noble or any entity controlled by
Noble, which shares shall have no voting rights.
Whenever dividends on the $1.50 Noble Preferred Stock have not been paid in
an aggregate amount equal to at least six quarterly dividends on such shares
(whether or not consecutive), the holders of the $1.50 Noble Preferred Stock
(voting separately as a class with the holders of any stock ranking on a parity
as to dividends with the $1.50 Noble Preferred Stock on which like voting rights
have been conferred and are exercisable, including the $2.25 Noble Preferred
Stock) will be entitled to elect two directors to the Board of Directors either
by written consent or at any meeting of stockholders of Noble at which directors
are to be elected held during the period such dividends remain in arrears. Such
voting rights will terminate when all such dividends accrued and in default have
been paid in full or declared and funds set apart for payment in full. The term
of office of all directors so elected will terminate immediately upon such
payment or setting apart for payment.
In addition, without the affirmative vote or consent of the holders of at
least 66 2/3 percent of shares of the $1.50 Noble Preferred Stock then
outstanding, voting separately as a class, Noble may not (i) authorize, create,
issue or increase the authorized number of shares of any class or classes or
series of stock, or any security convertible into stock of such class or series,
ranking prior to the $1.50 Noble Preferred Stock either as to dividends or upon
liquidation, dissolution or winding up of Noble, (ii) amend, alter or repeal
(whether by merger, consolidation or otherwise) any of the provisions of the
Certificate of Incorporation (including the Certificate of Designation) of Noble
so as to affect adversely any right, preference, privilege or voting power of
the $1.50 Noble Preferred Stock or the holders thereof or (iii) authorize any
reclassification of the $1.50 Noble Preferred Stock. Without the affirmative
vote or consent of holders of at least 50 percent of the shares of $1.50 Noble
Preferred Stock then outstanding, Noble may not increase the amount of
authorized $1.50 Noble Preferred Stock or create additional classes of stock or
issue series of capital stock ranking on a parity with the $1.50 Noble Preferred
Stock with respect to the payment of dividends or upon liquidation, dissolution
and winding up of Noble. However, Noble may increase the amount of authorized
preferred stock or create additional classes of stock or issue series of capital
stock ranking junior to the $1.50 Noble Preferred Stock with respect to the
payment of dividends and upon liquidation, dissolution and winding up of Noble
without the consent of any holder of $1.50 Noble Preferred Stock.
Special Conversion Rights. The $1.50 Noble Preferred Stock has a special
conversion right that becomes effective upon the occurrence of certain types of
significant transactions affecting ownership or control of Noble or the market
for the Noble Common Stock. The purpose of the special conversion right is to
provide (subject to certain exceptions) partial loss protection upon the
occurrence of a Change of Control or a Fundamental Change (each as defined
below) at a time when the Market Value (as defined below) of the Noble Common
Stock issuable upon conversion by a holder at the prevailing conversion price is
less than the amount to which the holder would be entitled upon redemption. In
such situations, the special conversion right would, for a limited period,
reduce the then prevailing conversion price to the higher of the Market Value of
the Noble Common Stock or a minimum conversion price of $6.53 per share of Noble
Common Stock, subject to certain adjustments (and increase the equivalent
conversion ratio accordingly). Consequently, to the extent that the Market Value
of the Noble Common Stock is less than the minimum conversion price, a holder
will have a lesser degree of protection from loss upon exercise of a special
conversion right.
The special conversion right is intended to provide limited loss protection
to investors in certain circumstances, while not giving holders a veto power
over significant transactions affecting ownership or
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control of Noble. Although the special conversion right may render more costly
or otherwise inhibit certain proposed transactions, its purpose is not to
inhibit or discourage takeovers or other business combinations.
Each holder of the $1.50 Noble Preferred Stock will be entitled to a
special conversion right if a Change of Control or Fundamental Change occurs. A
Change of Control will occur if a person or group acquires more than 55 percent
of the Noble Common Stock. A Fundamental Change is, generally, a sale of all or
substantially all of Noble's assets or a transaction in which at least 55
percent of the Noble Common Stock is transferred for, or is converted into, any
other asset. However, if the majority of the value of the consideration received
in a transaction by holders of Noble Common Stock is Marketable Stock (as
defined below) or if the holders of Noble Common Stock hold a majority of the
Voting Stock (as defined below) of Noble's successor, the transaction will not
be a Fundamental Change, and holders of the $1.50 Noble Preferred Stock will not
have special conversion rights as the result of that transaction.
A special conversion right will permit a holder of $1.50 Noble Preferred
Stock, at the holder's option during the 30-day period described in the
following paragraph, to convert all, but not less than all, the holder's $1.50
Noble Preferred Stock at a conversion price equal to the Special Conversion
Price, as defined below. A holder exercising a special conversion right will
receive Noble Common Stock if a Change of Control occurs and, if a Fundamental
Change occurs, will receive the same consideration received for the number of
shares of Noble Common Stock into which the holder's $1.50 Noble Preferred Stock
would have been convertible at the Special Conversion Price. In either case,
however, Noble or its successor may, at its option, elect to pay to the holder
cash equal to the Market Value of the number of shares of Noble Common Stock
into which the holder's $1.50 Noble Preferred Stock is convertible at the
Special Conversion Price.
Noble will mail to each registered holder of $1.50 Noble Preferred Stock a
notice setting forth details of any special conversion right occasioned by a
Change of Control or Fundamental Change within 30 days after the event occurs. A
special conversion right may be exercised only within the 30-day period after
the notice is mailed and will expire at the end of that period. Exercise of a
special conversion right, to the extent permitted by law, is irrevocable, and
all $1.50 Noble Preferred Stock surrendered for conversion will be converted at
the end of the 30-day period mentioned in the preceding sentence. Noble, in
taking any action in connection with any Change of Control, Fundamental Change
or related special conversion right, will undertake to comply with all
applicable federal securities regulations including, to the extent applicable,
Rules 13e-4 and 14e-1 under the Exchange Act.
The $1.50 Noble Preferred Stock that is not converted pursuant to a special
conversion right will continue to be convertible pursuant to the general
conversion rights described under the caption "Conversion Rights" above.
The special conversion right is not intended to, and does not, protect
holders of $1.50 Noble Preferred Stock in all circumstances that might affect
ownership or control of Noble or the market for the Noble Common Stock or that
might otherwise adversely affect the value of an investment in the $1.50 Noble
Preferred Stock. The ability to control Noble may be obtained by a person even
if that person does not, as is required to constitute a Change of Control,
acquire 55 percent of Noble's voting stock. Noble and the market for the Noble
Common Stock may be affected by various transactions that do not constitute a
Fundamental Change. In particular, transactions involving the transfer or
conversion of less than 55 percent of the Noble Common Stock may have a
significant effect on Noble and the market for the Noble Common Stock, as could
transactions in which holders of Noble Common Stock receive primarily Marketable
Stock or continue to own a majority of the Voting Stock of the successor to
Noble. In addition, if the special conversion right does arise as the result of
a Fundamental Change, the special conversion right will allow a holder
exercising a special conversion right to receive the same type of consideration
received by the holders of Noble Common Stock and, thus, the degree of
protection afforded by the special conversion right may be affected by the type
of consideration received.
As used herein, a "Change of Control" with respect to Noble shall be deemed
to have occurred at the first time after the first issuance of any $1.50 Noble
Preferred Stock that any person (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act), including a group (within the meaning of Rule
13d-5 under the Exchange Act), together with any of its Affiliates or Associates
(as defined below), files or becomes
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obligated to file a report (or any amendment or supplement thereto) on Schedule
13D or 14D-1 pursuant to the Exchange Act disclosing that such person has become
the beneficial owner of either (i) more than 55 percent of the shares of Noble
Common Stock then outstanding or (ii) securities representing more than 55
percent of the combined voting power of the Voting Stock (as defined below) then
outstanding; provided that a Change of Control will not be deemed to have
occurred with respect to any transaction that constitutes a Fundamental Change.
An "Affiliate" of a specified person is a person that directly or indirectly
controls, or is controlled by or is under common control with, the person
specified. An "Associate" of a person means (a) any corporation or organization,
other than Noble or any subsidiary of Noble, of which the person is an officer
or partner or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities, (b) any trust or estate in which the
person has a substantial beneficial interest or as to which the person serves as
trustee or in a similar fiduciary capacity and (c) any relative or spouse of the
person, or any relative of the spouse, who has the same home as the person or
who is a director or officer of the person or any of its parents or
subsidiaries. As used herein, a person shall be deemed to have "beneficial
ownership" with respect to, and shall be deemed to "beneficially own," any
securities of Noble in accordance with Section 13 of the Exchange Act and the
rules and regulations (including Rule 13d-3, Rule 13d-5 and any successor rules)
promulgated by the Commission thereunder; provided that a person shall be deemed
to have beneficial ownership of all securities that any such person has a right
to acquire whether such right is exercisable immediately or only after the
passage of time and without regard to the 60-day limitation referred to in Rule
13d-3.
As used herein, a "Fundamental Change" with respect to Noble means (i) the
occurrence of any transaction or event in connection with which 55 percent or
more of the outstanding Noble Common Stock is exchanged for, converted into,
acquired for or constitutes solely the right to receive cash, securities,
property or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) or (ii) the conveyance, sale, lease, assignment,
transfer or other disposal of all or substantially all of Noble's property,
business or assets; provided, however, that a Fundamental Change will not be
deemed to have occurred with respect to either of the following transactions or
events: (a) any transaction or event in which more than 50 percent (by value as
determined in good faith by the Board of Directors) of the consideration
received by holders of Noble Common Stock consists of Marketable Stock (as
defined below) or (b) any consolidation or merger of Noble in which the holders
of Noble Common Stock immediately prior to such transaction own, directly or
indirectly, (1) 50 percent or more of the common stock of the sole surviving
corporation (or of the ultimate parent of such sole surviving corporation)
outstanding at the time immediately after such consolidation or merger and (2)
securities representing 50 percent or more of the combined voting power of the
surviving corporation's Voting Stock (or of the Voting Stock of the ultimate
parent of such surviving corporation) outstanding at such time. There is no
established meaning of what constitutes a sale of "all or substantially all" of
a company's property, business or assets. This uncertainty may make it difficult
for a holder to determine whether or not a "Fundamental Change" has occurred,
and thus, whether he is entitled to a special conversion right respecting the
shares of $1.50 Noble Preferred Stock held by him.
As used herein, "Voting Stock" means, with respect to any person, capital
stock of such person having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of
such person (irrespective of whether or not at the time capital stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
As used herein, "Special Conversion Price" means (i) the higher of (a) the
Market Value of the Noble Common Stock or (b) $6.53 per share (which amount
will, each time the conversion price is adjusted, be adjusted so that the ratio
of such amount to the conversion price, after giving effect to any such
adjustment, shall always be the same as the ratio of $6.53 to the initial
conversion price, without giving effect to any such adjustment) multiplied by
(ii) a ratio the numerator of which is $25.00 and the denominator of which is
the Redemption Price (or, if prior to the date on which Noble may begin to
redeem the $1.50 Noble Preferred Stock, the Redemption Price applicable
commencing on such date).
As used herein, "Market Value" of the Noble Common Stock or any other
Marketable Stock is the average of the last reported sales prices of the Noble
Common Stock or such other Marketable Stock, as the
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case may be, for the five trading days ending on the last trading day preceding
the date of the Fundamental Change or Change of Control; provided, however, that
if the Marketable Stock is not traded on any national securities exchange or
similar quotation system as described in the definition of "Marketable Stock"
during such period, then the Market Value of such Marketable Stock is the
average of the last reported sales prices per share of such Marketable Stock
during the first five trading days commencing with the first day after the date
on which such Marketable Stock was first distributed to the general public and
traded on the New York Stock Exchange, the American Stock Exchange, the NASDAQ
National Market System or any similar system of automated dissemination of
quotations of securities prices in the United States.
As used herein, the term "Marketable Stock" means Noble Common Stock or
common stock of any corporation that is the successor to all or substantially
all of the business or assets of Noble as a result of a Fundamental Change or of
the ultimate parent of such successor, which is (or will, upon distribution
thereof, be) listed or quoted on the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market System or any similar system of automated
dissemination of quotations of securities prices in the United States.
FEDERAL INCOME TAX CONSIDERATIONS REGARDING $1.50 NOBLE PREFERRED STOCK
The following is a summary of the material federal income tax consequences
of acquiring, owning and disposing of the $1.50 Noble Preferred Stock and unless
otherwise noted represents the opinion of Thompson & Knight, A Professional
Corporation, counsel to Noble ("Counsel"). This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, corporations subject to the alternative
minimum tax, S corporations, foreign entities, nonresidential alien individuals,
broker-dealers and tax-exempt entities. Each stockholder or prospective
stockholder should consult his or her own tax advisor with respect to his or her
own particular circumstances.
This summary is based on the Code, Treasury regulations and proposed
regulations, court decisions and current administrative rulings and
pronouncements of the IRS, all of which are subject to change, possibly with
retroactive effect. Also, this summary assumes that the $1.50 Noble Preferred
Stock to be issued in connection with the Merger will be held as a capital asset
(generally, property held for investment) as defined in the Code.
Dividends. Distributions with respect to $1.50 Noble Preferred Stock will
constitute "dividends" for federal income tax purposes to the extent that Noble
has current or accumulated earnings and profits for federal income tax purposes.
Distributions paid to corporations that qualify as "dividends" for federal
income tax purposes will generally be eligible for the 70 percent dividends
received deduction under Section 243 of the Code, subject to the limitations
discussed below. If a distribution with respect to $1.50 Noble Preferred Stock
exceeds the holder's allocable share of Noble's current and accumulated earnings
and profits, the excess will be treated as a nontaxable return of capital which
will reduce the stockholder's tax basis in the $1.50 Noble Preferred Stock; any
amount in excess of the holder's basis will be treated as capital gain. A
reduction in tax basis could result in increased capital gain upon a sale or
other disposition of the $1.50 Noble Preferred Stock.
In general, the dividends received deduction will be available with respect
to dividends on $1.50 Noble Preferred Stock held for at least 46 days, or at
least 91 days in the case of a dividend attributable to a period or periods
aggregating more than 366 days. A stockholder's holding period for these
purposes will be reduced by periods during which the stockholder has an option
to sell, is under a contractual obligation to sell, has made (but not closed) a
short sale of, or is the grantor of an option to purchase, substantially
identical stock or securities. A stockholder's holding period also will be
reduced where the stockholder's risk of loss with respect to the $1.50 Noble
Preferred Stock is considered diminished by reason of the stockholder's holding
one or more other positions in substantially similar or related property,
including (under proposed regulations) a short sale of Noble Common Stock if
price changes of the Noble Common Stock are related to price changes on the
$1.50 Noble Preferred Stock. The dividends received deduction also will not be
available if the stockholder is under an obligation to make related payments
with respect to positions in substantially similar or related property. The
dividends received deduction generally will be limited to 70 percent of the
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stockholder's taxable income. The dividends received deduction will be
proportionately reduced to the extent the holder has indebtedness "directly
attributable" to its investment in the $1.50 Noble Preferred Stock. Prospective
corporate purchasers of $1.50 Noble Preferred Stock should consult their own tax
advisors to determine whether these limitations might apply to them.
Extraordinary Dividends. If a corporate holder receives an "extraordinary
dividend" from Noble with respect to $1.50 Noble Preferred Stock which it has
not held for more than two years before the dividend announcement date, the
holder's basis in the $1.50 Noble Preferred Stock will be reduced (but not below
zero) by the portion of the dividend which is deductible by reason of the
dividends received deduction. If, because of the limitation on reducing basis
below zero, any portion of an extraordinary dividend that is deductible by
reason of the dividends received deduction has not been applied to reduce basis,
such amount will be treated as gain from the sale or exchange of stock upon the
sale or disposition of the $1.50 Noble Preferred Stock. An "extraordinary
dividend" on the $1.50 Noble Preferred Stock would include a dividend that (i)
equals or exceeds five percent of the holder's adjusted tax basis in the stock,
treating all dividends having ex-dividend dates within an 85-day period as one
dividend or (ii) exceeds 20 percent of the holder's adjusted tax basis
(determined without regard to any reduction for the non-taxed portion of prior
extraordinary dividends) in the stock, treating all dividends having ex-dividend
dates within a 365-day period as one dividend. A holder may elect to use the
fair market value of the stock as of the day before the ex-dividend date rather
than its adjusted basis for purposes of applying the five percent or 20 percent
limitation if the holder is able to establish such fair market value to the
satisfaction of the IRS. An "extraordinary dividend" would also include any
amount treated as a dividend in the case of a redemption of the $1.50 Noble
Preferred Stock that is non-pro rata as to all stockholders, without regard to
the period the holder held the stock.
Special rules apply with respect to a "qualified preferred dividend," which
would include any fixed dividend payable with respect to the $1.50 Noble
Preferred Stock provided the $1.50 Noble Preferred Stock is not in arrears as to
the dividends when acquired and the actual rate of return on the $1.50 Noble
Preferred Stock does not exceed 15 percent calculated by reference to the lower
of the stockholder's basis in the $1.50 Noble Preferred Stock or its liquidation
preference. The extraordinary dividend rules will not apply to a qualified
preferred dividend if the stockholder has held the $1.50 Noble Preferred Stock
for more than five years. If the stockholder disposes of the $1.50 Noble
Preferred Stock before it has been held for more than five years, the aggregate
reduction in basis will not exceed the excess of the qualified preferred
dividends paid during the period held by the stockholder over the qualified
preferred dividends which would have been paid during such period on the basis
of the stated rate of return calculated by reference to the lower of the
stockholder's basis in the $1.50 Noble Preferred Stock or its liquidation
preference.
The length of time that a stockholder is deemed to have held $1.50 Noble
Preferred Stock for purposes of the extraordinary dividend rules is determined
under principles similar to those applicable for purposes of the dividends
received deduction discussed above.
Redemption Premium. All or a portion of any excess of the Redemption Price
over the issue price of the $1.50 Noble Preferred Stock could be considered to
constitute an unreasonable redemption premium taxable as a dividend to the
extent of Noble's current or accumulated earnings and profits. Any such premium
will not be considered to be unreasonable if it is in the nature of a penalty
for a premature redemption and if such premium does not exceed the amount which
Noble would be required to pay for such redemption right under market conditions
existing at the time of issuance of the $1.50 Noble Preferred Stock. Noble
believes that the redemption premium is reasonable under this standard, but
there can be no assurance that the IRS or the courts will agree therewith, and
Counsel renders no opinion with respect thereto. If, however, any portion of the
redemption premium payable on the $1.50 Noble Preferred Stock were considered
unreasonable under the foregoing rules, a holder of the $1.50 Noble Preferred
Stock would take the amount of such premium into income over the period during
which the stock cannot be called for redemption under the economic accrual
method of Section 1272 of the Code. The Revenue Reconciliation Act of 1990
authorized the Treasury Department to promulgate new regulations regarding the
federal income tax treatment of redemption premiums with respect to preferred
stock. As of this date, certain proposed regulations have been issued. The
primary focus of the proposed regulations is on the treatment of preferred stock
callable at a premium at the option of the issuer. In general, such proposed
regulations are to apply prospectively (only to stock issued on or
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after final regulations are issued) and, therefore, it is not anticipated that
the proposed regulations will apply to the $1.50 Noble Preferred Stock. It is
not known to what extent final regulations will incorporate or modify the
proposed regulations or to what extent other new regulations will incorporate or
modify the existing rules referred to above.
Redemption for Cash. A redemption of shares of $1.50 Noble Preferred Stock
by Noble for cash will be treated under Section 302 of the Code as a
distribution taxable as a dividend to redeeming stockholders to the extent of
Noble's current or accumulated earnings and profits unless the redemption (i)
results in a "complete termination" of the stockholder's interest in Noble
(within the meaning of Section 302(b)(3) of the Code), (ii) is "substantially
disproportionate" (within the meaning of Section 302(b)(2) of the Code) with
respect to the holder or (iii) is "not essentially equivalent to a dividend"
(within the meaning of Section 302(b)(1) of the Code). In determining whether
any of the Code Section 302(b) tests have been met, shares of Noble Common Stock
and of any other class of stock of Noble will be taken into account along with
shares of $1.50 Noble Preferred Stock. Moreover, shares considered to be owned
by the holder by reason of the constructive ownership rules set forth in Section
318 of the Code, as well as shares actually owned, will be taken into account.
If any of the foregoing tests is met, then, except with respect to declared and
unpaid dividends, if any, the redemption of shares of $1.50 Noble Preferred
Stock for cash will result in taxable gain or loss equal to the difference
between the amount of cash received and the holder's tax basis in the redeemed
shares. Any such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if the stockholder's holding period exceeds one year. Based
on a published IRS ruling, the redemption of a stockholder's $1.50 Noble
Preferred Stock for cash should be treated as "not essentially equivalent to a
dividend" if, taking into account the constructive ownership rules, (a) the
stockholder's relative stock interest in Noble is minimal, (b) the stockholder
exercises no control over Noble's affairs and (c) there is a reduction in the
holder's proportionate interest in Noble.
If a redemption of $1.50 Noble Preferred Stock is treated as a dividend
under the rules set forth in the preceding paragraphs, then the holder's tax
basis in the redeemed $1.50 Noble Preferred Stock will be transferred to any
remaining stock in Noble held by such holder. If the holder does not retain any
stock ownership in Noble, then such holder may lose that basis completely.
Also, if a redemption of the $1.50 Noble Preferred Stock is treated as a
dividend, then under the "extraordinary dividend" provisions discussed above, a
corporate holder that has not held the $1.50 Noble Preferred Stock for more than
two years before the date of the announcement of the dividend (or regardless of
its holding period in the case of a redemption that is not pro rata as to all
stockholders) may be required to reduce its basis in its remaining shares of
stock in Noble (and possibly recognize gain upon a disposition of such shares)
to the extent the holder has received the benefit of the 70 percent dividends
received deduction with respect to the dividend.
Conversion into Noble Common Stock. No gain or loss generally will be
recognized upon conversion of shares of $1.50 Noble Preferred Stock into shares
of Noble Common Stock, except with respect to any cash paid in lieu of
fractional shares of Noble Common Stock. The tax basis of the Noble Common Stock
received upon conversion will be equal to the tax basis of the shares of $1.50
Noble Preferred Stock converted, reduced by the portion of such basis
attributable to fractional shares surrendered for cash and increased, in the
case of a conversion after a dividend record date but before the corresponding
dividend payment date, by the amount of such dividend required to be paid to
Noble. The holding period of the Noble Common Stock will include the holding
period of the shares of $1.50 Noble Preferred Stock converted.
Adjustment of Conversion Price. Holders of $1.50 Noble Preferred Stock may
be deemed to have received a constructive distribution of stock that is taxable
as a dividend where the conversion ratio of the $1.50 Noble Preferred Stock is
adjusted unless the change in conversion ratio is made pursuant to a bona fide
reasonable adjustment formula which has the effect of preventing the dilution of
the interest of the holders. Adjustments to compensate for taxable distributions
of cash or property to other stockholders are not considered as made pursuant to
a bona fide adjustment formula. In addition, certain of the possible adjustments
provided with respect to the $1.50 Noble Preferred Stock (including those in
connection with the special conversion rights applicable to the $1.50 Noble
Preferred Stock) may not qualify as being pursuant to
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a bona fide reasonable adjustment formula. If a nonqualifying adjustment were
made, the holders of $1.50 Noble Preferred Stock could be deemed to have
received a taxable stock dividend.
Backup Withholding. Under the backup withholding provisions of the Code and
applicable Treasury regulations, a holder of $1.50 Noble Preferred Stock may be
subject to backup withholding at the rate of 31 percent with respect to
dividends on, or the proceeds of a sale, conversion or redemption of, the $1.50
Noble Preferred Stock, unless such holder (i) is a corporation or comes within
certain other exempt categories and when required demonstrates this fact or (ii)
provides a taxpayer identification number, certifies as to no loss of exemption
from backup withholding and otherwise complies with applicable requirements of
the backup withholding rules. The amount of any backup withholding from a
payment to a holder will be allowed as a credit against the holder's federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
RESTRICTIONS ON DIVIDENDS
Senior Note Indenture. Certain provisions of the indenture (the "Senior
Note Indenture") governing Noble's outstanding 9 1/4% Senior Notes Due 2003 (the
"Senior Notes") may restrict Noble's ability to pay cash dividends on the Noble
Common Stock and the $1.50 Noble Preferred Stock. Under the Senior Note
Indenture, Noble may not make certain Restricted Payments (as defined in the
Senior Note Indenture), including dividends and other payments with respect to
Noble Common Stock and $1.50 Noble Preferred Stock, if (i) a default under the
Senior Note Indenture is continuing or would result from such Restricted
Payment; (ii) for the 12-month period ending on the last day of Noble's most
recently completed fiscal quarter, Noble's consolidated interest coverage ratio
was less than (A) 2.0:1, for any such payment occurring on or prior to December
31, 1995, or (B) 2.5:1, for any such payment occurring on or after January 1,
1996; or (iii) after giving effect to such Restricted Payment, the aggregate
amount of all Restricted Payments since October 7, 1993, the date of issuance of
the Senior Notes, exceeds the sum (such sum, the "Restricted Payment Basket") of
(A) 50 percent of the aggregate consolidated net income (as defined) of Noble
(or if such consolidated net income is a deficit, minus 100 percent of such
deficit) accrued during the period beginning on October 1, 1993 and ending on
the last day of the fiscal quarter ending immediately prior to the date of such
proposed Restricted Payment; (B) the aggregate net cash proceeds to Noble from
the sale of certain capital stock of Noble subsequent to October 7, 1993 and the
liability (expressed as a positive number) of any indebtedness of Noble, or the
carrying value of any redeemable stock of Noble (including the $2.25 Noble
Preferred Stock), which has been converted into shares of Noble Common Stock
subsequent to October 7, 1993; and (C) $10,000,000. The provisions of the Senior
Note Indenture described above do not directly prevent Noble from paying regular
cash dividends on the $2.25 Noble Preferred Stock. However, the aggregate amount
of such dividends paid by Noble are taken into account as Restricted Payments
for purposes of subsequent computations of the aggregate amount of all
Restricted Payments under the provisions of the Senior Note Indenture described
in clause (iii) above.
The payment of dividends on the $1.50 Noble Preferred Stock will constitute
Restricted Payments for all purposes of the Senior Note Indenture, and,
accordingly, will be subject to the Restricted Payment Basket. To the extent
that the payment of dividends on Noble Common Stock, $2.25 Noble Preferred Stock
and $1.50 Noble Preferred Stock would result in the aggregate amount of all
Restricted Payments made by Noble exceeding the Restricted Payment Basket, and
during such times that the aggregate amount of all Restricted Payments exceeds
the Restricted Payment Basket, dividend payments on Noble Common Stock and $1.50
Noble Preferred Stock will be prohibited under the provisions of the Senior Note
Indenture. The $1.50 Noble Preferred Stock will rank on a parity with the $2.25
Noble Preferred Stock with respect to the payment of dividends, which means that
no dividends may be paid on the $2.25 Noble Preferred Stock unless accrued
dividends on the $1.50 Noble Preferred Stock are also paid. Accordingly, if the
payment of accrued dividends on the $1.50 Noble Preferred Stock is prohibited
pursuant to the Senior Note Indenture, dividend payments on the $2.25 Noble
Preferred Stock will also be prohibited.
As of June 30, 1994, Noble's consolidated interest coverage ratio was 5.1:1
and the amount of the Restricted Payment Basket was $15,825,000. As of that same
date, Noble had made Restricted Payments (consisting solely of regular dividends
on the $2.25 Noble Preferred Stock) since October 7, 1993 of
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$5,046,000, leaving $10,779,000 of the Restricted Payment Basket available, as
of June 30, 1994, for Restricted Payments. Annual dividends on the currently
outstanding shares of $2.25 Noble Preferred Stock total $6,727,500. Annual
dividends on 4,025,000 shares of $1.50 Noble Preferred Stock (which is the
maximum number of shares of $1.50 Noble Preferred Stock issuable in connection
with the Merger upon conversion and exchange of the Chiles Preferred Stock) will
total $6,037,500.
As of June 30, 1994, the aggregate carrying value of the outstanding shares
of $2.25 Noble Preferred Stock was approximately $71,760,000. The $2.25 Noble
Preferred Stock is convertible into Noble Common Stock at any time at a rate
(subject to adjustment in the case of certain dilutive events) of 5.41946 shares
of Noble Common Stock for each share of such preferred stock (equivalent to a
conversion price of $4.613 per share of Noble Common Stock). The $2.25 Noble
Preferred Stock is also redeemable at the option of Noble at any time on and
after December 31, 1994, initially at a redemption price of $26.575 per share,
and thereafter at prices decreasing ratably annually to $25.00 per share on and
after January 1, 2002, plus accrued and unpaid dividends. See "Description of
Noble Capital Stock -- $2.25 Noble Preferred Stock." To the extent that shares
of $2.25 Noble Preferred Stock are converted into shares of Noble Common Stock
as a result of a call for redemption of such preferred stock or otherwise, the
carrying value of such converted shares of preferred stock will be added to the
Restricted Payment Basket. Giving effect to an assumed full conversion on
December 31, 1994 of the $2.25 Noble Preferred Stock, and assuming (i) the
amount of the Restricted Payment Basket remains unchanged from June 30, 1994
through December 31, 1994 and (ii) no Restricted Payments are made during such
period other than regular cash dividends on the $2.25 Noble Preferred Stock and,
after the Effective Time, the $1.50 Noble Preferred Stock, the amount of the
Restricted Payment Basket available for Restricted Payments as of December 31,
1994 would be $77,059,000. There can be no assurance as to when or if a full, or
any partial, conversion of the $2.25 Noble Preferred Stock will occur.
Credit Agreement. On June 16, 1994, Noble entered into a credit agreement
(the "Credit Agreement") with two banks providing for a $25 million revolving
line of credit. Certain provisions of the Credit Agreement restrict Noble's
ability to pay cash dividends on Noble Common Stock and $2.25 Noble Preferred
Stock and will restrict Noble's ability to pay cash dividends on the $1.50 Noble
Preferred Stock. Under the Credit Agreement, Noble may not make certain
Restricted Payments (as defined in the Credit Agreement), including dividends
and other payments with respect to Noble Common Stock, $2.25 Noble Preferred
Stock and $1.50 Noble Preferred Stock, if (i) a default under the Credit
Agreement is continuing or would result from such Restricted Payment; (ii)
Noble's tangible net worth is less than the sum of (A) $280,000,000, plus (B) 50
percent of any positive net income of Noble computed on a cumulative basis for
the period beginning April 30, 1994 and ending on the last day of the fiscal
quarter immediately preceding the date of any determination, with no negative
adjustment to be made in the event net income is a deficit figure for any fiscal
period, plus (C) 85 percent of the aggregate amount of net non-cash proceeds,
and 100 percent of net cash proceeds, to Noble from the issuance or sale after
April 30, 1994, and determined as of the last day of each fiscal quarter
subsequent to March 31, 1994, of (x) shares of Noble Common Stock or warrants,
rights or options to purchase or acquire Noble Common Stock and (y) shares of
preferred stock of Noble, provided that such 85 percent rate will increase to
100 percent at such time as the aggregate of all net noncash proceeds from the
sale by Noble of Noble Common Stock, or warrants, rights or options to purchase
or acquire Noble Common Stock, exceeds $300,000,000; or (iii) Noble's debt to
capital ratio exceeds 0.35:1.
As of June 30, 1994, Noble's tangible net worth was approximately
$334,600,000, and the minimum tangible net worth required under the provisions
of the Credit Agreement to allow Restricted Payments, calculated as set forth in
the Credit Agreement and as generally described above, was $280,000,000. As of
June 30, 1994, Noble's debt to capital ratio was 0.28:1. As of June 30, 1994,
Noble's and Chiles' pro forma combined net worth was approximately $531,700,000,
and the minimum tangible net worth required under the provisions of the Credit
Agreement to allow Restricted Payments, calculated as set forth in the Credit
Agreement and generally described above, was $447,500,000. As of June 30, 1994,
Noble's and Chiles' pro forma debt to capital ratio was 0.20:1.
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FOREIGN OWNERSHIP
The Noble Certificate of Incorporation contains provisions that limit
foreign ownership of the stock of Noble. These provisions are to protect the
ability of Noble to continue to own its mobile offshore drilling units as U.S.
flag vessels and to comply with covenants of Noble to maintain U.S. citizenship
(as defined) that are contained in certain financing agreements.
In order to continue to enjoy the benefits of U.S. flag registry for its
vessels, Noble must maintain "United States citizenship" as defined in the
Shipping Act, 1916, as amended (the "Shipping Act"). A corporation is not
considered a U.S. citizen for these purposes unless, among other things, the
controlling interest therein (a majority in the case of non-coastwise trade) is
owned by U.S. citizens. Under regulations adopted by the U.S. Maritime
Administration to implement the citizenship requirements, the "controlling
interest" test is applied to each class of stock of Noble. The Noble Common
Stock and all series of Noble's preferred stock combined are considered to be
separate classes of stock for this purpose.
Under the provisions of the Noble Certificate of Incorporation, (i) any
transfer, or attempted or purported transfer, of any shares of stock of Noble
that would result in the ownership or control by one or more persons who is not
a U.S. citizen for purposes of the Shipping Act of an aggregate percentage of
the shares of any class of stock in excess of a fixed percentage (the "Permitted
Percentage") that is equal to 90 percent of the percentage that would prevent
Noble from being a U.S. citizen (currently 50 percent) for purposes of the
Shipping Act, will, for so long as such excess shall exist, be void and
ineffective as against Noble, and (ii) if at any time ownership of shares of
stock of Noble (either of record or beneficial) by persons other than U.S.
citizens exceeds the Permitted Percentage, Noble may withhold payment of
dividends on such shares determined to be in excess of the Permitted Percentage
and may suspend voting rights attributable to such shares. The shares subject to
any such withholding of dividends or suspension of voting rights would be those
foreign-owned shares that the Board of Directors of Noble determines became so
owned most recently. The Permitted Percentage is currently 45 percent.
Certificates representing the shares of Noble Common Stock and $1.50 Noble
Preferred Stock issued pursuant to the Merger Agreement will bear legends
concerning the restrictions on ownership by persons other than U.S. citizens.
Noble has instructed its transfer agent for the Noble Common Stock, the $2.25
Noble Preferred Stock and the $1.50 Noble Preferred Stock to attempt to ensure
the applicable transfer instructions are enforced.
CERTAIN CORPORATE GOVERNANCE PROVISIONS
Stockholder Consent Action Prohibited. The Noble Certificate of
Incorporation and the Bylaws of Noble require that, subject to the possible
rights of the holders of any class or series of stock having a preference over
the Noble Common Stock as to dividends or upon liquidation, stockholder action
be taken only at an annual meeting or at a special meeting of stockholders
called by the Chairman of the Board or the President of Noble or by a majority
of the entire Board of Directors of Noble, and prohibit stockholder action by
written consent in lieu of a meeting. Stockholders are not permitted to call a
special meeting of stockholders or to require that the Board of Directors of
Noble call such a special meeting.
Classified Board and Other Provisions. The Noble Certificate of
Incorporation and the Bylaws of Noble provide that, subject to the possible
rights of the holders of any class or series of stock having a preference over
the Noble Common Stock as to dividends or upon liquidation, the Board of
Directors of Noble will be composed of not less than three directors, with the
exact number of directors fixed from time to time by resolution adopted by vote
of a majority of the entire Board of Directors, and is divided into three
classes of directors, each class to be as nearly equal in number as possible.
The term of office of one class of directors expires each year in rotation so
that one class is elected at each annual meeting of stockholders for a full
three-year term.
The Noble Certificate of Incorporation and the Bylaws of Noble provide that
a director may be removed only for cause as defined in the Certificate of
Incorporation, and only by the affirmative vote of the holders of a majority of
the combined voting power of the Voting Stock.
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The Noble Certificate of Incorporation provides that, subject to the
possible rights of the holders of any class or series of stock having a
preference over the Noble Common Stock as to dividends or upon liquidation, a
vacancy on the Board resulting from any increase in the number of directors may
be filled by the Board or in the manner provided in the Bylaws of Noble, that
any other vacancy shall be filled only by an affirmative vote of a majority of
directors remaining in office, even though less than a quorum, and that the
newly-elected director shall serve for the unexpired term of his predecessor in
office. The Bylaws provide that if any vacancy resulting from an increase in the
number of directors is not filled by the remaining directors it will be filled
by the stockholders of Noble at the next annual meeting or at a special meeting
of stockholders called for that purpose.
An anti-takeover effect is accomplished by these provisions in that they
tend to preclude a third party from removing incumbent directors and
simultaneously gaining control of the Board by filling the vacancies created by
removal with its own nominees unless such third party controls at least 80
percent of the combined voting power of the Voting Stock (the ownership level
required to amend the Noble Certificate of Incorporation and the Bylaws of Noble
in this respect). Under these provisions, together with the classified board
provisions described above, it would take at least two elections of directors
for any individual or group to gain control of the Noble Board.
Fair Price Provision. The affirmative vote of the holders of at least 80
percent of the combined voting power of the Voting Stock is required to approve
certain Business Combinations (as such term is defined in the Noble Certificate
of Incorporation). The transactions included in the definition of Business
Combination are those between Noble and an Interested Stockholder (as defined
below) or, in certain instances, proposed by an Interested Stockholder and
include: (i) a merger or consolidation of Noble, or any subsidiary having assets
of $1,000,000 or more, with any Interested Stockholder or with any other
corporation or entity that is, or after such merger or consolidation would be,
an affiliate or associate of an Interested Stockholder; (ii) the sale or other
disposition by Noble, or a subsidiary, of assets of $1,000,000 or more if an
Interested Stockholder (or an affiliate or associate thereof) is a party to the
transaction; (iii) the issuance or transfer of any securities of Noble, or a
subsidiary, to an Interested Stockholder (or an affiliate or associate thereof)
in exchange for cash, securities or other property (or a combination thereof) of
$1,000,000 or more; (iv) the adoption of any plan or proposal for the
liquidation or dissolution of Noble proposed by or on behalf of an Interested
Stockholder (or an affiliate or associate thereof); (v) any reclassification of
securities, recapitalization, merger with a subsidiary or other transaction that
has the effect, directly or indirectly, of increasing the proportionate share of
the outstanding shares (or securities convertible into shares) of any class or
series of stock of Noble or a subsidiary owned by an Interested Stockholder (or
an affiliate or associate thereof); (vi) any series or combination of
transactions directly or indirectly having the same effect as any of the
foregoing; or (vii) any contract, agreement or other arrangement providing
directly or indirectly for any of the foregoing. An "Interested Stockholder" is
defined in the Noble Certificate of Incorporation to include a beneficial owner
of five percent or more of the combined voting power of the Voting Stock, other
than Noble, and any affiliate of Noble who, at any time during the preceding two
years, was the beneficial owner of five percent or more of the combined voting
power of the Voting Stock and includes any person who is an assignee of or has
succeeded to any shares of Voting Stock in a transaction not involving a public
offering which were at any time within the prior two-year period beneficially
owned by an Interested Stockholder. The term "beneficial owner" includes persons
directly and indirectly owning or having the right to acquire or vote the stock
in question.
The provisions of the Noble Certificate of Incorporation of Noble described
in the preceding paragraph may have the effect of delaying, deterring or
preventing a change in control of Noble. The special vote requirement of such
provisions may be waived if the Business Combination is duly approved by a
majority of the Disinterested Directors (as such term is defined in the Noble
Certificate of Incorporation) or if certain minimum price criteria and
procedural requirements are met. There is no requirement that a Business
Combination duly approved by the Disinterested Directors meet any minimum price
criteria or procedural requirements.
Alteration or Amendment. The approval of the holders of 80 percent or more
of the combined voting power of the Voting Stock is required for the alteration,
amendment or repeal of, or the adoption of any provision inconsistent with, the
foregoing corporate governance provisions as stated in the Noble Certificate of
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Incorporation. In addition, the affirmative vote of a majority of the entire
Board may authorize the alteration, amendment or repeal of the Bylaws of Noble.
Elimination of Certain Director Liability; Indemnification. The Noble
Certificate of Incorporation contains an article, which was approved by
stockholders at the 1987 annual meeting of stockholders, that eliminates the
personal liability of Noble's directors for monetary damages resulting from
breaches of their fiduciary duty, to the extent permitted by the DGCL. This
article eliminates the liability of each director to Noble or its stockholders
for all claims for negligence or gross negligence in the performance of his
duties other than the duty of loyalty. Directors remain liable to Noble and its
stockholders for breaches of their duty of loyalty, as well as for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, and for transactions from which a director derives improper
personal benefit. The article does not limit the liability of directors under
Section 174 of the DGCL, which makes directors personally liable for unlawful
dividends or unlawful stock repurchases or redemptions and expressly sets forth
a negligence standard with respect to such liability.
The Noble Certificate of Incorporation and the Bylaws of Noble contain
provisions providing for the indemnification of Noble's directors and officers
to the fullest extent permitted by Section 145 of the DGCL, including in
circumstances in which indemnification is otherwise discretionary.
Noble believes that these provisions are necessary to attract and retain
qualified persons as directors and officers.
The Delaware Business Combination Act. Noble is covered by Section 203 of
the DGCL which provides that a corporation shall not engage in any business
combination with an "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder
unless: (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of such
transaction, the interested stockholder owned at least 85 percent of the voting
stock of the corporation outstanding at the time (excluding, from the
calculation of outstanding shares, shares beneficially owned by management,
directors and certain employee stock plans), or (iii) on or after such date, the
business combination is (A) approved by the board of directors and (B)
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding voting stock other than the interested
stockholder.
COMPARISON OF STOCKHOLDER RIGHTS
If the Merger is consummated, the stockholders of Chiles will become
stockholders of Noble. The rights of the stockholders of both Noble and Chiles
are governed by and subject to the provisions of the DGCL. The rights of current
Chiles stockholders following the Merger will be governed by the Noble
Certificate of Incorporation and the Noble Bylaws rather than the provisions of
the Certificate of Incorporation and Bylaws of Chiles. The following is a brief
summary of certain differences between the rights of stockholders of Noble and
the rights of stockholders of Chiles and is qualified in its entirety by
reference to the relevant provisions of the DGCL, the Noble Certificate of
Incorporation, the Noble Bylaws, Chiles' Certificate of Incorporation (the
"Chiles Certificate of Incorporation") and Chiles' Bylaws.
GENERAL
Chiles, like Noble, is a Delaware corporation organized under the DGCL.
Both the Noble Certificate of Incorporation and the Chiles Certificate of
Incorporation deny preemptive rights, and neither permits cumulative voting.
Whereas Noble has a classified Board of Directors, Chiles does not. Although
Noble does not allow its stockholders to take action by written consent, Chiles
does. The Chiles Certificate of Incorporation does not contain provisions
requiring a supermajority vote under any circumstances and does not include a
fair price provision.
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AUTHORIZED CAPITAL
Noble has 90,000,000 authorized shares of stock, consisting of (i)
75,000,000 shares of Noble Common Stock and (ii) 15,000,000 shares of preferred
stock having a par value of $1.00 per share. There is one series of preferred
stock designated, of which there are 2,990,000 shares of $2.25 Noble Preferred
Stock outstanding. If the Noble Charter Amendment is effected, Noble will have
215,000,000 authorized shares of stock, consisting of (i) 200,000,000 shares of
Noble Common Stock and (ii) 15,000,000 shares of preferred stock. If the Merger
is consummated, up to 4,025,000 shares of a new series of preferred stock will
be issued in the Merger as the $1.50 Noble Preferred Stock.
Chiles has the authority to issue 110,000,000 shares of capital stock,
100,000,000 of which are Chiles Common Stock and 10,000,000 are preferred stock,
par value $1.00 per share. Chiles has designated 4,025,000 shares of the
preferred stock as $1.50 Convertible Preferred Stock, all of which shares were
outstanding as of the date hereof.
REMOVAL OF DIRECTORS
A director of Noble may be removed from office only for cause and only by
the affirmative vote of the holders of a majority of the combined voting power
of the then outstanding shares of Voting Stock, voting together as a single
class. For this purpose, "cause" means the willful and continuous failure of a
director substantially to perform such director's duties to Noble (other than
any such failure resulting from incapacity due to physical or mental illness) or
the willful engaging by a director in gross misconduct materially and
demonstrably injurious to Noble. In accordance with Section 141(k) of the DGCL,
a director of Chiles may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
POWER OF STOCKHOLDERS TO CALL SPECIAL MEETING
The Noble Certificate of Incorporation and Noble Bylaws do not provide the
stockholders the right to call a special meeting. A special meeting of Chiles
stockholders may be called by 10 percent of the holders of the shares then
outstanding and entitled to vote.
CLASSIFIED BOARD AND FAIR PRICE PROVISION
Classified Board. As discussed above, Noble's Board of Directors is divided
into three classes. Chiles does not have a classified Board of Directors.
Noble's classified Board and the possible anti-takeover effects of
classification are described above. See "Description of Noble Capital
Stock -- Certain Corporate Governance Provisions."
Fair Price Provision. As discussed above, the Noble Certificate of
Incorporation contains a fair price provision. The Chiles Certificate of
Incorporation does not contain such a provision. The fair price provision and
its possible anti-takeover effects are described above. See "Description of
Noble Capital Stock -- Certain Corporate Governance Provisions."
Alteration or Amendment. The approval of the holders of 80 percent or more
of the combined voting power of the Voting Stock of Noble is required for the
alteration, amendment or repeal of, or the adoption of any provision
inconsistent with, the foregoing corporate governance provisions as stated in
the Noble Certificate of Incorporation. The Noble Board of Directors may
authorize the alteration, amendment or repeal of the Noble Bylaws.
MANAGEMENT AND OTHER INFORMATION
Certain information relating to the management, executive compensation,
voting securities and the principal holders thereof, certain relationships and
related transactions and other related matters pertaining to Noble and Chiles is
set forth in or incorporated by reference in their respective Annual Reports on
Form 10-K for the year ended December 31, 1993. Such Annual Reports are
incorporated in this Joint Proxy
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Statement/Prospectus. See "Incorporation of Certain Documents by Reference."
Stockholders who wish to obtain copies of these documents may contact Noble or
Chiles at their respective addresses or telephone numbers as set forth under
"Incorporation of Certain Documents by Reference."
LEGAL MATTERS
The validity of the shares of Noble Common Stock and $1.50 Noble Preferred
Stock offered by this Joint Proxy Statement/Prospectus will be passed upon for
Noble by Thompson & Knight, A Professional Corporation, Dallas, Texas.
EXPERTS
The audited consolidated financial statements and schedules of Noble
incorporated by reference in this Joint Proxy Statement/Prospectus have been
audited by Arthur Andersen & Co., independent public accountants, as indicated
in their report with respect thereto, and are so incorporated in reliance upon
the authority of said firm as experts in giving said report.
The audited consolidated financial statements and schedules of Chiles
incorporated by reference in this Joint Proxy Statement/Prospectus have been
audited by Arthur Andersen & Co., independent public accountants, as indicated
in their report with respect thereto, and are so incorporated in reliance upon
the authority of said firm as experts in giving said report.
The consolidated financial statements of Triton and subsidiaries as of
December 31, 1993 and 1992, and for each of the years in the two-year period
ended December 31, 1993, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in Noble's proxy materials in
connection with the 1995 annual meeting of stockholders must be received by
Noble at its offices in Houston, Texas, addressed to Ms. Julie J. Robertson,
Secretary, no later than November 28, 1994.
If the Merger is not consummated, the annual meeting of the stockholders of
Chiles is expected to be held in May 1995. Any proposals of the stockholders of
Chiles intended to be presented at the annual meeting must be received by
Chiles, addressed to the Secretary, no later than December 20, 1995, to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
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APPENDIX I
AGREEMENT AND PLAN OF MERGER
AMONG
NOBLE DRILLING CORPORATION,
NOBLE OFFSHORE CORPORATION
AND
CHILES OFFSHORE CORPORATION
JUNE 13, 1994
<PAGE> 90
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
1.1 The Merger......................................................................... 1
1.2 Closing Date....................................................................... 1
1.3 Consummation of the Merger......................................................... 1
1.4 Effects of the Merger.............................................................. 2
1.5 Certificate of Incorporation; Bylaws............................................... 2
1.6 Directors and Officers............................................................. 2
1.7 Conversion of Securities........................................................... 2
1.8 Exchange of Certificates; Fractional Shares........................................ 2
1.9 Taking of Necessary Action; Further Action......................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Noble and Sub.................................... 4
2.2 Representations and Warranties of Chiles........................................... 11
ARTICLE III
COVENANTS OF CHILES PRIOR TO THE EFFECTIVE TIME
3.1 Conduct of Business by Chiles Pending the Merger................................... 16
3.2 Joint Proxy Statement.............................................................. 17
3.3 Meeting of Stockholders of Chiles.................................................. 18
3.4 No Shopping........................................................................ 18
3.5 Affiliates' Agreements............................................................. 19
ARTICLE IV
COVENANTS OF NOBLE PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Noble Pending the Merger.................................... 19
4.2 Joint Proxy Statement.............................................................. 20
4.3 Meeting of Stockholders of Noble................................................... 20
4.4 Registration Statement............................................................. 20
4.5 Reservation of Noble Stock......................................................... 21
4.6 Stock Exchange Listing............................................................. 21
4.7 Affiliates' Agreements............................................................. 21
4.8 Registration Rights Agreement...................................................... 21
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Accountants Letters................................................................ 21
5.2 Filings; Consents; Reasonable Efforts.............................................. 21
5.3 Notification of Certain Matters.................................................... 21
5.4 Agreement to Defend................................................................ 21
5.5 Expenses........................................................................... 22
5.6 Noble's Board of Directors......................................................... 22
5.7 Indemnification.................................................................... 22
</TABLE>
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<TABLE>
<S> <C> <C>
5.8 Chiles Employee Benefits........................................................... 23
5.9 Post-Effective Time Mailing........................................................ 23
5.10 Tax Opinion........................................................................ 23
5.11 Chiles Stock Options............................................................... 23
5.12 Designation of $1.50 Noble Preferred Stock......................................... 24
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger........................ 24
6.2 Additional Conditions to Obligations of Noble...................................... 25
6.3 Additional Conditions to Obligations of Chiles..................................... 26
ARTICLE VII
MISCELLANEOUS
7.1 Termination........................................................................ 27
7.2 Effect of Termination.............................................................. 27
7.3 Waiver and Amendment............................................................... 28
7.4 Nonsurvival of Representations, Warranties and Agreements.......................... 28
7.5 Public Statements.................................................................. 28
7.6 Assignment......................................................................... 28
7.7 Notices............................................................................ 29
7.8 Governing Law...................................................................... 29
7.9 Severability....................................................................... 29
7.10 Counterparts....................................................................... 29
7.11 Headings........................................................................... 29
7.12 Confidentiality Agreements......................................................... 29
7.13 Entire Agreement; Third Party Beneficiaries........................................ 29
7.14 Disclosure Letters................................................................. 29
7.15 Stock Exchange..................................................................... 30
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 13th day of June, 1994
(the "Agreement"), is among Noble Drilling Corporation, a Delaware corporation
("Noble"), Noble Offshore Corporation, a newly-formed Delaware corporation and a
wholly-owned subsidiary of Noble ("Sub"), and Chiles Offshore Corporation, a
Delaware corporation ("Chiles").
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Noble, Sub and Chiles, and
Noble as sole stockholder of Sub, have approved the merger of Chiles with and
into Sub (the "Merger"), whereby (i) each issued and outstanding share of common
stock, par value $.01 per share, of Chiles ("Chiles Common Stock") not owned
directly or indirectly by Chiles will be converted into the right to receive
shares of common stock, par value $.10 per share, of Noble ("Noble Common
Stock") and (ii) each issued and outstanding share of $1.50 Convertible
Preferred Stock, par value $1.00 per share, of Chiles ("Chiles Preferred Stock")
not owned directly or indirectly by Chiles will be converted into the right to
receive shares of a new series of $1.50 Convertible Preferred Stock of Noble
("$1.50 Noble Preferred Stock") having substantially equivalent rights and
preferences to the Chiles Preferred Stock, as provided herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be treated as a "pooling of interests"
for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), at the Effective Time (as defined in Section
1.3) Chiles shall be merged with and into Sub. As a result of the Merger, the
separate corporate existence of Chiles shall cease and Sub shall continue as the
surviving corporation (sometimes referred to herein as the "Surviving
Corporation"), and all the properties, rights, privileges, powers and franchises
of Chiles and Sub shall vest in the Surviving Corporation, without any transfer
or assignment having occurred, and all debts, liabilities and duties of Chiles
and Sub shall attach to the Surviving Corporation, all in accordance with the
DGCL.
1.2 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Thompson & Knight,
P.C., 1700 Texas Commerce Tower, 600 Travis, Houston, Texas 77002, as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VI or at such other time and place and on such other date as Noble and
Chiles shall agree; provided, that the closing conditions set forth in Article
VI shall have been satisfied or waived at or prior to such time. The date on
which the Closing occurs is herein referred to as the "Closing Date".
1.3 Consummation of the Merger. As soon as practicable on the Closing Date,
the parties hereto will cause the Merger to be consummated by filing with the
Secretary of State of Delaware a certificate of merger in such form as required
by, and executed in accordance with, the relevant provisions of the DGCL. The
"Effective Time" of the Merger as that term is used in this Agreement shall mean
such time as the certificate of merger is duly filed with the Secretary of State
of Delaware or at such later time (not to exceed 90 days from the date the
certificate is filed) as is specified in the certificate of merger pursuant to
the mutual agreement of Noble and Chiles.
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1.4 Effects of the Merger. The Merger shall have the effects set forth in
the applicable provisions of the DGCL.
1.5 Certificate of Incorporation; Bylaws. The Certificate of Incorporation
of Chiles, as in effect immediately prior to the Effective Time, shall be
amended as of the Effective Time so that Article 1 thereof reads in its
entirety: "The name of the corporation is Noble Offshore Corporation" and, as so
amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation and thereafter shall continue to be
its Certificate of Incorporation until amended as provided therein and under the
DGCL. The bylaws of Sub, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation and thereafter shall continue
to be its bylaws until amended as provided therein and under the DGCL.
1.6 Directors and Officers. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation at and after
the Effective Time, each to hold office in accordance with the Certificate of
Incorporation and bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation at and after the Effective Time, in each case until their respective
successors are duly elected or appointed and qualified.
1.7 Conversion of Securities. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Noble, Chiles, Sub or their stockholders:
(a) Each share of Chiles Common Stock issued and outstanding
immediately prior to the Effective Time, other than any shares of Chiles
Common Stock to be cancelled pursuant to Section 1.7(c), shall be converted
into the right to receive 0.75 of a share of Noble Common Stock; provided,
however, that no fractional shares of Noble Common Stock shall be issued,
and, in lieu thereof, a cash payment shall be made in accordance with
Section 1.8(d) hereof.
(b) Each share of Chiles Preferred Stock (together with the shares of
Chiles Common Stock issued and outstanding immediately prior to the
Effective Time, the "Shares") issued and outstanding immediately prior to
the Effective Time, other than any shares of Chiles Preferred Stock to be
cancelled pursuant to Section 1.7(c), shall be converted into the right to
receive one share of $1.50 Noble Preferred Stock.
(c) Each Share held in the treasury of Chiles and each Share owned by
Sub, Noble or any direct or indirect wholly-owned subsidiary of Noble or of
Chiles immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto.
(d) Each share of common stock, par value $.01 per share, of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, $.01 par value per share, of the
Surviving Corporation.
1.8 Exchange of Certificates; Fractional Shares.
(a) As soon as practicable after the Effective Time, each holder of a
certificate that prior thereto represented Shares shall be entitled, upon
surrender thereof to Noble or its transfer agent, to receive in exchange
therefor, as applicable (i) a certificate or certificates representing the
number of whole shares of Noble Common Stock into which the shares of
Chiles Common Stock so surrendered shall have been converted as aforesaid,
in such denominations and registered in such names as such holder may
request or (ii) a certificate or certificates representing the number of
shares of $1.50 Noble Preferred Stock into which the shares of Chiles
Preferred Stock so surrendered shall have been converted as aforesaid, in
such denominations and registered in such names as such holder may request.
Each holder of shares of Chiles Common Stock who would otherwise be
entitled to a fraction of a share of Noble Common Stock shall, upon
surrender of the certificates representing such shares held by such holder
to Noble or its transfer agent, be paid an amount in cash in accordance
with the provisions of Section 1.8(d). Until so surrendered and exchanged,
each certificate that prior to the Effective Time represented Shares shall
represent solely the right to receive Noble Common Stock and cash in lieu
of fractional shares, if any, or
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<PAGE> 94
$1.50 Noble Preferred Stock, as the case may be. Unless and until any such
certificates shall be so surrendered and exchanged, no dividends or other
distributions payable to the holders of Noble Common Stock or $1.50 Noble
Preferred Stock, as of any time on or after the Effective Time, shall be
paid to the holders of such certificates that prior to the Effective Time
represented Shares; provided, however, that, upon any such surrender and
exchange of such certificates, there shall be paid to the record holders of
the certificates issued and exchanged therefor the amount, without interest
thereon, of dividends and other distributions, if any, that theretofore
were declared and became payable after the Effective Time with respect to
the number of whole shares of Noble Common Stock or $1.50 Noble Preferred
Stock, as the case may be, issued to such holder.
(b) All shares of Noble Common Stock and $1.50 Noble Preferred Stock
issued upon the surrender for exchange of certificates that prior to the
Effective Time represented Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8(d)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
Shares. At and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates which prior to
the Effective Time represented Shares are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article I.
(c) If any certificate for shares of Noble Common Stock or $1.50 Noble
Preferred Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall have paid to Noble or its transfer
agent any transfer or other taxes required by reason of the issuance of a
certificate for shares of Noble Common Stock or $1.50 Noble Preferred Stock
in any name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of Noble or its transfer
agent that such tax has been paid or is not payable.
(d) No fraction of a share of Noble Common Stock shall be issued, but
in lieu thereof each holder of Chiles Common Stock who would otherwise be
entitled to a fraction of a share of Noble Common Stock shall, upon
surrender of the certificate formerly representing Chiles Common Stock held
by such holder to Noble or its transfer agent, be paid an amount in cash
equal to the value of such fraction of a share based upon the closing sales
price of Noble Common Stock, as reported on the NASDAQ National Market
System, on the last day on which there is a reported trade in the Noble
Common Stock prior to the date on which the Effective Time occurs. No
interest shall be paid on such amount. All shares of Chiles Common Stock
held by a record holder shall be aggregated for purposes of computing the
number of shares of Noble Common Stock to be issued pursuant to this
Article I and cash in lieu of fractional shares payable hereunder.
(e) None of Noble, Sub, Chiles, the Surviving Corporation or their
transfer agents shall be liable to a holder of the Shares for any amount
properly paid to a public official pursuant to applicable property, escheat
or similar laws.
1.9 Taking of Necessary Action; Further Action. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Chiles or Sub, such corporations shall direct their
respective officers and directors to take all such lawful and necessary action.
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<PAGE> 95
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Noble and Sub. Noble and Sub hereby
jointly and severally represent and warrant to Chiles that:
(a) Organization and Compliance with Law. Each of Noble and its
consolidated subsidiaries (the "Noble Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized and has all requisite
corporate power and corporate authority and all necessary governmental
authorizations to own, lease and operate all of its properties and assets
and to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
governmental authority would not have a material adverse effect on the
financial condition, results of operations or business of Noble and the
Noble Subsidiaries, taken as a whole. Except as set forth in Section 2.1(a)
of the disclosure letter delivered by Noble to Chiles on the date hereof
(the "Noble Disclosure Letter"), each of Noble and the Noble Subsidiaries
is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to
be duly qualified does not and would not, either individually or in the
aggregate, have a material adverse effect on the financial condition,
results of operations or business of Noble and the Noble Subsidiaries,
taken as a whole. Each of Noble and the Noble Subsidiaries is in compliance
with all applicable laws, judgments, orders, rules and regulations,
domestic and foreign, except where failure to be in such compliance would
not have a material adverse effect on the financial condition, results of
operations or business of Noble and the Noble Subsidiaries, taken as a
whole. Noble has heretofore delivered to Chiles true and complete copies of
Noble's Restated Certificate of Incorporation (the "Noble Certificate") and
bylaws as in existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Noble consists of 75,000,000
shares of Noble Common Stock, par value $.10 per share, and 15,000,000
shares of preferred stock, par value $1.00 per share (subject to an
amendment (the "Noble Charter Amendment") to the Noble Certificate to
increase the authorized shares of Noble Common Stock to 200,000,000
shares to be proposed in connection with the Merger). As of May 31,
1994, there were issued and outstanding 48,390,873 shares of Noble
Common Stock and 2,990,000 shares of $2.25 Convertible Exchangeable
Preferred Stock (the "$2.25 Noble Preferred Stock"), and 250,000 shares
of Noble Common Stock and no shares of $2.25 Noble Preferred Stock were
held as treasury shares. As of May 31, 1994, (A) an aggregate of
19,755,352 shares of Noble Common Stock were reserved (subject, in the
case of the 1991 Stock Option and Restricted Stock Plan, to an amendment
to such plan to be proposed to increase the number of shares of Noble
Common Stock subject thereto) for issuance and issuable pursuant to
Noble's Thrift Plan, Field Hourly Employees' Retirement Plan and Noble
(International) Employees' Retirement Savings Plan or upon the exercise
of outstanding employee or non-employee director stock options granted
under Noble's stock option plans and agreements or the conversion of the
$2.25 Noble Preferred Stock, and (B) an indeterminable number of shares
of Noble Common Stock (of up to at least 254,551 shares) were reserved
for issuance pursuant to that certain Stock Purchase Agreement dated
April 22, 1994 among Noble, Triton Engineering Services Company, Joseph
E. Beall and George H. Bruce (the "Triton Agreement"). All issued shares
of Noble Common Stock and $2.25 Noble Preferred Stock are validly
issued, fully paid and nonassessable and no holder thereof is entitled
to preemptive rights. All shares of Noble Common Stock and $1.50 Noble
Preferred Stock to be issued pursuant to the Merger, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable and will not violate the preemptive rights of any person.
Except as set forth in Section 2.1(b) of the Noble Disclosure Letter,
Noble is not a party to, and is not aware of, any voting agreement,
voting trust or similar agreement or
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<PAGE> 96
arrangement relating to any class or series of its capital stock, or
any agreement or arrangement providing for registration rights with
respect to any capital stock or other securities of Noble.
(ii) As of May 31, 1994, there were outstanding options to purchase
2,095,775 shares of Noble Common Stock pursuant to the plans and
agreements referenced in Section 2.1(b)(i) above (the "Noble Options").
Other than as set forth in this Section 2.1(b) and except for issuances
contemplated by this Agreement in connection with the Merger and by the
Triton Agreement, there are not now, and at the Effective Time there
will not be, any (A) shares of capital stock or other equity securities
of Noble outstanding (other than Noble Common Stock issued pursuant to
the exercise of Noble Options as described herein or upon the conversion
of any convertible securities of Noble outstanding on the date hereof)
or (B) outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
class of capital stock of Noble, or contracts, understandings or
arrangements to which Noble is a party, or by which it is or may be
bound, to issue additional shares of its capital stock or options,
warrants, scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of its
capital stock.
(iii) Except as set forth in Section 2.1(b) of the Noble Disclosure
Letter, all outstanding shares of capital stock of the Noble
Subsidiaries are owned by Noble, a wholly-owned subsidiary of Noble or
individuals who hold nominal quantities of shares on behalf of Noble or
such a subsidiary as director's qualifying shares, free and clear of all
liens, charges, encumbrances, adverse claims and options of any nature
which are material to Noble and the Noble Subsidiaries, taken as a
whole.
(iv) As of the date hereof, the authorized capital stock of Sub
consists of 1,000 shares of common stock, par value $.01 per share, all
of which are validly issued, fully paid and nonassessable and are owned
by Noble.
(c) Authorization and Validity of Agreement. Noble and Sub have all
requisite corporate power and authority to enter into this Agreement and to
perform their obligations hereunder. The execution and delivery by Noble
and Sub of this Agreement and the consummation by each of them of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action (subject only, with respect to the Merger, to the adoption
of the Noble Charter Amendment and the approval of this Agreement by the
stockholders of Noble as provided for in Section 4.3). On or prior to the
date hereof, the Board of Directors of Noble has determined to recommend
the adoption of the Noble Charter Amendment and the approval of the Merger
to the stockholders of Noble, and such determination is in effect as of the
date hereof. This Agreement has been duly executed and delivered by Noble
and Sub and is the valid and binding obligation of Noble and Sub,
enforceable against Noble and Sub in accordance with its terms.
(d) No Approvals or Notices Required; No Conflict with Instruments to
which Noble or any of the Noble Subsidiaries is a Party. Neither the
execution and delivery of this Agreement nor the performance by Noble or
Sub of its obligations hereunder, nor the consummation of the transactions
contemplated hereby by Noble and Sub, will (i) conflict with the Noble
Certificate or the bylaws of Noble or the charter or bylaws of any of the
Noble Subsidiaries; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Noble or any of the Noble Subsidiaries; (iii) except for (A) requirements
of Federal or state securities laws, (B) requirements arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (C)
requirements of notice filings in such foreign jurisdictions as may be
applicable, and (D) the filing of a certificate of merger by Sub in
accordance with the DGCL, require any consent or approval of, or filing
with or notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Noble or any of the Noble Subsidiaries;
or (iv) require any consent, approval or notice under, or violate, breach,
be in conflict with or constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition of
any lien upon any properties, assets or business of Noble or any of the
Noble Subsidiaries under, any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit,
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authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Noble or any of the
Noble Subsidiaries is a party or by which Noble or any of the Noble
Subsidiaries or any of its or their assets or properties is bound or
encumbered, except (A) those that have already been given, obtained or
filed, (B) those that are required pursuant to bank loan agreements, as set
forth in Section 2.1(d) of the Noble Disclosure Letter, which will be
obtained prior to the Effective Time, and (C) those that, in the aggregate,
would not have a material adverse effect on the financial condition,
results of operations or business of Noble and the Noble Subsidiaries,
taken as a whole.
(e) Commission Filings; Financial Statements. Noble and each of the
Noble Subsidiaries have filed all reports, registration statements and
other filings, together with any amendments required to be made with
respect thereto, that they have been required to file with the Securities
and Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"). All reports, registration statements
and other filings (including all notes, exhibits and schedules thereto and
documents incorporated by reference therein) filed by Noble with the
Commission since January 1, 1992, through the date of this Agreement,
together with any amendments thereto, are sometimes collectively referred
to as the "Noble Commission Filings". Noble has heretofore delivered to
Chiles copies of the Noble Commission Filings. As of the respective dates
of their filing with the Commission, the Noble Commission Filings complied
in all material respects with the Securities Act, the Exchange Act and the
rules and regulations of the Commission thereunder, and did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
All material contracts of Noble and the Noble Subsidiaries have been
included in the Noble Commission Filings, except for those contracts not
required to be filed pursuant to the rules and regulations of the
Commission.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Noble Commission Filings was prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto) and complied with all applicable rules and regulations
of the Commission. Such consolidated financial statements fairly present
the consolidated financial position of Noble and the Noble Subsidiaries as
of the dates thereof and the results of operations, cash flows and changes
in shareholders' equity for the periods then ended (subject, in the case of
the unaudited interim financial statements, to normal year-end audit
adjustments on a basis comparable with past periods). As of the date
hereof, Noble has no liabilities, absolute or contingent, that may
reasonably be expected to have a material adverse effect on the financial
condition, results of operations or business of Noble and the Noble
Subsidiaries, taken as a whole, that are not reflected in the Noble
Commission Filings, except (i) those incurred in the ordinary course of
business consistent with past operations and not relating to the borrowing
of money, and (ii) those set forth in Section 2.1 (e) of the Noble
Disclosure Letter.
(f) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since January 1, 1994, except as contemplated by this
Agreement or as disclosed in the Noble Commission Filings filed with the
Commission prior to the date hereof or as set forth in Section 2.1(f) of
the Noble Disclosure Letter, Noble and the Noble Subsidiaries have
conducted their business only in the ordinary and usual course, and there
has not been (i) any material adverse change in the financial condition,
results of operations or business of Noble and the Noble Subsidiaries,
taken as a whole, or any condition, event or development that reasonably
may be expected to result in any such material adverse change; (ii) any
material change by Noble in its accounting methods, principles or
practices; (iii) any revaluation by Noble or any of the Noble Subsidiaries
of any of its or their assets, including, without limitation, writing down
the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business; (iv) any entry by Noble or any of
the Noble Subsidiaries into any commitment or transaction material to Noble
and the Noble Subsidiaries, taken as a whole; (v) any declaration, setting
aside or payment of any dividends or distributions in respect of the Noble
Common Stock, or any redemption, purchase or other acquisition of any of
its securities or any securities of any of the Noble
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Subsidiaries; (vi) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
Noble and the Noble Subsidiaries, taken as a whole; (vii) any increase in
indebtedness for borrowed money other than borrowings under existing credit
facilities; (viii) any granting of a security interest or lien on any
material property or assets of Noble and the Noble Subsidiaries, taken as a
whole, other than (A) liens for taxes not due and payable or which are
being contested in good faith; (B) maritime liens and mechanics',
warehousemen's and other statutory liens incurred in the ordinary course of
business; and (C) defects and irregularities in title and encumbrances
which are not substantial in character or amount and do not materially
impair the use of the property or asset in question (collectively,
"Permitted Liens"); or (ix) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan or any other
increase in the compensation payable or to become payable to any officers
or key employees of Noble or any of the Noble Subsidiaries.
(g) Litigation. Except as disclosed in the Noble Commission Filings or
as set forth in Section 2.1(g) of the Noble Disclosure Letter, there are no
claims, actions, suits, investigations, inquiries or proceedings pending
or, to the knowledge of Noble, overtly threatened against or affecting
Noble or any of the Noble Subsidiaries or any of their respective
properties at law or in equity, or any of their respective employee benefit
plans or fiduciaries of such plans, or before or by any federal, state,
municipal or other governmental agency or authority, or before any
arbitration board or panel, wherever located, that individually or in the
aggregate if adversely determined would have a material adverse effect on
the financial condition, results of operations or business of Noble and the
Noble Subsidiaries, taken as a whole, or that involve the risk of criminal
liability.
(h) Employee Benefit Plans.
(i) Section 2.1(h) of the Noble Disclosure Letter provides a
description of each of the following which is sponsored, maintained or
contributed to by Noble, a Noble Subsidiary or any corporation, trade,
business or entity under common control with Noble or a Noble Subsidiary
within the meaning of Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA (a "Noble ERISA Affiliate") for the benefit of its
employees, or has been so sponsored, maintained or contributed to within
six years prior to the Closing Date:
(A) each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), ("Plan"); and
(B) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting
agreement, employment agreement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding that is
not described in Section 2.1(h)(i)(A) ("Benefit Program or
Agreement").
True and complete copies of each of the Plans, Benefit Programs or
Agreements, related trusts, if applicable, and all amendments thereto,
have been furnished to Chiles.
(ii) Except as otherwise set forth in Section 2.1(h) of the Noble
Disclosure Letter,
(A) None of Noble, any Noble Subsidiary or any Noble ERISA
Affiliate contributes to or has an obligation to contribute to, or
has at any time contributed to or had an obligation to contribute to,
a plan subject to Title IV of ERISA, including, without limitation, a
multiemployer plan within the meaning of Section 3(37) of ERISA;
(B) Each Plan and each Benefit Program or Agreement has been
administered, maintained and operated in all material respects in
accordance with the terms thereof and in
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compliance with its governing documents and applicable law
(including, where applicable, ERISA and the Code);
(C) There is no matter pending with respect to any of the Plans
before any governmental agency, and there are no actions, suits or
claims pending (other than routine claims for benefits) or threatened
against, or with respect to, any of the Plans or Benefit Programs or
Agreements or their assets;
(D) No act, omission or transaction has occurred which would
result in imposition on Noble, any Noble Subsidiary or any Noble
ERISA Affiliate of breach of fiduciary duty liability damages under
Section 409 of ERISA, a civil penalty assessed pursuant to
Subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code; and
(E) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not require
Noble, any Noble Subsidiary or any Noble ERISA Affiliate to make a
larger contribution to, or pay greater benefits under, any Plan or
Benefit Program or Agreement than it otherwise would or create or
give rise to any additional vested rights or service credits under
any Plan or Benefit Program or Agreement.
(iii) Termination of employment of any employee of Noble, any Noble
Subsidiary or any Noble ERISA Affiliate immediately after consummation
of the transactions contemplated by this Agreement would not result in
payments under the Plans, Benefit Programs or Agreements which, in the
aggregate, would result in imposition of the sanctions imposed under
Sections 280G and 4999 of the Code.
(iv) Each Plan which is an "employee welfare benefit plan," as such
term is defined in Section 3(1) of ERISA, may be unilaterally amended or
terminated in its entirety without liability except as to benefits
accrued thereunder prior to such amendment or termination.
(v) Except as set forth in Section 2.1(h) of the Noble Disclosure
Letter, none of the employees of Noble, any of the Noble Subsidiaries or
any Noble ERISA Affiliate are subject to union or collective bargaining
agreements.
(i) Taxes. Except as set forth in Section 2.1(i) of the Noble
Disclosure Letter, all returns and reports, including, without limitation,
information and withholding returns and reports ("Tax Returns"), of or
relating to any foreign, federal, state or local tax, assessment or other
governmental charge ("Taxes" or a "Tax") that are required to be filed on
or before the Closing Date by or with respect to Noble or any of the Noble
Subsidiaries, or any other corporation that is or was a member of an
affiliated group (within the meaning of Section 1504(a) of the Code) of
corporations of which Noble was a member for any period ending on or prior
to the Closing Date, have been or will be duly and timely filed, and all
Taxes, including interest and penalties, due and payable pursuant to such
Tax Returns have been paid or, except as set forth in Section 2.1(i) of the
Noble Disclosure Letter, adequately provided for in reserves established by
Noble, except where the failure to file, pay or provide for would not have
a material adverse effect on the financial condition, results of operations
or business of Noble and the Noble Subsidiaries, taken as a whole. Except
as set forth in Section 2.1(i) of the Noble Disclosure Letter, all U.S.
Federal income Tax Returns of or with respect to Noble and the Noble
Subsidiaries have been audited by the applicable governmental authority, or
the applicable statute of limitations has expired, for all periods up to
and including the taxable year ended December 31, 1989. Except as set forth
in Section 2.1(i) of the Noble Disclosure Letter, there is no material
claim against Noble or any of the Noble Subsidiaries with respect to any
Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Noble or any of the Noble Subsidiaries that has not been adequately
provided for in reserves established by Noble. The total amounts set up as
liabilities for current and deferred Taxes in the consolidated financial
statements included in the Noble Commission Filings have been prepared in
accordance with generally accepted
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<PAGE> 100
accounting principles and, except as set forth in Section 2.1(i) of the
Noble Disclosure Letter, are sufficient to cover the payment of all
material Taxes, including any penalties or interest thereon and whether or
not assessed or disputed, that are, or are hereafter found to be, or to
have been, due with respect to the operations of Noble and the Noble
Subsidiaries through the periods covered thereby. Noble and each of the
Noble Subsidiaries have (and as of the Closing Date will have) made all
deposits (including estimated tax payments for taxable years for which the
consolidated federal income tax return is not yet due) required with
respect to Taxes. Except as set forth in Section 2.1(i) of the Noble
Disclosure Letter, no waiver or extension of any statute of limitations as
to any federal, local or foreign Tax matter has been given by or requested
from Noble or any of the Noble Subsidiaries. Except for statutory liens for
current Taxes not yet due, no liens for Taxes exist upon the assets of
either Noble or the Noble Subsidiaries. Except as set forth in Section
2.1(i) of the Noble Disclosure Letter, neither Noble nor any of the Noble
Subsidiaries has filed consolidated income Tax Returns with any
corporation, other than consolidated federal and state income Tax Returns
by Noble, for any taxable period which is not now closed by the applicable
statute of limitations. Except as set forth in Section 2.1(i) of the Noble
Disclosure Letter, neither Noble nor any of the Noble Subsidiaries has any
deferred intercompany gain as defined in Treasury Regulation Section
1.1502-13.
Noble has no present plan or intention after the Merger to (i)
liquidate the Surviving Corporation, (ii) merge the Surviving Corporation
with or into another corporation, (iii) sell or otherwise dispose of the
stock of the Surviving Corporation, (iv) cause or permit the Surviving
Corporation to sell or otherwise dispose of any of the assets of Chiles or
the assets of Sub vested in the Surviving Corporation except for
dispositions made in the ordinary course of business or transfers of assets
to a corporation controlled by the Surviving Corporation within the meaning
of Section 368(a)(2)(C) of the Code, (v) reacquire any of the stock issued
to the Chiles stockholders pursuant to the Merger, or (vi) cause or permit
the Surviving Corporation to discontinue the historic business of Chiles.
(j) Environmental Matters. Except for matters disclosed in Section
2.1(j) of the Noble Disclosure Letter and except for matters that in the
aggregate would not have a material adverse effect on the financial
condition, results of operations or business of Noble and the Noble
Subsidiaries, taken as a whole, (i) the properties, operations and
activities of Noble and the Noble Subsidiaries comply with all applicable
Environmental Laws (as defined below); (ii) Noble and the Noble
Subsidiaries and the properties and operations of Noble and the Noble
Subsidiaries are not subject to any existing, pending or, to the knowledge
of Noble, threatened action, suit, investigation, inquiry or proceeding by
or before any governmental authority under any Environmental Law; (iii) all
notices, permits, licenses, or similar authorizations, if any, required to
be obtained or filed by Noble or the Noble Subsidiaries under any
Environmental Law in connection with any aspect of the business of Noble or
the Noble Subsidiaries, including without limitation those relating to the
treatment, storage, disposal or release of a hazardous substance or solid
waste, have been duly obtained or filed and will remain valid and in effect
after the Merger, and Noble and the Noble Subsidiaries are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations; (iv) Noble and the Noble Subsidiaries have
satisfied and are currently in compliance with all financial responsibility
requirements applicable to their operations and imposed by the U.S. Coast
Guard and Minerals Management Service pursuant to OPA (as hereinafter
defined) or by any other governmental authority under any other
Environmental Law, and Noble and the Noble Subsidiaries have not received
any notice of noncompliance with any such financial responsibility
requirements; (v) to Noble's knowledge, there are no physical or
environmental conditions existing on any property of Noble and the Noble
Subsidiaries or resulting from Noble's and the Noble Subsidiaries'
operations or activities, past or present, at any location, that would give
rise to any on-site or off-site remedial obligations under any
Environmental Laws; (vi) to Noble's knowledge, since the effective date of
the relevant requirements of applicable Environmental Laws, all hazardous
substances or solid wastes generated by Noble and the Noble Subsidiaries or
used in connection with their properties or operations have been
transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at treatment,
storage, and disposal facilities authorized under environmental laws to
treat, store or dispose of such substances and wastes, and, to the
knowledge of Noble, such carriers and facilities have been and are
operating in compliance with such authorizations
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and are not the subject of any existing, pending, or overtly threatened
action, investigation, or inquiry by any governmental authority in
connection with any Environmental Laws; (vii) there has been no exposure of
any person or property to hazardous substances, solid waste, or any
pollutant or contaminant, nor has there been any release of hazardous
substances, solid waste, or any pollutant or contaminant into the
environment by Noble or the Noble Subsidiaries or in connection with their
properties or operations that could reasonably be expected to give rise to
any claim for damages or compensation; and (viii) Noble and the Noble
Subsidiaries shall make available to Chiles all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters in the possession of Noble and the Noble Subsidiaries
relating to any of the current or former properties or operations of Noble
and the Noble Subsidiaries; provided that neither Noble nor any of the
Noble Subsidiaries shall be required to make available any such audits,
studies or correspondence that may be subject to the attorney-client
privilege or similar privilege.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, orders or
determinations of any Governmental Authority pertaining to health or the
environment currently in effect in any and all jurisdictions in which the
party in question and its subsidiaries own property or conduct business,
including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Hazardous & Solid Waste Amendments Act of 1984, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Oil Pollution Act
of 1990 ("OPA"), any state laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of
pits and impoundments, and all other environmental conservation or
protection laws. For purposes of this Agreement, the terms "hazardous
substance" and "release" have the meanings specified in CERCLA, and the
terms "solid waste" and "disposal" have the meanings specified in RCRA;
provided, however, that to the extent the laws of the state in which the
property is located establish a meaning for "hazardous substance,"
"release," "solid waste" or "disposal" that is broader than that specified
in either CERCLA or RCRA, such broader meaning shall apply. For purposes of
this Agreement, the term "Governmental Authority" includes the United
States, the state, county, city, and political subdivisions in which the
party in question owns property or conducts business, and any agency,
department, commission, board, bureau or instrumentality of any of them
that exercises jurisdiction over the party in question.
(k) Severance Payments. Except as set forth in Section 2.1(k) of the
Noble Disclosure Letter, none of Noble or the Noble Subsidiaries will owe a
severance payment or similar obligation to any of their respective
employees, officers or directors as a result of the Merger or the
transactions contemplated by this Agreement, nor will any of such persons
be entitled to an increase in severance payments or other benefits as a
result of the Merger or the transactions contemplated by this Agreement in
the event of the subsequent termination of their employment.
(l) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Noble Common Stock is the only vote
of the holders of any class or series of the capital stock of Noble
necessary to approve the Noble Charter Amendment; and the affirmative vote
of the holders of a majority of the shares of Noble Common Stock present at
the Noble special stockholders' meeting convened in accordance with Section
4.3 and entitled to vote thereon is the only vote of the holders of any
class or series of the capital stock of Noble necessary to approve this
Agreement.
(m) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
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2.2 Representations and Warranties of Chiles. Chiles hereby represents and
warrants to Noble that:
(a) Organization and Compliance with Law. Each of Chiles and its
consolidated subsidiaries (the "Chiles Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized and has all requisite
corporate power and corporate authority and all necessary governmental
authorizations to own, lease and operate all of its properties and assets
and to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
governmental authority would not have a material adverse effect on the
financial condition, results of operations or business of Chiles and the
Chiles Subsidiaries, taken as a whole. Except as set forth in Section
2.2(a) of the disclosure letter delivered by Chiles to Noble on the date
hereof (the "Chiles Disclosure Letter"), each of Chiles and the Chiles
Subsidiaries is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such jurisdictions where the
failure to be duly qualified does not and would not, either individually or
in the aggregate, have a material adverse effect on the financial
condition, results of operations or business of Chiles and the Chiles
Subsidiaries, taken as a whole. Each of Chiles and the Chiles Subsidiaries
is in compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not have a material adverse effect on the financial
condition, results of operations or business of Chiles and the Chiles
Subsidiaries, taken as a whole. Chiles has heretofore delivered to Noble
true and complete copies of Chiles's Certificate of Incorporation (the
"Chiles Certificate") and bylaws as in existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Chiles consists of 60,000,000
shares of Chiles Common Stock, par value $.01 per share, and 10,000,000
shares of Chiles Preferred Stock, par value $1.00 per share. As of May
31, 1994, there were issued and outstanding 38,131,780 shares of Chiles
Common Stock, and 4,025,000 shares of Chiles Preferred Stock and no
shares of Chiles Common Stock or Chiles Preferred Stock were held as
treasury shares. A total of 3,400,000 shares of Chiles Common Stock have
been reserved for issuance pursuant to the stock option plans described
in Section 2.2(b)(ii). All issued shares of Chiles Common Stock are
validly issued, fully paid and nonassessable and no holder thereof is
entitled to preemptive rights. Except as set forth in Section 2.2(b) of
the Chiles Disclosure Letter, Chiles is not a party to, and is not aware
of, any voting agreement, voting trust or similar agreement or
arrangement relating to any class or series of its capital stock, or any
agreement or arrangement providing for registration rights with respect
to any capital stock or other securities of Chiles.
(ii) As of the date hereof, there are outstanding options (the
"Chiles Options") to purchase an aggregate of 1,073,800 shares of Chiles
Common Stock under the Amended and Restated 1990 Stock Option Plan (the
"Chiles 1990 Plan"). There are no options outstanding under Chiles's
1994 Stock Option Plan. Other than as set forth in this Section 2.2(b),
there are not now, and at the Effective Time there will not be, any (A)
shares of capital stock or other equity securities of Chiles outstanding
other than Chiles Common Stock issued pursuant to the exercise of Chiles
Options or upon the conversion of any convertible securities of Chiles
outstanding on the date hereof as described herein or (B) outstanding
options, warrants, scrip, rights to subscribe for, calls or commitments
of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any class of capital
stock of Chiles, or contracts, understandings or arrangements to which
Chiles is a party, or by which it is or may be bound, to issue
additional shares of its capital stock or options, warrants, scrip or
rights to subscribe for, or securities or rights convertible into or
exchangeable for, any additional shares of its capital stock.
(iii) Except as set forth in Section 2.2(b) of the Chiles
Disclosure Letter, all outstanding shares of capital stock of the Chiles
Subsidiaries are owned by Chiles or a wholly-owned subsidiary of Chiles,
free and clear of all liens, charges, encumbrances, adverse claims and
options of any nature which are material to Chiles and the Chiles
Subsidiaries, taken as a whole.
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(c) Authorization and Validity of Agreement. Chiles has all requisite
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery by Chiles of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action (subject
only, with respect to the Merger, to approval of this Agreement by its
stockholders as provided for in Section 3.3). On or prior to the date
hereof the Board of Directors of Chiles has determined to recommend
approval of the Merger to the stockholders of Chiles, and such
determination is in effect as of the date hereof. This Agreement has been
duly executed and delivered by Chiles and is the valid and binding
obligation of Chiles, enforceable against Chiles in accordance with its
terms.
(d) No Approvals or Notices Required; No Conflict with Instruments to
which Chiles or any of the Chiles Subsidiaries is a Party. Except as set
forth in Section 2.2(d) of the Chiles Disclosure Letter, neither the
execution and delivery of this Agreement nor the performance by Chiles of
its obligations hereunder, nor the consummation of the transactions
contemplated hereby by Chiles, will (i) conflict with the Chiles
Certificate or the bylaws of Chiles or the charter or bylaws of any of the
Chiles Subsidiaries; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Chiles or any of the Chiles Subsidiaries; (iii) except for (A) requirements
of Federal or state securities laws, (B) requirements arising out of the
HSR Act, (C) requirements of notice filings in such foreign jurisdictions
as may be applicable, and (D) the filing of articles of merger in
accordance with the DGCL, require any consent or approval of, or filing
with or notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Chiles or any of the Chiles
Subsidiaries; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of any provision of, or result in the
creation or imposition of any lien upon any properties, assets or business
of Chiles or any of the Chiles Subsidiaries under, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Chiles or any of the
Chiles Subsidiaries is a party or by which Chiles or any of the Chiles
Subsidiaries or any of its or their assets or properties is bound or
encumbered, except (A) those that have already been given, obtained or
filed, (B) those that are required pursuant to bank loan agreements or
leasing arrangements, as set forth in Section 2.2(d) of the Chiles
Disclosure Letter, which will be obtained prior to the Effective Time, and
(C) those that, in the aggregate, would not have a material adverse effect
on the financial condition, results of operations or business of Chiles and
the Chiles Subsidiaries, taken as a whole.
(e) Commission Filings; Financial Statements. Chiles and each of the
Chiles Subsidiaries have filed all reports, registration statements and
other filings, together with any amendments required to be made with
respect thereto, that they have been required to file with the Commission
under the Securities Act and the Exchange Act. All reports, registration
statements and other filings (including all notes, exhibits and schedules
thereto and documents incorporated by reference therein) filed by Chiles
with the Commission since January 1, 1992 through the date of this
Agreement, together with any amendments thereto, are sometimes collectively
referred to as the "Chiles Commission Filings." Chiles has heretofore
delivered to Noble copies of the Chiles Commission Filings. As of the
respective dates of their filing with the Commission, the Chiles Commission
Filings complied in all material respects with the Securities Act, the
Exchange Act and the rules and regulations of the Commission thereunder,
and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
were made, not misleading.
All material contracts of Chiles and the Chiles Subsidiaries have been
included in the Chiles Commission Filings, except for those contracts not
required to be filed pursuant to the rules and regulations of the
Commission.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Chiles Commission Filings was prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto) and
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complied with the rules and regulations of the Commission. Such
consolidated financial statements fairly present the consolidated financial
position of Chiles and the Chiles Subsidiaries as of the dates thereof and
the results of operations, cash flows and changes in shareholders' equity
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments on a basis
comparable with past periods). As of the date hereof, Chiles has no
liabilities, absolute or contingent, that may reasonably be expected to
have a material adverse effect on the financial condition, results of
operations or business of Chiles and the Chiles Subsidiaries, taken as a
whole, that are not reflected in the Chiles Commission Filings, except (i)
those incurred in the ordinary course of business consistent with past
operations and not relating to the borrowing of money, and (ii) those set
forth in Section 2.2(e) of the Chiles Disclosure Letter.
(f) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since January 1, 1994, except as contemplated by this
Agreement or as disclosed in the Chiles Commission Filings filed with the
Commission prior to the date hereof or as set forth in Section 2.2(f) of
the Chiles Disclosure Letter, Chiles and the Chiles Subsidiaries have
conducted their business only in the ordinary and usual course, and there
has not been (i) any material adverse change in the financial condition,
results of operations, or business of Chiles and the Chiles Subsidiaries,
taken as a whole, or any condition, event or development that reasonably
may be expected to result in any such material adverse change; (ii) any
material change by Chiles in its accounting methods, principles or
practices; (iii) any revaluation by Chiles or any of the Chiles
Subsidiaries of any of its or their assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (iv) any entry by
Chiles or any of the Chiles Subsidiaries into any commitment or transaction
material to Chiles and the Chiles Subsidiaries, as a whole; (v) any
declaration, setting aside or payment of any dividends or distributions in
respect of the Chiles Common Stock or any redemption, purchase or other
acquisition of any of its securities or any securities of any of the Chiles
Subsidiaries; (vi) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
Chiles and the Chiles Subsidiaries, taken as a whole; (vii) any increase in
indebtedness for borrowed money; (viii) any granting of a security interest
or lien on any material property or assets of Chiles and the Chiles
Subsidiaries, taken as a whole, other than Permitted Liens; or (ix) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or
other employee benefit plan or any other increase in the compensation
payable or to become payable to any officers or key employees of Chiles or
any of the Chiles Subsidiaries.
(g) Litigation. Except as disclosed in the Chiles Commission Filings
or as set forth in Section 2.2(g) of the Chiles Disclosure Letter, there
are no claims, actions, suits, investigations, inquiries or proceedings
pending or, to the knowledge of Chiles, overtly threatened against or
affecting Chiles or any of the Chiles Subsidiaries or any of their
respective properties at law or in equity, or any of their respective
employee benefit plans or fiduciaries of such plans, or before or by any
federal, state, municipal or other governmental agency or authority, or
before any arbitration board or panel, wherever located, that individually
or in the aggregate if adversely determined would have a material adverse
effect on the financial condition, results of operations or business of
Chiles and the Chiles Subsidiaries, taken as a whole, or that involve the
risk of criminal liability.
(h) Employee Benefit Plans.
(i) Section 2.2(h) of the Chiles Disclosure Letter provides a
description of each Plan or Benefit Program or Agreement which is
sponsored, maintained or contributed to by Chiles, a Chiles Subsidiary
or any corporation, trade, business or entity under common control with
Chiles or a Chiles Subsidiary within the meaning of Section 414(b), (c),
(m) or (o) of the Code or Section 4001 of ERISA (an "Chiles ERISA
Affiliate") for the benefit of its employees, or has been so sponsored,
maintained or contributed to within six years prior to the Closing Date.
True and
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complete copies of each of the Plans, Benefit Programs or Agreements,
related trusts, if applicable, and all amendments thereto, have been
furnished to Noble.
(ii) Except as otherwise set forth in Section 2.2(h) of the Chiles
Disclosure Letter,
(A) None of Chiles, any Chiles Subsidiary or any Chiles ERISA
Affiliate contributes to or has an obligation to contribute to, or
has at any time contributed to or had an obligation to contribute to,
a plan subject to Title IV of ERISA, including, without limitation, a
multiemployer plan within the meaning of Section 3(37) of ERISA;
(B) Each Plan and each Benefit Program or Agreement has been
administered, maintained and operated in all material respects in
accordance with the terms thereof and in compliance with its
governing documents and applicable law (including, where applicable,
ERISA and the Code);
(C) There is no matter pending with respect to any of the Plans
before any governmental agency, and there are no actions, suits or
claims pending (other than routine claims for benefits) or threatened
against, or with respect to, any of the Plans or Benefit Programs or
Agreements or their assets;
(D) No act, omission or transaction has occurred which would
result in imposition on Chiles, any Chiles Subsidiary or any Chiles
ERISA Affiliate of breach of fiduciary duty liability damages under
Section 409 of ERISA, a civil penalty assessed pursuant to
subSections (c), (i) or (l) of Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code; and
(E) Except as provided in Section 5.11, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not require Chiles, any Chiles Subsidiary or
any Chiles ERISA Affiliate to make a larger contribution to, or pay
greater benefits under, any Plan, Benefit Program or Agreement than
it otherwise would or create or give rise to any additional vested
rights or service credits under any Plan or Benefit Program or
Agreement.
(iii) Termination of employment of any employee of Chiles, any
Chiles Subsidiary or any Chiles ERISA Affiliate immediately after
consummation of the transactions contemplated by this Agreement would
not result in payments under the Plans, Benefit Programs or Agreements
which, in the aggregate, would result in imposition of the sanctions
imposed under Sections 280G and 4999 of the Code.
(iv) Each Plan which is an "employee welfare benefit plan," as such
term is defined in Section 3(1) of ERISA, may be unilaterally amended or
terminated in its entirety without liability except as to benefits
accrued thereunder prior to such amendment or termination.
(v) None of the employees of Chiles, any of the Chiles Subsidiaries
or any Chiles ERISA Affiliate are subject to union or collective
bargaining agreements.
(i) Taxes. Except as set forth in Section 2.2(i) of the Chiles
Disclosure Letter, all Tax Returns of or relating to any Tax that are
required to be filed on or before the Closing Date by or with respect to
Chiles or any of the Chiles Subsidiaries, or any other corporation that is
or was a member of an affiliated group (within the meaning of Section 1504
(a) of the Code) of corporations of which Chiles was a member for any
period ending on or prior to the Closing Date, have been or will be duly
and timely filed, and all Taxes, including interest and penalties, due and
payable pursuant to such Tax Returns have been paid or adequately provided
for in reserves established by Chiles, except where the failure to file,
pay or provide for would not have a material adverse effect on the
financial condition, results of operations or business of Chiles and the
Chiles Subsidiaries, taken as a whole. Except as set forth in Section
2.2(i) of the Chiles Disclosure Letter, all U.S. Federal income Tax Returns
of or with respect to Chiles or any of the Chiles Subsidiaries have been
audited by the applicable governmental authority, or the applicable
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statute of limitations has expired, for all periods up to and including the
tax year ended December 31, 1989. There is no material claim against Chiles
or any of the Chiles Subsidiaries with respect to any Taxes, and no
material assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return of or with respect to Chiles or any of the
Chiles Subsidiaries that has not been adequately provided for in reserves
established by Chiles. The total amounts set up as liabilities for current
and deferred Taxes in the consolidated financial statements included in the
Chiles Commission Filings have been prepared in accordance with generally
accepted accounting principles and are sufficient to cover the payment of
all material Taxes, including any penalties or interest thereon and whether
or not assessed or disputed, that are, or are hereafter found to be, or to
have been, due with respect to the operations of Chiles and the Chiles
Subsidiaries through the periods covered thereby. Chiles and each of the
Chiles Subsidiaries have (and as of the Closing Date will have) made all
deposits (including estimated tax payments for taxable years for which the
consolidated federal income tax return is not yet due) required with
respect to Taxes. Except as set forth in Section 2.2(i) of the Chiles
Disclosure Letter, no waiver or extension of any statute of limitations as
to any federal, local or foreign Tax matter has been given by or requested
from Chiles or any of the Chiles Subsidiaries. Except for statutory liens
for current Taxes not yet due, no liens for Taxes exist upon the assets of
either Chiles or the Chiles Subsidiaries. Except as set forth in Section
2.2(i) of the Chiles Disclosure Letter, neither Chiles nor any of the
Chiles Subsidiaries has filed consolidated income Tax Returns with any
corporation, other than consolidated federal and state income Tax Returns
by Chiles, for any taxable period which is not now closed by the applicable
statute of limitations. Neither Chiles nor the Chiles Subsidiaries has any
deferred intercompany gain as defined in Treasury Regulation Section
1.1502-13.
In the Merger, at least 90% of the fair market value of Chiles's net
assets and at least 70% of the fair market value of Chiles's gross assets
held immediately prior to the Merger will be vested in Sub. For purposes of
this representation, amounts paid by Chiles to stockholders who receive
cash or other property, amounts used by Chiles to pay reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by Chiles will be included as assets of Chiles immediately
prior to the Merger. As of the Closing Date, there is no plan or intention
by the stockholders of Chiles to sell, exchange or otherwise dispose of a
number of shares of Noble received in the Merger that would reduce the
Chiles stockholders' ownership of Noble shares to a number of shares having
a value, as of the date of the Merger, of less than 50% of the value of all
of the formerly outstanding Shares as of the same date. For purposes of
this representation, Shares exchanged for cash or other property or
exchanged in lieu of fractional shares of Noble will be treated as
outstanding Shares on the date of the Merger. Moreover, the shares of Noble
held by the Chiles stockholders and otherwise sold, redeemed or disposed of
prior or subsequent to the Merger will be considered in making this
representation.
(j) Environmental Matters. Except for matters disclosed in Section
2.2(j) of the Chiles Disclosure Letter and except for matters that in the
aggregate would not have a material adverse effect on the financial
condition, results of operations or business of Chiles and the Chiles
Subsidiaries, taken as a whole, (i) the properties, operations and
activities of Chiles and the Chiles Subsidiaries comply with all applicable
Environmental Laws; (ii) Chiles and the Chiles Subsidiaries and the
properties and operations of Chiles and the Chiles Subsidiaries are not
subject to any existing, pending or, to the knowledge of Chiles, threatened
action, suit, investigation, inquiry or proceeding by or before any
governmental authority under any Environmental Law; (iii) all notices,
permits, licenses, or similar authorizations, if any, required to be
obtained or filed by Chiles or the Chiles Subsidiaries under any
Environmental Law in connection with any aspect of the business of Chiles
or the Chiles Subsidiaries, including without limitation those relating to
the treatment, storage, disposal or release of a hazardous substance or
solid waste, have been duly obtained or filed and will remain valid and in
effect after the Merger, and Chiles and the Chiles Subsidiaries are in
compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations; (iv) Chiles and the Chiles
Subsidiaries have satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by the U.S. Coast Guard and Minerals Management Service pursuant to
OPA (as hereinafter defined) or by any other governmental authority under
any other Environmental Law, and Chiles and the Chiles Subsidiaries have
not received any notice of noncompliance with any such financial
responsibility
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requirements; (v) to Chiles's knowledge, there are no physical or
environmental conditions existing on any property of Chiles and the Chiles
Subsidiaries or resulting from Chiles's and the Chiles Subsidiaries'
operations or activities, past or present, at any location, that would give
rise to any on-site or off-site remedial obligations under any
Environmental Laws; (vi) to Chiles's knowledge, since the effective date of
the relevant requirements of applicable Environmental Laws, all hazardous
substances or solid wastes generated by Chiles and the Chiles Subsidiaries
or used in connection with their properties or operations have been
transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at treatment,
storage, and disposal facilities authorized under environmental laws to
treat, store or dispose of such substances and wastes, and, to the
knowledge of Chiles, such carriers and facilities have been and are
operating in compliance with such authorizations and are not the subject of
any existing, pending, or overtly threatened action, investigation, or
inquiry by any governmental authority in connection with any Environmental
Laws; (vii) there has been no exposure of any person or property to
hazardous substances, solid waste, or any pollutant or contaminant, nor has
there been any release of hazardous substances, solid waste, or any
pollutant or contaminant into the environment by Chiles or the Chiles
Subsidiaries or in connection with their properties or operations that
could reasonably be expected to give rise to any claim for damages or
compensation; and (viii) Chiles and the Chiles Subsidiaries shall make
available to Noble all internal and external environmental audits and
studies and all correspondence on substantial environmental matters in the
possession of Chiles and the Chiles Subsidiaries relating to any of the
current or former properties or operations of Chiles and the Chiles
Subsidiaries; provided that neither Chiles nor any of the Chiles
Subsidiaries shall be required to make available any such audits, studies
or correspondence that may be subject to the attorney-client privilege or
similar privilege.
(k) Severance Payments. Except as set forth in Section 2.2(k) of the
Chiles Disclosure Letter, none of Chiles or the Chiles Subsidiaries will
owe a severance payment or similar obligation to any of their respective
employees, officers or directors as a result of the Merger or the
transactions contemplated by this Agreement, nor will any of such persons
be entitled to an increase in severance payments or other benefits as a
result of the Merger or the transactions contemplated by this Agreement in
the event of the subsequent termination of their employment.
(l) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Chiles Common Stock is the only vote
of the holders of any class or series of the capital stock of Chiles
necessary to approve this Agreement and the Merger.
ARTICLE III
COVENANTS OF CHILES PRIOR TO THE EFFECTIVE TIME
3.1 Conduct of Business by Chiles Pending the Merger. Chiles covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
Noble shall otherwise agree in writing or as otherwise expressly contemplated by
this Agreement or set forth in Section 3.1 of the Chiles Disclosure Letter:
(a) the business of Chiles and the Chiles Subsidiaries shall be
conducted only in, and Chiles and the Chiles Subsidiaries shall not take
any action except in, the ordinary course of business and consistent with
past practice; in addition, from and after the date of this Agreement,
Chiles shall not, and shall not permit any of the Chiles Subsidiaries to,
(i) enter into any new drilling contracts with respect to any of Chiles'
drilling rigs unless in the good faith opinion of Chiles such contracts may
reasonably be expected to have a duration of 90 days or less, or amend in
any material respect adverse to Chiles or Noble any drilling contract or
other material contract or agreement, without giving prior written notice
to Noble, or (ii) mobilize any of Chiles' drilling rigs from the Gulf of
Mexico or from the West African coast, without giving prior written notice
to Noble;
(b) Chiles shall not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber, or permit any Chiles
Subsidiary to issue, sell, pledge, dispose of or encumber, (A) any capital
stock of Chiles or any Chiles Subsidiary except upon the exercise of Chiles
Options or upon conversion of
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any convertible securities of Chiles outstanding as of the date of this
Agreement or (B) other than in the ordinary course of business and
consistent with past practice and not relating to the borrowing of money,
any assets of Chiles or any Chiles Subsidiary; (ii) amend or propose to
amend the respective charters or bylaws of Chiles or any Chiles Subsidiary;
(iii) split, combine or reclassify any outstanding capital stock, or
declare, set aside or pay any dividend payable in cash, stock, property or
otherwise with respect to its capital stock whether now or hereafter
outstanding other than its regular quarterly cash dividends on the Chiles
Preferred Stock; (iv) redeem, purchase or acquire or offer to acquire, or
permit any of the Chiles Subsidiaries to redeem, purchase or acquire or
offer to acquire, any of its or their capital stock; (v) except in the
ordinary course of business and consistent with past practice, enter into
any contract, agreement, commitment or arrangement with respect to any of
the matters set forth in this Section 3.1(b); (vi) enter into, adopt or
(except as may be required by law and except for an amendment to the Chiles
1990 Plan (or any option agreements existing thereunder) to provide the
Board of Directors of Chiles with the power to take the actions required
pursuant to Section 5.11) amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock
purchase, pension, retirement, deferred compensation, employment, severance
or other employee benefit agreement, trust, plan, fund or other arrangement
for the benefit or welfare of any director, officer or employee; (vii)
except as provided in Section 5.11 and except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense, increase in any manner the compensation or fringe benefits of any
director, officer or employee; or (viii) except as provided in Section
5.11, pay to any director, officer or employee any benefit not required by
any employee benefit agreement, trust, plan, fund or other arrangement as
in effect on the date hereof;
(c) Chiles shall use its reasonable efforts (i) to preserve intact the
business organization of Chiles and each of the Chiles Subsidiaries, (ii)
to maintain in effect any authorizations or similar rights of Chiles and
each of the Chiles Subsidiaries, (iii) to keep available the services of
its and their current officers and key employees, (iv) to preserve the
goodwill of those having business relationships with it and the Chiles
Subsidiaries, (v) to maintain and keep its properties and the properties of
the Chiles Subsidiaries in as good a repair and condition as presently
exists, except for deterioration due to ordinary wear and tear and damage
due to casualty; and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained by
it and the Chiles Subsidiaries;
(d) Chiles shall not make or agree to make, or permit any of the
Chiles Subsidiaries to make or agree to make, new capital expenditures that
in the aggregate exceed $500,000;
(e) neither Chiles nor any of the Chiles Subsidiaries shall take, and
Chiles will use its reasonable efforts to prevent any affiliate of Chiles
from taking, any action that, in the judgment of Arthur Andersen & Co.,
Chiles's independent auditors, would cause the Merger not to be treated as
a "pooling of interests" for accounting purposes;
(f) Chiles shall, and shall cause the Chiles Subsidiaries to, perform
their respective obligations under any contracts and agreements to which
any of them is a party or to which any of their assets is subject, except
to the extent such failure to perform would not have a material adverse
effect on Chiles and the Chiles Subsidiaries, taken as a whole, and except
for such obligations as Chiles or the Chiles Subsidiaries in good faith may
dispute; and
(g) Chiles shall not, and shall not permit any of the Chiles
Subsidiaries to, take any action that would, or that reasonably could be
expected to, result in any of the representations and warranties set forth
in this Agreement becoming untrue or any of the conditions to the Merger
set forth in Article VI not being satisfied. Chiles promptly shall advise
Noble orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a material adverse
effect on Chiles and the Chiles Subsidiaries, taken as a whole.
3.2 Joint Proxy Statement. Promptly after the date of this Agreement,
Chiles shall cooperate with Noble in preparing and shall file with the
Commission under the Exchange Act, and shall use its reasonable efforts to
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have cleared by the Commission, a joint proxy statement (the "Proxy Statement")
with respect to the meeting of stockholders of Chiles referred to in Section 3.3
and Chiles shall cooperate with Noble in preparing the Registration Statement
(as defined below in Section 4.4). Chiles agrees that the Proxy Statement
(except with respect to information concerning Noble and the Noble Subsidiaries
furnished by or on behalf of Noble specifically for use therein, for which
information Noble shall be responsible) will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
adopted thereunder, and the Registration Statement (with respect to information
concerning Chiles and the Chiles Subsidiaries provided by Chiles specifically
for use therein) and the Proxy Statement (except with respect to information
concerning Noble and the Noble Subsidiaries furnished by or on behalf of Noble
specifically for use therein, for which information Noble shall be responsible)
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Subject to the terms and conditions of Section 3.4, the
Proxy Statement shall contain the recommendation of the Board of Directors of
Chiles that the stockholders of Chiles vote to approve and adopt this Agreement.
Chiles will advise Noble promptly in writing if prior to the Effective Time it
shall obtain knowledge of any facts that would make it necessary to amend or
supplement the Proxy Statement (or the Registration Statement of which the Proxy
Statement is a part) in order to make the statements therein not misleading or
to comply with applicable law.
3.3 Meeting of Stockholders of Chiles. Subject to the terms and conditions
set forth in Section 3.4, Chiles shall promptly take all action reasonably
necessary in accordance with the DGCL and the Chiles Certificate and bylaws to
convene a meeting of its stockholders to consider and vote upon the adoption and
approval of this Agreement. Subject to the terms and conditions set forth in
Section 3.4, the Board of Directors of Chiles (i) shall recommend at such
meeting that the stockholders of Chiles vote to adopt and approve this
Agreement; (ii) shall use its reasonable efforts to solicit from stockholders of
Chiles proxies in favor of such adoption and approval; and (iii) shall take all
other action reasonably necessary to secure a vote of its stockholders in favor
of the adoption and approval of this Agreement.
3.4 No Shopping. From and after the date of this Agreement, neither Chiles
nor any Chiles Subsidiary shall, directly or indirectly, through any officer,
director, employee, representative or agent of Chiles or any of the Chiles
Subsidiaries, solicit or knowingly encourage, including by way of furnishing
information, the initiation of any inquiries or proposals regarding (i) any
merger, tender offer, sale of shares of capital stock or similar business
combination transactions involving Chiles or the Chiles Subsidiaries that would
have the effect of causing the holders of Chiles Common Stock immediately prior
to the effectiveness of such proposed transaction to own in the aggregate less
than 50% of the shares of the surviving or resulting entity entitled to vote
generally for the election of directors of the surviving or resulting entity, or
(ii) any sale of all or substantially all the assets of Chiles and the Chiles
Subsidiaries, taken as a whole (any of the foregoing transactions being referred
to herein as a "Chiles Acquisition Transaction"); provided, however, that
nothing in this Section 3.4 or elsewhere in this Agreement shall prevent the
members of the Board of Directors of Chiles in the exercise of their fiduciary
duties and after consulting with independent counsel, from considering,
negotiating and approving an unsolicited bona fide proposal that the Board of
Directors of Chiles determines in good faith, after consultation with its
financial advisors, may result in a transaction more favorable to Chiles'
stockholders than the transactions contemplated by this Agreement. If the Board
of Directors of Chiles receives a request for confidential information by a
potential bidder for Chiles and the Board of Directors determines, after
consultation with independent counsel, that the Board of Directors has a
fiduciary obligation to provide such information to a potential bidder, then
Chiles may, subject to a confidentiality agreement substantially similar to that
previously executed by Noble, provide such potential bidder with access to
information regarding Chiles. Chiles shall promptly notify Noble, orally and in
writing, if any such proposal or offer is made and shall, in any such notice,
indicate the identity and terms and conditions of any proposal or offer, or any
such inquiry or contact. Chiles shall keep Noble advised of the progress and
status of any such proposals or offers. The obligation of the Board of Directors
of Chiles to convene a meeting of its stockholders and to recommend the adoption
and approval of this Agreement to the stockholders of Chiles pursuant to Section
3.3 of this Agreement shall be subject to the fiduciary duties of the directors,
as determined by the directors after consultation with their independent
counsel, and nothing contained in this Section 3.4 or elsewhere in this
Agreement shall prevent the Board of Directors of Chiles from approving or
recommending
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to the stockholders of Chiles any unsolicited offer or proposal by a third party
if required in the exercise of their fiduciary duties, as determined by the
directors after consultation with independent counsel.
3.5 Affiliates' Agreements. Prior to the Closing Date, Chiles shall deliver
to Noble a letter identifying all persons whom it believes are, at the time this
Agreement is submitted for approval to the stockholders of Chiles, "affiliates"
of Chiles for purposes of Rule 145 under the Securities Act. Chiles shall use
its reasonable efforts to cause each such person to deliver to Noble on or prior
to the Closing Date a written agreement substantially in the form of Exhibit A.
Noble shall not be required to maintain the effectiveness of the Registration
Statement (as defined below) for the purpose of resale by stockholders of Chiles
who may be "affiliates" pursuant to Rule 145 under the Securities Act.
ARTICLE IV
COVENANTS OF NOBLE PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Noble Pending the Merger. Noble covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
Chiles shall otherwise agree in writing or as otherwise expressly contemplated
by this Agreement:
(a) the business of Noble and the Noble Subsidiaries shall be
conducted only in, and Noble and the Noble Subsidiaries shall not take any
action except in, the ordinary course of business and consistent with past
practice;
(b) except as set forth in Section 4.1(b) of the Noble Disclosure
Letter, Noble shall not directly or indirectly do any of the following: (i)
issue, sell, pledge, dispose of or encumber, or permit any Noble Subsidiary
to issue, sell, pledge, dispose of or encumber, (A) any capital stock of
Noble or any Noble Subsidiary except upon the exercise of Noble Options or
upon conversion of any convertible securities of Noble outstanding as of
the date of this Agreement or pursuant to Noble's Thrift Plan, Noble
(International) Employees' Retirement Savings Plan or Noble Field Hourly
Employees' Retirement Plan or (B) other than in the ordinary course of
business and consistent with past practice and not relating to the
borrowing of money, any assets of Noble or any Noble Subsidiary; (ii) amend
or propose to amend the respective charters or bylaws of Noble or any Noble
Subsidiary, (iii) split, combine or reclassify any outstanding capital
stock, or declare, set aside or pay any dividend payable in cash, stock,
property or otherwise with respect to its capital stock whether now or
hereafter outstanding other than its regular quarterly cash dividends on
the $2.25 Noble Preferred Stock; (iv) redeem, purchase or acquire or offer
to acquire, or permit any of the Noble Subsidiaries to redeem, purchase or
acquire or offer to acquire, any of its or their capital stock; or (v)
except in the ordinary course of business and consistent with past
practice, enter into any contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 4.1 (b);
(c) except as set forth in Section 4.1(c) of the Noble Disclosure
Letter, Noble shall use its reasonable efforts (i) to preserve intact the
business organization of Noble and each of the Noble Subsidiaries, (ii) to
maintain in effect any authorizations, or similar rights of Noble and each
of the Noble Subsidiaries, (iii) to keep available the services of its and
their current officers and key employees, (iv) to preserve the goodwill of
those having business relationships with it and the Noble Subsidiaries, (v)
to maintain and keep its properties and the properties of the Noble
Subsidiaries in as good a repair and condition as presently exists, except
for deterioration due to ordinary wear and tear and damage due to casualty,
and (vi) to maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by it and the
Noble Subsidiaries;
(d) Noble shall not make or agree to make, or permit any of the Noble
Subsidiaries to make or agree to make, any capital expenditure other than
as previously disclosed in the Noble Commission Filings or those made in
the ordinary course of business and consistent with past practice;
(e) neither Noble nor any of the Noble Subsidiaries shall take, and
Noble will use its reasonable efforts to prevent any affiliate of Noble
from taking, any action that, in the judgment of Arthur Andersen
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& Co., Noble's independent auditors, would cause the Merger not to be
treated as a "pooling of interests" for accounting purposes;
(f) Noble shall, and shall cause the Noble Subsidiaries to, perform
their respective obligations under any contracts and agreements to which
any of them is a party or to which any of their assets is subject, except
to the extent such failure to perform would not have a material adverse
effect on Noble and the Noble Subsidiaries, taken as a whole, and except
for such obligations as Noble or the Noble Subsidiaries in good faith may
dispute; and
(g) Noble shall not, and shall not permit any of the Noble
Subsidiaries to, take any action that would, or that reasonably could be
expected to, result in any of the representations and warranties set forth
in this Agreement becoming untrue or any of the conditions to the Merger
set forth in Article VI not being satisfied. Noble promptly shall advise
Chiles orally and in writing of any change or event having, or which,
insofar as reasonably can be foreseen, would have, a material adverse
effect on Noble and the Noble Subsidiaries, taken as a whole.
4.2 Joint Proxy Statement. Promptly after the date of this Agreement, Noble
shall cooperate with Chiles in preparing and shall file with the Commission
under the Exchange Act, and shall use its reasonable efforts to have cleared by
the Commission, the Proxy Statement with respect to the meeting of the
stockholders of Noble referred to in Section 4.3. Noble agrees that the Proxy
Statement (except with respect to information concerning Chiles and the Chiles
Subsidiaries furnished by or on behalf of Chiles specifically for use therein,
for which information Chiles shall be responsible) will comply as to form in all
material respects with the requirements of the Exchange Act and the respective
rules and regulations adopted thereunder, and the Proxy Statement (except with
respect to information concerning Chiles and the Chiles Subsidiaries furnished
by or on behalf of Chiles specifically for use therein, for which information
Chiles shall be responsible) will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Proxy Statement
shall contain the recommendation of the Board of Directors of Noble that the
stockholders of Noble vote to adopt the Noble Charter Amendment and approve this
Agreement. Noble will advise Chiles promptly in writing if prior to the
Effective Time it shall obtain knowledge of any facts that would make it
necessary to amend or supplement the Proxy Statement in order to make the
statements therein not misleading or to comply with applicable law.
4.3 Meeting of Stockholders of Noble. Noble shall promptly take all action
reasonably necessary in accordance with the DGCL and the Noble Certificate and
bylaws to convene a meeting of its stockholders to consider and vote upon the
adoption of the Noble Charter Amendment and approval of this Agreement. The
Board of Directors of Noble (i) shall recommend at such meeting that the
stockholders of Noble vote to adopt and approve the matters referenced in the
preceding sentence; (ii) shall use its reasonable efforts to solicit from
stockholders of Noble proxies in favor of such adoption and approval; and (iii)
shall take all other action reasonably necessary to secure a vote of its
stockholders in favor of such adoption and approval.
4.4 Registration Statement. Promptly after the date of this Agreement,
Noble will file a registration statement (the "Registration Statement") on Form
S-4 with the Commission under the Securities Act with respect to the offering,
sale and delivery of the shares of Noble Common Stock and $1.50 Noble Preferred
Stock to be issued pursuant to the Merger; and Noble will use its reasonable
efforts to cause such Registration Statement to become effective as soon as
practicable after filing. Noble agrees that the Registration Statement (except
with respect to information concerning Chiles and the Chiles Subsidiaries
furnished by or on behalf of Chiles specifically for use therein, for which
information Chiles shall be responsible) will comply as to form in all material
respects with the requirements of the Securities Act and the Exchange Act and
the respective rules and regulations adopted thereunder, and will not contain
any untrue statement of any material fact or omit to state any material fact
required to be stated therein or necessary to make the statements made therein
not misleading. Noble will advise Chiles in writing if prior to the Effective
Time it shall obtain knowledge of any fact that would, in its opinion, make it
necessary to amend or supplement the Registration Statement in order to make the
statements therein not misleading or to comply with applicable law.
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4.5 Reservation of Noble Stock. Subject to adoption by the stockholders of
Noble of the Noble Charter Amendment, Noble shall reserve for issuance, out of
its authorized but unissued capital stock, such number of shares of Noble Common
Stock and $1.50 Noble Preferred Stock as may be issuable upon consummation of
the Merger and such number of shares of Noble Common Stock as may be issuable
upon conversion of the $1.50 Noble Preferred Stock.
4.6 Stock Exchange Listing. Subject to the adoption by the stockholders of
Noble of the Noble Charter Amendment, Noble shall use all reasonable efforts to
cause the shares of Noble Common Stock and $1.50 Noble Preferred Stock to be
issued in the Merger, the shares of Noble Common Stock to be reserved for
issuance upon the exercise of Chiles Options to be assumed by Noble in the
Merger, if any, and the shares of Noble Common Stock issuable upon conversion of
the $1.50 Noble Preferred Stock to be approved for listing on the NASDAQ
National Market System, subject to official notice of issuance, prior to the
Closing Date.
4.7 Affiliates' Agreements. Noble shall use its reasonable efforts to cause
each person whom it believes is an "affiliate" of Noble within the meaning
thereof under Rule 405 under the Securities Act, to deliver to Noble on or prior
to the Closing Date a written agreement substantially in the form of Exhibit B
hereto.
4.8 Registration Rights Agreement. At (and subject to the occurrence of)
the Closing, Noble agrees to execute and deliver a Registration Rights Agreement
to P.A.J.W. Corporation in substantially the form attached hereto as Exhibit F.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Accountants Letters.
(a) Chiles shall use its reasonable efforts to cause Arthur Andersen &
Co. to deliver a letter dated as of the date of the Proxy Statement, and
addressed to itself and Noble, in form and substance reasonably
satisfactory to Noble and customary in scope and substance for agreed upon
procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
(b) Noble shall use its reasonable efforts to cause Arthur Andersen &
Co. to deliver a letter dated as of the date of the Proxy Statement, and
addressed to itself and Chiles, in form and substance reasonably
satisfactory to Chiles and customary in scope and substance for agreed upon
procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
5.2 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, Chiles and Noble shall (i) make all necessary
filings with respect to the Merger and this Agreement under the HSR Act, the
Securities Act, the Exchange Act and applicable blue sky or similar securities
laws and shall use all reasonable efforts to obtain required approvals and
clearances with respect thereto; (ii) obtain all consents, waivers, approvals,
authorizations and orders required in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger; and
(iii) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
5.3 Notification of Certain Matters. Chiles shall give prompt notice to
Noble, and Noble shall give prompt notice to Chiles, orally and in writing, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate at any time from the date hereof to
the Effective Time, and (ii) any material failure of Chiles or Noble, as the
case may be, or any officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
5.4 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions
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the validity or legality of the transactions contemplated hereby or seeks
damages in connection therewith, the parties hereto agree to cooperate and use
their reasonable efforts to defend against and respond thereto.
5.5 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except
that expenses incurred in connection with printing and mailing the Registration
Statement and the Proxy Statement shall be shared equally by Noble and Chiles;
provided, however, that if this Agreement shall have been terminated pursuant to
Section 7.1 as a result of the willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, such breaching party shall pay the costs and expenses of the other
parties in connection with the transactions contemplated by this Agreement.
5.6 Noble's Board of Directors. Noble's Board of Directors will take action
to increase the number of directors comprising the full Board of Directors of
Noble at the Effective Time to nine persons and the directors of Noble shall
elect two persons designated by Chiles to fill the two vacancies created by the
increase in the number of directors prior to the Effective Time. The designees
of Chiles shall be as set forth in Part I of Exhibit C. If, prior to the
Effective Time, any such designees shall decline or be unable to serve, Chiles
shall designate another person to serve in such person's stead in accordance
with the provisions of Part II of Exhibit C.
5.7 Indemnification.
(a) From and after the Effective Time, Noble and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective
Time, an officer, director or employee of Chiles or any of the Chiles
Subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid
in settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of Chiles or any of the Chiles Subsidiaries,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether reasserted or claimed prior to, or at or after,
the Effective Time ("Indemnified Liabilities"), including without
limitation all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby, AND SPECIFICALLY INCLUDING ANY
INDEMNIFIED LIABILITY THAT MAY BE BASED ON THE SOLE OR CONTRIBUTORY
NEGLIGENCE (WHETHER ACTIVE, PASSIVE, OR GROSS) OF ANY INDEMNIFIED PARTY, in
each case to the full extent such corporations are permitted under the DGCL
to indemnify their own directors, officers and employees, as the case may
be (and the Surviving Corporation or Noble will pay expenses in advance of
the final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). The defense of any such claim,
action, suit, proceeding or investigation shall be conducted by Noble. If
Noble has failed to conduct such defense, the Indemnified Parties may
retain counsel satisfactory to them and the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received. The party not
conducting the defense will use reasonable efforts to assist in the
vigorous defense of any such matter, provided that such party shall not be
liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.7,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify Noble (but the failure so to notify a party shall not relieve
such party from any liability which it may have under this Section 5.7
except to the extent such failure materially prejudices such party). If
Noble and the Surviving Corporation are responsible for the attorneys' fees
of the Indemnified Parties, then the Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties.
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(b) The Surviving Corporation shall purchase and maintain for a period
of six years after the Effective Time continuation coverage for Chiles's
directors' and officers' liability insurance policy as in effect on the
date hereof or obtain a directors' and officers' insurance policy with
comparable coverage.
(c) The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each
Indemnified Party, his heirs and his representatives.
5.8 Chiles Employee Benefits.
(a) After the Effective Time, Noble shall provide those employees of
Chiles and the Chiles Subsidiaries covered by the benefit plans of Chiles
and the Chiles Subsidiaries with the same benefits in respect of future
service that accrue in respect of future services to the employees of Noble
who are employed in comparable positions. Noble and Chiles further agree
that any present employees of Chiles and the Chiles Subsidiaries shall be
credited for their service with Chiles for purposes of eligibility, benefit
entitlement and vesting in the plans provided by Noble (other than for
purposes of benefit accruals under any defined benefit pension plan). Those
employees' benefits under Noble's medical benefit plan shall not be subject
to any exclusions for any pre-existing conditions, and credit shall be
received for any deductibles or out-of-pocket amounts previously paid.
(b) The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each
employee of Chiles or any of the Chiles Subsidiaries covered by benefit
plans of Chiles or a Chiles Subsidiary.
5.9 Post-Effective Time Mailing. As soon as practicable following the
Effective Time, Noble will cause to be mailed to each holder of certificates
that represented Shares immediately prior to the Effective Time, at such
holder's address as it appears on Chiles's stock transfer records, a letter of
transmittal and other information advising such holder of the consummation of
the Merger along with information and instructions to enable such holder to
effect the exchange of stock certificates as contemplated by Article I of this
Agreement.
5.10 Tax Opinion. Noble covenants and agrees that during the two year
period following the Merger it will not cause or permit the Surviving
Corporation to sell or otherwise dispose of assets of Chiles vested in the
Surviving Corporation other than in the ordinary course of business having a
fair market value in excess of 10% of the fair market value of the net assets or
30% of the fair market value of the gross assets of Chiles as of the Effective
Time without first obtaining an opinion of counsel that such sale or disposition
will not affect the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
5.11 Chiles Stock Options.
(a) Chiles covenants and agrees to use its best efforts to take all
action necessary to provide for the exchange of the Chiles Options for
shares of Noble Common Stock as described in this Section 5.11(a),
including, but not limited to, making any necessary amendments to the
Chiles 1990 Plan and obtaining the consent of each holder of the Chiles
Options to the exchange of such holder's options. Subject to obtaining the
consent of each holder of the Chiles Options, and further subject to the
consummation of the Merger and effective at the Effective Time, all then
outstanding Chiles Options shall be cancelled in exchange for shares of
Noble Common Stock. If all the currently outstanding Chiles Options remain
outstanding immediately prior to the Effective Time, then such options
shall be cancelled in exchange for an aggregate of 480,000 shares of Noble
Common Stock. If any currently outstanding Chiles Options are exercised
prior to the Effective Time, then the aggregate number of shares of Noble
Common Stock specified in the immediately preceding sentence shall be
reduced based on a formula that ascribes to such exercised option a
proportionate value of the value of all the currently outstanding Chiles
Options. The number of shares of Noble Common Stock to be received by each
holder of a Chiles Option shall be based on a formula that provides that
all holders of Chiles Options having the same exercise price per share and
vesting schedule shall receive the same number of shares of Noble Common
Stock per share of Chiles Common Stock purchasable under such Chiles
Options.
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(b) If the consent to the exchange described in Section 5.11(a) by
each of the holders of Chiles Options has not been obtained by Chiles prior
to the Closing Date, then, in order to preserve that the Merger be treated
as a "pooling of interests" for accounting purposes, the Chiles Options
shall not be exchanged as provided in Section 5.11(a) and Noble will take
such action as is necessary to assume, effective at the Effective Time,
each Chiles Option that remains as of such time unexercised in whole or in
part and to substitute shares of Noble Common Stock as purchasable under
each such assumed option ("Assumed Option"), with such assumption and
substitution to be effected as follows:
(i) The Assumed Option shall not give the optionee additional
benefits which he did not have under the Chiles Option before such
assumption and shall be assumed on the same terms and conditions,
including, without limitation, vesting schedule, as the Chiles Options
being assumed, subject to Section 5.11(b)(ii) and (iii);
(ii) The number of shares of Noble Common Stock purchasable under
the Assumed Option shall be equal to the number of shares of Noble
Common Stock that the holder of the Chiles Option being assumed would
have received (without regard to any vesting schedule) upon consummation
of the Merger had such Chiles Option been exercised in full immediately
prior to consummation of the Merger; and
(iii) The per share exercise price of such Assumed Option shall be
an amount equal to the per share exercise price of the Chiles Option
being assumed divided by 0.75.
(c) If the Chiles Options are assumed by Noble pursuant to Section
5.11(b), Noble shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Noble Common Stock for delivery
upon exercise of the Assumed Options, and, as soon as practicable after the
Effective Time, Noble shall file a registration statement on Form S-8 (or
other appropriate form) with respect to the shares of Noble Common Stock
subject to the Assumed Options, and shall use its best efforts to maintain
the effectiveness of such registration statement (and maintain the current
status of any prospectus contained therein) for so long as any of the
Assumed Options remain outstanding.
5.12 Designation of $1.50 Noble Preferred Stock. Noble agrees to take such
action prior to the Effective Time, including the filing of a certificate of
designations with the Secretary of State of Delaware, to establish and create a
new series of Noble preferred stock designated the "$1.50 Convertible Preferred
Stock" from its authorized but unissued shares of preferred stock and having
substantially the same rights, privileges, preferences and voting power as
shares of Chiles Preferred Stock. The shares of $1.50 Noble Preferred Stock
issuable pursuant to the Merger to holders of Chiles Preferred Stock shall be
convertible into the consideration received by holders of Chiles Common Stock at
the Conversion Price (as defined in the certificate of designations of the
Chiles Preferred Stock) immediately after the Effective Time. The shares of
$1.50 Noble Preferred Stock and the shares of $2.25 Noble Preferred Stock shall
rank on a parity with each other in respect of the payment of dividends and upon
liquidation, dissolution or winding up of Noble.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Noble Charter Amendment shall have been
approved and adopted by the requisite vote of the stockholders of Noble,
and this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of Chiles, as may be required by law, by the rules
of the NASDAQ National Market System and the American Stock Exchange,
respectively, and by any applicable provisions of their respective
certificates of incorporation or bylaws;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
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(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Merger;
(d) The Registration Statement shall be effective on the Closing Date,
and all post-effective amendments filed shall have been declared effective
or shall have been withdrawn; and no stop-order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the parties,
threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that reasonably
may be deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a material adverse effect
on the business, financial condition or results of operations of Noble, the
Surviving Corporation and their subsidiaries, taken as a whole after
consummation of the Merger;
(f) The shares of Noble Common Stock and $1.50 Noble Preferred Stock
issuable upon consummation of the Merger and the shares of Noble Common
Stock issuable upon conversion of the $1.50 Noble Preferred Stock or upon
exercise of any Assumed Options shall have been approved for listing on the
NASDAQ National Market System, subject to official notice of issuance;
(g) All approvals of private persons or corporations, (i) the granting
of which is necessary for the consummation of the Merger or the
transactions contemplated in connection therewith and (ii) the non-receipt
of which would have a material adverse effect on the business, financial
condition or results of operations of Noble, the Surviving Corporation and
their subsidiaries, taken as a whole after the consummation of the Merger,
shall have been obtained; and
(h) Noble and Chiles shall have been advised in writing on the Closing
Date by Arthur Andersen & Co. that, in accordance with generally accepted
accounting principles, the Merger should be treated as a "pooling of
interests" for accounting purposes.
6.2 Additional Conditions to Obligations of Noble. The obligation of Noble
to effect the Merger is, at the option of Noble, also subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Chiles contained in Section
2.2 shall be accurate in all material respects as of the date of this
Agreement and (except to the extent such representations and warranties
speak specifically as of an earlier date) as of the Closing Date as though
such representations and warranties had been made at and as of that time;
all of the terms, covenants and conditions of this Agreement to be complied
with and performed by Chiles on or before the Closing Date shall have been
duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Chiles shall have been delivered to Noble;
(b) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or business of Chiles and
the Chiles Subsidiaries, taken as a whole, shall have occurred, and Chiles
and the Chiles Subsidiaries shall not have suffered any damage, destruction
or loss materially adversely affecting the properties or business of Chiles
and the Chiles Subsidiaries, taken as a whole, and Noble shall have
received a certificate signed by the chief executive officer of Chiles
dated the Closing Date to such effect;
(c) The Board of Directors of Noble shall have received from Simmons &
Company International, financial advisor to Noble, a written opinion, dated
as of the date of this Agreement, satisfactory in form and substance to the
Board of Directors of Noble, to the effect that (i) the conversion ratio of
0.75 of a share of Noble Common Stock to be issued for each share of Chiles
Common Stock and (ii) the conversion ratio of one share of $1.50 Noble
Preferred Stock to be issued for each share of Chiles Preferred Stock, in
each case pursuant to the Merger, is fair to the stockholders of Noble from
a financial
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point of view, which opinion shall have been confirmed in writing to such
Board as of the date the Proxy Statement is first mailed to the
stockholders of Noble and not subsequently withdrawn;
(d) Chiles shall have received, and furnished written copies to Noble
of, the Chiles affiliates' agreements pursuant to Section 3.5;
(e) Noble shall have received from Vinson & Elkins L.L.P., counsel to
Chiles, an opinion dated the Closing Date covering the matters set forth in
Exhibit D;
(f) Noble shall have received from Thompson & Knight, P.C. a written
opinion dated as of the date that the Proxy Statement is first mailed to
stockholders of Noble to the effect that (i) the Merger will be treated for
U.S. federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, (ii) Noble, Sub and Chiles will each be a party
to that reorganization within the meaning of Section 368(b) of the Code,
and (iii) Noble, Sub and Chiles shall not recognize any gain or loss for
U.S. federal income tax purposes as a result of the Merger, and such
opinion shall not have been withdrawn or modified in any material respect;
(g) The Shareholder Voting Agreement dated April 23, 1990, as amended
on May 24, 1991, among P.A.J.W. Corporation, OMI Investments, Inc., AWILCO
Shipping and WILCO A/S shall have been terminated or shall terminate by its
terms as of the Effective Time; and
(h) Chiles and its agent in Nigeria, Hydrocarbon Services of Nigeria
("HSN"), shall have executed any documentation necessary to the reasonable
satisfaction of Noble to permit the export of the drilling rigs of Chiles
that have been imported by HSN and Chiles into Nigeria.
6.3 Additional Conditions to Obligations of Chiles. The obligation of
Chiles to effect the Merger is, at the option of Chiles, also subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Noble and Sub contained in
Section 2.1 shall be accurate in all material respects as of the date of
this Agreement and (except to the extent such representations and
warranties speak specifically as of an earlier date) as of the Closing Date
as though such representations and warranties had been made at and as of
that time; all the terms, covenants and conditions of this Agreement to be
complied with and performed by Noble on or before the Closing Date shall
have been duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Noble shall have been delivered to Chiles;
(b) Since the date of this Agreement, no material adverse change in
the results of operations, financial condition or business of Noble and the
Noble Subsidiaries, taken as a whole, shall have occurred, and Noble and
the Noble Subsidiaries shall not have suffered any damage, destruction or
loss materially adversely affecting the properties or business of Noble and
the Noble Subsidiaries, taken as a whole, and Chiles shall have received a
certificate signed by the chief executive officer of Noble dated the
Closing Date to such effect;
(c) Chiles shall have received from Salomon Brothers Inc, financial
advisor to Chiles, a written opinion, dated as of the date of this
Agreement, satisfactory in form and substance to the Board of Directors of
Chiles, to the effect that (i) the conversion ratio of 0.75 of a share of
Noble Common Stock to be issued for each share of Chiles Common Stock and
(ii) the conversion ratio of one share of $1.50 Noble Preferred Stock to be
issued for each share of Chiles Preferred Stock, in each case pursuant to
the Merger, is fair to the common and preferred stockholders of Chiles from
a financial point of view, which opinion shall have been confirmed in
writing to such Board as of the date the Proxy Statement is first mailed to
the stockholders of Chiles and not subsequently withdrawn;
(d) The Board of Directors of Noble shall have taken such action as
may be necessary to elect the persons designated by Chiles on or pursuant
to Exhibit C to the Noble Board of Directors effective as of the Effective
Time;
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(e) Chiles shall have received from Thompson & Knight, P.C., counsel
to Noble, an opinion dated the Closing Date covering the matters set forth
in Exhibit E;
(f) Noble shall have received, and furnished copies to Chiles of, the
Noble affiliates' agreements pursuant to Section 4.7; and
(g) Chiles shall have received from Vinson & Elkins L.L.P., a written
opinion dated as of the date that the Proxy Statement is first mailed to
stockholders of Chiles to the effect that (i) the Merger will be treated
for U.S. federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code; (ii) Noble, Sub and Chiles will each be a
party to that reorganization within the meaning of Section 368(b) of the
Code; and (iii) the stockholders of Chiles shall not recognize any gain or
loss for U.S. federal income tax purposes as a result of the Merger, other
than to the extent such stockholders receive cash in lieu of fractional
shares, and such opinion shall not have been withdrawn or modified in any
material respect.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of Noble
or the stockholders of Chiles:
(a) by mutual consent of Noble and Chiles;
(b) by either Noble or Chiles if the Merger has not been effected on
or before January 31, 1995;
(c) by Noble if the condition set forth in Section 6.2(c) is not
satisfied;
(d) by Chiles if the condition set forth in Section 6.3(c) is not
satisfied;
(e) by either Noble or Chiles if a final, unappealable order of a
judicial or administrative authority of competent jurisdiction to restrain,
enjoin or otherwise prevent a consummation of this Agreement or the
transactions contemplated in connection herewith shall have been entered;
(f) by either Noble or Chiles if the required approval of the
stockholders of Chiles or the stockholders of Noble provided for in
Sections 3.3 and 4.3, respectively, is not received in a vote duly taken at
their respective stockholders' meetings;
(g) by Noble if (i) since the date of this Agreement there has been a
material adverse change in the results of operations, financial condition
or business of Chiles and the Chiles Subsidiaries, taken as a whole, or
(ii) there has been a material breach of any representation or warranty or
covenant set forth in this Agreement by Chiles which breach has not been
cured within five business days following receipt by Chiles of notice of
such breach;
(h) by Chiles if (i) since the date of this Agreement there has been a
material adverse change in the results of operations, financial condition
or business of Noble and the Noble Subsidiaries, taken as a whole, or (ii)
there has been a material breach of any representation or warranty or
covenant set forth in this Agreement by Noble which breach has not been
cured within five business days following receipt by Noble of notice of
such breach; or
(i) by Noble if the Board of Directors of Chiles exercises its right
pursuant to Section 3.4 not to convene a meeting of the Chiles
stockholders.
7.2 Effect of Termination.
(a) In the event of any termination of this Agreement pursuant to
Section 7.1, (i) the provisions of the Confidentiality Agreements (as
defined below) and the provisions of Section 5.5 shall survive any such
termination, and (ii) such termination shall not relieve any party from
liability for any breach of this Agreement.
27
<PAGE> 119
(b) In the event that either Noble or Chiles terminates this Agreement
pursuant to Sections 7.1(a), 7.1(b), 7.1(d), 7.1(f), 7.1(g)(ii) or 7.1(i),
and (i) this Agreement has either not been submitted to the stockholders of
Chiles or the stockholders of Chiles have declined to approve this
Agreement by the requisite vote, (ii) after the date of this Agreement but
at or before the time this Agreement is terminated there shall have been a
Chiles Acquisition Transaction proposed in writing to Chiles and (iii) any
Chiles Acquisition Transaction (whether the same or different from the one
referenced in clause (ii)) is consummated at any time within one year after
the date of this Agreement, then Chiles shall promptly pay to Noble the sum
of $6,000,000.
(c) If this Agreement is terminated pursuant to Section 7.1(f) because
of the failure of Noble to secure the approval of its stockholders as
required under Section 4.3 and the conditions to closing set forth in
Sections 6.1 and 6.2 (other than Sections 6.1(f), 6.1(h), 6.2(d), 6.2(e),
6.2(f), 6.2(g) and 6.2(h)) have otherwise been satisfied, then Noble shall
promptly, but in no event later than five business days after written
request by Chiles, pay to Chiles an amount equal to $1,000,000 in
immediately available funds as reimbursement for an agreed upon estimate of
Chiles's out-of-pocket fees and expenses incurred in connection with the
transactions contemplated hereby.
(d) If this Agreement is terminated pursuant to Section 7.1(f) because
of the failure of Chiles to secure the approval of its stockholders as
required under Section 3.3 and the conditions to closing set forth in
Sections 6.1 and 6.3 (other than Sections 6.1(f), 6.1(h), 6.3(d), 6.3(e),
6.3(f), and 6.3(g)) have otherwise been satisfied, then Chiles shall
promptly, but in no event later than five business days after written
request by Noble, pay to Noble an amount equal to $1,000,000 in immediately
available funds as reimbursement for an agreed upon estimate of Noble's
out-of-pocket fees and expenses incurred in connection with the
transactions contemplated hereby; provided, however, that if Chiles shall
be obligated to make any payment to Noble pursuant to Section 7.2(b), then
Chiles shall be entitled to offset from any amount due under Section 7.2(b)
any amount paid to Noble pursuant to this Section 7.2(d).
7.3 Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any time,
except by an instrument in writing signed on behalf of each party hereto,
provided that after this Agreement has been approved and adopted by the
stockholders of Noble and Chiles, this Agreement may be amended only as may be
permitted by applicable provisions of the DGCL. The waiver by any party hereto
of any condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement other than with respect to the condition so waived.
7.4 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the terms of Article I, the second paragraph of Section 2.1(i),
the third, fourth and fifth sentences of the second paragraph of Section 2.2(i),
Sections 5.7, 5.8, 5.10 and 5.11, Article VII, and the agreements of the
"affiliates" of Chiles and Noble delivered pursuant to Sections 3.5 and 4.7,
respectively hereof.
7.5 Public Statements. Chiles and Noble agree to consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or applicable stock exchange policy.
7.6 Assignment. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns. Except as set forth in this Agreement, this
Agreement shall not be assignable by the parties hereto.
28
<PAGE> 120
7.7 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
<TABLE>
<S> <C>
if to Chiles: Chiles Offshore Corporation
1400 Broadfield Blvd., Suite 400
Houston, Texas 77084-5133
Attention: C. Ray Bearden
with a copy to: Vinson & Elkins L.L.P.
2500 First City Tower
Houston, Texas 77002-6760
Attention: Keith R. Fullenweider
if to Noble: Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Attention: James C. Day
with a copy to: Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Attention: Robert D. Campbell
</TABLE>
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of Texas without giving effect
to the principles of conflicts of law thereof.
7.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
7.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
7.11 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.12 Confidentiality Agreements. The Confidentiality Agreements entered
into between Noble and Chiles in May 1994 (the "Confidentiality Agreements") are
hereby incorporated by reference herein and made a part hereof.
7.13 Entire Agreement; Third Party Beneficiaries. This Agreement and the
Confidentiality Agreements constitute the entire agreement and supersede all
other prior agreements and understandings, both oral and written, among the
parties or any of them, with respect to the subject matter hereof and neither
this nor any document delivered in connection with this Agreement confers upon
any person not a party hereto any rights or remedies hereunder except as
provided in Sections 5.7, 5.8 and 5.11.
7.14 Disclosure Letters.
(a) The Chiles Disclosure Letter, executed by Chiles as of the date
hereof, and delivered to Noble on the date hereof, contains all disclosure
required to be made by Chiles under the various terms and
29
<PAGE> 121
provisions of this Agreement. Each item of disclosure set forth in the
Chiles Disclosure Letter specifically refers to the Article and Section of
the Agreement to which such disclosure responds, and shall not be deemed to
be disclosed with respect to any other Article or Section of the Agreement.
(b) The Noble Disclosure Letter, executed by Noble as of the date
hereof, and delivered to Chiles on the date hereof, contains all disclosure
required to be made by Noble under the various terms and provisions of this
Agreement. Each item of disclosure set forth in the Noble Disclosure Letter
specifically refers to the Article and Section of the Agreement to which
such disclosure responds, and shall not be deemed to be disclosed with
respect to any other Article or Section of the Agreement.
7.15 Stock Exchange. If any securities of Noble become listed and traded on
the New York Stock Exchange, references herein to the "NASDAQ National Market
System" shall be deemed changed to the "New York Stock Exchange" where the
context so requires; provided that, subject to Section 6.1(f) hereof, there
shall be no obligation on Noble to list the $1.50 Noble Preferred Stock on such
exchange.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
JAMES C. DAY
Chairman, President and
Chief Executive Officer
NOBLE OFFSHORE CORPORATION
By: /s/ BYRON L. WELLIVER
BYRON L. WELLIVER
President
CHILES OFFSHORE CORPORATION
By: /s/ C. RAY BEARDEN
C. RAY BEARDEN
President
30
<PAGE> 122
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Agreement............................................................................. 1
Noble................................................................................. 1
Sub................................................................................... 1
Chiles................................................................................ 1
Merger................................................................................ 1
Chiles Common Stock................................................................... 1
Noble Common Stock.................................................................... 1
Chiles Preferred Stock................................................................ 1
$1.50 Noble Preferred Stock........................................................... 1
Code.................................................................................. 1
DGCL.................................................................................. 1
Surviving Corporation................................................................. 1
Closing............................................................................... 1
Closing Date.......................................................................... 1
Effective Time........................................................................ 1
Shares................................................................................ 2
Noble Subsidiaries.................................................................... 4
Noble Disclosure Letter............................................................... 4
Noble Certificate..................................................................... 4
Noble Charter Amendment............................................................... 4
$2.25 Noble Preferred Stock........................................................... 4
Triton Agreement...................................................................... 4
Noble Options......................................................................... 5
HSR Act............................................................................... 5
Commission............................................................................ 6
Securities Act........................................................................ 6
Exchange Act.......................................................................... 6
Noble Commission Filings.............................................................. 6
Permitted Liens....................................................................... 7
Noble ERISA Affiliate................................................................. 7
ERISA................................................................................. 7
Plan.................................................................................. 7
Benefit Program or Agreement.......................................................... 7
Tax Returns........................................................................... 8
Taxes................................................................................. 8
Tax................................................................................... 8
Environmental Laws.................................................................... 10
CERCLA................................................................................ 10
RCRA.................................................................................. 10
OPA................................................................................... 10
Governmental Authority................................................................ 10
Chiles Subsidiaries................................................................... 11
Chiles Disclosure Letter.............................................................. 11
Chiles Certificate.................................................................... 11
Chiles Options........................................................................ 11
Chiles 1990 Plan...................................................................... 11
Chiles Commission Filings............................................................. 12
Chiles ERISA Affiliate................................................................ 13
Proxy Statement....................................................................... 18
Chiles Acquisition Transaction........................................................ 18
Registration Statement................................................................ 20
Indemnified Parties................................................................... 22
Indemnified Liabilities............................................................... 22
Assumed Option........................................................................ 24
HSN................................................................................... 26
Confidentiality Agreements............................................................ 29
</TABLE>
<PAGE> 123
APPENDIX II
SIMMONS & COMPANY INTERNATIONAL
700 Louisiana Street, Suite 5000
Houston, Texas 77002
713-236-9999
June 13, 1994
Board of Directors
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Members of the Board:
You have requested the opinion of Simmons & Company International ("Simmons") as
investment bankers as to the fairness, from a financial point of view, to the
holders of common stock and $2.25 convertible exchangeable preferred stock
("$2.25 Noble Preferred Stock") of Noble Drilling Corporation ("Noble" or the
"Company") of the consideration to be paid by Noble in the proposed merger of
Chiles Offshore Corporation ("Chiles") with and into Noble Offshore Corporation,
a wholly owned subsidiary of the Company (the "Noble Sub"), pursuant to the
Agreement and Plan of Merger (the "Agreement"), to be executed by Noble, the
Noble Sub and Chiles (the "Proposed Merger").
As more specifically set forth in the Agreement, in the Proposed Merger each
issued and outstanding share of common stock of Chiles ("Chiles Common Stock")
will be converted into the right to receive 0.75 of a share of common stock, par
value of $.10 per share, of Noble ("Noble Common Stock"). Each issued and
outstanding share of $1.50 convertible preferred stock of Chiles ("Chiles
Preferred Stock") will be converted into the right to receive one share of a new
series of $1.50 convertible preferred stock of Noble having substantially the
same rights, privileges, preferences, and voting power as the Chiles Preferred
Stock.
Simmons, as a specialized energy-related investment banking firm, is engaged in,
among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, the management and underwriting of
sales of equity and debt to the public, and private placements of equity and
debt. Simmons has previously rendered investment banking services to the Company
in connection with a number of transactions for which Simmons received customary
compensation. In addition, in the ordinary course of business, Simmons may
actively trade the securities of Noble and Chiles for its own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
In connection with rendering its opinion, Simmons has reviewed and analyzed,
among other things, the following: (i) the Agreement; (ii) the financial
statements and other information concerning the Company, including the Annual
Reports on Form 10-K of the Company for each of the years in the three year
period ended December 31, 1993, the common stock and senior notes prospectuses
of the Company dated September 30, 1993, the Current Report on Form 8-K of the
Company dated April 22, 1994, and the Quarterly Report on Form 10-Q of the
Company for the quarter ended March 31, 1994; (iii) certain near-term forecasts
and other internal information, primarily financial in nature, concerning the
business and operations of the Company, and reflecting its recent acquisitions,
furnished by the Company for purposes of Simmons' analysis; (iv) certain
publicly available information concerning the trading of, and the trading market
for, Noble Common Stock and the $2.25 Noble Preferred Stock; (v) certain
publicly available information concerning Chiles, including the Annual Reports
on Form 10-K of Chiles for each of the years in the three year period ended
December 31, 1993, the preferred stock prospectus of Chiles dated October 14,
1993, and the Quarterly Report on Form 10-Q of Chiles for the quarter ended
March 31, 1994; (vi) certain near-term forecasts and other internal information,
primarily financial in nature, concerning the business and operations of Chiles
furnished by Chiles for purposes of Simmons' analysis; (vii) certain publicly
available information concerning the trading of, and the trading market for,
Chiles Common Stock and Chiles Preferred Stock; (viii) certain publicly
available information with respect to certain other companies that Simmons
believes to be comparable to the Company or Chiles ("Comparable Companies") and
the trading markets for
<PAGE> 124
Board of Directors
Noble Drilling Corporation
June 13, 1994
Page 2
such Comparable Companies' securities; (ix) certain publicly available
information concerning estimates of the future operating and financial
performance of the Company, Chiles and Comparable Companies prepared by industry
experts unaffiliated with either the Company or Chiles; and (x) certain publicly
available information concerning the nature and terms of certain other
transactions considered relevant to the inquiry. Simmons has also met with
certain officers and employees of the Company and Chiles to discuss the
foregoing as well as other matters believed relevant to the inquiry.
In the review and analysis and in arriving at its opinion, Simmons has assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided by the Company and Chiles, or publicly available, including
without limitation, information with respect to asset conditions, tax positions,
liability reserves and insurance coverages, and has not attempted independently
to verify any of such information. Simmons has not conducted a physical
inspection of any of the assets, properties or facilities of the Company or
Chiles, nor has Simmons made or obtained any independent valuations or
appraisals of any of such properties or facilities, other than certain publicly
available estimates (the "Analyst Reports"). We have also assumed, with your
permission, that the Proposed Merger be treated as a "pooling of interests" in
accordance with generally accepted accounting principles.
In conducting its analysis and arriving at its opinion as expressed herein,
Simmons has considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of the
Company and Chiles; (ii) the business prospects of the Company and Chiles; (iii)
the financial performance and historical and current market for the equity
securities of Noble, Chiles and Comparable Companies; (iv) the relative value of
each company's assets, based upon the Analyst Reports and information contained
in each company's balance sheet; (v) the respective contributions in terms of
assets, and current and prospective earnings and cash flow of Noble and Chiles
to the combined company, and the relative ownership of Noble after the Proposed
Merger by the current holders of Noble Common Stock and Chiles Common Stock;
(vi) the pro forma effect of the Proposed Merger on Noble's capitalization
ratios, earnings per share and cash flow per share; and (vii) the nature and
terms of certain other acquisition transactions that Simmons believes to be
relevant. Simmons' analyses reflect recent acquisitions and current
capitalization structures of the Company and Chiles. Simmons has also taken into
account other financial analyses and studies deemed appropriate, its assessment
of general economic, market and financial conditions, and its experience in
connection with similar transactions and securities valuation generally.
Simmons' opinion necessarily is based upon conditions as they exist and can be
evaluated on, and on the information made available at, the date hereof.
Simmons is acting as financial advisor to the Company in this transaction and
will receive a customary fee for its services.
Based upon and subject to the foregoing, Simmons is of the opinion, as
investment bankers, that the consideration to be paid by the Company in the
Proposed Merger is fair, from a financial point of view, to holders of Noble
Common Stock and the $2.25 Noble Preferred Stock.
Sincerely,
SIMMONS & COMPANY INTERNATIONAL
/s/ NICHOLAS L. SWYKA
- ---------------------------
Nicholas L. Swyka
Managing Director
NLS/sm
<PAGE> 125
August 12, 1994
Board of Directors
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Members of the Board:
Reference is made to our letter dated June 13, 1994 with respect to the
proposed merger of Chiles Offshore Corporation ("Chiles") with and into a
wholly owned subsidiary of Noble Drilling Corporation (the "Company"), a copy
of which is attached. Capitalized terms used and not defined herein shall have
the meanings assigned to them in our June 13, 1994 letter.
This is to advise you that since the date of our June 13, 1994 letter, we have
performed the following additional procedures:
(1) monitored the stock prices of the Company, Chiles and companies
deemed comparable to the Company or Chiles ("Comparable Companies");
(2) reviewed all publicly available press releases made by the Company
and Chiles;
(3) monitored certain other publicly available information of the
Company, Chiles and Comparable Companies, including, to the extent
available, Quarterly Reports on Form 10-Q and estimates of the
future operating and financial performance of the Company, Chiles and
Comparable Companies prepared by industry experts unaffiliated with
either the Company or Chiles;
(4) reviewed with management the latest available financial statements of
the Comapny and Chiles, including Quarterly Reports on Form 10-Q of
the Comapny and Chiles for the quarter ended June 30, 1994;
(5) discussed with management recent events and any changes in the
forecasts of 1994 operating results of the Company and Chiles;
(6) monitored certain publicly available information regarding the nature
and terms of certain other transactions deemed relevant to the
proposed merger;
<PAGE> 126
Board of Directors
Noble Drilling Corporation
August 12, 1994
Page 2
(7) monitored certain publicly available spot and futures prices of
crude oil and natural gas and certain publicly available offshore
drilling rig statistics; and
(8) reviewed the Company's Registration Statement on Form S-4 (No.
33-54495), as amended, which includes the Joint Proxy Statement/
Prospectus relating to the proposed merger.
Based upon the foregoing, Simmons confirms as of the date hereof, its opinion
of June 13, 1994, that the consideration to be paid by the Company in the
proposed merger is fair, from a financial point of view, to holders of Noble
Common Stock and the $2.25 Noble Preferred Stock.
Sincerely,
SIMMONS & COMPANY INTERNATIONAL
/s/ Nicholas L. Swyka
Nicholas L. Swyka
Managing Director
NLS/sm
Attachments
<PAGE> 127
APPENDIX III
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
212-783-7000
SALOMON BROTHERS
August 12, 1994
The Board of Directors
Chiles Offshore Corporation
1400 Broadfield Boulevard, Suite 400
Houston, Texas 77084
Members of the Board:
You have requested our opinion as investment bankers as to the fairness, from a
financial point of view, to the holders of shares of common stock, par value
$0.01 per share (the "Company Common Stock"), and to holders of shares of $1.50
Convertible Preferred Stock, par value $1.00 per share (the "Company Preferred
Stock"), of Chiles Offshore Corporation (the "Company") of the consideration to
be received by such stockholders in the proposed merger of the Company with
Noble Offshore Corporation ("Acquiror Sub"), a wholly-owned subsidiary of Noble
Drilling Corporation ("Acquiror"), pursuant to the Agreement and Plan of Merger,
dated as of June 13, 1994 (the "Agreement"), among Acquiror, Acquiror Sub and
the Company (the "Proposed Merger").
As more specifically set forth in the Agreement, and subject to the terms and
conditions thereof, in the Proposed Merger, each issued and outstanding share of
the Company Common Stock will be converted into the right to receive 0.75 of a
share of common stock, par value $0.10 per share, of Acquiror (the "Acquiror
Common Stock") and each issued and outstanding share of Company Preferred Stock
will be converted into the right to receive one share of a new series of $1.50
convertible preferred stock of Acquiror (the "Acquiror Preferred Stock").
Pursuant to the Agreement, cash will be exchanged in lieu of fractional shares
of the Acquiror Common Stock.
As you are aware, Salomon Brothers Inc has acted as financial advisor to the
Company in connection with the Merger and will receive a fee for our services.
Salomon Brothers Inc has previously rendered certain investment banking and
financial advisory services to the Company for which we have received customary
compensation. Salomon Brothers Inc has also previously rendered investment
banking and financial advisory services to Acquiror for which we have received
customary compensation. In addition, in the ordinary course of our business, we
may actively trade the securities of the Company and Acquiror for our own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
In connection with rendering our opinion we have reviewed and analyzed, among
other things, the following: (i) the Agreement; (ii) certain publicly available
information concerning the Company, including the Annual Reports on Form 10-K of
the Company for each of the three years in the three year period ended December
31, 1993 and the Quarterly Reports on Form 10-Q of the Company for the quarters
ended March 31, 1994, and June 30, 1994; (iii) certain internal information,
primarily historical financial in nature, concerning the business and operations
of the Company furnished to us by the Company for purposes of our analysis; (iv)
certain publicly available information concerning the trading of, and the
trading market for, the Company Common Stock; (v) certain publicly available
information concerning Acquiror, including the
<PAGE> 128
The Board of Directors
Chiles Offshore Corporation
August 12, 1994
Page 2
SALOMON BROTHERS
Annual Reports on Form 10-K of Acquiror for each of the three years in the three
year period ended December 31, 1993 and the Quarterly Reports on Form 10-Q of
the Acquiror for the quarters ended March 31, 1994, and June 30, 1994; (vi)
certain internal information, primarily historical financial in nature,
concerning the business and operations of Acquiror furnished to us by Acquiror
for purposes of our analysis; (vii) certain publicly available information
concerning the trading of, and the trading market for, the Acquiror Common
Stock; (viii) certain publicly available information with respect to certain
other companies that we believe to be comparable to the Company or Acquiror and
the trading markets for certain of such other companies' securities; and (ix)
certain publicly available information concerning the nature and terms of
certain other transactions that we consider relevant to our inquiry. We have
also met with certain officers and employees of the Company and Acquiror to
discuss the foregoing as well as other matters we believe relevant to our
inquiry.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have not attempted
independently to verify any of such information. We have not conducted a
physical inspection of any of the properties or facilities of the Company of
Acquiror, nor have we made or obtained any independent appraisals of any of such
properties or facilities. We have assumed that the Acquiror Preferred Stock will
have substantially identical rights, privileges, preferences and voting power as
those of the Company Preferred Stock. In addition, we have assumed that the
Proposed Merger will not be taxable for the holders of the Company Common Stock
and the Company Preferred Stock, and that the Proposed Merger will be accounted
for as a pooling of interests.
In conducting our analysis and arriving at our opinion as expressed herein, we
have considered such financial and other factors as we have deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of the
Company and Acquiror; (ii) the business prospects of the Company and Acquiror;
(iii) the historical and current trading market for the Company Common Stock,
for the Acquiror Common Stock and for the equity securities of certain other
companies that we believe to be comparable to the Company and Acquiror; and (iv)
the nature and terms of certain other acquisition transactions that we believe
to be relevant. We have also taken into account our assessment of general
economic, market and financial conditions and our experience in connection with
similar transactions and securities valuation generally. Our opinion is
necessarily based upon conditions as they exist and can be evaluated on the date
hereof. Our opinion as expressed herein is, in any event, limited to the
fairness, from a financial point of view, to the holders of the Company Common
Stock and the Company Preferred Stock, of the consideration to be received by
such holders in the Proposed Merger and does not address the Company's
underlying business decision to effect the Proposed Merger.
Based upon and subject to the foregoing, we are of the opinion as investment
bankers that the consideration to be received by the holders of the Company
Common Stock and the Company Preferred Stock in the Proposed Merger is fair,
from a financial point of view, to such holders.
Very truly yours,
SALOMON BROTHERS INC
/s/ Salomon Brothers Inc
<PAGE> 129
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Noble is a Delaware corporation. Under Section 145 of the Delaware General
Corporation Law (the "DGCL"), Noble has the power to indemnify its directors and
officers, subject to certain limitations.
Reference is made to Article VI of the Bylaws of Noble, which provides for
indemnification of directors and officers of Noble under certain circumstances.
Pursuant to the DGCL, the Restated Certificate of Incorporation of Noble
limits the personal liability of the directors of Noble to Noble or its
stockholders for monetary damages for breach of fiduciary duty under certain
circumstances.
Noble also maintains insurance to protect itself and its directors,
officers, employees and agents against expenses, liabilities and losses incurred
by such persons in connection with their service in the foregoing capacities.
The foregoing summaries are necessarily subject to the complete text of the
statute, bylaws, restated certificate of incorporation and insurance policy
referred to above and are qualified in their entirety by reference thereto.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ----------------------------------------------------------------------
<C> <S>
2.1** -- Agreement and Plan of Merger dated as of June 13, 1994, among Noble
Drilling Corporation, Noble Offshore Corporation and Chiles
Offshore Corporation (included as Appendix I to the Joint Proxy
Statement/Prospectus included in the original filing of this
Registration Statement).
2.2 -- Stock Purchase Agreement dated April 22, 1994, between Joseph E.
Beall, George H. Bruce, Triton Engineering Services Company and
Noble Drilling Corporation (filed as Exhibit 2.1 to Noble Drilling
Corporation's Form 8-K dated May 6, 1994 and incorporated herein by
reference).
</TABLE>
<TABLE>
<C> <S>
2.3 -- Assets Purchase Agreement dated as of August 20, 1993 (the "Western
Assets Purchase Agreement"), between Noble Drilling Corporation and
The Western Company of North America (filed as Exhibit 2.1 to Noble
Drilling Corporation's Registration Statement on Form S-3 (No.
33-67130) and incorporated herein by reference).
2.4 -- Agreement dated as of October 7, 1993, among Noble Drilling
Corporation, Noble Drilling (U.S.) Inc., Noble International
Limited, The Western Company of North America and Offshore
International Ltd., amending the Western Assets Purchase Agreement
(filed as Exhibit 2.2 to Noble Drilling Corporation's Form 8-K
dated October 15, 1993 and incorporated herein by reference).
2.5 -- Exchange Agreement dated as of June 4, 1993 (the "Exchange
Agreement"), by and among Noble Drilling Corporation, Grasso
Corporation, Offshore Logistics, Inc., PPI-Seahawk Services, Inc.
and Noble Production Services Inc. (filed as Exhibit 2.2 to Noble
Drilling Corporation's Registration Statement on Form S-3 (No.
33-67130) and incorporated herein by reference).
</TABLE>
II-1
<PAGE> 130
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<S> <C>
2.6 -- Amendment No. 1 dated October 29, 1993 to the Exchange Agreement by
and among Noble Drilling Corporation, Grasso Corporation, Offshore
Logistics, Inc., PPI-Seahawk Services, Inc. and Noble Production
Services Inc. (filed as Exhibit 2.4 to Noble Drilling Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
2.7 -- Assignment and Assumption Agreement made as of October 28, 1993, by
and between Noble Production Management Inc., Noble Production
Services Inc., OLOG Production Management Inc., PPI-Seahawk
Services, Inc. and Grasso Corporation (filed as Exhibit 2.7 to
Noble Drilling Corporation's Annual Report on Form 10-K for the
year ended December 31, 1993 and incorporated herein by reference).
2.8 -- Assets Purchase Agreement dated as of August 20, 1993 (the "Portal
Assets Purchase Agreement"), between Noble Drilling Corporation and
Portal Rig Corporation (filed as Exhibit 2.3 to Noble Drilling
Corporation's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
2.9 -- Agreement dated as of October 25, 1993, among Noble Drilling
Corporation, Noble (Gulf of Mexico) Inc. and Portal Rig
Corporation, amending the Portal Assets Purchase Agreement (filed
as Exhibit 2.5 to Noble Drilling Corporation's Quarterly Report on
Form 10-Q for the three-month period ended September 30, 1993 and
incorporated herein by reference).
4.1 -- Restated Certificate of Incorporation of Noble Drilling Corporation
dated August 29, 1985 (filed as Exhibit 3.7 to Noble Drilling
Corporation's Registration Statement on Form 10 (No. 0-13857) and
incorporated herein by reference).
4.2 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated May 5, 1987 (filed as Exhibit
4.2 to Noble Drilling Corporation's Registration Statement on Form
S-3 (No. 33-67130) and incorporated herein by reference).
4.3 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated June 1, 1987 (filed as Exhibit
4.3 to Noble Drilling Corporation's Registration Statement on Form
S-3 and incorporated herein by reference).
4.4 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated April 28, 1988 (filed as
Exhibit 3.12 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1988 and incorporated herein
by reference).
4.5 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated April 27, 1989 (filed as
Exhibit 3.13 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1989, as amended, and
incorporated herein by reference).
4.6 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated August 1, 1991 (filed as
Exhibit 3.16 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1991 and incorporated herein
by reference).
4.7 -- Certificate of Designations of $2.25 Convertible Exchangeable
Preferred Stock, par value $1.00 per share, of Noble Drilling
Corporation, dated as of November 18, 1991 (filed as Exhibit 3.17
to Noble Drilling Corporation's Annual Report on Form 10-K for the
year ended December 31, 1991 and incorporated herein by reference).
</TABLE>
II-2
<PAGE> 131
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<S> <C>
4.8* -- Form of Certificate of Designations of $1.50 Convertible Preferred
Stock, par value $1.00 per share, of Noble Drilling Corporation.
4.9** -- Form of certificate to evidence shares of $1.50 Convertible
Preferred Stock of Noble Drilling Corporation.
4.10 -- Composite copy of the Bylaws of Noble Drilling Corporation as
currently in effect (filed as Exhibit 4.8 to Noble Drilling
Corporation's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
4.11 -- Indenture governing the 9 1/4% Senior Notes Due 2003 of Noble
Drilling Corporation (filed as Exhibit 4.1 to Noble Drilling
Corporation's Quarterly Report on Form 10-Q for the three-month
period ended September 30, 1993 and incorporated herein by
reference).
4.12 -- Form of Senior Notes (included in Section 2.02 of the Indenture
filed as Exhibit 4.1 to Noble Drilling Corporation's Quarterly
Report on Form 10-Q for the three-month period ended September 30,
1993 and incorporated herein by reference).
5.1* -- Opinion of Thompson & Knight, A Professional Corporation.
8.1* -- Opinion of Thompson & Knight, A Professional Corporation.
10.1** -- Credit Agreement dated as of June 16, 1994 among Noble Drilling
Corporation, First Interstate Bank of Texas, N.A., in its
individual capacity and as agent, and Credit Lyonnais Cayman Island
Branch.
10.2** -- Revolving Credit Note dated June 16, 1994 of Noble Drilling
Corporation in the amount of $12,500,000 in favor of Credit
Lyonnais Cayman Island Branch.
10.3** -- Revolving Credit Note dated June 16, 1994 of Noble Drilling
Corporation in the amount of $12,500,000 in favor of First
Interstate Bank of Texas, N.A.
10.4** -- Guaranty Agreement dated as of June 16, 1994 by and among Noble
Drilling (U.S.) Inc., Noble Drilling (West Africa) Inc. and Noble
Drilling (Mexico) Inc.
10.5* -- Amendment No. 1 to the Noble Drilling Corporation 1992 Nonqualified
Stock Option Plan for Non-Employee Directors.
12.1* -- Statement regarding computation of ratios.
23.1* -- Consent of Arthur Andersen & Co.
23.2* -- Consent of Arthur Andersen & Co.
23.3** -- Consent of KPMG Peat Marwick.
23.4* -- Consent of Thompson & Knight, A Professional Corporation (contained
in its opinion filed as Exhibit 5.1).
23.5* -- Consent of Thompson & Knight, A Professional Corporation (contained
in its opinion filed as Exhibit 8.1).
23.6* -- Consent of Simmons & Company International.
23.7* -- Consent of Salomon Brothers Inc .
24.1** -- Power of attorney (included on the signature page of the original
Registration Statement).
24.2* -- Power of attorney granted by Michael A. Cawley.
24.3* -- Power of attorney granted by James L. Fishel.
99.1** -- Form of Proxy of Noble Drilling Corporation (relating to the
Special Meeting of the stockholders of Noble Drilling Corporation
described in the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
</TABLE>
II-3
<PAGE> 132
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<S> <C>
99.2** -- Form of Proxy of Chiles Offshore Corporation (relating to the
Special Meeting of the stockholders of Chiles Offshore Corporation
described in the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
99.3* -- Form of Voting Instruction Card for participants in the Noble
Drilling Corporation Thrift Plan (relating to the Special Meeting
of the stockholders of Noble Drilling Corporation described in the
Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
99.4* -- Form of Noble Drilling Corporation 1991 Stock Option and Restricted
Stock Plan, as proposed to be amended.
99.5* -- Consent of Marc E. Leland.
99.6* -- Consent of Lawrence Chazen.
</TABLE>
- ---------------
* Filed herewith.
** Filed previously.
ITEM 22. UNDERTAKINGS.
(b) Filings incorporating subsequent Exchange Act documents by reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Acceleration of effectiveness.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Requests for information incorporated by reference; post-effective amendments.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 12th day of August, 1994.
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
James C. Day
Chairman, President and Chief
Executive Officer
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES C. DAY Chairman, President and August 12, 1994
James C. Day Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ BYRON L. WELLIVER Senior Vice President -- August 12, 1994
Byron L. Welliver Finance and Treasurer
(Principal Financial
Officer)
/s/ ALAN KRENEK Controller (Principal August 12, 1994
Alan Krenek Accounting Officer)
/s/ MICHAEL A. CAWLEY* Director August 12, 1994
Michael A. Cawley
/s/ TOMMY C. CRAIGHEAD* Director August 12, 1994
Tommy C. Craighead
/s/ JOHNNIE W. HOFFMAN* Director August 12, 1994
Johnnie W. Hoffman
/s/ JAMES L. FISHEL* Director August 12, 1994
James L. Fishel
/s/ JOHN F. SNODGRASS* Director August 12, 1994
John F. Snodgrass
/s/ BILL M. THOMPSON* Director August 12, 1994
Bill M. Thompson
*By: /s/ JAMES C. DAY
James C. Day
Attorney-in-fact
</TABLE>
II-5
<PAGE> 134
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ----------------------------------------------------------------------
<C> <S>
2.1** -- Agreement and Plan of Merger dated as of June 13, 1994, among Noble
Drilling Corporation, Noble Offshore Corporation and Chiles
Offshore Corporation (included as Appendix I to the Joint Proxy
Statement/Prospectus included in the original filing of this
Registration Statement)
2.2 -- Stock Purchase Agreement dated April 22, 1994, between Joseph E.
Beall, George H. Bruce, Triton Engineering Services Company and
Noble Drilling Corporation (filed as Exhibit 2.1 to Noble Drilling
Corporation's Form 8-K dated May 6, 1994 and incorporated herein by
reference).
</TABLE>
<TABLE>
<C> <S>
2.3 -- Assets Purchase Agreement dated as of August 20, 1993 (the "Western
Assets Purchase Agreement"), between Noble Drilling Corporation and
The Western Company of North America (filed as Exhibit 2.1 to Noble
Drilling Corporation's Registration Statement on Form S-3 (No.
33-67130) and incorporated herein by reference).
2.4 -- Agreement dated as of October 7, 1993, among Noble Drilling
Corporation, Noble Drilling (U.S.) Inc., Noble International
Limited, The Western Company of North America and Offshore
International Ltd., amending the Western Assets Purchase Agreement
(filed as Exhibit 2.2 to Noble Drilling Corporation's Form 8-K
dated October 15, 1993 and incorporated herein by reference).
2.5 -- Exchange Agreement dated as of June 4, 1993 (the "Exchange
Agreement"), by and among Noble Drilling Corporation, Grasso
Corporation, Offshore Logistics, Inc., PPI-Seahawk Services, Inc.
and Noble Production Services Inc. (filed as Exhibit 2.2 to Noble
Drilling Corporation's Registration Statement on Form S-3 (No.
33-67130) and incorporated herein by reference).
2.6 -- Amendment No. 1 dated October 29, 1993 to the Exchange Agreement by
and among Noble Drilling Corporation, Grasso Corporation, Offshore
Logistics, Inc., PPI-Seahawk Services, Inc. and Noble Production
Services Inc. (filed as Exhibit 2.4 to Noble Drilling Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
2.7 -- Assignment and Assumption Agreement made as of October 28, 1993, by
and between Noble Production Management Inc., Noble Production
Services Inc., OLOG Production Management Inc., PPI-Seahawk
Services, Inc. and Grasso Corporation (filed as Exhibit 2.7 to
Noble Drilling Corporation's Annual Report on Form 10-K for the
year ended December 31, 1993 and incorporated herein by reference).
2.8 -- Assets Purchase Agreement dated as of August 20, 1993 (the "Portal
Assets Purchase Agreement"), between Noble Drilling Corporation and
Portal Rig Corporation (filed as Exhibit 2.3 to Noble Drilling
Corporation's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
2.9 -- Agreement dated as of October 25, 1993, among Noble Drilling
Corporation, Noble (Gulf of Mexico) Inc. and Portal Rig
Corporation, amending the Portal Assets Purchase Agreement (filed
as Exhibit 2.5 to Noble Drilling Corporation's Quarterly Report on
Form 10-Q for the three-month period ended September 30, 1993 and
incorporated herein by reference).
4.1 -- Restated Certificate of Incorporation of Noble Drilling Corporation
dated August 29, 1985 (filed as Exhibit 3.7 to Noble Drilling
Corporation's Registration Statement on Form 10 (No. 0-13857) and
incorporated herein by reference).
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<S> <C>
4.2 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated May 5, 1987 (filed as Exhibit
4.2 to Noble Drilling Corporation's Registration Statement on Form
S-3 (No. 33-67130) and incorporated herein by reference).
4.3 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated June 1, 1987 (filed as Exhibit
4.3 to Noble Drilling Corporation's Registration Statement on Form
S-3 and incorporated herein by reference).
4.4 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated April 28, 1988 (filed as
Exhibit 3.12 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1988 and incorporated herein
by reference).
4.5 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated April 27, 1989 (filed as
Exhibit 3.13 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1989, as amended, and
incorporated herein by reference).
4.6 -- Certificate of Amendment of Restated Certificate of Incorporation
of Noble Drilling Corporation dated August 1, 1991 (filed as
Exhibit 3.16 to Noble Drilling Corporation's Annual Report on Form
10-K for the year ended December 31, 1991 and incorporated herein
by reference).
4.7 -- Certificate of Designations of $2.25 Convertible Exchangeable
Preferred Stock, par value $1.00 per share, of Noble Drilling
Corporation, dated as of November 18, 1991 (filed as Exhibit 3.17
to Noble Drilling Corporation's Annual Report on Form 10-K for the
year ended December 31, 1991 and incorporated herein by reference).
4.8* -- Form of Certificate of Designations of $1.50 Convertible Preferred
Stock, par value $1.00 per share, of Noble Drilling Corporation.
4.9** -- Form of certificate to evidence shares of $1.50 Convertible
Preferred Stock of Noble Drilling Corporation.
4.10 -- Composite copy of the Bylaws of Noble Drilling Corporation as
currently in effect (filed as Exhibit 4.8 to Noble Drilling
Corporation's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
4.11 -- Indenture governing the 9 1/4% Senior Notes Due 2003 of Noble
Drilling Corporation (filed as Exhibit 4.1 to Noble Drilling
Corporation's Quarterly Report on Form 10-Q for the three-month
period ended September 30, 1993 and incorporated herein by
reference).
4.12 -- Form of Senior Notes (included in Section 2.02 of the Indenture
filed as Exhibit 4.1 to Noble Drilling Corporation's Quarterly
Report on Form 10-Q for the three-month period ended September 30,
1993 and incorporated herein by reference).
5.1* -- Opinion of Thompson & Knight, A Professional Corporation.
8.1* -- Opinion of Thompson & Knight, A Professional Corporation.
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<S> <C>
10.1** -- Credit Agreement dated as of June 16, 1994 among Noble Drilling
Corporation, First Interstate Bank of Texas, N.A., in its
individual capacity and as agent, and Credit Lyonnais Cayman Island
Branch.
10.2** -- Revolving Credit Note dated June 16, 1994 of Noble Drilling
Corporation in the amount of $12,500,000 in favor of Credit
Lyonnais Cayman Island Branch.
10.3** -- Revolving Credit Note dated June 16, 1994 of Noble Drilling
Corporation in the amount of $12,500,000 in favor of First
Interstate Bank of Texas, N.A.
10.4** -- Guaranty Agreement dated as of June 16, 1994 by and among Noble
Drilling (U.S.) Inc., Noble Drilling (West Africa) Inc. and Noble
Drilling (Mexico) Inc.
10.5* -- Amendment No. 1 to the Noble Drilling Corporation 1992 Nonqualified
Stock Option Plan for Non-Employee Directors.
12.1* -- Statement regarding computation of ratios.
23.1* -- Consent of Arthur Andersen & Co.
23.2* -- Consent of Arthur Andersen & Co.
23.3** -- Consent of KPMG Peat Marwick.
23.4* -- Consent of Thompson & Knight, A Professional Corporation (contained
in its opinion filed as Exhibit 5.1).
23.5* -- Consent of Thompson & Knight, A Professional Corporation (contained
in its opinion filed as Exhibit 8.1).
23.6* -- Consent of Simmons & Company International.
23.7* -- Consent of Salomon Brothers Inc .
24.1** -- Power of attorney (included on the signature page of the original
Registration Statement).
24.2* -- Power of attorney granted by Michael A. Cawley.
24.3* -- Power of attorney granted by James L. Fishel.
99.1** -- Form of Proxy of Noble Drilling Corporation (relating to the
Special Meeting of the stockholders of Noble Drilling Corporation
described in the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
99.2** -- Form of Proxy of Chiles Offshore Corporation (relating to the
Special Meeting of the stockholders of Chiles Offshore Corporation
described in the Joint Proxy Statement/Prospectus forming a part of
this Registration Statement).
99.3* -- Form of Voting Instruction Card for participants in the Noble
Drilling Corporation Thrift Plan (relating to the Special Meeting
of the stockholders of Noble Drilling Corporation described in the
Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
99.4* -- Form of Noble Drilling Corporation 1991 Stock Option and Restricted
Stock Plan, as proposed to be amended.
99.5* -- Consent of Marc E. Leland.
99.6* -- Consent of Lawrence Chazen.
</TABLE>
- ---------------
* Filed herewith.
** Filed previously.
<PAGE> 1
EXHIBIT 4.8
CERTIFICATE OF DESIGNATIONS
of
$1.50 CONVERTIBLE PREFERRED STOCK
(Par Value $1.00 Per Share)
of
NOBLE DRILLING CORPORATION
Pursuant to Section 151
of the General Corporation Law of the State of Delaware
NOBLE DRILLING CORPORATION, a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY that, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Restated Certificate of Incorporation, as
amended, of the Corporation and in accordance with Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation on _________, 1994 duly adopted the following preamble and
resolution establishing and creating a series of 4,025,000 shares of Preferred
Stock, par value $1.00 per share, of the Corporation:
WHEREAS, the Board of Directors on June 9, 1994
duly adopted resolutions authorizing the Corporation to
enter into that certain Agreement and Plan of Merger
(the "Merger Agreement") dated June 13, 1994 among the
Corporation, Chiles Offshore Corporation, a Delaware
corporation ("Chiles"), and Noble Offshore Corporation,
a Delaware corporation and a wholly owned subsidiary of
the Corporation ("Noble Sub"), which provides for the
merger (the "Merger") of Chiles with and into Noble Sub;
and
WHEREAS, the Corporation agreed in the Merger
Agreement to take action prior to the Effective Time (as
defined in the Merger Agreement and in the following
resolution), to establish and create a new series of
preferred stock of the Corporation to be designated the
"$1.50 Convertible Preferred Stock;" and
WHEREAS, the Merger Agreement provides, among
other things, that, subject to the terms and conditions
of the Merger Agreement, at the Effective Time, by
virtue of the Merger, each share of Chiles $1.50
Convertible Preferred Stock, par value $1.00 per share
("Chiles Preferred Stock"), issued and outstanding
immediately prior to the Effective Time, other than any
shares of Chiles Preferred Stock to be cancelled
pursuant to Section 1.7(c) of the Merger Agreement,
shall be converted into the right to receive one share
of the $1.50 Convertible Preferred Stock of the
Corporation; and
WHEREAS, the $1.50 Convertible Preferred Stock of
the Corporation shall rank on a parity with the $2.25
Convertible Exchangeable Preferred Stock, par value
$1.00 per share, of the Corporation; and
<PAGE> 2
WHEREAS, a certificate of designations with
respect to the $1.50 Convertible Preferred Stock of the
Corporation shall become effective, in accordance with
Section 151 of the General Corporation Law of the State
of Delaware, prior to the Effective Time;
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to
the authority conferred on the Board of Directors of
this Corporation by the Restated Certificate of
Incorporation, as amended (the "Certificate of
Incorporation"), of the Corporation, a series of
Preferred Stock, par value $1.00 per share, of the
Corporation is hereby established and created, and that
the designation and number of shares thereof and the
voting and other powers, preferences and relative,
participating, optional or other rights of the shares of
such series, and the qualifications, limitations and
restrictions thereof, are as follows:
$1.50 Convertible Preferred Stock
Section 1. Number of Shares and Designation. 4,025,000
shares of the Preferred Stock, par value $1.00 per share, of the Corporation
are hereby constituted as a series of the Preferred Stock designated as "$1.50
Convertible Preferred Stock" (hereinafter referred to as the "$1.50 Preferred
Stock").
Section 2. Definitions. For purposes of the $1.50
Preferred Stock, the following terms shall have the meanings indicated:
"Board of Directors" shall mean the Board of
Directors of the Corporation or any committee authorized
by such Board of Directors to perform any of its
responsibilities with respect to the $1.50 Preferred
Stock.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions
in the City of New York are authorized or obligated by
law or executive order to close.
"Change of Control" shall have the meaning set
forth in paragraph (e)(i) of Section 8 hereof.
"Chiles Preferred Stock" shall mean the $1.50
Convertible Preferred Stock, par value $1.00 per share,
of Chiles Offshore Corporation, a Delaware corporation,
which shall be converted into the right to receive
shares of the $1.50 Preferred Stock pursuant to the
Merger.
"Closing Price" with respect to a particular
security on any day shall mean on such day the last
reported sales price, regular way, for such security or,
in case no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way,
for such security, in either case as reported on the
principal national securities exchange on which such
security is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Market System
of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ National Market
System"), or, if such security is not quoted on the
NASDAQ National Market
-2-
<PAGE> 3
System, the average of the closing bid and asked prices
for such security in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such
security on such day shall not have been reported by
NASDAQ, the average of the bid and asked prices for
such security for such day as furnished by any National
Association of Securities Dealers, Inc. ("NASD") member
firm regularly making a market in such security selected
for such purpose by the board of directors or similar
governing body of the issuer of such security or, if no
such quotations are available, the fair market value of
such security furnished by any NASD member firm selected
from time to time by the board of directors or similar
governing body of the issuer of such security for that
purpose.
"Common Stock" shall mean the Common Stock of the
Corporation, par value $.10 per share.
"Conversion Price" shall mean the conversion price
per share of Common Stock into which the $1.50 Preferred
Stock is convertible, as such Conversion Price may be
adjusted pursuant to Section 7 hereof. The initial
Conversion Price will be $10.23 (equivalent to the rate
of 2.4446 shares of Common Stock for each share of $1.50
Preferred Stock).
"Current Market Price" per share of Common Stock
on any date shall mean the average of the daily Closing
Prices for the 30 consecutive Trading Dates commencing
45 Trading Dates before the date of determination.
"Defaulted Preferred Stock" shall have the meaning
set forth in paragraph (a) of Section 10 hereof.
"dividend payment date" shall have the meaning set
forth in paragraph (a) of Section 3 hereof.
"dividend payment record date" shall have the
meaning set forth in paragraph (a) of Section 3 hereof.
"Dividend Periods" shall mean quarterly dividend
periods commencing on the first day of January, April,
July and October of each year and ending on and
including the day preceding the first day of the next
succeeding Dividend Period (other than the initial
Dividend Period, which shall commence on the Effective
Date and end on and include September 30, 1994).
"Effective Date" shall mean July 1, 1994.
"Effective Time" shall mean such time as a
certificate of merger with respect to the Merger is duly
filed with the Secretary of State of Delaware or at such
later time (not to exceed 90 days form the date the
certificate is filed) as is specified in the certificate
of merger pursuant to the mutual agreement of the
Corporation and Chiles Offshore Corporation.
-3-
<PAGE> 4
"Fundamental Change" shall have the meaning set
forth in paragraph (e)(ii) of Section 8 hereof.
"Merger" shall mean the merger of Chiles Offshore
Corporation with and into Noble Offshore Corporation
pursuant to that certain Agreement and Plan of Merger
dated June 13, 1994 among the Corporation, Chiles
Offshore Corporation and Noble Offshore Corporation.
"Person" shall mean any individual, firm,
partnership, corporation or other entity, and shall
include any successor (by merger or otherwise) of such
entity.
"Redemption Price" shall have the meaning set
forth in paragraph (a) of Section 5 hereof.
"Securities" shall have the meaning set forth in
paragraph (d)(iii) of Section 7 hereof.
"Trading Date" with respect to any security means
(i) if such security is listed or admitted for trading
on any national securities exchange, a day on which such
national securities exchange is open for trading, (ii)
if such security is quoted on the NASDAQ National Market
System, or any similar system of automated dissemination
of quotations of securities prices, a day on which
trades may be made on such system, (iii) if not listed
or admitted for trading as described in clause (i) or
quoted as described in clause (ii), a day on which
quotations are reported by the National Quotation Bureau
Incorporated or (iv) otherwise, any Business Day.
"Transaction" shall have the meaning set forth in
paragraph (e) of Section 7hereof.
"Transfer Agent" means Liberty Bank and Trust
Company of Oklahoma City, N.A., Oklahoma City, Oklahoma,
or such other agent or agents of the Corporation as may
be designated by the Board of Directors as the transfer
agent or conversion agent for the $1.50 Preferred Stock.
Section 3. Dividends. (a) The holders of shares of the
$1.50 Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available therefor, cumulative cash
dividends at an annual rate of $1.50 per share of $1.50 Preferred Stock. Such
dividends shall be cumulative from the Effective Date, whether or not in any
Dividend Period or Periods there shall be funds of the Corporation legally
available for the payment of such dividends and whether or not such dividends
are declared, and shall be payable quarterly, when, as and if declared by the
Board of Directors, on March 31, June 30, September 30 and December 31 in each
year (each a "dividend payment date"), commencing on September 30, 1994. If
any dividend payment date shall be on a day other than a Business Day, then the
dividend payment date shall be on the next succeeding Business Day. Each such
dividend shall be payable in arrears to the holders of record of shares of the
$1.50 Preferred Stock, as they appear on the stock records of the Corporation
at the close of business on those dates (each such date, a "dividend payment
record date"), not less than 10 days nor more than 60 days preceding the
dividend payment dates thereof, as shall be fixed by the Board of
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<PAGE> 5
Directors. Dividends on the $1.50 Preferred Stock shall accrue (whether or
not declared) on a daily basis from the Effective Date and accrued dividends
for each Dividend Period shall accumulate to the extent not paid on the
dividend payment date occurring on the last day of the Dividend Period for
which they accrue. As used herein, the term "accrued" with respect to
dividends includes both accrued and accumulated dividends. Accrued and unpaid
dividends for any past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of record
on such date, not exceeding 45 days preceding the payment date thereof, as may
be fixed by the Board of Directors.
(b) The amount of dividends payable for each full
Dividend Period for the $1.50 Preferred Stock shall be computed by dividing the
annual dividend amount by four (rounded down to the nearest cent). The amount
of dividends payable for any period shorter or longer than a full Dividend
Period on the $1.50 Preferred Stock shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. Holders of shares of $1.50 Preferred
Stock called for redemption on a redemption date falling between the close of
business on a dividend payment record date and the opening of business on the
corresponding dividend payment date shall, in lieu of receiving such dividend
on the dividend payment date fixed therefor, receive such dividend payment
together with all other accrued and unpaid dividends on the date fixed for
redemption (unless such holder converts such shares in accordance with Section
7 hereof). Holders of shares of $1.50 Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or securities, in excess of
cumulative dividends, as herein provided, on the $1.50 Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the $1.50 Preferred Stock which are in
arrears.
(c) So long as any shares of the $1.50 Preferred Stock
are outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on any class or
series of stock of the Corporation ranking, as to dividends, on a parity with
the $1.50 Preferred Stock, for any period unless full cumulative dividends on
all outstanding shares of $1.50 Preferred Stock have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment for all Dividend Periods terminating on or prior to
the date of payment, or setting apart for payment, of such full cumulative
dividends on such parity stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, upon the shares of
the $1.50 Preferred Stock and any other class or series of stock ranking on a
parity as to dividends with the $1.50 Preferred Stock, all dividends declared
upon such other stock shall be declared and paid pro rata so that the amounts
of dividends per share declared and paid on the $1.50 Preferred Stock and such
other stock shall in all cases bear to each other the same ratio that accrued
and unpaid dividends per share on the shares of the $1.50 Preferred Stock and
on such other stock bear to each other.
(d) So long as any shares of the $1.50 Preferred Stock
are outstanding, no other stock of the Corporation ranking on a parity with the
$1.50 Preferred Stock as to dividends or upon liquidation, dissolution or
winding up shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund or
otherwise for the purchase or redemption of any shares of any such stock) by
the Corporation (except by
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<PAGE> 6
conversion into or exchange for stock of the Corporation ranking junior to the
$1.50 Preferred Stock as to dividends and upon liquidation, dissolution or
winding up) unless (i) the full cumulative dividends, if any, accrued on all
outstanding shares of the $1.50 Preferred Stock shall have been paid or set
apart for payment for all past Dividend Periods and (ii) sufficient funds
shall have been set apart for the payment of the dividend for the current
Dividend Period with respect to the $1.50 Preferred Stock.
(e) So long as any shares of the $1.50 Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of Common Stock or other stock ranking junior to the $1.50 Preferred
Stock as to dividends and upon liquidation, dissolution or winding up) shall be
declared or paid or set apart for payment and no other distribution shall be
declared or made or set apart for payment, in each case upon the Common Stock
or any other stock of the Corporation ranking junior to the $1.50 Preferred
Stock as to dividends or upon liquidation, dissolution or winding up, nor shall
any Common Stock nor any other such stock of the Corporation ranking junior to
the $1.50 Preferred Stock as to dividends or upon liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund or otherwise for
the purchase or redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the $1.50 Preferred Stock as to dividends and upon liquidation,
dissolution or winding up) unless, in each case (i) the full cumulative
dividends, if any, accrued on all outstanding shares of the $1.50 Preferred
Stock and any other stock of the Corporation ranking on a parity with the $1.50
Preferred Stock as to dividends shall have been paid or set apart for payment
for all past Dividend Periods and all past dividend periods with respect to
such other stock and (ii) sufficient funds shall have been set apart for the
payment of the dividend for the current Dividend Period with respect to the
$1.50 Preferred Stock and for the current dividend period with respect to any
other stock of the Corporation ranking on a parity with the $1.50 Preferred
Stock as to dividends.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Common Stock or any
other series or class or classes of stock of the Corporation ranking junior to
the $1.50 Preferred Stock upon liquidation, dissolution or winding up, the
holders of the shares of $1.50 Preferred Stock shall be entitled to receive
$25.00 per share plus an amount per share equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. No payment on account of any liquidation, dissolution or
winding up of the Corporation shall be made to the holders of any class or
series of stock ranking on a parity with the $1.50 Preferred Stock in respect
of the distribution of assets upon dissolution, liquidation or winding up
unless there shall likewise be paid at the same time to the holders of the
$1.50 Preferred Stock like proportionate amounts determined ratably in
proportion to the full amounts to which the holders of all outstanding shares
of $1.50 Preferred Stock and the holders of all outstanding shares of such
parity stock are respectively entitled with respect to such distribution. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or
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<PAGE> 7
proceeds thereof, distributable among the holders of the shares of $1.50
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of stock ranking, as to
liquidation, dissolution or winding up, on a parity with the $1.50 Preferred
Stock, then such assets, or the proceeds thereof, shall be distributed among
the holders of shares of $1.50 Preferred Stock and any such other stock ratably
in accordance with the respective amounts that would be payable on such shares
of $1.50 Preferred Stock and any such other stock if all amounts payable t
hereon were paid in full. For the purposes of this Section 4, neither a
consolidation or merger of the Corporation with one or more corporations or
other entities nor a sale, lease, exchange or transfer of all or any part of
the Corporation's assets for cash, securities or other property shall be
deemed to be a liquidation, dissolution or winding up, voluntary or involuntary.
(b) Subject to the rights of the holders of shares of
any series or class or classes of stock ranking on a parity with or prior to
the $1.50 Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made in full to the holders of $1.50 Preferred Stock, as provided in
this Section 4, any other series or class or classes of stock ranking junior to
the $1.50 Preferred Stock upon liquidation, dissolution or winding up shall,
subject to the respective terms and provisions (if any) applicable thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of $1.50 Preferred Stock shall not be entitled to share therein.
(c) Written notice of any liquidation, dissolution or
winding up of the Corporation, stating the payment date or dates when and the
place or places where the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage prepaid, not less than 30
days prior to any payment date stated therein, to the holders of record of the
$1.50 Preferred Stock at their respective addresses as the same shall appear on
the stock records of the Corporation.
Section 5. Redemption at the Option of the Corporation.
(a) $1.50 Preferred Stock may not be redeemed by the
Corporation prior to December 31, 1996. On or after such date the Corporation,
at its option, may redeem the shares of $1.50 Preferred Stock, in whole or in
part, out of funds legally available therefor, at any time or from time to
time, subject to the notice provisions and provisions for partial redemption
described below, during the twelve-month periods beginning on December 31 in
each of the following years at the following redemption prices per share plus
an amount equal to accrued and unpaid dividends, if any, to (and including) the
date fixed for redemption, whether or not earned or declared (the "Redemption
Price").
<TABLE>
<CAPTION>
Year Price per Share
---- ---------------
<S> <C>
1996 $26.05
1997 $25.90
1998 $25.75
1999 $25.60
2000 $25.45
2001 $25.30
2002 $25.15
2003 and thereafter $25.00
</TABLE>
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<PAGE> 8
(b) In the event the Corporation shall redeem shares
of $1.50 Preferred Stock, notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the redemption date, to each holder of record of the shares to be
redeemed, at such holder's address as the same appears on the stock records of
the Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of $1.50 Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the Redemption Price; (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the Redemption Price; (v) the then current Conversion Price; and
(vi) that dividends on the shares to be redeemed shall cease to accrue on such
redemption date. If, on the date fixed for redemption, funds necessary for the
redemption shall be available therefor and shall have been irrevocably
deposited or set aside, then, notwithstanding that the certificates evidencing
any shares of $1.50 Preferred Stock so called for redemption shall not have
been surrendered, the dividends with respect to the shares so called shall
cease to accrue after the date fixed for redemption, such shares shall no
longer be deemed outstanding, all rights of the holders of such shares as
stockholders of the Corporation shall cease, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest upon surrender of their
certificates therefor) shall terminate.
Upon surrender in accordance with said notice of the
certificates for any such shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the applicable
Redemption Price aforesaid. If fewer than all the outstanding shares of $1.50
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of $1.50 Preferred Stock not previously
called for redemption by lot or pro rata (as near as may be) or by any other
method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable. If fewer than all the shares represented by any
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
In the event that the Corporation has failed to pay
accrued and unpaid dividends on the $1.50 Preferred Stock, it may not redeem
less than all of the then outstanding shares of the $1.50 Preferred Stock until
all such accrued and unpaid dividends and the then current quarterly dividends
have been paid in full.
Notwithstanding the foregoing, if notice of redemption
has been given pursuant to this Section 5 and any holder of shares of $1.50
Preferred Stock shall, prior to the close of business on the redemption date,
give written notice to the Corporation pursuant to Section 7(b) hereof of the
conversion of any or all of the shares to be redeemed held by such holder
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then (i) the Corporation shall not have the right
to redeem such shares, (ii) the conversion of such shares to be redeemed shall
become effective as provided in Section 7 and (iii) any funds which shall have
been deposited for the payment of the Redemption Price for such shares shall
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<PAGE> 9
be returned to the Corporation immediately after such conversion (subject to
declared dividends payable to holders of shares of $1.50 Preferred Stock on the
dividend payment record date for such dividends being so payable, to the extent
set forth in Section 7 hereof, regardless of whether such shares are converted
subsequent to such dividend payment record date and prior to the related
dividend payment date).
Section 6. Shares to be Retired. All shares of $1.50
Preferred Stock purchased, redeemed, exchanged or converted by the Corporation
shall be retired and cancelled and shall be restored to the status of
authorized but unissued shares of preferred stock, without designation as to
series, and may thereafter be reissued.
Section 7. Conversion. Holders of shares of $1.50
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions
of this Section 7, a holder of shares of $1.50 Preferred Stock shall have the
right, at such holder's option, at any time to convert all or any of such
shares into the number of fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) obtained
by dividing the aggregate liquidation preference of the shares to be converted
by the Conversion Price and by surrender of such shares, such surrender to be
made in the manner provided in paragraph (b) of this Section 7; provided,
however, that the right to convert shares called for redemption pursuant to
Section 5 hereof shall terminate at the close of business on the date fixed for
such redemption. No share of $1.50 Preferred Stock may be converted in part
into Common Stock.
(b) In order to exercise the conversion right, the
holder of each share of $1.50 Preferred Stock to be converted shall surrender
the certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert
such share of $1.50 Preferred Stock. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such share of $1.50
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid or are not required to be paid).
Holders of shares of $1.50 Preferred Stock at the close
of business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding dividend payment date
(except that holders of shares called for redemption on a redemption date
falling between the close of business on such dividend payment record date and
the opening of business on the corresponding dividend payment date shall, in
lieu of receiving such dividend on the dividend payment date fixed therefor,
receive such dividend payment together with all other accrued and unpaid
dividends on the date fixed for redemption, unless such holders convert such
shares called for redemption pursuant to this Section 7) notwithstanding the
conversion thereof following such dividend payment record date and prior to
such dividend payment date. However, shares of $1.50 Preferred Stock
surrendered for conversion during the period between
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<PAGE> 10
the close of business on any dividend payment record date and the opening of
business on the corresponding dividend payment date (except shares of $1.50 \
Preferred Stock called for redemption on a redemption date during such period)
must be accompanied by payment of an amount equal to the dividend payment with
respect to such shares of $1.50 Preferred Stock presented for conversion prior
to the opening of business on such dividend payment date. A holder of shares
of $1.50 Preferred Stock on a dividend payment record date who (or whose
transferee) surrenders any such shares for conversion into shares of Common
Stock on the corresponding dividend payment date will receive the dividend
payable by the Corporation on such shares of $1.50 Preferred Stock on such
date and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of $1.50 Preferred Stock for conversion on
the dividend payment date. Except as provided in this paragraph, the
Corporation shall make no payment or allowance for unpaid dividends, whether
or not in arrears, on converted shares of $1.50 Preferred Stock or for
dividends on the shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of
certificates for shares of $1.50 Preferred Stock as aforesaid, the Corporation
shall issue and shall deliver at such office to such holder, or on such
holder's written order, a certificate or certificates for the number of shares
of Common Stock issuable upon the conversion of such shares in accordance with
the provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for shares of $1.50 Preferred Stock shall have been surrendered
and such notice received by the Corporation as aforesaid, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby at
such time on such date and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such person or persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date upon which such shares shall have been surrendered and such notice
received by the Corporation. All shares of Common Stock delivered upon
conversion of the $1.50 Preferred Stock will upon delivery be duly and
validly issued and fully paid and nonassessable.
(c) In connection with the conversion of any shares of
$1.50 Preferred Stock, no fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the $1.50 Preferred
Stock. Instead of any fractional interest in a share of Common Stock which
would otherwise be deliverable upon the conversion of a share of $1.50
Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash (computed to the nearest cent) equal to the Closing Price of
Common Stock on the Trading Date immediately preceding the date of conversion
multiplied by the fraction of a share of Common Stock represented by such
fractional interest. If more than one certificate for shares of $1.50
Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number
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<PAGE> 11
of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of $1.50 Preferred
Stock so surrendered.
(d) The Conversion Price shall be adjusted from time
to time as follows:
(i) In case the Corporation shall after the
Effective Time (A) pay a dividend or make a distribution
on its Common Stock that is paid or made (1) in shares
of its Common Stock or (2) in rights to purchase stock
or other securities if such rights are not separable
from the Common Stock except upon the occurrence of a
contingency, (B) subdivide or split its outstanding
Common Stock into a greater number of shares, (C)
combine its outstanding Common Stock into a smaller
number of shares or (D) issue any shares of capital
stock by reclassification of its Common Stock, the
Conversion Price in effect immediately prior thereto
shall be adjusted or (in the case of clause (A)(2))
other provision shall be made so that the holder of any
share of $1.50 Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number
of shares of Common Stock of the Corporation and rights
to purchase stock or other securities which such holder
would have owned or have been entitled to receive after
the occurrence of any of the events described above had
such share been surrendered for conversion immediately
prior to the occurrence of such event or the record date
therefor, whichever is earlier. In the event of the
redemption of any rights referred to in clause (A), such
holder shall have the right to receive, in lieu of any
such rights, any cash, property or securities paid in
respect of such redemption; provided, however, that if
the value of such cash, property or securities is less
than $.10 per share of Common Stock, such holder shall
not be entitled to such cash, property or securities.
An adjustment made pursuant to this subparagraph (i)
shall become effective immediately after the close of
business on the record date for determination of
stockholders entitled to receive such dividend or
distribution in the case of a dividend or distribution
(except as provided in paragraph (h) below) and shall
become effective immediately after the close of business
on the effective date in the case of a subdivision,
split, combination or reclassification. Any shares of
Common Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the
close of business on the record date for such dividend
for purposes of calculating the number of outstanding
shares of Common Stock under clauses (ii) and (iii)
below.
(ii) In case the Corporation shall issue after
the Effective Time rights or warrants to all holders of
Common Stock entitling them (for a period expiring
within 45 days after the issuance date) to subscribe for
or purchase Common Stock at a price per share less than
the Current Market Price per share of Common Stock at
the record date for the determination of stockholders
entitled to receive such rights or warrants, then the
Conversion Price in effect immediately prior thereto
shall be adjusted to equal the price determined by
multiplying (A) the Conversion Price in effect
immediately prior to the date of issuance of such rights
or warrants by (B) a fraction, the numerator of which
shall be the sum of (1) the number of shares of Common
Stock outstanding on the date of issuance of such rights
or warrants (without giving effect to any such issuance)
and (2) the number of shares which the aggregate
proceeds from the exercise of such rights or warrants
for Common Stock would purchase at such Current Market
Price, and the denominator of which shall be the sum of
(1) the number of shares of Common Stock outstanding on
the
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<PAGE> 12
date of issuance of such rights or warrants (without
giving effect to any such issuance) and (2) the number
of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made
successively whenever any such rights or warrants are
issued, and shall become effective immediately after
such record date. In determining whether any rights or
warrants entitle the holders of Common Stock to
subscribe for or purchase shares of Common Stock at less
than such Current Market Price, there shall be taken
into account any consideration received by the
Corporation upon issuance and upon exercise of such
rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of
Directors (whose determination shall, if made in good
faith, be conclusive).
(iii) In case the Corporation shall pay a
dividend or make a distribution to all holders of its
Common Stock after the Effective Time of any shares of
capital stock of the Corporation or its subsidiaries
(other than Common Stock) or evidences of its
indebtedness or assets, including securities (any of the
foregoing being hereinafter in this subparagraph (iii)
called the "Securities"), but excluding rights,
warrants, dividends and distributions referred to in
subparagraphs (i) and (ii) above, regular periodic cash
dividends payable out of the Corporation's surplus that
may from time to time be fixed by the Board of Directors
and dividends and distributions in connection with the
liquidation, dissolution or winding up of the
Corporation, then in each such case, the Conversion
Price shall be adjusted so that it shall equal the price
determined by multiplying (A) the Conversion Price in
effect on the record date mentioned below by (B) a
fraction, the numerator of which shall be the Current
Market Price per share of the Common Stock on the record
date mentioned below less the then fair market value as
determined by the Board of Directors (whose
determination shall, if made in good faith, be
conclusive) as of such record date of the portion of the
Securities applicable to one share of Common Stock, and
the denominator of which shall be the Current Market
Price per share of the Common Stock on such record date;
provided, however, that in the event the then fair
market value (as so determined) of the portion of
Securities so distributed applicable to one share of
Common Stock is equal to or greater than the Current
Market Price per share of Common Stock on the record
date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that
each holder of shares of $1.50 Preferred Stock shall
have the right to receive the amount and kind of
Securities such holder would have received had such
holder converted each such share of $1.50 Preferred
Stock immediately prior to the record date for the
distribution of the Securities. Except as provided in
paragraph (h) below, such adjustment shall become
effective immediately after the record date for the
determination of stockholders entitled to receive such
distribution.
(iv) Notwithstanding anything in subparagraph
(ii) above, if such rights or warrants shall by their
terms provide for an increase or increases with the
passage of time or otherwise in the price payable to the
Corporation upon the exercise thereof, the Conversion
Price upon any such increase becoming effective shall
forthwith be readjusted (but to no greater extent than
originally adjusted by reason of such issuance or sale)
to reflect the same. Upon the expiration or termination
of such rights or warrants, if any such rights or
warrants shall not have been exercised, then the
Conversion Price shall forthwith be readjusted and
thereafter be the rate which it would have been had an
adjustment been
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<PAGE> 13
made on the basis that (A) the only rights or warrants
so issued or sold were those so exercised and they were
issued or sold for the consideration actually received
by the Corporation upon such exercise plus the
consideration, if any, actually received by the
Corporation for the granting of all such rights or
warrants whether or not exercised and (B) the
Corporation issued and sold a number of shares of Common
Stock equal to those actually issued upon exercise of
such rights or warrants, and such shares were issued and
sold for a consideration equal to the aggregate exercise
price in effect under the rights or warrants actually
exercised at the respective dates of their exercise.
For purposes of subparagraph (ii), the aggregate
consideration received by the Corporation in connection
with the issuance of shares of Common Stock or of rights
or warrants shall be deemed to be equal to the sum of
the aggregate offering price (before deduction of
underwriting discounts or commissions and expenses
payable to third parties) of all such securities plus
the minimum aggregate amount, if any, payable upon the
exercise of such rights or warrants into shares of
Common Stock.
(v) No adjustment in the Conversion Price shall
be required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason
of this subparagraph (v) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment; and provided, however, that any
adjustment shall be required and shall be made in
accordance with the provisions of this Section 7 (other
than this subparagraph (v)) not later than such time as
may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Common
Stock. All calculations under this Section 7 shall be
made to the nearest cent (with $.005 being rounded
upward) or to the nearest 1/100th of a share (with .005
of a share being rounded upward), as the case may be.
Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to
the extent permitted by law, to make such reductions in
the Conversion Price, in addition to those required by
this paragraph (d), as it in its discretion shall
determine to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights
or warrants to purchase stock or securities, or
distribution of other assets or any other transaction
which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal
Revenue Code of 1986, as amended (or any successor
statute), hereafter made by the Corporation to its
stockholders shall not be taxable to such stockholders.
(e) In case the Corporation shall be a party to any
transaction (including without limitation a merger, consolidation, statutory
share exchange, sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock), in each case as a result of which shares
of Common Stock shall be converted into the right to receive stock, securities
or other property (including cash or any combination thereof) (each of the
foregoing transactions being referred to as a "Transaction"), then the $1.50
Preferred Stock remaining outstanding will thereafter no longer be subject to
conversion into Common Stock pursuant to Section 7, but instead shall be
convertible into the kind and amount of shares of stock and other securities
and property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares or fraction thereof of Common
Stock into which one share of $1.50 Preferred Stock was convertible immediately
prior to such Transaction. The Corporation shall not be a party to any
Transaction after which shares of the $1.50 Preferred Stock shall remain
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outstanding unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any such Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the $1.50 Preferred Stock which will contain
provisions enabling the holders of shares of the $1.50 Preferred Stock which
remain outstanding after such Transaction to convert such shares into the
consideration received by holders of Common Stock at the Conversion Price
immediately after such Transaction. In the event that at any time, as a result
of an adjustment made pursuant to this Section 7, the $1.50 Preferred Stock
shall become subject to conversion into any securities other than shares of
Common Stock, thereafter the number of such other securities so issuable upon
conversion of the shares of $1.50 Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of $1.50 Preferred
Stock contained in this Section 7. The provisions of this paragraph (e) shall
similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or
any other distribution) on the Common Stock that would
cause an adjustment to the Conversion Price of the $1.50
Preferred Stock pursuant to the terms of any of the
paragraphs above (including such an adjustment that
would occur but for the terms of the first sentence of
subparagraph (d)(v) above);
(ii) the Corporation shall authorize the granting
to the holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of any class of
stock or any other rights or warrants;
(iii) there shall be any reclassification or
change of the Common Stock (other than an event to which
paragraph (d)(i) of this Section 7 applies) or any
consolidation, merger or statutory share exchange to
which the Corporation is a party and for which approval
of any stockholders of the Corporation is required, or
the sale or transfer of all or substantially all of the
assets of the Corporation or any Fundamental Change or
Change of Control (each as defined in Section 8 below);
or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation;
then, in addition to actions otherwise required to be taken pursuant to Section
8, the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the $1.50 Preferred Stock at
their addresses as shown on the stock records of the Corporation, as promptly
as possible, but at least 30 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights or
warrants are to be determined or (B) the date on which such reclassification,
change, consolidation, merger, statutory share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, statutory share exchange, sale, transfer,
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<PAGE> 15
dissolution, liquidation or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.
(g) Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall promptly file with the Transfer Agent an
officers' certificate signed by the President or a Vice President and the Chief
Financial Officer or the Secretary of the Corporation setting forth the
Conversion Price after such adjustment, the method of calculation thereof and
setting forth a brief statement of the facts requiring such adjustment and upon
which such adjustment is based. If the calculation of the adjustment requires
a determination by the Board of Directors pursuant to paragraph (d)(iii) of
this Section 7 or any similar provision, such certificate shall include a copy
of the resolution of the Board of Directors relating to such determination.
Promptly after delivery of such certificate, the Corporation shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price, the facts requiring such adjustment and upon which such
adjustment is based and the date on which such adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Price to the holder
of each share of $1.50 Preferred Stock at such holder's last address as shown
on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section
7 provides that an adjustment shall become effective immediately after a record
date for an event and the date fixed for conversion pursuant to Section 7
occurs after such record date but before the occurrence of such event, the
Corporation may defer until the actual occurrence of such event (i) issuing to
the holder of any share of $1.50 Preferred Stock surrendered for conversion the
additional shares of Common Stock issuable upon such conversion by reason of
the adjustment required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to paragraph
(c) of this Section 7.
(i) For purposes of this Section 7, the number of
shares of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Corporation or any
corporation controlled by the Corporation.
(j) If any single action would require adjustment
pursuant to more than one paragraph of this Section 7, only one adjustment
shall be made and such adjustment shall be the amount of adjustment which has
the highest absolute value to the holders of the $1.50 Preferred Stock.
(k) In case the Corporation shall take any action
affecting the Common Stock, other than action described in this Section 7,
which in the opinion of the Board of Directors would materially adversely
affect the conversion rights of the holders of the shares of $1.50 Preferred
Stock, the Conversion Price for the $1.50 Preferred Stock may be adjusted, to
the extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances. Subject
to the foregoing, there shall be no
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<PAGE> 16
adjustment of the Conversion Price in case of the issuance of any stock of the
Corporation in a reorganization, acquisition or other similar transaction
except as specifically set forth in this Section 7.
(l) The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purpose of effecting conversion of
the $1.50 Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of $1.50 Preferred
Stock not theretofore converted. For purposes of this paragraph (l), the
number of shares of Common Stock which shall be deliverable upon the conversion
of all outstanding shares of $1.50 Preferred Stock shall be computed as if at
the time of computation all such outstanding shares were held by a single
holder.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of Common
Stock deliverable upon conversion of the $1.50 Preferred Stock, the Corporation
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of Common Stock at such adjusted Conversion
Price.
The Corporation will endeavor to make the shares of
Common Stock required to be delivered upon conversion of the $1.50 Preferred
Stock eligible for trading upon any national securities exchange, or any
automated quotation system of a registered securities association, upon or
through which the Common Stock shall then be traded prior to such delivery.
Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the $1.50
Preferred Stock, the Corporation will endeavor to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
(m) The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of the shares of $1.50 Preferred Stock (or any other securities issued
on account of the $1.50 Preferred Stock pursuant hereto) or shares of Common
Stock on conversion of the $1.50 Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of $1.50 Preferred Stock (or any other securities issued on account of the
$1.50 Preferred Stock pursuant hereto) or shares of Common Stock in a name
other than the name in which the shares of $1.50 Preferred Stock with respect
to which such Common Stock shares are issued were registered and the
Corporation shall not be required to make any issue or delivery unless and
until the person requesting such issue or delivery has paid to the Corporation
the amount of any such tax or has established, to the reasonable satisfaction
of the Corporation, that such tax has been paid or is not required to be paid.
(n) The Corporation shall not take any action which
results in an adjustment of the number of shares of Common Stock issuable upon
conversion of a share of $1.50 Preferred Stock if the
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<PAGE> 17
total number of shares of Common Stock issuable after such action upon
conversion of the $1.50 Preferred Stock then outstanding, together with the
total number of shares of Common Stock then outstanding, would exceed the
total number of shares of Common Stock then authorized under the Certificate
of Incorporation. Subject to the foregoing, the Corporation shall take all
such actions as it may deem reasonable under the circumstances to provide for
the issuance of such number of shares of Common Stock as would be necessary to
allow for the conversion from time to time, and taking into account adjustments
as herein provided, of outstanding shares of the $1.50 Preferred Stock in
accordance with the terms and provisions of the Certificate of Incorporation.
Section 8. Special Conversion Rights.
(a) Upon the occurrence of a Change of Control with
respect to the Corporation, each holder of $1.50 Preferred Stock shall have the
right, at the holder's option, for a period of 30 days after the mailing of a
notice by the Corporation to the holders of the $1.50 Preferred Stock pursuant
to Section 12 hereof that a Change of Control has occurred, to convert all, but
not less than all, of such holder's $1.50 Preferred Stock into Common Stock of
the Corporation at an adjusted Conversion Price per share equal to the Special
Conversion Price (as defined in paragraph (e) below). The Corporation may, at
its option, in lieu of providing Common Stock upon any such special conversion,
pay to the holder cash equal to the Market Value (as defined in paragraph (e)
below) of the Common Stock multiplied by the number of shares of Common Stock
into which such shares of $1.50 Preferred Stock would have been convertible
immediately prior to such Change of Control at an adjusted Conversion Price
equal to the Special Conversion Price. The Special Conversion Price arising
upon a Change of Control shall only be applicable in respect of the first
Change of Control that occurs after the Effective Time. $1.50 Preferred Stock
which becomes convertible pursuant to a special conversion right shall, unless
so converted, remain convertible into the number of shares of Common Stock that
the holders of the $1.50 Preferred Stock would have owned immediately after the
Change of Control if the holders had converted the $1.50 Preferred Stock
immediately before the effective date of the Change of Control, subject to
adjustment as provided in Section 7 hereof.
(b) Upon the occurrence of a Fundamental Change with
respect to the Corporation, each holder of $1.50 Preferred Stock shall have a
special conversion right, at the holder's option, for a period of 30 days after
the mailing of a notice by the Corporation to the holders of the $1.50
Preferred Stock pursuant to Section 12 hereof that a Fundamental Change has
occurred, to convert all, but not less than all, of such holder's $1.50
Preferred Stock into the kind and amount of cash, securities, property or other
assets receivable upon such Fundamental Change by a holder of the number of
shares of Common Stock into which such shares of $1.50 Preferred Stock would
have been convertible immediately prior to such Fundamental Change at an
adjusted Conversion Price equal to the Special Conversion Price. The
Corporation or a successor corporation, as the case may be, may, at its option
and in lieu of providing the consideration as required above upon such
conversion, pay to the holder cash equal to the Market Value of the Common
Stock multiplied by the number of shares of Common Stock into which such shares
of $1.50 Preferred Stock would have been convertible immediately prior to such
Fundamental Change at an adjusted Conversion Price equal to the Special
Conversion Price. $1.50 Preferred Stock which becomes convertible pursuant to
a special conversion right shall, unless so
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<PAGE> 18
converted, remain convertible into the kind and amount of cash, securities,
property or other assets that the holders of the $1.50 Preferred Stock would
have owned immediately after the Fundamental Change if the holders had
converted the $1.50 Preferred Stock immediately before the effective date of
the Fundamental Change, subject toadjustment as provided in Section 7 hereof.
(c) Upon the occurrence of a Change of Control or a
Fundamental Change with respect to the Corporation, within 30 days after such
occurrence, the Corporation shall mail to each registered holder of $1.50
Preferred Stock a notice of such occurrence (the "Special Conversion Notice")
setting forth the following:
(i) the event constituting the Change of
Control or Fundamental Change;
(ii) the conversion date upon exercise of the
applicable special conversion right;
(iii) the Special Conversion Price;
(iv) the conversion rate (and related
conversion price) then in effect under Section 7 and the
continuing conversion rights, if any, under Section 7;
(v) the name and address of the paying agent
and conversion agent;
(vi) that holders who want to convert shares of
$1.50 Preferred Stock must satisfy the requirements of
Section 7(b) (specifying such requirements) and must
exercise such conversion right within the 30-day period
after the mailing of such notice by the Corporation;
(vii) that exercise of such conversion right
shall be irrevocable and no dividends on shares of $1.50
Preferred Stock (or portions thereof) tendered for
conversion shall accrue from and after the conversion
date; and
(viii) that the Corporation (or a successor
corporation, if applicable) may, at its option, elect to
pay cash (specifying the amount thereof per share) for
all shares of $1.50 Preferred Stock tendered for
conversion.
(d) A holder of $1.50 Preferred Stock must exercise
the special conversion right within the 30-day period after the mailing of the
Special Conversion Notice or such special conversion right shall expire. Such
right must be exercised in accordance with Section 7(b) to the extent the
procedures in Section 7(b) are consistent with the special provisions of this
Section 8. Exercise of such conversion right shall be irrevocable, to the
extent permitted by applicable law, and dividends on $1.50 Preferred Stock
tendered for conversion shall cease to accrue from and after the conversion
date. The conversion date with respect to the exercise of a special conversion
right arising upon a Change of Control or Fundamental Change shall be the 30th
day after the mailing of the Special Conversion Notice. In taking any action
in connection with any Change of Control or Fundamental Change or related
special conversion right, the Corporation will comply with all applicable
federal securities laws and regulations.
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(e) The following definitions shall apply to terms
used in this Section 8:
(i) a "Change of Control" with respect to the
Corporation shall be deemed to have occurred at such
time as any person (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), including a
group (within the meaning of Rule 13d-5 under the
Exchange Act and any successor rule), together with any
of its Affiliates or Associates (as defined below),
files or becomes obligated to file a report (or any
amendment or supplement thereto) on Schedule 13D or
14D-1 pursuant to the Exchange Act disclosing that such
person has become the beneficial owner of either (i) 55%
or more of the shares of Common Stock of the Corporation
then outstanding or (ii) securities representing 55% or
more of the combined voting power of the Voting Stock
(as defined below) of the Corporation then outstanding;
provided, however, that a Change of Control shall not be
deemed to have occurred with respect to any transaction
that constitutes a Fundamental Change. An "Affiliate"
of a specified person is a person that directly or
indirectly controls, or is controlled by, or is under
common control with, the person specified. An
"Associate" of a person means (1) any corporation or
organization, other than the Corporation or any
subsidiary of the Corporation, of which the person is an
officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity
securities; (2) any trust or estate in which the person
has a substantial beneficial interest or as to which the
person serves as trustee or in a similar fiduciary
capacity; (3) any relative or spouse of the person, or
any relative of the spouse, who has the same home as the
person; and (4) any person who is a director or officer
of the person or any of its parents or subsidiaries. As
used herein, a person shall be deemed to have
"beneficial ownership" with respect to, and shall be
deemed to "beneficially own," any securities of the
Corporation in accordance with Section 13 of the
Exchange Act and the rules and regulations (including
Rule 13d-3, Rule 13d-5 and any successor rules)
promulgated by the Securities and Exchange Commission
thereunder; provided, however, that a person shall be
deemed to have beneficial ownership of all securities
that any such person has a right to acquire whether such
right is exercisable immediately or only after the
passage of time and without regard to the 60-day
limitation referred to in Rule 13d-3.
(ii) a "Fundamental Change" with respect to the
Corporation means (i) the occurrence of any transaction
or event in connection with which 55% or more of the
outstanding Common Stock of the Corporation shall be
exchanged for, converted into, acquired for or
constitute solely the right to receive cash, securities,
property or other assets (whether by means of an
exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification,
recapitalization or otherwise) or (ii) the conveyance,
sale, lease, assignment, transfer or other disposal of
all or substantially all of the Corporation's property,
business or assets; provided, however, that a
Fundamental Change shall not be deemed to have occurred
with respect to either of the following transactions or
events: (a) any transaction or event in which more than
50% (by value as determined in good faith by the Board
of Directors of the Corporation) of the consideration
received by holders of Common Stock consists of
Marketable Stock (as defined below); or (b) any
consolidation or merger of the Corporation in which the
holders of Common Stock of the Corporation immediately
prior to such transaction own, directly or indirectly,
(1) 50% or more of the common stock of the sole
surviving corporation (or of the ultimate parent of
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such sole surviving corporation) outstanding at the time
immediately after such consolidation or merger and (2)
securities representing 50% or more of the combined
voting power of the surviving corporation's Voting Stock
(as defined below) (or of the Voting Stock of the
ultimate parent of such surviving corporation)
outstanding at such time.
(iii) "Voting Stock" means, with respect to
any person, capital stock of such person having general
voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or
trustees of such person (irrespective of whether or not
at the time capital stock of any other class or classes
shall have or might have voting power by reason of the
happening of any contingency).
(iv) the "Special Conversion Price" shall mean
(i) the higher of (a) the Market Value of the Common
Stock or (b) $6.53 per share (which amount will, each
time the Conversion Price is adjusted as provided
elsewhere herein, be adjusted so that the ratio of such
dollar amount to the Conversion Price, after giving
effect to any such adjustment, shall always be the same
as the ratio of $6.53 to the initial Conversion Price,
without giving effect to any such adjustment) multiplied
by (ii) a ratio the numerator of which is $25.00 and the
denominator of which is the Redemption Price (or, if
prior to the date on which the Corporation may begin to
redeem the $1.50 Preferred Stock, the Redemption Price
applicable commencing on such date).
(v) the "Market Value" of the Common Stock or
any other Marketable Stock shall be the average of the
Closing Price of the Common Stock or such other
Marketable Stock, as the case may be, for the five
Trading Dates ending on the last Trading Date preceding
the date of the Change of Control or Fundamental Change;
provided, however, that if the Marketable Stock is not
traded on any national securities exchange or similar
quotation system as described in the definition of
"Marketable Stock" during such period, then the Market
Value of such Marketable Stock shall be the average of
the Closing Price of such Marketable Stock during the
first five Trading Dates commencing with the first day
after the date on which such Marketable Stock was first
distributed to the general public and traded on the New
York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market System or any similar system of
automated dissemination of quotations of securities
prices in the United States.
(vi) "Marketable Stock" shall mean the Common
Stock or common stock of any corporation that is the
successor to all or substantially all of the business or
assets of the Corporation as a result of a Fundamental
Change (or of the ultimate parent of such successor),
which is (or will, upon distribution thereof, be) listed
or quoted on the New York Stock Exchange, the American
Stock Exchange, the NASDAQ National Market System or any
similar system of automated dissemination of quotations
of securities prices in the United States.
Section 9. Ranking.
(a) Any class or classes of stock of the Corporation
shall be deemed to rank:
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(i) prior to the $1.50 Preferred Stock, as to
dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, if the holders
of such class shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
preference or priority to the holders of $1.50 Preferred
Stock;
(ii) on a parity with the $1.50 Preferred Stock,
as to dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not
the dividend rates, dividend payment dates or redemption
or liquidation prices per share thereof be different
from those of the $1.50 Preferred Stock, if the holders
of such class of stock and of the $1.50 Preferred Stock
shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their
respective amounts of accrued and unpaid dividends per
share or liquidation prices, without preference or
priority of one over the other; and
(iii) junior to the $1.50 Preferred Stock,
as to dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, if such stock
shall be the Common Stock or if the holders of $1.50
Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of such
stock.
(b) For purposes of dividends and the distribution of
assets upon liquidation, dissolution or winding up, the shares of the $2.25
Convertible Exchangeable Preferred Stock, par value $1.00 per share, of the
Corporation shall rank on a parity with the shares of $1.50 Preferred Stock.
Section 10. Voting.
(a) Except as herein provided or as otherwise from
time to time required by law, holders of $1.50 Preferred Stock shall have no
voting rights. Whenever, at any time or times, dividends payable on the shares
of $1.50 Preferred Stock at the time outstanding have not been paid in an
aggregate amount equal to at least six quarterly dividends on such shares
(whether or not consecutive), the holders of $1.50 Preferred Stock shall have
the right, voting separately as a class with the holders of shares of any one
or more other series of stock ranking on a parity as to dividends with the
$1.50 Preferred Stock upon which like voting rights have been conferred and are
exercisable (the $1.50 Preferred Stock and any such other stock, collectively
for purposes hereof, the "Defaulted Preferred Stock"), to elect two directors
of the Corporation at the Corporation's next annual meeting of the stockholders
and at each subsequent annual meeting of stockholders; provided, however, that
if such voting rights shall become vested more than 90 days or less than 20
days before the date prescribed for the annual meeting of stockholders,
thereupon the holders of the shares of Defaulted Preferred Stock shall be
entitled to exercise their voting rights at a special meeting of the holders of
shares of Defaulted Preferred Stock as set forth herein. At elections for such
directors, each holder of $1.50 Preferred Stock shall be entitled to one vote
for each share held (the holders of shares of any other series of Defaulted
Preferred Stock ranking on such a parity being entitled to such number of
votes, if any, for each share of stock held as may be granted to them). Upon
the vesting of such rights of the holders
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of Defaulted Preferred Stock, the then authorized number of members of
the Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of outstanding
Defaulted Preferred Stock as hereinafter set forth. The right of holders of
Defaulted Preferred Stock, voting separately as a class, to elect members of
the Board of Directors as aforesaid shall continue until such time as all
dividends accumulated on Defaulted Preferred Stock shall have been paid, or
declared and funds set aside for payment in full, at which time such right
shall terminate, except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of the character
above mentioned. As long as any shares of $1.50 Preferred Stock shall remain
outstanding, the number of directors of the Corporation (excluding any
directors elected by vote of the holders of shares of Defaulted Preferred
Stock) elected at any meeting of stockholders of the Corporation at which
directors are to be elected shall not be such as would cause the number of
directors in office after such meeting (excluding any directors elected by vote
of the holders of shares of Defaulted Preferred Stock) to exceed the number
which is two less than the maximum number of directors permitted by the
Certificate of Incorporation.
(b) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of the holders of
shares of Defaulted Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such meetings, or by the written consent of such holders pursuant
to Section 228 of the General Corporation Law of the State of Delaware.
(c) At any time when such voting right shall have
vested in the holders of shares of Defaulted Preferred Stock entitled to vote
thereon, and if such right shall not already have been initially exercised, an
officer of the Corporation shall, upon the written request of 10% of the
holders of record of shares of such Defaulted Preferred Stock then outstanding,
addressed to the Secretary of the Corporation, call a special meeting of
holders of shares of such Defaulted Preferred Stock. Such meeting shall be
held at the earliest practicable date upon the notice to holders of Defaulted
Preferred Stock given as required for annual meetings of stockholders at the
place for holding annual meetings of stockholders of the Corporation or, if
none, at a place designated by the Secretary of the Corporation. If such
meeting shall not be called by the proper officers of the Corporation within 30
days after the personal service of such written request upon the Secretary of
the Corporation, or within 30 days after mailing the same within the United
States, by registered mail, addressed to the Secretary of the Corporation at
its principal office (such mailing to be evidenced by the registry receipt
issued by the postal authorities), then the holders of record of 10% of the
shares of Defaulted Preferred Stock then outstanding may designate in writing
any person to call such meeting at the expense of the Corporation, and such
meeting may be called by such person so designated upon the notice to holders
of Defaulted Preferred Stock given as required for annual meetings of
stockholders and shall be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted Preferred Stock then
outstanding that would be entitled to vote at such meeting shall have access to
the stock books of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this paragraph.
Notwithstanding the provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45 days immediately
preceding the date fixed for the next annual meeting of stockholders.
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(d) The directors elected as provided herein shall
serve until the next annual meeting or until their respective successors shall
be elected and shall qualify; any director elected by the holders of Defaulted
Preferred Stock may be removed without cause by, and shall not be removed
without cause otherwise than by, the vote of the holders of a majority of the
outstanding shares of the Defaulted Preferred Stock who are entitled to
participate in such election of directors, voting separately as a class, at a
meeting called for such purpose or by written consent as permitted by law and
the Certificate of Incorporation and Bylaws of the Corporation. If the office
of any director elected by the holders of Defaulted Preferred Stock, voting
separately as a class, becomes vacant by reason of death, resignation,
retirement, disqualification or removal from office or otherwise, the remaining
director elected by the holders of Defaulted Preferred Stock, voting separately
as a class, may choose a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred. Upon any termination of the right
of the holders of Defaulted Preferred Stock to vote for directors as herein
provided, the term of office of all directors then in office elected by the
holders of Defaulted Preferred Stock, voting separately as a class, shall
terminate immediately. Whenever the terms of office of the directors elected
by the holders of Defaulted Preferred Stock, voting separately as a class,
shall so terminate and the special voting powers vested in the holders of
Defaulted Preferred Stock shall have expired, the number of directors shall be
reduced by the number of directors whose term of office shall have terminated
as provided hereinabove.
(e) So long as any shares of the $1.50 Preferred Stock
remain outstanding, the affirmative vote or consent of the holders of at least
66-2/3% of the shares of $1.50 Preferred Stock outstanding at the time given
either by written consent or in person or by proxy at any special or annual
meeting, shall be necessary to permit, effect or validate any one or more of
the following:
(i) the authorization, creation or issuance, or
any increase in the authorized or issued amount, of any
class or series of stock, or any security convertible
into stock of such class or series, ranking prior to the
$1.50 Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or
winding up;
(ii) the amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the
provisions of the Certificate of Incorporation
(including the Certificate of Designations relating to
the $1.50 Preferred Stock) which would adversely affect
any right, preference, privilege or voting power of the
$1.50 Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of
authorized preferred stock or the creation and issuance
of other series of preferred stock, or any increase in
the amount of authorized shares of any such other series
of preferred stock, in each case ranking on a parity
with or junior to the $1.50 Preferred Stock with respect
to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up,
shall not be deemed to adversely affect such rights,
preferences, privileges or voting powers; or
(iii) the authorization of any reclassification
of the $1.50 Preferred Stock.
-23-
<PAGE> 24
(f) So long as any shares of the $1.50 Preferred Stock
remain outstanding, the affirmative vote or consent of the holders of at least
50% of the shares of $1.50 Preferred Stock outstanding at the time given either
by written consent or in person or by proxy at any special or annual meeting,
shall be necessary to permit, effect or validate any increase in the amount of
authorized $1.50 Preferred Stock or the creation of additional classes of stock
or the issuance of any series of capital stock ranking on a parity with the
$1.50 Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution and winding up of the
Corporation.
The foregoing voting provisions shall not apply if, at
or prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of $1.50
Preferred Stock shall have been redeemed.
Section 11. Record Holders. The Corporation and
the Transfer Agent may deem and treat the record holder of any shares of $1.50
Preferred Stock as the true and lawful owner thereof for all purposes, and
neither the Corporation nor the Transfer Agent shall be affected by any notice
to the contrary.
Section 12. Notice. Except as may otherwise be
provided by law or provided for herein, all notices referred to herein shall be
in writing, and all notices hereunder shall be deemed to have been given upon
receipt, in the case of a notice of conversion given to the Corporation as
contemplated in Section 7(b) hereof, or, in all other cases, upon the earlier
of receipt of such notice or three Business Days after the mailing of such
notice if sent by registered mail (unless first-class mail shall be
specifically permitted for such notice under the terms hereof) with postage
prepaid, addressed: if to the Corporation, to its offices at 10370 Richmond
Avenue, Suite 400, Houston, Texas 77042 (Attention: Corporate Secretary) or
other agent of the Corporation designated as permitted hereby; or, if to any
holder of the $1.50 Preferred Stock, to such holder at the address of such
holder of the $1.50 Preferred Stock as listed in the stock record books of the
Corporation (which shall include the records of the Transfer Agent), or to such
other address as the Corporation or holder, as the case may be, shall have
designated by notice similarly given.
IN WITNESS WHEREOF, this Certificate has been signed on
behalf of the Corporation by its Chairman, President and Chief Executive
Officer as of the ____ day of _________, 1994.
NOBLE DRILLING CORPORATION
By:
--------------------------
James C. Day
Chairman, President and Chief
Executive Officer
-24-
<PAGE> 1
EXHIBIT 5.1
August 12, 1994
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Dear Sirs:
We have acted as counsel for Noble Drilling Corporation, a Delaware
corporation (the "Company"), in connection with the preparation of the
Company's Registration Statement on Form S-4 (No. 33-54495), as amended (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), for the purpose of registering under the Securities Act (i)
29,324,280 shares of common stock of the Company, par value $.10 per share
("Noble Common Stock"), and (ii) 4,025,000 shares of $1.50 convertible
preferred stock of the Company, par value $1.00 per share ("$1.50 Noble
Preferred Stock"), and an indeterminable number of shares of Noble Common Stock
issuable from time to time upon the conversion of such $1.50 Noble Preferred
Stock, which shares of Noble Common Stock and $1.50 Noble Preferred Stock
(collectively, the "Shares") may be issued in connection with the merger of
Chiles Offshore Corporation, a Delaware corporation ("Chiles"), with and into
Noble Offshore Corporation, a Delaware corporation and a wholly owned
subsidiary of the Company ("Noble Sub"). The Shares are to be issued by the
Company in accordance with the terms and subject to the conditions set forth in
the Agreement and Plan of Merger dated June 13, 1994 among the Company, Chiles
and Noble Sub (the "Agreement").
In connection with the foregoing, we have examined the originals or
copies, certified or otherwise authenticated to our satisfaction, of the
Registration Statement, the Agreement and such corporate records of the
Company, certificates of public officials and of officers of the Company, and
other agreements, instruments and documents as we have deemed necessary to
require as a basis for the opinions hereinafter expressed. Where facts
material to the opinions hereinafter expressed were not independently
established by us, we have relied upon the statements of officers of the
Company, where we deemed such reliance appropriate under the circumstances.
Based upon the foregoing and in reliance thereon, and subject to the
assumptions and qualifications hereinafter specified, it is our opinion that
the Shares to be issued by the Company pursuant to the Merger and in accordance
with the Agreement have been duly authorized by the Company and when (i) the
Registration Statement has become effective under the Securities Act, (ii)
state securities laws have been fully complied with and (iii) the Shares are
issued and delivered pursuant to the Agreement as described in the Joint Proxy
Statement/Prospectus
<PAGE> 2
Noble Drilling Corporation
August 12, 1994
Page 2
forming a part of the Registration Statement or upon conversion of the $1.50
Noble Preferred Stock, the Shares will be validly issued, fully paid and
nonassessable.
The opinions expressed above are limited by and subject to the
following qualifications:
(a) We are members of the Bar of the State of Texas only and do
not purport to be experts on the laws of any state or jurisdiction other than
the State of Texas and the United States. Insofar as the opinions expressed
herein relate to matters governed by Delaware law, we have relied solely upon a
reading of the applicable statutes and the corporate records of the Company
with respect to the opinions given herein.
(b) In rendering the opinions expressed herein, we have assumed
that no action heretofore taken by the Board of Directors of the Company in
connection with the matters described or referred to herein will be modified,
rescinded or withdrawn after the date hereof.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the reference to us under the
caption "Legal Matters" in the Joint Proxy Statement/Prospectus forming a part
of the Registration Statement. In giving this consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules or regulations of the Commission
thereunder.
Respectfully submitted,
THOMPSON & KNIGHT,
A Professional Corporation
By: /s/ ROBERT D. CAMPBELL
Robert D. Campbell, Attorney
<PAGE> 1
EXHIBIT 8.1
(214) 969-1504
August 12, 1994
Noble Drilling Corporation
10370 Richmond Avenue
Suite 400
Houston, Texas 77042
Re: Merger of Chiles Offshore Corporation into a Subsidiary
of Noble Drilling Corporation under Agreement and Plan
of Merger dated June 13, 1994
Gentlemen:
This firm has acted as counsel to Noble Drilling Corporation, a
Delaware corporation ("Noble"), in connection with the merger of Chiles
Offshore Corporation, a Delaware corporation ("Chiles"), with and into Noble
Offshore Corporation, a newly-formed Delaware corporation and a wholly-owned
subsidiary of Noble ("Noble Sub") (the "Merger"), pursuant to an Agreement and
Plan of Merger dated June 13, 1994, by and among Noble, Noble Sub and Chiles
(the "Agreement"). We have also acted as counsel for Noble in connection with
the preparation of the Joint Proxy Statement/Prospectus (the "Joint Proxy
Statement") contained in the Registration Statement on Form S-4 (No. 33-54495)
(the "Registration Statement"), filed by Noble with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended, (the
"Securities Act"), in connection with the issuance of an aggregate of up to
29,324,280 shares of common stock of Noble, par value $.10 per share (the
"Noble Common Stock"), and of up to 4,025,000 shares of $1.50 convertible
preferred stock of Noble, par value $1.00 per share (the "$1.50 Noble Preferred
Stock"), and the shares of Noble Common Stock into which such shares of $1.50
Noble Preferred stock may be converted.
Except as expressly provided otherwise, capitalized terms used herein
shall have the same meanings assigned to them in the Agreement.
You have requested that we render our opinion as to the material
federal income tax consequences which are expected to result from the Merger
and the issuance of the $1.50 Noble Preferred Stock and the Noble Common Stock
under the applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"). In connection with such opinions, we have reviewed the
Agreement and the Joint Proxy Statement; we have investigated
<PAGE> 2
Noble Drilling Corporation
August 12, 1994
Page 2
such law and other authorities as we have deemed appropriate; and we have
relied upon such additional facts, representations and assumptions as are
discussed herein. In rendering the opinions expressed below, we have assumed
that the Noble Common Stock and the $1.50 Noble Preferred Stock will be issued
in accordance with the terms and provisions of the Agreement, that the rights
of the holders thereof will be as described therein and in the Joint Proxy
Statement, and that there are no changes in the facts, representations and
assumptions stated herein or in the Registration Statement. Our opinion is
based upon existing provisions of the Code, regulations promulgated thereunder,
interpretations of the Code and such regulations published by the Internal
Revenue Service (the "IRS"), and existing court decisions, any of which could
be changed at any time.
In analyzing the tax consequences of the Merger, we have made the
following assumptions which are based upon representations made to us by Noble
and Chiles:
(a) The aggregate fair market value of the shares of
Noble Common Stock and $1.50 Noble Preferred Stock (referred to
collectively herein as "Noble Stock") and cash received by each
shareholder of Chiles will be approximately equal to the aggregate
fair market value of the Chiles Common Stock and Chiles Preferred
Stock (referred to collectively herein as "Chiles Stock") surrendered
in the exchange.
(b) There is no plan or intention by the shareholders of
Chiles to sell, exchange or otherwise dispose of a number of shares of
Noble Stock received in the transaction that would reduce the Chiles
shareholders' ownership of Noble Stock to a number of shares having a
value, as of the date of the Merger, of less than 50 percent of the
value of all of the formerly outstanding stock of Chiles as of such
date. For purposes of this assumption, shares of Chiles Stock
exchanged for cash or other property or exchanged for cash in lieu of
fractional shares of Noble Stock, will be treated as outstanding
Chiles Stock on the date of the Merger. Moreover, shares of Chiles
Stock and shares of Noble Stock presently held by the Chiles
stockholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered as outstanding.
(c) Noble Sub will acquire at least 90 percent of the
fair market value of the net assets of, and at least 70 percent of the
fair market value of the gross assets of, Chiles held by Chiles
immediately prior to the Merger. For
<PAGE> 3
Noble Drilling Corporation
August 12, 1994
Page 3
purposes of this assumption, Chiles assets used to pay Chiles's Merger
expenses, and all redemptions and distributions made by Chiles will be
included as assets of Chiles immediately prior to the Merger.
(d) The liabilities of Chiles to be assumed by Noble and
Noble Sub and the liabilities to which the transferred assets of
Chiles are subject were incurred by Chiles in the ordinary course of
its business.
(e) Noble, Noble Sub, Chiles and the stockholders of
Chiles will pay their own expenses incurred in connection with the
Merger, except that expenses incurred in connection with the printing
and distributing of the Registration Statement and the Joint Proxy
Statement will be shared equally by Noble and Chiles.
(f) Noble has no plan or intention to (1) liquidate Noble
Sub following the Merger, (2) merge Noble Sub with or into another
corporation following the Merger, (3) sell or otherwise dispose of the
stock of Noble Sub following the Merger, or (4) cause or permit Noble
Sub to sell or otherwise dispose of any of the assets owned by Chiles
prior to the Merger, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of
the Code.
(g) There is no intercorporate indebtedness between Noble and
Chiles or between Noble Sub and Chiles that was or will be issued,
acquired or settled at a discount in connection with the Merger.
(h) Chiles is not under the jurisdiction of a court in a
Title XI or similar case within the meaning of Section 368(a)(3)(A) of
the Code.
(i) None of Noble, Noble Sub or Chiles is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(j) The Joint Proxy Statement accurately states Noble's
business purposes and reasons for the Merger.
(k) The Joint Proxy Statement accurately states Chiles'
business purposes and reasons for the Merger.
<PAGE> 4
Noble Drilling Corporation
August 12, 1994
Page 4
(l) The payment of cash in lieu of fractional shares of
Noble is solely for the purpose of saving the expense and
inconvenience of issuing and transferring the fractional share
interests in Noble and is not separately bargained for consideration.
The total cash paid to the holders of Chiles Stock in lieu of
fractional share interests in Noble Stock will not exceed one percent
of the aggregate consideration received by the holders of Chiles Stock
in exchange for their Chiles Stock pursuant to the Merger. The
consideration paid for the fractional shares will be paid by Noble.
(m) Any compensation paid to the holders of Chiles Stock
who enter (or have entered) into employment, consulting or
non-competition contracts, if any, with Noble or Noble Sub (1) will be
for services actually rendered or to be rendered, (2) will be
commensurate with amounts paid to third parties bargaining at arm's
length, and (3) will not represent consideration for the exchange of
Chiles Stock for Noble Stock. None of the shares of Noble Stock and
cash to be received by holders of Chiles Stock in the Merger is
separate consideration for or otherwise allocable to anything other
than shares of Chiles Stock except to the extent that such holders
receive Noble Stock in exchange for their Chiles Options pursuant to
Section 5.11 of the Agreement.
(n) Prior to the Merger, Noble will own one hundred
percent of the outstanding stock of Noble Sub.
(o) Noble Sub has no plan or intention to issue
additional shares of its stock following the Merger that would result
in Noble owning stock possessing less than eighty percent of the total
combined voting power of all classes of stock entitled to vote or less
than eighty percent of the total number of shares of all other classes
of stock of Noble Sub.
(p) Noble has no plan or intention to redeem or otherwise
reacquire any of the Noble Stock to be issued in the Merger (other
than any cash paid by Noble in lieu of fractional shares pursuant to
the Merger Agreement).
(q) Following the Merger, Noble Sub will continue the
historic business of Chiles or use a significant portion of Chiles's
historic business assets in a business.
<PAGE> 5
Noble Drilling Corporation
August 12, 1994
Page 5
(r) No stock of Noble Sub will be issued in connection
with the Merger.
(s) Noble does not own, nor has it owned during the past
five years, any shares of Chiles Stock.
The tax consequences of the Merger will depend upon whether the Merger
qualifies for tax purposes as a "reorganization" under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. If it does qualify as a
reorganization under such provisions, (1) no gain or loss should be recognized
by Chiles, Noble Sub or Noble as a result of the Merger; (2) the Surviving
Corporation should have the same basis in the assets received from Chiles as
the basis for such assets in the hands of Chiles immediately prior to the
Merger; and (3) no gain or loss should be recognized by a shareholder of Chiles
as a result of the Merger, except to the extent that cash or property other
than the stock of Noble ("boot") is received.
Based upon the foregoing discussion and subject to the qualifications
stated therein, it is our opinion that the Merger will have the following tax
consequences:
(a) The Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code.
(b) Noble, Noble Sub and Chiles will each be a party to
the reorganization within the meaning of Section 368(b) of the Code.
(c) Noble, Noble Sub and Chiles will not recognize any
gain or loss as a result of the Merger.
(d) The stockholders of Chiles will not recognize any
gain or loss upon the exchange of their Chiles Stock for Noble Stock
pursuant to the terms of the Merger Agreement (except for gain on cash
received in lieu of fractional shares, as described in (e) below).
(e) Chiles stockholders receiving cash in lieu of
fractional shares will be treated as if such fractional shares had
been received in the Merger and redeemed by Noble for cash. Unless
the redemption is found to be essentially equivalent to a dividend,
the stockholder will recognize gain or loss measured by the difference
between the
<PAGE> 6
Noble Drilling Corporation
August 12, 1994
Page 6
stockholder's basis in the fractional share surrendered and the amount
of cash received.
(f) The aggregate basis of the shares of Noble Stock
received by stockholders of Chiles pursuant to the Merger will be the
same as the aggregate basis of the Chiles Stock exchanged therefor
(less basis attributable to fractional shares surrendered for cash).
(g) The holding period of Noble Stock will include the
period during which the Chiles Stock exchanged therefor was held,
provided such Chiles Stock was held as a capital asset at the time of
the Merger.
As stated above, we have assisted in the preparation of the Joint Proxy
Statement and, in particular, the sections of the Joint Proxy Statement
entitled "Certain Federal Income Tax Consequences" and "Description of Noble
Capital Stock--Federal Income Tax Considerations Relating to the $1.50 Noble
Preferred Stock." It is our opinion that these sections, to the extent they
contain statements of legal conclusions, include a summary of the material
federal income tax consequences which are expected to result from the Merger
and the issuance of the Noble Common Stock and the $1.50 Noble Preferred Stock.
We hereby consent to the filing of this opinion with the SEC as an
exhibit to the Registration Statement and to the reference to us under "Certain
Federal Income Tax Consequences" and "Description of Noble Capital Stock --
Federal Income Tax Considerations Relating to the $1.50 Noble Preferred Stock"
in the Joint Proxy Statement forming a part of the Registration Statement. In
giving this consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules or regulations of the SEC thereunder.
THOMPSON & KNIGHT
A Professional Corporation
By:/s/ THORNTON HARDIE III
________________________
Thornton Hardie III
Shareholder
<PAGE> 1
Exhibit 10.5
AMENDMENT NO. 1
TO THE
NOBLE DRILLING CORPORATION
1992 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
Pursuant to the provisions of Section 5.1 of the Noble Drilling
Corporation 1992 Nonqualified Stock Option Plan for Non- Employee Directors
(the "Plan"), the Plan is hereby amended as follows:
1. Restate Section 3.02(d) of the Plan in its entirety to read as
follows:
(d) Option Period. Each Option shall be exercisable from
time to time over a period (i) commencing upon the earlier of (A) the
date that is one year following the Grant Date of such Option and (B)
the day immediately prior to the date of the next annual meeting of
stockholders occurring following such Grant Date, provided that the
date of such annual meeting of stockholders is at least 355 days after
such Grant Date, and (ii) ending upon the expiration of ten years from
the Grant Date (the "Option Period"), unless terminated sooner
pursuant to the provisions described in Section 3.02(e) below.
2. Restate Section 3.02(g) of the Plan in its entirety to read as
follows:
(g) Agreement to Continue in Service. Each Optionee
shall agree to remain in the service of the Company, at the pleasure
of the Company's stockholders, for a continuous period extending at
least through the earlier of (i) the date that is one year following
the Grant Date of the Option and (ii) the day immediately prior to the
date of the next annual meeting of stockholders occurring following
such Grant Date, at the retainer rate and fee schedule then in effect
or at such changed rate or schedule as the Company from time to time
may establish; provided, that nothing in the Plan or in any stock
option agreement evidencing an Option shall confer upon such Optionee
any right to continue as a Director.
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
-----------------------------
James C. Day
Chairman, President and Chief
Executive Officer
Date: July 28, 1994
<PAGE> 1
EXHIBIT 12.1
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF EARNINGS (DEFICIENCY) AVAILABLE
TO COVER FIXED CHARGES AND PREFERRED DIVIDENDS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended December 31,
------------------ -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Noble-Historical
Earnings available for fixed charges:
Income (loss) from continuing operations
before income taxes and extraordinary items $11,011 $ 8,976 $21,620 $ (5,844) $(11,285) $(7,541) $ (9,286)
Add-fixed charges 6,280 2,064 5,715 8,148 14,994 3,450 3,110
Deduct-capitalized interest (1,054) (614)
------- ------- ------- -------- -------- ------- --------
Total 17,291 11,040 27,335 2,304 2,655 (4,705) (6,176)
------- ------- ------- -------- -------- ------- --------
Fixed charges:
Interest and related costs 5,937 1,910 5,314 7,140 13,408 3,061 2,781
Amortization of debt expense 177 92 678 1,140
Rental expense factor representative
of interest factor 166 154 309 330 446 389 329
------- ------- ------- -------- -------- ------- --------
Total 6,280 2,064 5,715 8,148 14,994 3,450 3,110
------- ------- ------- -------- -------- ------- --------
Preferred dividends:
Amount declared $ 3,364 $ 3,364 $ 6,728 $ 6,728 $ 721 $ $
======= ======= ======= ======== ======== ======= ========
Gross-up to pretax based on
effective tax rate(A) $ 4,391 $ 4,032 $ 7,597 $ 6,728 $ 721 $ $
======= ======= ======= ======= ======== ======== ========
Ratio of earnings to fixed charges
and preferred dividends 1.62 1.81 2.05
Deficiency of earnings available to cover
combined fixed charges and
preferred dividends $ $ $ $ 12,572 $ 13,060 $ 8,155 $ 9,286
======= ======= ======= ======== ======== ======= ========
Chiles-Historical
Earnings available for fixed charges:
Income (loss) from continuing operations
before income taxes and extraordinary items $12,773 $(4,448) $ 2,795 $(30,738) $(25,472) $(2,762) $(10,531)
Add-fixed charges 36 1,689 3,053 6,384 8,412 5,167 8,343
Deduct-capitalized interest (302)
------- ------- ------- -------- -------- ------- --------
12,809 (2,759) 5,848 (24,354) (17,060) 2,103 (2,188)
------- ------- ------- -------- -------- ------- --------
Fixed charges:
Interest and related costs 1,615 2,632 5,456 6,917 4,520 8,199
Amortization of debt expense 28 332 642 758 45 23
Rental expense factor representative of
interest factor 36 46 89 286 737 602 121
------- ------- ------- -------- -------- ------- --------
36 1,689 3,053 6,384 8,412 5,167 8,343
------- ------- ------- -------- -------- ------- --------
Preferred dividends:
Amount declared $ 3,019 $ $ 1,208 $ $ $ $
======= ======= ======= ======== ======== ======= ========
Gross-up to pretax based on
effective tax rate $ 3,191 $ $ 1,744 $ $ $ $
======= ======= ======= ======= ======== ======== ========
Ratio of earnings to fixed charges
and preferred dividends 3.97 1.22
Deficiency of earnings available to cover
combined fixed charges and
preferred dividends $ $ 4,448 $ $ 30,738 $ 25,472 $ 3,064 $ 10,531
======= ======= ======= ======== ======== ======= ========
</TABLE>
(A) The amounts for fiscal years 1992 and 1991 were not grossed-up as the
effective tax rates for these periods were negative.
<PAGE> 2
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended December 31,
------------------ -------------------------------
1994 1993 1993 1992 1991
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Noble and Chiles-Pro Forma Combined
Earnings available for fixed charges:
Income (loss) from continuing operations
before income taxes and extraordinary items $23,784 $ 4,528 $24,415 $(36,582) $(36,757)
Add-fixed charges 6,316 3,753 8,768 14,532 23,406
Deduct-capitalized interest (1,054)
------- ------- ------- -------- --------
Total 30,100 8,281 33,183 (22,050) (14,405)
------- ------- ------- -------- --------
Fixed charges:
Interest and related costs 5,937 3,525 7,946 12,596 20,325
Amortization of debt expense 177 28 424 1,320 1,898
Rental expense factor representative of
interest factor 202 200 398 616 1,183
------- ------- ------- -------- --------
Total 6,316 3,753 8,768 14,532 23,406
------- ------- ------- -------- --------
Preferred dividends:
Amount declared $ 6,383 $ 3,364 $ 7,936 $ 6,728 $ 721
======= ======= ======= ========= ========
Gross-up to pretax based on effective
tax rate (A) $ 7,399 $ 5,964 $ 9,191 $ 6,728 $ 721
======= ======= ======= ========= ========
Ratio of earnings to fixed charges and
preferred dividends 2.19 0.85 1.85
Deficiency of earnings available to cover
combined fixed charges and preferred
dividends $ $ $ $ 43,310 $ 38,532
======= ======= ======= ======== ========
Noble (A), Chiles and Triton-Pro Forma Combined
Earnings available for fixed charges:
Income (loss) from continuing operations
before income taxes and extraordinary items $24,689 $24,003
Add-fixed charges 6,401 16,852
Deduct-capitalized interest
------- -------
Total 31,090 40,855
------- -------
Fixed charges:
Interest and related costs 5,937 15,554
Amortization of debt expense 177 424
Rental expense factor representative of
interest factor 287 874
------- -------
Total 6,401 16,852
------- -------
Preferred dividends:
Amount declared $ 6,383 $ 7,936
======= ========
Gross-up to pretax based on effective
tax rate $ 7,645 $ 11,080
======= ========
Ratio of earnings to fixed charges and
preferred dividends 2.21 1.46
Deficiency of earnings available to cover
combined fixed charges and preferred
dividends $ $
======= =======
</TABLE>
A) The amounts for fiscal years 1992 and 1991 were not grossed-up as the
effective tax rates for these periods were negative.
B) Noble historical amounts were adjusted to include the effects of the
Western Acquisition as if it had occurred on January 1, 1993.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated January 27, 1994
related to the audited consolidated historical financial statements of Noble
Drilling Corporation and subsidiaries and the related schedules included in the
Noble Drilling Corporation Form 10-K for the year ended December 31, 1993 and
incorporated by reference in this Registration Statement, and to all references
to our Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN & CO.
Houston, Texas
August 12, 1994
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 7, 1994
(except with respect to the matter discussed in Note 9, as to which the date is
March 24, 1994) related to the audited consolidated financial statements of
Chiles Offshore Corporation and subsidiaries and the related schedules included
in the Chiles Offshore Corporation Form 10-K for the year ended December 31,
1993 and incorporated by reference in this Registration Statement, and to all
references to our Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN & CO.
Houston, Texas
August 12, 1994
<PAGE> 1
EXHIBIT 23.6
CONSENT OF SIMMONS & COMPANY INTERNATIONAL
We hereby consent to the use of our name, to the summarization of our
letters dated June 13, 1994 and August 12, 1994 and to the other references to
us in the Joint Proxy Statement/Prospectus of Noble Drilling Corporation and
Chiles Offshore Corporation, and to the inclusion of such letters as Appendix
II to such Joint Proxy Statement/Prospectus, which Joint Proxy
Statement/Prospectus is part of this Registration Statement on Form S-4 of
Noble Drilling Corporation. By giving such consent, we do not thereby admit
that we are experts with respect to any part of such Registration Statement
within the meaning of the term "expert" as used in the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, or are within the class of persons whose
consent is required thereunder.
SIMMONS & COMPANY INTERNATIONAL
By /s/ FREDERICK CHARLTON
----------------------------------
Vice President
Houston, Texas
August 12, 1994
<PAGE> 1
EXHIBIT 23.7
SALOMON BROTHERS INC SALOMON BROTHERS
Seven World Trade Center
New York, New York 10048
212-783-7000
CONSENT OF SALOMON BROTHERS INC
We hereby consent to the use of our name, to the summarization of our
letter dated August 12, 1994 and to the other references to us in the Joint
Proxy Statement/Prospectus of Noble Drilling Corporation and Chiles Offshore
Corporation, and to the inclusion of such letter as Appendix III to such Joint
Proxy Statement/Prospectus, which Joint Proxy Statement/Prospectus is part of
this Registration Statement on Form S-4 of Noble Drilling Corporation. By
giving such consent, we do not thereby admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"expert" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder,
or are within the class of persons whose consent is required thereunder.
SALOMON BROTHERS INC
/s/ SALOMON BROTHERS INC
New York, New York
August 12, 1994
<PAGE> 1
EXHIBIT 24.2
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints James C. Day and Byron L. Welliver, and each of them
(with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign on
his behalf individually and in each capacity stated below any amendment,
including post-effective amendments, to this Registration Statement, and to file
the same, with all exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<S> <C> <C>
/s/ MICHAEL A. CAWLEY Director July 8, 1994
- ---------------------------------------------
Michael A. Cawley
</TABLE>
<PAGE> 1
EXHIBIT 24.3
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints James C. Day and Byron L. Welliver, and each of them
(with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign on
his behalf individually and in each capacity stated below any amendment,
including post-effective amendments, to this Registration Statement, and to file
the same, with all exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<S> <C> <C>
/s/ JAMES L. FISHEL Director July 8, 1994
- ---------------------------------------------
James L. Fishel
</TABLE>
<PAGE> 1
Exhibit 99.3
(NOBLE LOGO)
(Voting Instruction Card)
NOBLE DRILLING CORPORATION
VOTING INSTRUCTION CARD FOR COMMON STOCK
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs the trustee to vote, as designated
below, all shares of Common Stock of Noble Drilling Corporation (the "Company")
that are credited to the accounts of the undersigned (whether or not vested) in
the Noble Drilling Corporation Thrift Plan at the special meeting of
stockholders to be held on September 15, 1994 at 10:00 a.m. at Houston, Texas,
and at any adjournment thereof, as more fully described in the notice of the
meeting and the proxy statement accompanying the same, receipt of which is
hereby acknowledged.
<TABLE>
<S> <C> <C> <C> <C>
1. FOR ( ) AGAINST ( ) ABSTAIN ( ) Approval of (a) the Agreement and Plan of Merger (the "Merger Agreement"), as
more fully described in the accompanying Joint Proxy Statement/Prospectus, and
pursuant to which, among other things, (i) Chiles Offshore Corporation ("Chiles")
would merge with and into a newly formed, wholly owned subsidiary of the Company
and (ii) each issued and outstanding share of Common Stock of Chiles would be
converted into the right to receive 0.75 shares of Common Stock of the Company
and each issued and outstanding share of $1.50 Convertible Preferred Stock of
Chiles would be converted into the right to receive one share of a new series of
$1.50 Convertible Preferred Stock of the Company, and (b) the issuance of shares
of Common Stock of the Company and the new series of $1.50 Convertible Preferred
Stock of the Company pursuant to the Merger Agreement.
2. FOR ( ) AGAINST ( ) ABSTAIN ( ) Adoption of the amendment to the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 75,000,000 to
200,000,000.
3. FOR ( ) AGAINST ( ) ABSTAIN ( ) Approval of amendments to the Noble Drilling Corporation 1991 Stock Option and
Restricted Stock Plan to (a) increase from 1,900,000 to 5,200,000 the aggregate
number of shares of Common Stock available for issuance thereunder, (b) limit to
1,500,000 the total number of shares of Common Stock that may be made subject to
grants of options and stock appreciation rights or awards of restricted stock
under the Plan to any one person during any five-year period and (c) provide
for administration of the Plan by directors who are "outside" directors within
the meaning of federal tax laws.
</TABLE>
4. In its discretion, the Trustee is authorized to vote upon such other
business or matters as may properly come before the meeting or any
adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 2
(Reverse of Voting Instruction Card)
THIS VOTING INSTRUCTION CARD, WHEN DULY EXECUTED AND RETURNED, WILL BE
VOTED BY THE TRUSTEE OF THE NOBLE DRILLING CORPORATION THRIFT PLAN ("THRIFT
PLAN") IN THE MANNER DESIGNATED HEREIN BY THE UNDERSIGNED THRIFT PLAN
PARTICIPANT. IF THIS VOTING INSTRUCTION CARD IS DULY EXECUTED AND RETURNED,
BUT WITHOUT A CLEAR VOTING DESIGNATION, IT WILL BE VOTED FOR ITEMS 1, 2 AND 3.
Dated:___________________________________, 1994
_______________________________________________
Signature
This voting instruction card should be signed
exactly as your name appears hereon.
PLEASE COMPLETE, DATE AND SIGN THIS VOTING
INSTRUCTION CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE> 1
EXHIBIT 99.4
NOBLE DRILLING CORPORATION
1991 STOCK OPTION AND RESTRICTED STOCK PLAN
As Amended and Restated*
SECTION 1. PURPOSE
The purpose of this Plan is to assist Noble Drilling Corporation, a
Delaware corporation, in attracting and retaining, as officers and key
employees of the Company and its Affiliates, persons of training, experience
and ability and to furnish additional incentive to such persons by encouraging
them to become owners of Shares of the Company's capital stock, by granting to
such persons Incentive Options, Nonqualified Options, Restricted Stock, or any
combination of the foregoing.
SECTION 2. DEFINITIONS
Unless the context otherwise requires, the following words as used
herein shall have the following meanings:
(a) "Affiliate" means any corporation (other than the
Company) in any unbroken chain of corporations (i) beginning with the
Company if, at the time of the granting of the Option or award of
Restricted Stock, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain, or (ii) ending with the
Company if, at the time of the granting of the Option or award of
Restricted Stock, each of the corporations, other than the Company,
owns stock possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
(b) "Agreement" means the written agreement (i) between
the Company and the Optionee evidencing the Option and any SARs that
relate to such Option granted by the Company and the understanding of
the parties with respect thereto or (ii) between the Company and a
recipient of Restricted Stock evidencing the restrictions, terms and
conditions applicable to such award of Restricted Stock and the
understanding of the parties with respect thereto.
(c) "Board" means the Board of Directors of the Company
as the same may be constituted from time to time.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the Committee provided for in
Section 3 of the Plan as the same may be constituted from time to
time.
(f) "Company" means Noble Drilling Corporation, a
Delaware corporation.
(g) "Corporate Transaction" shall have the meaning as
defined in Section 8 of the Plan.
(h) "Disinterested Person" means a person who satisfies
the definition thereof under Rule 16b-3 promulgated under the Exchange
Act.
_________________
* Marked to indicate amendments made by the Board of Directors of the
Company at a meeting thereof held on July 28, 1994. Additions are
underscored and deletions are struck through.
<PAGE> 2
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(j) "Fair Market Value" means the fair market value per
Share as determined by the Committee in good faith; provided, however,
that if a Share is listed or admitted to trading on a securities
exchange registered under the Exchange Act, the Fair Market Value per
Share shall be the average of the reported high and low sales price on
the date in question (or if there was no reported sale on such date,
on the last preceding date on which any report sale occurred) on the
principal securities exchange on which such Share is listed or
admitted to trading, or if a Share is not listed or admitted to
trading on any such exchange but is listed as a national market
security on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or any similar system then in
use, the Fair Market Value per Share shall be the average on the
reported high and low sales price on the date in question (or if there
was no reported sale on such date, on the last preceding date on which
any reported sale occurred) on such system, or if a Share is not
listed or admitted to trading on any such exchange and is not listed
as a national market security on NASDAQ but is quoted on NASDAQ or any
similar system then in use, the Fair Market Value per Share shall be
the average of the closing high bid and low asked quotations on such
system for such Share on the date in question. For purposes of
valuing Shares to be made subject to Incentive Options, the Fair
Market Value per Share shall be determined without regard to any
restriction other than one which, by its terms, will never lapse.
(k) "Incentive Option" means an Option that is intended
to satisfy the requirements of Section 422(h) of the Code and Section
17 of the Plan.
(l) "Nonqualified Option" means an Option that does not
qualify as a statutory stock option under Section 422 or 423 of the
Code.
(m) "Option" means an option to purchase one or more
Shares granted under and pursuant to the Plan. Such Option may be
either an Incentive Option or a Nonqualified Option.
(n) "Optionee" means a person who has been granted an
Option and who has executed an Agreement with the Company.
(o) "Outside Director" means a director of the Company who
satisfies the definition thereof under Treasury Regulation Section
1.62-27(e) under the Code.
(p) "Plan" means this Noble Drilling Corporation 1991
Stock Option and Restricted Stock Plan, as amended.
(q) "Restricted Stock" means Shares issued or transferred
pursuant to Section 20 of the Plan.
(r) "SARs" means stock appreciation rights granted
pursuant to Section 7 of the Plan.
(s) "Securities Act" means the Securities Act of 1933, as
amended.
(t) "Share" means a share of the Company's present common
stock, par value $.10 per share, and any share or shares of capital
stock or other securities of the Company hereafter issued or issuable
in respect of or in substitution or exchange for each such present
share. Such Shares may be unissued or reacquired Shares, as the
Board, in its sole and absolute discretion, shall from time to time
determine.
SECTION 3. ADMINISTRATION
The Plan shall be administered by, and the decisions concerning the
Plan shall be made solely by, a Committee of two or more directors of the
Company, all of whom (a) are Disinterested Persons and (b) beginning
immediately after the 1995
-2-
<PAGE> 3
annual meeting of stockholders of the Corporation, shall be Outside Directors.
Each member of the Committee shall be appointed by and shall serve at the
pleasure of the Board. The Board shall have the sole continuing authority to
appoint members of the Committee. In making grants or awards, the Committee
shall take into consideration the contribution the person has made or may make
to the success of the Company or its Affiliates and such other considerations
as the Board may from time to time specify.
The Committee shall elect one of its members as its chairman and shall
hold its meetings at such times and places it may determine. A majority of the
members of the Committee shall constitute a quorum. All decisions and
determinations of the Committee shall be made by the majority vote or decision
of the members present at any meeting at which a quorum is present; provided,
however, that any decision or determination reduced to writing and signed by
all members of the Committee shall be as fully effective as if it had been made
by a majority vote or decision at a meeting duly called and held. The
Committee may appoint a secretary (who need not be a member of the Committee)
who shall keep minutes of its meetings. The Committee may make any rules and
regulations for the conduct of its business that are not inconsistent with the
express provisions of the Plan, the bylaws or certificate of incorporation of
the Company or any resolutions of the Board.
All questions of interpretation or application of the Plan, or of a
grant of an Option and any SARs that relate to such Option or an award of
Restricted Stock, including questions of interpretation or application of an
Agreement, shall be subject to the determination of the Committee, which
determination shall be final and binding upon all parties.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole and absolute discretion, (a) to adopt, amend or
rescind administrative and interpretive rules and regulations relating to the
Plan; (b) to construe the Plan; (c) to make all other determinations necessary
or advisable for administering the Plan; (d) to determine the terms and
provisions of the respective Agreements (which need not be identical),
including provisions defining or otherwise relating to (i) the term and the
period or periods and extent of exercisability of the Options, (ii) the extent
to which the transferability of Shares issued upon exercise of Options or any
SARs that relate to such Options is restricted, (iii) the effect of termination
of employment upon the exercisability of the Options, and (iv) the effect of
approved leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service) upon the exercisability of such Options; (e) subject
to Sections 9 and 11 of the Plan, to accelerate, for any reason, regardless of
whether the Agreement so provides, the time of exercisability of any Option and
any SARs that relate to such Option that have been granted or the time of the
lapsing of restrictions on Restricted Stock; (f) to construe the respective
Agreements; and (g) to exercise the powers conferred on the Committee under the
Plan. The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expediency. The determinations of the Committee or Board, as the case may
be, on the matters referred to in this Section 3 shall be final and conclusive.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) The total number of Shares that may be purchased
pursuant to Options, issued or transferred pursuant to the exercise of
SARs or awarded as Restricted Stock shall not exceed 5,200,000 in the
aggregate, and the total number of shares that may be purchased
pursuant to Options, issued or transferred pursuant to the exercise of
SARs or awarded as Restricted Stock, by or to any one person during
any continuous five-year period shall not exceed 1,500,000 in the
aggregate; provided that each such maximum number of Shares shall be
increased or decreased as provided in Section 13 of the Plan.
(b) At any time and from time to time after the Plan
takes effect, the Committee, pursuant to the provisions herein set
forth, may grant Options and any SARs that relate to such Options and
award
-3-
<PAGE> 4
Restricted Stock until the maximum number of Shares shall be exhausted
or the Plan shall be sooner terminated; provided, however, that no
Incentive Option and any SARs that relate to such Option shall be
granted after January 31, 2001.
(c) Shares subject to an Option that expires or
terminates prior to exercise and Shares that had been previously
awarded as Restricted Stock that have since been forfeited shall be
available for further grant of Options or award as Restricted Stock.
No Option shall be granted and no Restricted Stock shall be awarded if
the number of Shares for which Options have been granted and which
pursuant to this Section are not again available for Option grant,
plus the number of Shares that have been awarded as Restricted Stock,
would, if such Option were granted or such Restricted Stock were
awarded, exceed 5,200,000.
(d) Any Shares withheld pursuant to Section 19(c) of the
Plan shall not be available after such withholding for being optioned
or awarded pursuant to the provisions hereof.
(e) Unless the Shares awarded as Restricted Stock are
Shares that have been reacquired by the Company as treasury shares,
Restricted Stock shall be awarded only for services actually rendered,
as determined by the Committee.
SECTION 5. ELIGIBILITY
The persons who shall be eligible to receive grants of Options and any
SARs that relate to such Options, and to receive awards of Restricted Stock,
shall be regular salaried officers or other employees of the Company or one or
more of its Affiliates.
SECTION 6. GRANT OF OPTIONS
(a) From time to time while the Plan is in effect, the
Committee may, in its sole and absolute discretion, select from among
the persons eligible to receive a grant of Options under the Plan
(including persons who have already received such grants of Options)
such one or more of them as in the opinion of the Committee should be
granted Options. The Committee shall thereupon, likewise in its sole
and absolute discretion, determine the number of Shares to be allotted
for option to each person so selected.
(b) Each person so selected shall be offered an Option to
purchase the number of Shares so allotted to him, upon such terms and
conditions, consistent with the provisions of the Plan, as the
Committee may specify. Each such person shall have a reasonable
period of time, to be fixed by the Committee, within which to accept
or reject the proffered Option. Failure to accept within the period
so fixed may be treated as a rejection.
(c) Each person who accepts an Option offered to him
shall enter into an Agreement with the Company, in such form as the
Committee may prescribe, setting forth the terms and conditions of the
Option, whereupon such person shall become a participant in the Plan.
In the event a person is granted both one or more Incentive Options
and one or more Nonqualified Options, such grants shall be evidenced
by separate Agreements, one for each Incentive Option grant and one
for each Nonqualified Option grant. The date on which the Committee
completes all action constituting an offer of an Option to a person,
including the specification of the number of Shares to be subject to
the Option, shall constitute the date on which the Option covered by
such Agreement is granted. In no event, however, shall an Optionee
gain any rights in addition to those specified by the Committee in its
grant, regardless of the time that may pass between the grant of the
Option and the actual signing of the Agreement by the Company and the
Optionee.
(d) Each Agreement that includes SARs in addition to an
Option shall comply with the provisions of Section 7 of the Plan.
-4-
<PAGE> 5
SECTION 7. GRANT OF SARS
The Committee may from time to time grant SARs in conjunction with all
or any portion of any Option either (i) at the time of the initial Option grant
(not including any subsequent modification that may be treated as a new grant
of an Incentive Option for purposes of Section 424(h) of the Code) or (ii) with
respect to Nonqualified Options, at any time after the initial Option grant
while the Nonqualified Option is still outstanding. SARs shall not be granted
other than in conjunction with an Option granted hereunder.
SARs granted hereunder shall comply with the following conditions and
also with the terms of the Agreement governing the Option in conjunction with
which they are granted:
(a) The SAR shall expire no later than the expiration of
the underlying Option.
(b) Upon the exercise of an SAR, the Optionee shall be
entitled to receive payment equal to the excess of the aggregate Fair
Market Value of the Shares with respect to which the SAR is then being
exercised (determined as of the date of such exercise) over the
aggregate purchase price of such Shares as provided in the related
Option. Payment may be made in Shares, valued at their Fair Market
Value on the date of exercise, or in cash, or partly in Shares and
partly in cash, as determined by the Committee in its sole and
absolute discretion.
(c) SARs shall be exercisable (i) only during such
periods as may be permissible without causing the Optionee to incur
liability under Section 16(b) of the Exchange Act, (ii) only at such
time or times and only to the extent that the Option to which they
relate shall be exercisable, (iii) only when the Fair Market Value of
the Shares subject to the related Option exceeds the purchase price of
the Shares as provided in the related Option, and (iv) only upon
surrender of the related Option or any portion thereof with respect to
the Shares for which the SARs are then being exercised.
(d) Upon exercise of an SAR, a corresponding number of
Shares subject to option under the related Option shall be canceled.
Such canceled Shares shall be charged against the Shares reserved for
the Plan, as provided in Section 4 of the Plan, as if the Option had
been exercised to such extent and shall not be available for future
Option grants or Restricted Stock awards hereunder.
SECTION 8. OPTION PRICE
The option price for each Share covered by an Incentive Option shall
not be less than the greater of (a) the par value of such Share or (b) the Fair
Market Value of such Share at the time such Option is granted. The option
price for each Share covered by a Nonqualified Option shall not be less than
the greater of (a) the par value of such Share or (b) 50 percent of the Fair
Market Value of such Share at the time the Option is granted. Notwithstanding
the two immediately preceding sentences, if the Company or an Affiliate agrees
to substitute a new Option under the Plan for an old Option, or to assume an
old Option, by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation (any of such
events being referred to herein as a "Corporate Transaction"), the option price
of the Shares covered by each such new Option or assumed Option may be other
than the Fair Market Value of the Shares at the time the Option is granted as
determined by reference to a formula, established at the time of the Corporate
Transaction, which will give effect to such substitution or assumption;
provided, however, in no event shall:
(a) the excess of the aggregate Fair Market Value of the
Shares subject to the Option immediately after the substitution or
assumption over the aggregate option price of such Shares be more than
the excess of the aggregate Fair Market Value of all Shares subject to
the Option immediately prior to the substitution or assumption over
the aggregate option price of such Shares;
(b) in the case of an Incentive Option, the new Option or
the assumption of the old Option give the Optionee additional benefits
that he would not have under the old Option; or
-5-
<PAGE> 6
(c) the ratio of the option price to the Fair Market
Value of the stock subject to the Option immediately after the
substitution or assumption be more favorable to the Optionee than the
ratio of the option price to the Fair Market Value of the stock
subject to the old Option immediately prior to such substitution or
assumption, on a Share by Share basis.
Notwithstanding the above, the provisions of this Section 8 with respect to the
option price in the event of a Corporate Transaction shall, in the case of an
Incentive Option, be subject to the requirements of Section 424(a) of the Code
and the Treasury regulations and revenue rulings promulgated thereunder. In
the case of an Incentive Option, in the event of a conflict between the terms
of this Section 8 and the above cited statute, regulations and rulings, or in
the event of an omission in this Section 8 of a provision required by said
laws, the latter shall control in all respects and are hereby incorporated
herein by reference as if set out at length.
SECTION 9. OPTION PERIOD AND TERMS OF EXERCISE
(a) Each Option shall be exercisable during such period
of time as the Committee may specify, but in no event for longer than
10 years from the date when the Option is granted; provided, however,
that
(i) All rights to exercise an Option and any SARs
that relate to such Option shall, subject to the provisions of
subsection (c) of this Section 9, terminate three months after
the date the Optionee ceases to be employed by at least one of
the employers in the group of employers consisting of the
Company and its Affiliates, for any reason other than death or
becoming disabled (within the meaning of Section 22(e)(3) of
the Code), except that, in the event of the termination of
employment of the Optionee on account of fraud, dishonesty or
other acts detrimental to the interests of the Company or one
or more of its Affiliates, the Option and any SARs that relate
to such Option shall thereafter be null and void for all
purposes. Employment shall not be deemed to have ceased by
reason of the transfer of employment, without interruption of
service, between or among the Company and any of its
Affiliates.
(ii) If the Optionee ceases to be employed by at
least one of the employers in the group of employers
consisting of the Company and its Affiliates, by reason of his
death or becoming disabled (within the meaning of Section
22(e)(3) of the Code), all rights to exercise such Option and
any SARs that relate to such Option shall, subject to the
provisions of subsection (c) of this Section 9, terminate one
year thereafter.
(b) If an Option is granted with a term shorter than 10
years, the Committee may extend the term of the Option and any SARs
that relate to such Option, but for not more than 10 years from the
date when the Option was originally granted.
(c) In no event may an Option or any SARs that relate to
such Option be exercised after the expiration of the term thereof.
SECTION 10. OPTIONS AND SARS NOT TRANSFERABLE
No Option or any SARs that relate to such Option shall be transferable
by the Optionee otherwise than by will or the applicable laws of descent and
distribution or, on or after May 1, 1991, pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder.
-6-
<PAGE> 7
SECTION 11. EXERCISE OF OPTIONS AND SARS
(a) During the lifetime of an Optionee, only such
Optionee or his guardian or legal representative may exercise an
Option or any SARs that relate to such Option granted to him. In the
event of his death, any then exercisable portion of his Option and any
SARs that relate to such option may, within one year thereafter, or
earlier date of termination of the Option, be exercised in whole or in
part by the duly authorized representative of the deceased Optionee's
estate.
(b) At any time, and from time to time, during the period
when any Option and any SARs thereof are exercisable such Option or
SARs, or portion thereof, may be exercised in whole or in part;
provided, however, that the Committee may require any Option or SAR
that is partially exercised to be so exercised with respect to at
least a stated minimum number of Shares.
(c) Each exercise of an Option, or a portion thereof,
shall be evidenced by a notice in writing to the Company accompanied
by payment in full of the option price of the Shares then being
purchased. Payment in full shall mean payment of the full amount due,
either in cash, by certified check or cashier's check, or, with the
consent of the Committee, with Shares owned by the Optionee, including
an actual or deemed multiple series of exchanges of such Shares.
Notwithstanding anything contained herein to the contrary, at
the request of an Optionee and to the extent permitted by applicable
law, the Committee may, in its sole and absolute discretion,
selectively approve arrangements with a brokerage firm or firms under
which any such brokerage firm shall, on behalf of the Optionee, make
payment in full to the Company of the option price of the Shares then
being purchased, and the Company, pursuant to an irrevocable notice in
writing from the Optionee, shall make prompt delivery of one or more
certificates for the appropriate number of Shares to such brokerage
firm. Payment in full for purposes of the immediately preceding
sentence shall mean payment of the full amount due, either in cash or
by certified check or cashier's check.
(d) Each exercise of SARs, or a portion thereof, shall be
evidenced by a notice in writing to the Company.
(e) No Shares shall be issued upon exercise of an Option
until full payment therefor has been made, and an Optionee shall have
none of the rights of a stockholder until Shares are issued to him.
(f) Nothing herein or in any Agreement shall require the
Company to issue any Shares upon exercise of an Option or SAR if such
issuance would, in the opinion of counsel for the Company, constitute
a violation of the Securities Act or any similar or superseding
statute or statutes, or any other applicable statute or regulation, as
then in effect. Upon the exercise of an Option or SAR (as a result of
which the Optionee receives Shares), or portion thereof, the Optionee
shall give to the Company satisfactory evidence that he is acquiring
such Shares for the purposes of investment only and not with a view to
their distribution; provided, however, if or to the extent that the
Shares delivered to the Optionee shall be included in a registration
statement filed by the Company under the Securities Act, such
investment representation shall be abrogated.
SECTION 12. DELIVERY OF STOCK CERTIFICATES
As promptly as may be practicable after an Option or SAR (as a result
of the exercise of which the Optionee receives Shares), or a portion thereof,
has been exercised as hereinabove provided, the Company shall make delivery of
one or more certificates for the appropriate number of Shares. In the event
that an Optionee exercises both (i) an Incentive Option or SARs that relate to
such Option (as a result of which the Optionee receives Shares), or a portion
thereof, and (ii) a Nonqualified Option or SARs that relate to such Option (as
a result of which the Optionee receives Shares), or a portion thereof, separate
stock certificates shall be issued, one for the Shares subject to the Incentive
Option and one for the Shares subject to the Nonqualified Option.
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<PAGE> 8
SECTION 13. CHANGES IN COMPANY'S SHARES AND CERTAIN CORPORATE
TRANSACTIONS
If at any time while the Plan is in effect there shall be any increase
or decrease in the number of issued and outstanding Shares of the Company
effected without receipt of consideration therefor by the Company, through the
declaration of a stock dividend or through any recapitalization or merger or
otherwise in which the Company is the surviving corporation, resulting in a
stock split-up, combination or exchange of Shares of the Company, then and in
each such event:
(a) An appropriate adjustment shall be made in the
maximum number of Shares then subject to being optioned or awarded as
Restricted Stock under the Plan, to the end that the same proportion
of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned and awarded;
(b) Appropriate adjustment shall be made in the number of
and the option price per Share thereof then subject to purchase
pursuant to each Option previously granted and then outstanding, to
the end that the same proportion of the Company's issued and
outstanding Shares in each such instance shall remain subject to
purchase at the same aggregate option price; and
(c) In the case of Incentive Options, any such
adjustments shall in all respects satisfy the requirements of Section
424(a) of the Code and the Treasury regulations and revenue rulings
promulgated thereunder.
Except as is otherwise expressly provided herein, the issue by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of or option price of Shares
then subject to outstanding Options granted under the Plan. Furthermore, the
presence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities
or preferred stock that would rank above the Shares subject to outstanding
Options granted under the Plan; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
SECTION 14. EFFECTIVE DATE
The Plan shall be effective on January 31, 1991, the date of its
adoption by the Board but shall be submitted to the stockholders of the Company
for approval and ratification at the next annual or special meeting thereof to
be held within 12 months after the Board shall have adopted the Plan. If at
such a meeting of the stockholders of the Company a quorum is present, the Plan
shall be presented for approval and ratification, and unless at such a meeting
the Plan is approved and ratified by the affirmative vote of a majority of the
outstanding shares of common stock, par value $.10 per share, of the Company
present in person or by proxy and entitled to vote, then and in such event, the
Plan and all then outstanding Options and any SARs that relate to such Options
shall become null and void and of no further force or effect. No award of
Restricted Stock shall be made prior to the approval and ratification of the
Plan by stockholders in accordance with this Section 14.
SECTION 15. AMENDMENT, SUSPENSION OR TERMINATION
The Board may at any time amend suspend or terminate the Plan;
provided, however, that after the stockholders have approved and ratified the
Plan in accordance with Section 14 of the Plan, the Board may not, without
approval of the stockholders of the Company, amend the Plan so as to (a)
increase the maximum number of Shares subject thereto, as specified in Sections
4(a) and 13 of the Plan, or (b) reduce the option price for Shares covered by
Options granted hereunder below the price specified in Section 8 of the Plan;
and provided further, that
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<PAGE> 9
the Board may not modify, impair or cancel any outstanding Option or SAR that
relates to such Option, or the restrictions, terms or conditions applicable to
Shares of Restricted Stock, without the consent of the holder thereof.
SECTION 16. REQUIREMENTS OF LAW
Notwithstanding anything contained herein or in any Agreement to the
contrary, the Company shall not be required to sell or issue Shares under any
Option or SAR if the issuance thereof would constitute a violation by the
Optionee or the Company of any provision of any law or regulation of any
governmental authority or any national securities exchange; and as a condition
of any sale or issuance of Shares upon exercise of an Option or SAR, the
Company may require such agreements or undertakings, if any, as the Company may
deem necessary or advisable to assure compliance with any such law or
regulation.
SECTION 17. INCENTIVE OPTIONS
The Committee may, in its sole and absolute discretion, designate any
Option granted under the Plan as an Incentive Option intended to qualify under
Section 422(b) of the Code. Any provision of the Plan to the contrary
notwithstanding, (a) no Incentive Option shall be granted to any person who, at
the time such Incentive Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any Affiliate unless the option price under such Incentive Option is
at least 110 percent of the Fair Market Value of the Shares subject to the
Incentive Option at the date of its grant and such Incentive Option is not
exercisable after the expiration of five years from the date of its grant; and
(b) the aggregate Fair Market Value of the Shares subject to an Incentive
Option and the aggregate Fair Market Value of the shares of stock of the
Company or any Affiliate (or a predecessor corporation of the Company or an
Affiliate) subject to any other incentive stock option (within the meaning of
Section 422(b) of the Code) of the Company and its Affiliates (or a predecessor
corporation of any such corporation), that may become first exercisable in any
calendar year, shall not (with respect to any Optionee) exceed $100,000,
determined as of the date the Incentive Option is granted.
SECTION 18. MODIFICATION OF OPTIONS AND SARS
Subject to the terms and conditions of and within the limitations of
the Plan, the Committee may modify, extend or renew outstanding Options and any
SARs that relate to such Options granted under the Plan, or accept the
surrender of Options and any SARs that relate to such Options outstanding
hereunder (to the extent not theretofore exercised) and authorize the granting
of new Options and any SARs that relate to such new Options hereunder in
substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing provisions of this Section 18, no modification of
an Option and any SARs that relate to such Option granted hereunder shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option and any SARs that relate to such Option theretofore granted
hereunder to such Optionee, except as may be necessary, with respect to
Incentive Options, to satisfy the requirements of Section 422(b) of the Code.
SECTION 19. AGREEMENT PROVISIONS
(a) Each Agreement shall contain such provisions
(including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and any SARs that relate
to such Option and the transfer of shares thereby acquired) as the
Committee shall deem advisable. Each Agreement relating to an Option
shall identify the Option evidenced thereby as an Incentive Option or
Nonqualified Option, as the case may be. Incentive Options and
Nonqualified Options may not both be covered by a single Agreement.
Each such Agreement relating to Incentive Options shall contain such
limitations and restrictions upon the exercise of the Incentive Option
as shall be necessary for the Incentive Option to which such Agreement
relates to constitute an incentive stock option, as defined in Section
422(b) of the Code.
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<PAGE> 10
(b) Each Agreement shall recite that it is subject to the
Plan and that the Plan shall govern where there is any inconsistency
between the Plan and the Agreement.
(c) Each Agreement shall contain a covenant by the
Optionee, in such form as the Committee may require in its discretion,
that he consents to and will take whatever affirmative actions are
required, in the opinion of the Committee, to enable the Company or
appropriate Affiliate to satisfy its Federal income tax and FICA and
any applicable state and local withholding obligations. An Agreement
may contain such provisions as the Committee deems appropriate to
enable the Company or its Affiliates to satisfy such withholding
obligations, including provisions permitting the Company, upon the
exercise of an Option or SAR (as a result of which the Optionee
receives Shares), to withhold Shares otherwise issuable to the
Optionee exercising the Option or SAR, or to accept delivery of
Shares owned by the Optionee, to satisfy the applicable withholding
obligations.
(d) Each Agreement relating to an Incentive Option shall
contain a covenant by the Optionee immediately to notify the Company
in writing of any disqualifying disposition (within the meaning of
Section 421(b) of the Code) of Shares received upon the exercise of an
Incentive Option.
SECTION 20. RESTRICTED STOCK
(a) Subject to the provisions of Section 14 of the Plan,
the Committee may from time to time, in its sole and absolute
discretion, award Shares of Restricted Stock to such persons as it
shall select from among those persons who are eligible under Section 5
of the Plan to receive awards of Restricted Stock. Any award of
Restricted Stock shall be made from Shares subject hereto as provided
in Section 4 of the Plan.
(b) A Share of Restricted Stock shall be subject to such
restrictions, terms and conditions, including forfeitures, if any, as
may be determined by the Committee, which may include, without
limitation, the rendition of services to the Company or its Affiliates
for a specified time or the achievement of specific goals, and to the
further restriction that no such Share may be sold, assigned,
transferred, discounted, exchanged, pledged or otherwise encumbered or
disposed of until the terms and conditions set by the Committee at the
time of the award of the Restricted Stock have been satisfied. Each
recipient of an award of Restricted Stock shall enter into an
Agreement with the Company, in such form as the Committee shall
prescribe, setting forth the restrictions, terms and conditions of
such award, whereupon such recipient shall become a participant of the
Plan.
If a person is awarded Shares of Restricted Stock, whether or
not escrowed as provided below, the person shall be the record owner
of such Shares and shall have all the rights of a stockholder with
respect to such Shares (unless the escrow agreement, if any,
specifically provides otherwise), including the right to vote and the
right to receive dividends or other distributions made or paid with
respect to such Shares. Any certificate or certificates representing
Shares of Restricted Stock shall bear a legend simIlar to the
following:
The shares represented by this certificate have been
issued pursuant to the terms of the Noble Drilling Corporation
1991 Stock Option and Restricted Stock Plan and may not be
sold, assigned, transferred, discounted, exchanged, pledged or
otherwise encumbered or disposed of in any manner except as
set forth in the terms of the agreement embodying the award of
such shares dated , 19 .
In order to enforce the restrictions, terms and conditions
that may be applicable to a person's Shares of Restricted Stock, the
Committee may require the person, upon the receipt of a certificate or
certificates representing such Shares, or at any time thereafter, to
deposit such certificate or certificates, together with stock powers
and other instruments of transfer, appropriately endorsed in blank,
with the Company or an escrow agent designated by the Company under an
escrow agreement in such form as the Committee shall prescribe.
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<PAGE> 11
After the satisfaction of the restrictions, terms and
conditions set by the Committee at the time of an award of Restricted
Stock to a person, a new certificate, without the legend set forth
above, for the number of Shares that are no longer subject to such
restrictions, terms and conditions shall be delivered to the person.
If a person to whom Restricted Stock has been awarded dies
after satisfaction of the restrictions, terms and conditions for the
payment of all or a portion of the award but prior to the actual
payment of all or such portion thereof, such payment shall be made to
the person's beneficiary or beneficiaries at the time and in the same
manner that such payment would have been made to the person.
The Committee shall have the authority (and the Agreement
evidencing an award of Restricted Stock may so provide) to cancel all
or any portion of any outstanding restrictions prior to the expiration
of such restrictions with respect to any or all of the Shares of
Restricted Stock awarded to a person hereunder on such terms and
conditions as the Committee may deem appropriate.
(c) Without limiting the provisions of the first
paragraph of subsection (b) of this Section 20, if a person to whom
Restricted Stock has been awarded ceases to be employed by at least
one of the employers in the group of employers consisting of the
Company and its Affiliates, for any reason, prior to the satisfaction
of any terms and conditions of an award, any Restricted Stock
remaining subject to restrictions shall thereupon be forfeited by the
person and transferred to, and reacquired by, the Company or an
Affiliate at no cost to the Company or the Affiliate; provided,
however, if the cessation is due to the person's death or disability,
the Committee may, in its sole and absolute discretion, deem that the
terms and conditions have been met for all or part of such remaining
portion. In the event of such forfeiture, the person, or in the event
of his death, his personal representative, shall forthwith deliver to
the Secretary of the Company the certificates for the Shares of
Restricted Stock remaining subject to such restrictions, accompanied
by such instruments of transfer, if any, as may reasonably be required
by the Secretary of the Company.
(d) In case of any consolidation or merger of another
corporation into the Company in which the Company is the surviving
corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of
the Shares (other than a change in par value, or from par value to no
par value, or as a result of a subdivision or combination, but
including any change in such shares into two or more classes or series
of shares), the Committee may provide that payment of Restricted Stock
shall take the form of the kind and amount of shares of stock and
other securities (including those of any new direct or indirect parent
of the Company), property, cash or any combination thereof receivable
upon such consolidation or merger.
SECTION 21. GENERAL
(a) The proceeds received by the Company from the sale of
Shares pursuant to Options shall be used for general corporate
purposes.
(b) Nothing contained in the Plan or in any Agreement
shall confer upon any Optionee or recipient of Restricted Stock the
right to continue in the employ of the Company or any Affiliate, or
interfere in any way with the rights of the Company or any Affiliate
to terminate his employment at any time, with or without cause.
(c) Neither the members of the Board nor any member of
the Committee shall be liable for any act, omission or determination
taken or made in good faith with respect to the Plan or any Option and
any SARs that relate to such Option granted hereunder or any
Restricted Stock awarded hereunder; and the members of the Board and
the Committee shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expenses
(including counsel fees) arising therefrom to the full extent
permitted by law and under any directors' and officers' liability or
similar insurance coverage that may be in effect from time to time.
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<PAGE> 12
(d) Any payment of cash or any issuance or transfer of
Shares to the Optionee, or to his legal representative, heir, legatee
or distributee, in accordance with the provisions hereof, shall, to
the extent thereof, be in full satisfaction of all claims of such
persons hereunder. The Committee may require any Optionee, legal
representative, heir, legatee or distributee, as a condition precedent
to such payment, to execute a release and receipt therefor in such
form as it shall determine.
(e) Neither the Committee, the Board nor the Company
guarantees Shares from loss or depreciation.
(f) All expenses incident to the administration,
termination or protection of the Plan, including, but not limited to,
legal and accounting fees, shall be paid by the Company or its
Affiliates.
(g) Records of the Company and its Affiliates regarding a
person's employment, termination of employment and the reason
therefor, leaves of absence, re-employment and other matters shall be
conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
(h) Any action required of the Company shall be by
resolution of its Board or by a person authorized to act by resolution
of the Board. Any action required of the Committee shall be by
resolution of the Committee or by a person authorized to act by
resolution of the Committee.
(i) If any provision of the Plan or any Agreement is held
to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions the Plan or such Agreement,
as the case may be, but such provision shall be fully severable and
the Plan or such Agreement, as the case may be, shall be construed and
enforced as if the illegal or invalid provision had never been
included herein or therein.
(j) Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or
sent by mail. Any notice required or permitted to be delivered
hereunder shall be deemed to be delivered on the date on which it is
personally delivered, or, whether actually received or not, on the
third business day after it is deposited in the United States mall,
certified or registered, postage prepaid, addressed to the person who
is to receive it at the address which such person has theretofore
specified by written notice delivered in accordance herewith. The
Company, an Optionee or a recipient of Restricted Stock may change, at
any time and from time to time, by written notice to the other, the
address that it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee
and recipient of Restricted Stock shall specify as its and his address
for receiving notices the address set forth in the Agreement
pertaining to the Shares to which such notice relates.
(k) Any person entitled to notice hereunder may waive
such notice.
(l) The Plan shall be binding upon the Optionee or
recipient of Restricted Stock, his heirs, legatees, distributees and
legal representatives, upon the Company, its successors and assigns,
and upon the Committee, and its successors.
(m) The titles and headings of Sections and paragraphs
are included for convenience of reference only and are not to be
considered in the construction of the provisions hereof.
(n) All questions arising with respect to the provisions
of the Plan shall be determined by application of the laws of the
State of Texas except to the extent Texas law is preempted by Federal
law.
(o) Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of the Plan
dictates, the plural shall be read as the singular and the singular as
the plural.
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<PAGE> 1
EXHIBIT 99.5
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Gentlemen:
I hereby consent to my being named as a director designee in the
Registration Statement on Form S-4 (File No. 33-54495) filed by Noble Drilling
Corporation with the Securities and Exchange Commission, and any amendments
thereto.
Very truly yours,
/s/ Marc E. Leland
--------------------
Marc E. Leland
<PAGE> 1
EXHIBIT 99.6
Noble Drilling Corporation
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Gentlemen:
I hereby consent to my being named as a director designee in the
Registration Statement on Form S-4 (File No. 33-54495) filed by Noble Drilling
Corporation with the Securities and Exchange Commission, and any amendments
thereto.
Very truly yours,
/s/ Lawrence Chazen
---------------------
Lawrence Chazen
