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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION
12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
______________
NOBLE DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-0374541
(State of incorporation) (I.R.S. employer identification number)
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
(Address of principal executive offices) (Zip Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
% Senior Notes due 2006 New York Stock Exchange
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. [ ]
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [X]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The securities to be registered hereunder are the Registrant's %
Senior Notes due 2006 (the "Senior Notes"). A description of the Senior Notes
is set forth under the caption "Description of Senior Notes" in the Prospectus
constituting Part I of the Registrant's Registration Statement on Form S-3 (No.
333-02929) filed by the Registrant with the Securities and Exchange Commission
(the "Commission") on April 29, 1996, as amended by Amendment No. 1 thereto
filed with the Commission on May 31, 1996 (collectively, and as may be further
amended, the "Registration Statement"). The description of the Senior Notes,
as set forth in the Registration Statement, is incorporated herein by
reference.
ITEM 2. EXHIBITS.
1. Form of Indenture governing the Senior Notes (including form
of Senior Notes) (filed as Exhibit 4.1 to Amendment No. 1 to
the Registrant's Registration Statement on Form S-3 (SEC File
No. 333-02929) as filed on May 31, 1996 and incorporated
herein by reference).
2. Pages 39 through 61 of the Registrant's Registration Statement
on Form S-3 (SEC File No. 333-02929) as filed on May 31, 1996.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
NOBLE DRILLING CORPORATION
Date: May 31, 1996 By: /s/ BYRON L. WELLIVER
-----------------------------------
Byron L. Welliver, Senior Vice President--
Finance, Treasurer and Controller
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EXHIBIT INDEX
Exhibit Description
1 Form of Indenture governing the Senior Notes (including form
of Senior Notes) (filed as Exhibit 4.1 to Amendment No. 1 to
the Registrant's Registration Statement on Form S-3 (SEC File
No. 333-02929) as filed on May 31, 1996 and incorporated
herein by reference).
2 Pages 39 through 61 of the Registrant's Registration
Statement on Form S-3 (SEC File No. 333-02929) as filed on
May 31, 1996.
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DESCRIPTION OF SENIOR NOTES
The Senior Notes will be issued under an Indenture, dated as of
, 1996 (the "Indenture"), between the Company and Texas Commerce Bank National
Association, as trustee under the Indenture (the "Trustee"). For purposes of
this description of the Senior Notes, the term "Company" refers to Noble
Drilling Corporation and does not include its subsidiaries except for purposes
of financial data determined on a consolidated basis.
The terms of the Senior Notes include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act of
1939 as in effect on the date of the Indenture (the "Trust Indenture Act"). The
Senior Notes are subject to all such terms, and Holders of the Senior Notes are
referred to the Indenture and the Trust Indenture Act for a statement of those
terms. The statements and definitions of terms under this caption relating to
the Senior Notes and the Indenture are summaries and do not purport to be
complete. Such summaries make use of certain terms defined in the Indenture and
are qualified in their entirety by express reference to the Indenture. A copy of
the Indenture, substantially in the form in which it is to be executed, has been
filed with the Securities and Exchange Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. Certain terms used
herein are defined below under "-- Certain Definitions."
GENERAL
The Senior Notes will be senior unsecured obligations of the Company,
ranking pari passu in right of payment with all other senior unsecured
indebtedness of the Company including the Company's $125,000,000 outstanding
principal amount of 9 1/4% Senior Notes Due 2003 (the "9 1/4% Notes"), and will
be senior in right of payment to all existing and future subordinated
indebtedness of the Company. The Senior Notes will be effectively subordinated
to any secured indebtedness of the Company to the extent of the value of the
assets securing such indebtedness and will be effectively subordinated to all
obligations of the Company's subsidiaries. At March 31, 1996, after giving
effect to the use of proceeds from the Offerings as described in "Use of
Proceeds," the Company would have had (i) approximately $250,000,000 of
unsecured indebtedness for borrowed money (the 9 1/4% Notes and the Senior
Notes) and (ii) no indebtedness for borrowed money secured by the Company's
assets. In addition, subsidiaries of the Company would have had liabilities
(including trade payables) aggregating approximately $92,900,000 (including
$13,700,000 of indebtedness) and would have had approximately $24,724,000
available for borrowing or to support the issuance of letters of credit as of
that date under lines of credit and a letter of credit facility.
The Senior Notes will mature on , 2006 and will bear
interest from , 1996, at the rate per annum of percent.
Interest on the Senior Notes will be payable semiannually in arrears on
and of each year, commencing ,
1996, to the persons who are registered holders thereof at the close of business
on the or , as the case may be, immediately preceding
such interest payment date.
Interest on the Senior Notes will be computed on the basis of a 360-day
year of twelve 30-day months. Principal and interest will be payable at the
office of the Paying Agent. In addition, in the event the Senior Notes do not
stay in book entry form, at the option of the Company, interest may be paid by
check mailed to the registered Holders at their registered addresses. The Senior
Notes will be issued without coupons and in fully registered form only, in
denominations of $1,000 and integral multiples thereof.
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OPTIONAL REDEMPTION
The Senior Notes will not be redeemable at the option of the Company prior
to , 2001. On or after , 2001, the Senior Notes will be
redeemable at the option of the Company, in whole at any time or in part from
time to time, at the following prices (expressed in percentages of the principal
amount), if redeemed during the 12 months beginning of the years
indicated below, in each case together with interest accrued to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---------------------------------------------------------- ----------
<S> <C>
2001...................................................... %
2002...................................................... %
2003...................................................... %
2004 and thereafter....................................... 100%
</TABLE>
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder will have the right
to require the Company to repurchase all of such Holder's Senior Notes in whole
or in part (the "Change of Control Offer") at a purchase price (the "Repurchase
Price") in cash equal to 101 percent of the aggregate principal amount thereof
plus accrued and unpaid interest thereon, if any, to the Change of Control
Payment Date (as defined below).
Within 30 days following any Change of Control, the Company will mail a
notice to each Holder and to the Trustee stating, among other things, (i) that a
Change of Control has occurred and a Change of Control Offer is being made as
described in this provision, and that, although Holders are not required to
tender their Senior Notes, all Senior Notes that are timely tendered will be
accepted for payment; (ii) the Repurchase Price and the repurchase date, which
will be no earlier than 30 days and no later than 60 days after the date such
notice is mailed (the "Change of Control Payment Date"); (iii) that any Senior
Note accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest after the Change of Control Payment Date; and (iv) the
instructions and any other information necessary to enable Holders to tender
their Senior Notes and have such Senior Notes purchased pursuant to this
covenant. The Company will comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) in the event that the Change of Control Offer is triggered
under the circumstances described herein.
The provisions of the Indenture requiring the Company to repurchase Senior
Notes upon a Change of Control or from the proceeds of Asset Sales may not
afford holders of the Senior Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company or a Subsidiary that may adversely affect Holders of the
Senior Notes, if such transaction is not a transaction defined as a "Change of
Control" or an "Asset Sale," or, if such transaction is an "Asset Sale," the Net
Available Proceeds from such transaction (i) are otherwise used to purchase
Replacement Assets or repay certain Indebtedness as permitted under the
Indenture or (ii) together with the Net Available Proceeds from all other Asset
Sales which are not so used, do not exceed $15,000,000. See "-- Certain
Definitions" for the definitions of "Change of Control" and "Asset Sale" and
"-- Certain Covenants -- Limitation on Asset Sales" for the restrictions on the
ability of the Company and the Subsidiaries to engage in Asset Sales and the
terms of the Company's obligation to repurchase Senior Notes in the event of an
Asset Sale.
Notwithstanding that a transaction of the type described in the preceding
paragraph does not trigger the repurchase obligations of the Company under the
Indenture, the provisions of the Indenture will restrict the ability of the
Company or the Subsidiaries to incur additional Indebtedness or engage in the
transaction if it is a transaction involving an Affiliate of the Company or a
transaction involving a merger or consolidation of the Company or a disposition
of all or substantially all of the assets of the Company and the Subsidiaries,
taken as a whole. See "-- Certain Covenants -- Transactions with Affiliates,"
"-- Certain Covenants -- Limitation on Indebtedness," "-- Certain
Covenants -- Limitation on Subsidiary Indebtedness and Preferred Stock" and
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"-- Consolidation, Merger, Conveyance, Lease or Transfer" for a description of
such restrictions. Such restrictions, however, may be eliminated or modified
with the consent of, and a Default in respect thereof may be waived by, the
holders of not less than a majority in principal amount of the Outstanding
Senior Notes. See "-- Events of Default" and "-- Amendment, Supplement and
Waiver."
One of the events that constitutes a Change of Control under the Indenture
is a sale, conveyance, transfer or lease of all or substantially all of the
property of the Company and the Subsidiaries, taken as a whole. The Indenture
will be governed by New York law, and there is no established quantitative
definition under New York law of "substantially all" of the assets of a
corporation. Accordingly, if the Company were to engage in a transaction in
which it disposed of less than all of its assets, a question of interpretation
could arise as to whether such disposition was of "substantially all" of its
assets and whether the Company was required to make a Change of Control Offer.
CERTAIN COVENANTS
The Indenture will provide that the covenants set forth herein will be
applicable to the Company, except that during any period of time that (i) the
ratings assigned to the Senior Notes by both Standard & Poor's Ratings Group
("S&P") and Moody's Investors Service, Inc.("Moody's and, together with "S&P,"
the "Rating Agencies") are equal to or higher than BBB- and Baa3, or the
equivalents thereof, respectively (the "Investment Grade Ratings"), and (ii) no
Default has occurred and is continuing, the Company and its Subsidiaries will
not be subject to the provisions of the Indenture described under "Limitation on
Indebtedness," "-- Limitation on Asset Sales," "-- Limitation on Restricted
Payments," and clauses (iii) and (iv) of "-- Consolidation, Merger, Conveyance,
Lease or Transfer" (collectively, the "Suspended Covenants"). In the event that
the Company is not subject to the Suspended Covenants for any period of time as
a result of the preceding sentence and, subsequently, one or both Rating
Agencies withdraws its ratings or downgrades the ratings assigned to the Senior
Notes below the required Investment Grade Ratings, then the Company and its
Subsidiaries will again be subject to the Suspended Covenants and compliance
with the Suspended Covenants with respect to Restricted Payments made after the
time of such withdrawal or downgrade will be calculated in accordance with the
terms of the "Limitation on Restricted Payments" covenant as if such covenant
had been in effect during the entire period of time from the date of the
Indenture.
Set forth below are certain covenants contained in the Indenture:
Transactions with Affiliates. The Indenture provides that, subsequent to
the Issue Date, the Company will not, and will not permit any Subsidiary to,
directly or indirectly, enter into or permit to exist any transaction or series
of related transactions (including, but not limited to, the purchase, sale or
exchange of Property, the making of any Investment, the giving of any Guarantee
or the rendering of any service) with any Affiliate of the Company (other than
the Company or a Wholly Owned Subsidiary (except a Non-Recourse Subsidiary))
unless (i) such transaction or series of related transactions is on terms no
less favorable to the Company or such Subsidiary than those that could be
obtained in a comparable arm's length transaction with a Person that is not such
an Affiliate and (ii)(a) with respect to a transaction or series of related
transactions that has a Fair Market Value in excess of $2,000,000 but less than
$5,000,000, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction or series of related transactions complies with
clause (i) above and (b) with respect to a transaction or series of related
transactions that has a Fair Market Value equal to, or in excess of, $5,000,000,
the transaction or series of related transactions is approved by a majority of
the Board of Directors (including a majority of the disinterested directors),
which approval is set forth in a resolution certifying that such transaction or
series of transactions complies with clause (i) above.
Limitation on Restricted Payments. The Company will not, and will not
permit any Subsidiary (other than a Non-Recourse Subsidiary) to make any
Restricted Payment, unless at the time of and after giving effect to the
proposed Restricted Payment (the value of any such payment, if other than cash,
to be determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (a) no Default shall have
occurred and be continuing (or would result therefrom), (b) the Company could
incur at least $1.00 of additional Indebtedness under paragraph (a) of
"-- Certain
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Covenants -- Limitation on Indebtedness" and (c) the aggregate amount of all
Restricted Payments declared or made on or after the Issue Date by the Company
or any Subsidiary (other than a Non-Recourse Subsidiary) shall not exceed the
sum of (i) 50 percent of the aggregate Consolidated Net Income of the Company
(or if such Consolidated Net Income shall be 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, (ii) an amount equal to (A) the aggregate net
cash proceeds received by the Company, subsequent to October 7, 1993, from the
issuance or sale (other than to a Subsidiary), subsequent to October 7, 1993, of
shares of its Capital Stock (excluding Redeemable Stock, but including Capital
Stock issued upon the exercise of options, warrants or rights to purchase
Capital Stock (other than Redeemable Stock) of the Company and including the
Equity Offerings) and (B) the liability (expressed as a positive number) in
accordance with GAAP in respect of any Indebtedness of the Company or carrying
value of Redeemable Stock or the Preferred Stock, which has been converted into,
exchanged for or satisfied by the issuance of shares of Capital Stock (other
than Redeemable Stock) of the Company, subsequent to October 7, 1993, (iii) in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment made after the Issue Date in compliance with the provisions
of the Indenture, an amount equal to the lesser of the return of capital with
respect to such Investment and the initial amount of such Investment, in either
case, less the cost of the disposition of such Investment and (iv) $10,000,000;
provided, however, that the foregoing provisions will not prevent (A) the
payment of any dividend on Capital Stock of any class within 60 days after the
date of its declaration if at the date of declaration such payment would be
permitted by the Indenture, (B) the payment of regular dividends on the
Preferred Stock, (C) any repurchase or redemption of Capital Stock or
Subordinated Indebtedness of the Company out of the net cash proceeds from the
substantially concurrent issuance or sale (other than to a Subsidiary (except a
Non-Recourse Subsidiary)) of Capital Stock of the Company (other than Redeemable
Stock); provided that the net cash proceeds from such sale are excluded from
computations under clause (c)(ii) above to the extent such proceeds are applied
to purchase or redeem such Capital Stock or Subordinated Indebtedness or (D) any
repurchase or redemption of Subordinated Indebtedness of the Company solely in
exchange for, or out of the net cash proceeds from the substantially concurrent
sale of, new Subordinated Indebtedness of the Company, so long as such
Subordinated Indebtedness (x) is subordinated to the Senior Notes at least to
the same extent as the Subordinated Indebtedness so exchanged, purchased or
redeemed, (y) has a stated maturity equal to or later than the stated maturity
of the Subordinated Indebtedness so exchanged, purchased or redeemed and (z) has
an Average Life at the time incurred that is greater than the remaining Average
Life of the Indebtedness so exchanged, purchased or redeemed. Restricted
Payments permitted to be made as described in the proviso to the preceding
sentence will be excluded in calculating the amount of Restricted Payments
thereafter, except such Restricted Payments made as described in clause (A),
which will be included in calculating the amount of Restricted Payments
thereafter.
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Subsidiary (other than a Non-Recourse Subsidiary) to, directly or
indirectly, create, incur, assume, suffer to exist, Guarantee or otherwise
become liable with respect to the payment of (collectively, "incur"), any
Indebtedness unless immediately after the date of such transaction and after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof as if such Indebtedness had been incurred
and the proceeds thereof applied on the first day of the Determination Period,
the Consolidated Interest Coverage Ratio of the Company at such date is at least
2.50 to 1.0. See "Prospectus Summary -- Summary Historical and Pro Forma
Financial Information."
(b) Notwithstanding the foregoing paragraph (a), the Company or any
Subsidiary may incur Permitted Indebtedness.
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Limitation on Subsidiary Indebtedness and Preferred Stock. The Company
will not permit any Subsidiary to, directly or indirectly, create, incur,
assume, Guarantee or otherwise become liable with respect to the payment of
(collectively, "incur"), any Indebtedness or to issue or suffer to exist any
preferred stock, other than:
(i) Indebtedness described in clauses (b), (c), (d), (e), (f), (h),
(i), (k), (l), (m) and (n) of the definition of "Permitted Indebtedness";
(ii) Indebtedness of a Subsidiary which represents the assumption by
such Subsidiary of Indebtedness (other than Non-Recourse Indebtedness) of
another Subsidiary in connection with a merger of such Subsidiaries;
provided that no Subsidiary or any successor (by way of merger) thereto
existing on the Issue Date shall assume or otherwise incur any Indebtedness
of an entity which is not a Subsidiary on the Issue Date, except to the
extent that such Subsidiary would be permitted to incur such Indebtedness
under the Indenture;
(iii) Indebtedness or preferred stock of any Person existing at the
time such Person becomes a Subsidiary; provided that such Indebtedness was
not incurred in anticipation of such corporation becoming a Subsidiary and
would otherwise be permitted under paragraph (a) of "-- Certain Covenants
-- Limitation on Indebtedness";
(iv) Indebtedness or preferred stock issued to and held by the Company
or a Wholly Owned Subsidiary other than a Non-Recourse Subsidiary, so long
as the transfer of such Indebtedness or preferred stock to a Person other
than the Company or any Wholly Owned Subsidiary would be deemed to
constitute the issuance of such Indebtedness or preferred stock by the
issuer thereof;
(v) Indebtedness or preferred stock issued in exchange for, or the
proceeds of which are used to refinance, repurchase or redeem, Indebtedness
or preferred stock described in clause (iii) above or in clause (b) of the
definition of "Permitted Liens" (the "Retired Indebtedness or Stock");
provided that the Indebtedness or the preferred stock so issued has (A) a
principal amount or liquidation value, as the case may be, not in excess of
the principal amount or liquidation value of the Retired Indebtedness or
Stock, (B) a final redemption date later than the stated maturity or final
redemption date (if any) of the Retired Indebtedness or Stock and (C) an
Average Life at the time of issuance of such Indebtedness or preferred
stock that is greater than the Average Life of the Retired Indebtedness or
Stock; or
(vi) Indebtedness or preferred stock of a Subsidiary, which, when
combined with (A) the aggregate amount of all other outstanding
Indebtedness of the Subsidiaries plus the aggregate liquidation value of
all preferred stock of any Subsidiary, in either case excluding any
Non-Recourse Subsidiary (other than Indebtedness secured by Liens described
under clauses (c), (j), (o) and (s) of the definition of "Permitted
Liens"), plus (B) the aggregate amount of all Indebtedness of the Company
secured by Liens (other than such Indebtedness secured by Liens described
under clauses (b), (c), (j), (o) and (s) of the definition of "Permitted
Liens"), plus (C) the aggregate amount of all Capital Lease Obligations of
the Company and the Subsidiaries, shall not exceed 10 percent of the
Company's Consolidated Net Tangible Assets.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any Subsidiary (other
than a Non-Recourse Subsidiary) to, directly or indirectly, create, enter into
any agreement with any Person or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind which by its
terms restricts the ability of any Subsidiary (other than a Non-Recourse
Subsidiary) to (a) pay dividends, in cash or otherwise, or make any other
distributions on its Capital Stock, (b) pay any Indebtedness owed to the Company
or any Subsidiary (other than a Non-Recourse Subsidiary), (c) make loans or
advances to the Company or any Subsidiary or
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(d) transfer any of its Property or assets to the Company or any Subsidiary
(other than a Non-Recourse Subsidiary) except any encumbrance or restriction
contained in any agreement or instrument:
(i) existing on the Issue Date;
(ii) relating to any Property acquired after the date of the
Indenture, so long as such encumbrance or restriction relates only to the
Property so acquired;
(iii) relating to any Indebtedness of any Subsidiary at the date on
which such Subsidiary was acquired by the Company or any Subsidiary (other
than Indebtedness incurred in connection with or anticipation of such
acquisition);
(iv) effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in the foregoing clauses (i) through (iii), so long
as the encumbrances and restrictions contained in any such refinancing
agreement are no more restrictive than the encumbrances and restrictions
contained in such agreements;
(v) which constitute customary provisions restricting subletting or
assignment of any lease of the Company or any Subsidiary or provisions in
agreements that restrict the assignment of such agreement or any rights
thereunder; and
(vi) which constitute restrictions on the sale or other disposition of
any Property securing Indebtedness as a result of a Permitted Lien on such
Property.
Limitation on Asset Sales. The Company will not engage in, and will not
permit any Subsidiary (other than a Non-Recourse Subsidiary) to engage in, any
Asset Sale unless (a) except in the case of an Asset Sale resulting from the
requisition of title to, seizure or forfeiture of any Property or assets or any
actual or constructive total loss or an agreed or compromised total loss, the
Company or such Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value of the Property
and (b) at least 75 percent of such consideration consists of Cash Proceeds (or
the assumption of Indebtedness of the Company or such Subsidiary relating to the
Capital Stock or Property that was the subject of such Asset Sale and the
release of the Company or such Subsidiary from such Indebtedness). The Company
or such Subsidiary, as the case may be, may apply the Net Available Proceeds
from each Asset Sale to (i) the acquisition of one or more Replacement Assets,
provided that such acquisitions shall be made within 365 days after the
consummation of the relevant Asset Sale, (ii) repay Indebtedness described under
clause (b) of the definition of "Permitted Indebtedness" (but only if the
related commitments or amounts available to be reborrowed thereunder are
permanently reduced by the amount of such payment) or (iii) purchase and retire,
or otherwise repay, in whole or in part, the 9 1/4% Notes.
Any Net Available Proceeds from any Asset Sale that are not used to
purchase Replacement Assets within 365 days after consummation of the relevant
Asset Sale or applied to repay, or repurchase and retire, Indebtedness as
provided in the preceding sentence constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15,000,000, the Company shall make
a pro rata offer (an "Asset Sale Offer") to purchase from all holders of Senior
Notes and any then outstanding Indebtedness of the Company that is pari passu in
right of payment to the Senior Notes ("Pari Passu Indebtedness") required to be
repurchased or repaid on a permanent basis in connection with an Asset Sale, an
aggregate principal amount of Senior Notes and any such Pari Passu Indebtedness
equal to the Excess Proceeds as follows:
(i)(A) The Company shall make an offer to purchase (a "Net Proceeds
Offer") from all holders of the Senior Notes in accordance with the
procedures set forth in the Indenture the maximum principal amount
(expressed as a multiple of $1,000) of Senior Notes that may be purchased
out of an amount (the "Payment Amount") equal to the product of such Excess
Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Senior Notes and the denominator of
which is the sum of the outstanding principal amount of the Senior Notes
and such Pari Passu Indebtedness, if any (subject to proration in the event
the Payment Amount is less than the aggregate Offered Price (as defined in
clause (ii) below) of all Senior Notes tendered) and (B) to the extent
required by any such Pari Passu Indebtedness and provided there is a
permanent reduction in the
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principal amount of such Pari Passu Indebtedness, the Company shall make an
offer to purchase such Pari Passu Indebtedness (a "Pari Passu Offer") in an
amount (the "Pari Passu Indebtedness Amount") equal to the excess of the
Excess Proceeds over the Payment Amount.
(ii) The offer price for the Senior Notes shall be payable in cash in
an amount equal to 100 percent of the principal amount of the Senior Notes
tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid
interest, if any, to the date such Net Proceeds Offer is consummated (the
"Offered Price"), in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate Offered Price of the Senior
Notes tendered pursuant to a Net Proceeds Offer is less than the Payment
Amount relating thereto or the aggregate amount of the Pari Passu
Indebtedness that is purchased or repaid pursuant to the Pari Passu Offer
is less than the Pari Passu Indebtedness Amount (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such Net
Proceeds Deficiency, or a portion thereof, for general corporate purposes,
subject to the provisions of the Indenture described under "-- Limitation
on Restricted Payments" and the amount of Excess Proceeds shall be reset to
zero.
(iii) If the aggregate Offered Price of Senior Notes validly tendered
and not withdrawn by holders thereof exceeds the Payment Amount, Senior
Notes to be purchased will be selected on a pro rata basis. Upon completion
of such Net Proceeds Offer and Pari Passu Offer, the amount of Excess
Proceeds shall be reset to zero.
The Company will comply with any applicable tender offer rules (including,
without limitation, any applicable requirements of Rule 14e-1 under the Exchange
Act) in the event that an Asset Sale Offer is required under the circumstances
described herein. See "-- Change of Control" for a discussion of the protection
afforded the Holders of the Senior Notes under the provisions of the Indenture
requiring the Company to make a Change of Control Offer or Asset Sale Offer in
the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction.
Limitation on Sale and Lease-Back Transactions. The Company will not, and
will not permit any Subsidiary (other than a Non-Recourse Subsidiary) to,
directly or indirectly, enter into, assume, Guarantee or otherwise become liable
with respect to any Sale and Lease-Back Transaction if the lease obligations of
the Company or any such Subsidiary created or incurred in connection with such
Sale and Lease-Back Transaction constitute Capital Lease Obligations, unless the
Company or such Subsidiary would have been permitted to enter into such
transaction under paragraph (a) of "-- Certain Covenants -- Limitation on
Indebtedness," clause (vi) of "-- Certain Covenants -- Limitation on Subsidiary
Indebtedness and Preferred Stock" and "-- Certain Covenants -- Limitation on
Liens." Any Sale and Lease-Back Transaction that the Company or any Subsidiary
enters into and does not result in the creation or incurrence of any Capital
Lease Obligation of the Company or any Subsidiary, shall be deemed to constitute
an Asset Sale.
Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, affirm, incur, assume or suffer
to exist any Liens on or with respect to any Property of the Company or such
Subsidiary or any interest therein or any income or profits therefrom, whether
owned at the date of the Indenture or thereafter acquired, without effectively
providing that the Senior Notes shall be secured equally and ratably with (or
prior to) the Indebtedness so secured, other than Permitted Liens.
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CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
The Company will not, in any transaction or series of transactions,
consolidate with or merge into any other Person (other than a merger of a
Subsidiary into the Company in which the Company is the continuing corporation),
or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Property and assets of the Company and the
Subsidiaries, taken as a whole, to any Person, unless:
(i) either (a) the Company shall be the continuing corporation or (b)
the corporation (if other than the Company) formed by such consolidation or
into which the Company is merged, or the Person which acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the Property and assets of the Company and the
Subsidiaries, taken as a whole (such corporation or Person, the "Surviving
Entity"), shall be a corporation organized and validly existing under the
laws of the United States of America, any political subdivision thereof or
any state thereof or the District of Columbia, and shall expressly assume,
by a supplemental indenture, the due and punctual payment of the principal
of (and premium, if any) and interest on all the Senior Notes and the
performance of the Company's covenants and obligations under the Indenture;
(ii) immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction or series of transactions), no Event of
Default or Default shall have occurred and be continuing or would result
therefrom;
(iii) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), the Company (or
the Surviving Entity if the Company is not continuing) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth
of the Company immediately prior to such transaction; and
(iv) immediately after giving effect to any such transaction or series
of transactions on a pro forma basis as if such transaction or series of
transactions had occurred on the first day of the Determination Period, the
Company (or the Surviving Entity if the Company is not continuing) would be
permitted to incur $1.00 of additional Indebtedness pursuant to paragraph
(a) of "-- Certain Covenants -- Limitation on Indebtedness."
EVENTS OF DEFAULT
Each of the following is an "Event of Default" under the Indenture:
(a) default in the payment of any installment of interest upon any
Senior Note when it becomes due and payable, and the continuance of such
default for a period of 30 days;
(b) default in the payment of the principal of (or premium, if any,
on) any Senior Note at its Maturity, upon repurchase, acceleration,
redemption or otherwise;
(c) the Company fails to comply with any of its covenants or
agreements contained in "-- Change of Control" or "-- Consolidation,
Merger, Conveyance, Lease or Transfer" or fails to make an Asset Sale Offer
in accordance with "-- Certain Covenants -- Limitation on Asset Sales" and
such failure continues for a period of five days;
(d) default in the performance, or breach, of any covenant or warranty
of the Company in the Indenture (other than a covenant or warranty a
default in whose performance or whose breach is specifically dealt with)
and continuance of such default or breach for a period of 30 days after
written notice thereof has been mailed, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25 percent of the outstanding aggregate principal amount of
Senior Notes;
(e) Indebtedness (other than Non-Recourse Indebtedness) of the Company
or any Subsidiary is not paid when due within the applicable grace period
or is accelerated by the holders thereof and, in
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<PAGE> 9
either case, the principal amount of such due and unpaid or accelerated
Indebtedness exceeds $10,000,000 for any Indebtedness individually or in
the aggregate;
(f) the entry by a court of competent jurisdiction of one or more
judgments or orders against the Company or any Subsidiary in an uninsured
or unindemnified aggregate amount in excess of $10,000,000 which remain
undischarged or unsatisfied for a period of 60 consecutive days after the
right to appeal them has expired;
(g) the entry of a decree or order for relief in respect of the
Company or any Material Subsidiary by a court of competent jurisdiction in
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other Federal or State bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Company or any
Material Subsidiary or of any substantial part of the Property of the
Company or any Material Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any Material Subsidiary, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(h) (i) the commencement by the Company or any Material Subsidiary of
a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or (ii) the consent by the Company or any
Material Subsidiary to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or any Material Subsidiary or of any substantial part of the
Property of the Company or any Material Subsidiary, or the making by the
Company or any Material Subsidiary of an assignment for the benefit of
creditors, or the admission by the Company or any Material Subsidiary in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company or any Material Subsidiary in
furtherance of any such action.
If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) above) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25 percent of the outstanding aggregate
principal amount of Senior Notes may declare the unpaid principal of (and
premium, if any) and accrued and unpaid interest on all Senior Notes then
Outstanding to be immediately due and payable, by a notice in writing to the
Company (and to the Trustee if given by Holders), and, upon any such
declaration, such principal amount (and premium, if any) and accrued interest
will become and be immediately due and payable. If an Event of Default specified
in clause (g) or (h) above occurs, all unpaid principal of (and premium, if any)
and accrued interest on the Senior Notes then Outstanding shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
Outstanding Senior Notes, by notice to the Company and the Trustee may rescind
an acceleration and its consequences, if the Company has deposited with the
Trustee a sum sufficient to pay all overdue installments of interest, the
principal which has become due otherwise than by acceleration and certain other
amounts and all Events of Default, other than non-payment of principal of Senior
Notes which have become due solely by such declaration of acceleration, have
been cured or waived.
AMENDMENT, SUPPLEMENT AND WAIVER
The Company and the Trustee may, at any time and from time to time, without
notice to or consent of any Holder, enter into one or more indentures
supplemental to the Indenture (1) to evidence the succession of another Person
to the Company and the assumption by such successor of the covenants of the
Company under the Indenture and contained in the Senior Notes, (2) to add to the
covenants of the Company, for the benefit of the Holders, or to surrender any
right or power conferred upon the Company by the Indenture, (3) to add any
additional Events of Default, (4) to provide for uncertificated Senior Notes in
addition to or in place of certificated Senior Notes, (5) to change or eliminate
any of the provisions of the Indenture; provided that any such change or
elimination will become effective only when there is not outstanding any Senior
Note created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision, (6) to
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<PAGE> 10
evidence and provide for the acceptance of appointment under the Indenture by a
successor Trustee, (7) to secure the Senior Notes, (8) to cure any ambiguity, to
correct or supplement any provision in the Indenture which may be inconsistent
with any other provision therein or to add any other provisions with respect to
matters or questions arising under the Indenture; provided such actions will not
adversely affect the interests of the Holders in any material respect, or (9) to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
With the consent of the Holders of a majority in principal amount of the
Outstanding Senior Notes, the Company and the Trustee may enter into one or more
indentures supplemental to the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the Holders; provided,
however, that no such supplemental indenture will, without the consent of the
Holder of each Outstanding Senior Note, (1) change the Stated Maturity of the
principal of, or any installment of interest on, any Senior Note, or reduce the
principal amount thereof (or premium, if any), or the interest thereon that
would be due and payable upon Maturity thereof, or change the place of payment
where, or the coin or currency in which, any Senior Note or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof, (2) reduce the percentage
in principal amount of the Outstanding Senior Notes, the consent of whose
Holders is necessary for any such supplemental indenture or required for any
waiver of compliance with certain provisions of the Indenture or certain
Defaults thereunder, (3) modify the obligations of the Company to make offers to
purchase Senior Notes upon a Change of Control or from the proceeds of Asset
Sales, (4) subordinate in right of payment, or otherwise subordinate, the Senior
Notes to any other Indebtedness or (5) modify any of the provisions of this
paragraph (except to increase any percentage set forth herein).
The Holders of a majority in principal amount of the Outstanding Senior
Notes may on behalf of the Holders of all the Senior Notes waive any past
Default under the Indenture and its consequences, except a Default (1) in the
payment of the principal of (or premium, if any) or interest on any Senior Note
or (2) in respect of a covenant or provision hereof which under the proviso to
the prior paragraph cannot be modified or amended without the consent of the
Holder of each Outstanding Senior Note affected.
DEFEASANCE
The Company, at its option, either (a) will be discharged from any and all
obligations with respect to the Senior Notes (except for certain obligations to
register the transfer or exchange of Senior Notes, replace stolen, lost or
mutilated Senior Notes or maintain paying agencies and hold moneys for payment
in trust) or (b) will cease to be under any obligation to comply with certain
restrictive covenants of the Indenture, and certain Events of Default will no
longer constitute Events of Default with respect to any Senior Notes upon the
deposit with the Trustee, in trust, of money or the equivalent in U.S.
Government Obligations, or a combination thereof, which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal and interest on
such Senior Notes on the dates such payments are due in accordance with the
terms of the Senior Notes. To exercise any such option, among other things, no
Event of Default specified under "Events of Default" with respect to such Senior
Notes shall have occurred and be continuing. The Company is required to deliver
to the applicable Trustee an Opinion of Counsel (i) to the effect that the
deposit and related defeasance would not cause the Holders of the Senior Notes
to recognize income, gain or loss for Federal income tax purposes and, in the
case of a discharge pursuant to clause (a), accompanied by a ruling to such
effect from the United States Internal Revenue Service and (ii) with respect to
certain other matters.
THE TRUSTEE
Texas Commerce Bank National Association, the Trustee under the Indenture,
from time to time may extend credit to the Company in the ordinary course of
business. The Trustee's current address is 600 Travis Street, 8th Floor,
Houston, Texas 77002.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any capitalized terms used herein for which no definition
is provided.
"Appraised Value" means (i) with respect to property, equipment, or other
Consolidated Tangible Assets consisting of investments or other tangible
financial assets (excluding cash, cash equivalents and investments in marketable
securities) without a readily determinable market value, the Fair Value of such
Properties as determined within 60 days of the date of the transaction giving
rise to the need to calculate Appraised Value by means of a written appraisal or
valuation report by a nationally recognized investment banking firm, independent
appraisal firm or marine surveyor, in each case, (a) specializing in, or having
a specialty in, valuing or appraising Property of the Company and the
Subsidiaries of the type to be appraised or valued and (b) that is not an
Affiliate of the Company, (ii) with respect to marketable securities of the
Company and the Subsidiaries with a readily determinable market value, the
market value of such assets, as determined within five trading days of the date
of the transaction giving rise to the need to calculate Appraised Value, and as
determined by reference to a published or otherwise readily accessible market
data source selected in good faith by the Company, (iii) with respect to cash
and cash equivalents of the Company and the Subsidiaries, the carrying value
thereof reflected in the accounting records of the Company and (iv) with respect
to all other Consolidated Tangible Assets of the Company and the Subsidiaries,
the Fair Value of such assets, as determined in good faith by the Board of
Directors of the Company; provided, however, that written appraisals or
valuation reports shall not be required in respect of any Consolidated Tangible
Assets of the Company and the Subsidiaries described in clause (i) of this
definition to the extent that the Company determines in good faith the Fair
Value of such unappraised or unvalued assets and the aggregate Fair Value of
such assets does not exceed $25,000,000.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
or other disposition (including, without limitation, by means of a Sale and
Lease-Back Transaction (other than a Sale and Lease-Back Transaction that
results in the creation or incurrence of a Capital Lease Obligation of the
Company or any Subsidiary) or by way of merger or consolidation) (collectively,
for purposes of this definition, a "transfer") by the Company or any Subsidiary
to any Person other than the Company or a Subsidiary, in one transaction, or a
series of related transactions, of (i) any Capital Stock of any Subsidiary or
(ii) any other Property or assets of the Company or any Subsidiary, other than
(A) sales of inventory in the ordinary course of business of the Company and the
Subsidiaries and consistent with past practices, (B) sales of obsolete or worn
out equipment in the ordinary course of business, (C) sales of directors'
qualifying shares in a Subsidiary, (D) any charter (bareboat or otherwise) or
other lease of Property entered into by the Company or any Subsidiary in the
ordinary course of business, other than any charter or lease that provides for
acquisition of such Property by the charterer or lessee during or at the end of
the term thereof, (E) the issuance by the Company of its Capital Stock, (F)
sales in the ordinary course of business of drill pipe and associated equipment
utilized in connection with a drilling contract for the employment of a drilling
rig, (G) a Restricted Payment permitted under "-- Certain
Covenants -- Limitation on Restricted Payments," (H) a Change of Control, (I)
any transfer in a transaction or series of related transactions of Properties
(other than a transfer specifically permitted under clause (A) through (H), (J)
or (K) of this definition) having an aggregate Fair Value of less than $500,000,
(J) any sale or sales of land drilling rigs or barge drilling rigs of the
Company or any Subsidiary owned as of the Issue Date (or any subsequent
disposition of any non-cash consideration received by the Company or any
Subsidiary in any such sale or sales), (K) any trade or exchange by the Company
or any Subsidiary of one or more drilling rigs and related equipment for one or
more other drilling rigs and related equipment owned or held by another Person
that is not an Affiliate of the Company but only to the extent that the Fair
Value of the Property traded or exchanged by the Company or a Subsidiary (other
than cash or cash equivalents) is reasonably equivalent to the Fair Value of the
Properties (together with cash or cash equivalents not to exceed 15 percent of
such Fair Value) to be received by the Company or such Subsidiary as determined
in good faith by the Board of Directors of the Company, provided that if cash
and cash equivalents to be received by the Company or such Subsidiary is greater
than 15 percent of the Fair Value of the Properties to be received, the trade or
exchange shall be treated as an Asset Sale only to the extent that such
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cash and cash equivalents exceed the 15 percent amount and (L) the disposition
of shares of Capital Stock of Offshore Logistics, Inc. and of Century Drilling
Limited owned by the Company or any Subsidiary on the Issue Date. An Asset Sale
shall include the requisition of title to, seizure of or forfeiture of any
Property or assets, or any actual or constructive total loss or an agreed or
compromised total loss of any Property or assets, other than as provided for in
clause (ii)(F) of the preceding sentence of this definition.
"Average Life" means, as of any date, with respect to any debt security,
the quotient obtained by dividing (i) the sum of the products of (x) the number
of years from such date to the dates of each scheduled principal payment
(including any sinking fund or mandatory redemption payment requirements) of
such debt security multiplied in each case by (y) the amount of such principal
payment by (ii) the sum of all such principal payments.
"Capital Lease Obligation" means, at any time as to any Person with respect
to any Property leased by such Person as lessee, the amount of the liability
with respect to such lease that would be required at such time to be capitalized
and accounted for as a capital lease on the balance sheet of such Person
prepared in accordance with GAAP.
"Capital Stock" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than debt securities convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.
"Cash Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate consideration received for such Asset Sale by such Person in the form
of cash or cash equivalents (including any amounts of insurance or other
proceeds received in connection with an Asset Sale of the type described in the
last sentence of the definition thereof), including payments in respect of
deferred payment obligations when received in the form of cash or cash
equivalents (except to the extent that such obligations are financed or sold
with recourse to such Person or any subsidiary thereof). For purposes of this
definition, "cash or cash equivalents" shall be deemed to include, for a period
not to exceed 12 months from the related Asset Sale, noncash consideration
received with respect to an Asset Sale to the extent that such noncash
consideration consists of (i) publicly traded debt securities of a Person, which
securities are rated as "BBB-" or higher by S&P and "Baa3" or higher by Moody's
or having a comparable rating from the successors of each of such Rating
Agencies or (ii) other Indebtedness or publicly traded Capital Stock of a Person
if (x) the lowest rated long-term, unsecured debt obligation issued by such
Person is rated "BBB-" or higher by S&P and "Baa3" or higher by Moody's or
having a comparable rating from the successors of each such rating agency or (y)
in the case of other Indebtedness, the payment of such other Indebtedness is
secured by an irrevocable letter of credit issued by a commercial bank having
capital and surplus in excess of $100,000,000 and long-term unsecured debt
obligations rated at least "A-" by S&P and "A3" by Moody's or having a
comparable rating from the successors of each of such Rating Agencies.
"Change of Control" means (i) a determination by the Company that any
person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act)
has become the direct or indirect beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of more than 50 percent of the Voting Stock of the
Company, (ii) the Company is merged with or into or consolidated with another
corporation and, immediately after giving effect to the merger or consolidation,
less than 50 percent of the outstanding voting securities entitled to vote
generally in the election of directors or persons who serve similar functions of
the surviving or resulting entity are then beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the
stockholders of the Company immediately prior to such merger or consolidation or
(y) if a record date has been set to determine the stockholders of the Company
entitled to vote on such merger or consolidation, the stockholders of the
Company as of such record date, (iii) the Company, either individually or in
conjunction with one or more Subsidiaries, sells, conveys, transfers or leases,
or the Subsidiaries sell, convey, transfer or lease, all or substantially all of
the property of the Company and the Subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), including Capital Stock of
the Subsidiaries, to any Person (other than a Wholly Owned Subsidiary), (iv) the
liquidation or dissolution of the Company or (v) the first day on which a
majority of the individuals who constitute the Board of Directors are not
Continuing Directors.
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"Consolidated Asset Coverage Ratio" means as of the date of the transaction
giving rise to the need to calculate the Consolidated Asset Coverage Ratio (the
"Measurement Date") and after giving pro forma effect to the incurrence of any
Project Finance Indebtedness on the Measurement Date, the ratio of (i) the
aggregate Appraised Value of the Consolidated Tangible Assets of the Company
(other than accounts receivable, inventory, and the Properties of the Company
and its Subsidiaries described in clause (s) of the definition of Permitted
Liens as of the Measurement Date) that are not, and will not be, subject to any
Lien (other than Permitted Liens of the type described in clauses (g), (h) and
(i) of the definition of Permitted Liens) to (ii) the aggregate principal amount
of the Senior Notes plus the aggregate principal amount of unsecured
Indebtedness of the Company and its Subsidiaries for borrowed money that is pari
passu in right of payment to the Senior Notes, in each case outstanding as of
the Measurement Date.
"Consolidated Current Liabilities" of any Person means, as of any date, the
total liabilities (including tax and other proper accruals) of such Person and
its subsidiaries on a consolidated basis at such date which may properly be
classified as current liabilities in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means as of the date of the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio (the "Transaction Date"), the ratio of (i) the sum of (a) the
aggregate amount of EBITDA of the Company and its consolidated Subsidiaries for
the four fiscal quarters for which financial information in respect thereof is
available immediately prior to the applicable Transaction Date (the
"Determination Period") and (b) with respect to any fiscal quarter ending prior
to April 1, 1996, and the period from April 1, 1996 to the Issue Date included
in the calculation set forth in clause (a) above, the EBITDA for any such
quarter or period attributable to the Neddrill Assets to (ii) the aggregate
Consolidated Interest Expense of the Company and its consolidated Subsidiaries
that is anticipated to accrue during a period consisting of the fiscal quarter
in which the Transaction Date occurs and the three fiscal quarters immediately
subsequent thereto (based upon the pro forma amount and maturity of, and
interest payments in respect of, Indebtedness of the Company and its
consolidated Subsidiaries reasonably expected by the Company to be outstanding
on the Transaction Date and reasonably expected by the Company to be outstanding
from time to time during such period), assuming for the purposes of this
measurement the continuation of market interest rates prevailing on the
Transaction Date and base interest rates in respect of floating interest rate
obligations equal to the base interest rates on such obligations in effect as of
the Transaction Date; provided that if the Company or any of its consolidated
Subsidiaries is a party to any Interest Swap Obligation which would have the
effect of changing the interest rate on any Indebtedness of the Company or any
of its consolidated Subsidiaries for such four quarter period (or a portion
thereof), the resulting rate shall be used for such four quarter period or
portion thereof; provided, further, that any Consolidated Interest Expense with
respect to Indebtedness incurred or retired by the Company or any of its
Subsidiaries during the fiscal quarter in which the Transaction Date occurs
shall be calculated as if such debt was so incurred or retired on the first day
of the fiscal quarter in which the Transaction Date occurs; provided, further,
that if the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio would have the effect of increasing or decreasing EBITDA
in the future and if such increase or decrease is readily quantifiable and is
directly attributable to such transaction, EBITDA shall be calculated on a pro
forma basis as if such transaction had occurred on the first day of the four
fiscal quarters referred to in clause (i) of this definition, and if, during the
same four fiscal quarters, (x) the Company or any of its consolidated
Subsidiaries shall have engaged in any Asset Sale, EBITDA for such period shall
be reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the EBITDA (if negative), directly attributable to the assets
which are the subject of such Asset Sale for such period calculated on a pro
forma basis as if such Asset Sale and any related retirement of Indebtedness had
occurred on the first day of such period or (y) after the Issue Date, the
Company or any of its consolidated Subsidiaries shall have acquired any material
assets out of the ordinary course of business, EBITDA and Consolidated Interest
Expense (if Indebtedness is incurred or assumed in connection with such
acquisition) shall be calculated on a pro forma basis as if such asset
acquisition and related financing had occurred on the first day of such period.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication (a) the sum of (i) the aggregate amount of cash and
non-cash interest expense (including capitalized interest) of such Person and
its subsidiaries for such period as determined on a consolidated basis in
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accordance with GAAP in respect of Indebtedness (including, without limitation,
(v) any amortization of debt discount, (w) net costs associated with Interest
Swap Obligations (including any amortization of discounts), (x) the interest
portion of any deferred payment obligation, (y) all accrued interest and (z) all
commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptances or similar facilities) paid or accrued, or
scheduled to be paid or accrued, during such period, (ii) dividends on preferred
stock (other than dividends on the Preferred Stock) of such Person (and of its
subsidiaries if paid to a Person other than such Person or its subsidiaries)
declared and payable in cash, (iii) the portion of any rental obligation of such
Person or its subsidiaries in respect of any Capital Lease Obligation allocable
to interest expense in accordance with GAAP, (iv) the portion of any rental
obligation of such Person or its subsidiaries in respect of any Sale and
Lease-Back Transaction allocable to interest expense (determined as if such were
treated as a Capital Lease Obligation), (v) to the extent any debt of any other
Person is Guaranteed by such Person or any of its subsidiaries, the aggregate
amount of interest paid, accrued or scheduled to be paid or accrued, by such
other Person during such period attributable to any such debt, less (b) to the
extent included in (a) above, amortization or write-off of deferred financing
costs of such Person and its subsidiaries during such period and any charge
related to any premium or penalty paid in connection with redeeming or retiring
any Indebtedness of such Person and its subsidiaries prior to its stated
maturity, in the case of both (a) and (b) above, after elimination of
intercompany accounts among such Person and its subsidiaries and as determined
in accordance with GAAP and (vi) with respect to any fiscal quarter ending prior
to April 1, 1996, an amount equal to quarterly interest expense accrued in
respect of the Senior Notes had such Senior Notes been outstanding in the amount
issued on the Issue Date during the entirety of such fiscal quarter.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss, as the case may be) of such Person and its
subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom, without duplication,
(i) gains and losses from Asset Sales or reserves relating thereto, (ii) items
classified as extraordinary (other than the tax benefit of the utilization of
net operating loss carryforwards and alternative minimum tax credits), (iii)
except to the extent of the amount of cash dividends or other cash distributions
in respect of Capital Stock actually paid to such specified Person or a
subsidiary thereof by any other Person during such period, the net income (or
loss) of such other Person other than a subsidiary of such specified Person,
(iv) the net income of any Person acquired by such specified Person or any of
its subsidiaries in a pooling-of-interests transaction for any period prior to
the date of such acquisition, (v) any gain or loss, net of taxes, realized on
the termination of any employee pension benefit plan, (vi) the effect of the
adoption of Statement of Financial Accounting Standards No. 106 to the extent
expenses recognized pursuant to such adoption exceed the amount with respect to
such expenses which would have been recognized during such period using the "pay
as you go" accounting method, (vii) any charge against income for impairment or
write-down of long-lived assets of the Company or any Subsidiary made in
accordance with Statement of Financial Accounting Standards No. 121 and (viii)
the net income of any subsidiary of such specified Person to the extent that the
transfer to that Person of that income is not at the time permitted, directly or
indirectly, by any means (including by dividend, distribution, advance or loan
or otherwise), by operation of the terms of its charter or any agreement with a
Person other than with such specified Person or any Affiliate thereof,
instrument held by a Person other than by such specified Person or any Affiliate
thereof, judgment, decree, order, statute, law, rule or governmental regulations
applicable to such subsidiary or its stockholders, except for any dividends or
distributions actually paid by such subsidiary to such Person.
"Consolidated Net Tangible Assets" of any Person means, as of any date,
Consolidated Tangible Assets of such Person at such date, after deducting
therefrom (without duplication of deductions) all Consolidated Current
Liabilities of such Person at such date.
"Consolidated Net Worth" of any Person means, as of any date, the sum of
the Capital Stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of such Person and its subsidiaries on a consolidated
basis at such date, each item determined in accordance with GAAP, less amounts
attributable to Redeemable Stock of such Person or any of its subsidiaries.
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"Consolidated Tangible Assets" means, as of any date, the sum of the
Property of the Company and its Subsidiaries on a consolidated basis at such
date, after eliminating intercompany items, and after deducting from such total,
without duplication, (i) all Property that would be classified as intangibles
under GAAP (including, without limitation, goodwill, organizational expenses,
trademarks, trade names, copyrights, patents, licenses and any rights in any
thereof) and (ii) any prepaid expenses, deferred charges and unamortized debt
discount and expense, each such item determined in accordance with GAAP.
"Continuing Director" means an individual who (i) is a member of the Board
of Directors and (ii) either (a) was a member of the Board of Directors on the
Issue Date or (b) whose nomination for election or election to the Board of
Directors was approved by a vote of at least 66 2/3 percent of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election.
"Currency Hedge Obligations" means, at any time as to any Person, the
obligations of such Person at such time which were incurred in the ordinary
course of business pursuant to any foreign currency exchange agreement, option
or future contract or other similar agreement or arrangement designed to protect
against or manage such Person's or any of its subsidiaries' exposure to
fluctuations in foreign currency exchange rates.
"Default" means any event, act or condition the occurrence of which is, or
after notice or the passage of time or both would be, an Event of Default.
"Determination Period" has the meaning specified under clause (i)(a) of the
definition of "Consolidated Interest Coverage Ratio."
"drilling rig" means any drillship, drilling ship, semisubmersible drilling
unit, jackup or self-elevating drilling unit, submersible drilling unit,
drilling barge or posted barge, platform drilling unit or land drilling rig or
any other similar equipment used in oil, gas or other mineral or thermal well
drilling or workover operations.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person and its subsidiaries for such period, plus to the
extent reflected in the income statement of such Person for such period from
which Consolidated Net Income is determined, without duplication, (i) the
Consolidated Interest Expense of such Person for such period, (ii) income tax
expense, (iii) depreciation expense, (iv) amortization expense and (v) any
charge related to any premium or penalty paid in connection with redeeming or
retiring any Indebtedness prior to its stated maturity.
"Fair Market Value" means, with respect to the total consideration received
pursuant to any Asset Sale or by any Person as contemplated by Section 10.07 of
the Indenture or any noncash consideration received by any Person, the fair
market value of such consideration as determined in good faith by the Board of
Directors.
"Fair Value" means, with respect to any asset or Property, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
"GAAP" means, at any date, United States generally accepted accounting
principles, consistently applied, as set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
("AICPA") and statements of the Financial Accounting Standards Board, or in such
other statements by such other entity as may be designated by the AICPA, that
are applicable to the circumstances as of the date of determination; provided,
however, that all calculations made for purposes of determining compliance with
the provisions set forth in "Consolidation, Merger, Conveyance, Lease or
Transfer" and with the terms of the covenants set forth in "Certain Covenants"
shall utilize GAAP in effect at the Issue Date.
"Guarantee" means any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner.
"Indebtedness" as applied to any Person means, at any time, without
duplication, (i) any obligation of such Person, contingent or otherwise, for
borrowed money, (ii) any obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) any obligation of such
Person for all or any part of the purchase price of Property or for the cost of
Property constructed or of improvements thereto (including any obligation under
or in connection with any letter of credit related thereto), other than accounts
payable
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included in current liabilities incurred in respect of Property and services
purchased in the ordinary course of business, (iv) any obligation of such Person
upon which interest charges are customarily paid (other than accounts payable
incurred in the ordinary course of business), (v) any obligation of such Person
under conditional sale or other title retention agreements relating to purchased
Property, (vi) any obligation of such Person issued or assumed as the deferred
purchase price of Property (other than accounts payable incurred in the ordinary
course of business), (vii) any Capital Lease Obligation or any obligation
pursuant to any Sale and Lease-Back Transaction of such Person, (viii) any
obligation of any other Person secured by (or for which the obligee thereof has
an existing right, contingent or otherwise, to be secured by) any Lien on
Property owned or acquired, whether or not any obligation secured thereby has
been assumed, by such Person, (ix) any obligation of such Person in respect of
any letter of credit supporting any obligation of any other Person, (x) the
maximum fixed repurchase price of any Redeemable Stock of such Person (or if
such Person is a subsidiary, any preferred stock of such Person), (xi) any
Interest-Swap Obligation or Currency Hedge Obligation of such Person and (xii)
any obligation which is in economic effect a Guarantee, regardless of its
characterization, with respect to any Indebtedness of another Person, to the
extent guaranteed. For purposes of the preceding sentence, the maximum fixed
repurchase price of any Redeemable Stock or subsidiary preferred stock that does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock or subsidiary preferred stock as if such
Redeemable Stock or subsidiary preferred stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that if such Redeemable Stock or subsidiary preferred stock
is not then permitted to be repurchased, the repurchase price shall be the book
value of such Redeemable Stock or subsidiary preferred stock. The amount of
Indebtedness of any Person at any date shall be (x) the outstanding book value
at such date of all unconditional obligations as described above and (y) the
maximum liability of any such contingent obligation at such date.
"Interest-Swap Obligations" means, with respect to any Person, the
obligations of such Person pursuant to any interest rate swap agreement,
interest rate cap, collar or floor agreement or other similar agreement or
arrangement designed to protect against or manage such Person's or any of its
subsidiaries' exposure to fluctuations in interest rates.
"Investment" means any direct or indirect loan, advance, guarantee or other
extension of credit or capital contribution to (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise), or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. The amount of any Investment shall be the original cost of
such Investment, plus the cost of all additions thereto, and minus the amount of
any portion of such Investment repaid to such Person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the amount of any
investment involving a transfer of any Property other than cash, such Property
shall be valued at its Fair Value at the time of such transfer, as determined in
good faith by the board of directors (or comparable body) of the Person making
such transfer.
"Issue Date" means the date on which the Senior Notes are first
authenticated and delivered under the Indenture.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Material Subsidiary" means a Subsidiary that (a) has assets with an
aggregate book value in an amount greater than 5 percent of the Consolidated Net
Tangible Assets of the Company as of any date of determination as shown on a
separate balance sheet of such Subsidiary or (b) had operating revenues in
excess of 5 percent of the operating revenues of the Company and the
Subsidiaries as determined on a
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consolidated basis in accordance with GAAP for the four calendar quarters
immediately preceding the calendar quarter that includes the determination date.
"Maturity" means the date on which the principal of a Senior Note becomes
due and payable as provided therein or in the Indenture, whether at the Stated
Maturity or by declaration of acceleration or otherwise.
"Neddrill Agreement" means the Agreement of Sale and Purchase dated as of
April 25, 1996, between the Company and Royal Nedlloyd N.V. and Neddrill Holding
B.V.
"Neddrill Assets" means the Assets (as defined in the Neddrill Agreement)
being acquired by the Company and the Subsidiaries pursuant to the Neddrill
Agreement.
"Neddrill Joint Ventures" means (i) the drillship joint venture described
in the Acquisition Agreement relating to the Neddrill Muravlenko and (ii) a
joint venture relating to the drillship Valentin Shashin pursuant to which
Neddrill or an Affiliate of Neddrill may in the future acquire an indirect
ownership interest in such drillship.
"Net Available Proceeds" means, as to any Asset Sale, the Cash Proceeds
therefrom, (i) minus, without duplication, the sum of (a) reasonable legal and
title expenses, commissions and other reasonable fees and expenses incurred, and
all Federal, state, provincial, foreign, recording and local taxes payable as a
consequence of such Asset Sale and (b) all payments made to any Person other
than the Company or a Subsidiary on any Indebtedness of the Company or its
Subsidiaries which is secured by such assets, in accordance with the terms of
any Lien upon or with respect to such assets, or which must by its terms, or in
order to obtain a necessary consent to such Asset Sale, or by applicable law, be
repaid out of the proceeds from such Asset Sale, and (ii) in the case of an
Asset Sale by a Subsidiary, multiplied by the percentage of the Voting Stock of
such Subsidiary directly or indirectly owned by the Company.
"Non-Recourse Indebtedness" means any Indebtedness of a Non-Recourse
Subsidiary (a) in respect of which neither the Company nor any of its
Subsidiaries (other than a Non-Recourse Subsidiary) is liable or obligated in
any manner including, without limitation, liabilities or obligations
constituting Indebtedness of the Company or any of its Subsidiaries (other than
a Non-Recourse Subsidiary) and (b) the occurrence of any event or the existence
of any condition under any agreement or instrument relating to which shall not
at any time have the effect of accelerating, or permitting the acceleration of,
the maturity of any Indebtedness of the Company or any of its Subsidiaries
(other than a Non-Recourse Subsidiary) or otherwise permitting any such
Indebtedness to be declared to be due and payable, or to be required to be
prepaid, purchased or redeemed, prior to the stated maturity thereof.
"Non-Recourse Subsidiary" means a Subsidiary that (a) owns only Property
acquired by such Subsidiary after the Issue Date and (b) has no Indebtedness
other than Non-Recourse Indebtedness.
"Permitted Indebtedness" means (a) Indebtedness of the Company under the
Senior Notes; (b) Indebtedness of the Company and the Subsidiaries under one or
more bank credit facilities; provided that at the date such Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness and any
substantially concurrent repayment of Indebtedness permitted under this clause
(b) or under any bank credit facility permitted pursuant to clause (e), the
aggregate amount of all Indebtedness outstanding at such time under this clause
(b) and under any bank credit facility permitted in clause (e) hereof shall not
exceed $100,000,000 (except as such amount may be permanently reduced by the
application of Net Available Proceeds from Asset Sales to repay Indebtedness as
provided in clause (ii) of the first paragraph under "-- Certain
Covenants -- Limitation on Asset Sales"); (c) Indebtedness of the Company or any
Subsidiary under Interest-Swap Obligations; provided that (i) such Interest Swap
Obligations are related to payment obligations on Indebtedness otherwise
permitted under the covenants described in " -- Certain Covenants -- Limitation
on Indebtedness" and (ii) the notional principal amount of such Interest-Swap
Obligations does not exceed the principal amount of the Indebtedness to which
such Interest-Swap Obligations relate; (d) Indebtedness of the Company or any
Subsidiary under Currency Hedge Obligations; provided that (i) such Currency
Hedge Obligations are related to payment obligations on Indebtedness otherwise
permitted under the covenants described in " -- Certain Covenants -- Limitation
on Indebtedness" or to the foreign currency cash flows reasonably expected to be
generated by the Company and the Subsidiaries and (ii) the
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notional principal amount of such Currency Hedge Obligations does not exceed the
principal amount of the Indebtedness or the amount of the foreign currency cash
flows to which such Currency Hedge Obligations relate; (e) Indebtedness of the
Company or any Subsidiary outstanding on the Issue Date; (f) Indebtedness of the
Company or any Subsidiary in respect of performance bonds, surety bonds, appeal
bonds and letters of credit issued for the account of the Company or any
Subsidiary, in each case incurred in the ordinary course of business and not in
connection with the borrowing of money; (g) Indebtedness of the Company to any
Wholly Owned Subsidiary (but only so long as it remains a Wholly Owned
Subsidiary); (h) Indebtedness of any Subsidiary to the Company or any Wholly
Owned Subsidiary (but only so long as it remains a Wholly Owned Subsidiary); (i)
Non-Recourse Indebtedness of any Non-Recourse Subsidiary; (j) Indebtedness of
the Company in connection with a purchase of the Senior Notes pursuant to a
Change of Control Offer, provided that the aggregate principal amount of such
Indebtedness does not exceed 101 percent of the aggregate principal amount of
the Senior Notes purchased pursuant to such Change of Control Offer plus the
amount of expenses incurred in connection therewith, provided, further, that
such Indebtedness (i) has an Average Life equal to or greater than the remaining
Average Life of the Senior Notes and (ii) does not mature prior to one year
following the Stated Maturity of the Senior Notes; (k) other Indebtedness of the
Company or any Subsidiary, provided that at the date such Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness, the
aggregate amount of all Indebtedness outstanding at such time under this clause
(k) shall not exceed $30,000,000; (l) Permitted Refinancing Indebtedness; (m)
Indebtedness of a Subsidiary, if any, in respect of the Safe Harbor Leases, the
Letter of Credit Agreement and the Mortgage, as such terms are defined in, and
as contemplated by, the Assets Purchase Agreement dated August 20, 1993 between
the Company and Portal Rig Corporation; and (n) Project Finance Indebtedness,
provided that at the date such Indebtedness is incurred and after giving effect
to the incurrence of such Indebtedness, the aggregate principal amount of all
Indebtedness incurred and outstanding at such time under this clause (n) (or
under clause (i) of the covenants described in "-- Certain
Covenants -- Limitation on Subsidiary Indebtedness and Preferred Stock" by
reason of this clause (n) being referenced therein) shall not exceed
$75,000,000. So as to avoid duplication in determining the amount of Permitted
Indebtedness under any clause of this definition, Guarantees of, or obligations
in respect of letters of credit supporting, Indebtedness otherwise included in
the determination of such amount shall not also be included.
"Permitted Investments" means (a) certificates of deposit, bankers'
acceptances, time deposits, Eurocurrency deposits and similar types of
investments routinely offered by commercial banks with final maturities of one
year or less issued by commercial banks having capital and surplus in excess of
$100,000,000; (b) commercial paper issued by any corporation, if such commercial
paper has credit ratings of at least "A-1" by S&P and at least "P-1" by Moody's;
(c) U.S. Government Obligations with a maturity of four years or less; (d)
repurchase obligations for instruments of the type described in clause (c); (e)
shares of money market mutual or similar funds having assets in excess of
$100,000,000; (f) payroll advances in the ordinary course of business; (g) other
advances and loans to officers and employees of the Company or any Subsidiary,
so long as the aggregate principal amount of such advances and loans does not
exceed $500,000 at any one time outstanding; (h) Investments represented by that
portion of the proceeds from Asset Sales (i) that is not Cash Proceeds or (ii)
that is deemed to be Cash Proceeds pursuant to the second sentence of the
definition of "Cash Proceeds"; (i) Investments in the NN-1 Limited Partnership,
a Texas limited partnership, pursuant to the Agreement of Limited Partnership of
the NN-1 Limited Partnership in an aggregate amount not to exceed the amount of
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds outstanding on the
Issue Date; and (j) Investments in respect of the interest being acquired by the
Company or any Subsidiary in the Neddrill Joint Ventures.
"Permitted Liens" means (a) Liens in existence on the Issue Date; (b) Liens
created for the benefit of the Senior Notes; (c) Liens covering (i) accounts
receivable and inventory of the Company and the Subsidiaries and (ii) other
assets of the Company and the Subsidiaries with a Fair Value (as determined in
good faith by the Board of Directors) not to exceed $100,000,000, in each case
securing Indebtedness that may be incurred under clause (b) of the definition of
"Permitted Indebtedness," provided that if at the time Liens are proposed to be
granted or created in reliance on this clause (ii), Liens have been granted to
secure Project Finance Indebtedness as permitted by the proviso of clause (l) of
this definition and the aggregate principal amount of such secured Project
Finance Indebtedness exceeds $75,000,000, then the Fair Value of
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assets on which Liens may be granted or created under this clause (ii) shall be
limited to the greater of (x) $100,000,000 less the amount by which the
outstanding aggregate principal of Project Finance Indebtedness exceeds
$75,000,000, (y) an amount that would permit the Company, after the grant or
creation of proposed Liens pursuant to this clause (ii), to incur at least $1.00
of additional secured Project Finance Indebtedness under the proviso of clause
(l) of this definition and (z) an amount such that the Consolidated Assets
Coverage Ratio would have been at least 2.50 to 1 at the time of the incurrence
of Liens in reliance on the proviso of clause (l) of this definition had the
Liens proposed to be granted or created under this clause (ii) been granted or
created immediately prior to the Measurement Date of such Consolidated Asset
Coverage Ratio; (d) Liens on Property of a Person existing at the time such
Person is merged or consolidated with or into the Company or a Subsidiary (and
not incurred as a result of, or in anticipation of, such transaction); provided
that such Lien relates solely to the Property subject thereto; (e) Liens on
Property existing at the time of the acquisition thereof (and not incurred as a
result of, or in anticipation of, such transaction); provided that such Lien
relates solely to the Property subject thereto; (f) Liens incurred or pledges
and deposits in connection with worker's compensation, unemployment insurance
and other social security benefits, statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature (and obligations
with respect to any letters of credit issued in favor of the Company or a
Subsidiary and in order to secure or obtain any of the foregoing), in each case
incurred in the ordinary course of business and not in connection with the
borrowing of money; (g) Liens imposed by law or arising by operation of law,
including, without limitation, landlords', mechanics', carriers',
warehousemen's, materialmen's, suppliers' and vendors' Liens and Liens for
master's and crew's wages and other similar maritime Liens, and incurred in the
ordinary course of business; (h) zoning restrictions, easements, licenses,
covenants, reservations, restrictions on the use of real property and defects,
irregularities and deficiencies in title to real property that do not,
individually or in the aggregate, materially affect the ability of the Company
or any Subsidiary to conduct its business as presently conducted; (i) Liens for
taxes or assessments or other governmental charges or levies not yet due and
payable, or the validity of which is being contested by the Company or a
Subsidiary in good faith by appropriate proceedings upon stay of execution or
the enforcement thereof and for which adequate reserves in accordance with GAAP
or other appropriate provision has been made; (j) Liens to secure the payment of
all or a part of the purchase price or construction cost of Property acquired or
constructed after the Issue Date; provided that (i) the principal amount of
Indebtedness secured by such Liens shall not exceed the lesser of cost or Fair
Market Value of the assets or Property so acquired or constructed and (ii) such
Liens shall not encumber any other assets or Property of the Company or any
Subsidiary and shall attach to such Property within 120 days of the construction
or acquisition of such assets or Property; (k) Liens securing Capital Lease
Obligations; provided, that such Liens secure Capital Lease Obligations which,
when combined with (i) the outstanding secured Indebtedness of the Company
(other than Indebtedness secured by Liens described under clauses (b), (c), (j)
and (s) hereof), (ii) all Indebtedness and the aggregate liquidation value of
all preferred stock of any Subsidiary (other than a Non-Recourse Subsidiary)
incurred and outstanding in accordance with the covenants described in
"-- Certain Covenants -- Limitation on Subsidiary Indebtedness and Preferred
Stock" (other than of the type described in clauses (c), (j), (o), (s) hereof),
and (iii) the aggregate amount of all other Capital Lease Obligations of the
Company and the Subsidiaries, does not exceed 10 percent of the Company's
Consolidated Net Tangible Assets; (l) Liens securing Project Finance
Indebtedness incurred under clause (n) of the definition of Permitted
Indebtedness, provided that if, at the date such Project Finance Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness, the
Consolidated Asset Coverage Ratio shall equal or exceed 2.50 to 1.0 and such
additional Indebtedness can be incurred under paragraph (a) of "-- Certain
Covenants -- Limitation on Indebtedness," then, notwithstanding the $75,000,000
limitation set forth in clause (n) of the definition of Permitted Indebtedness,
the aggregate principal amount of Project Finance Indebtedness that may be
secured under this clause (l) shall not exceed (i) $250,000,000, if the
Consolidated Interest Coverage Ratio (after giving pro forma effect to the
incurrence of such Project Finance Indebtedness) shall be equal to or greater
than 3.00 to 1.0 but less than 4.00 to 1.0 or (ii) $400,000,000, if the
Consolidated Interest Coverage Ratio (after giving pro forma effect to the
incurrence of such Project Finance Indebtedness) shall be equal to or greater
than 4.00 to 1.0; (m) Liens securing Indebtedness of the Company or any
Subsidiary; provided that such Liens secure Indebtedness which, when combined
with (i) outstanding secured Indebtedness of the Company (other than
Indebtedness secured by Liens described under clauses (b), (c), (j) and (s)
hereof), (ii) all Indebtedness and the aggregate
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liquidation value of all preferred stock of any Subsidiary (other than a
Non-Recourse Subsidiary) incurred and outstanding in accordance with the
covenants described in "-- Certain Covenants -- Limitation on Subsidiary
Indebtedness and Preferred Stock" (other than of the type described in clauses
(c), (j), (o) and (s) hereof) and (iii) the aggregate amount of all Capital
Lease Obligations of the Company and the Subsidiaries, does not exceed 10
percent of the Company's Consolidated Net Tangible Assets; (n) Liens to secure
any extension, renewal, refinancing or refunding (or successive extensions,
renewals, refinancings or refundings), in whole or in part, of any Indebtedness
secured by Liens referred to in the foregoing clauses (a), (b), (d) and (e);
provided that such Lien does not extend to any other Property of the Company or
any Subsidiary and the principal amount of the Indebtedness secured by such Lien
is not increased; (o) Liens granted by a Non-Recourse Subsidiary securing
Non-Recourse Indebtedness of such Non-Recourse Subsidiary and Liens on the
Capital Stock of a Non-Recourse Subsidiary securing Non-Recourse Indebtedness of
such Non-Recourse Subsidiary; (p) any charter or lease that would not constitute
an Asset Sale pursuant to clause (ii)(D) of the definition of "Asset Sale"; (q)
leases or subleases of real property to other Persons; (r) Liens under the Safe
Harbor Leases, the Letter of Credit Agreement and the Mortgage, as such terms
are defined in, and as contemplated by, the Assets Purchase Agreement dated
August 20, 1993 between the Company and Portal Rig Corporation, with respect to
the Property being acquired pursuant to such Assets Purchase Agreement; (s)
Liens on (i) up to eight submersible drilling rigs, owned by the Company or any
Subsidiaries as of the Issue Date including any improvements on such rigs,
provided, that the Company may from time to time designate one or more of such
rigs as Property that is not, and will not be, subject to this clause (s) by
delivery of written notice of such designation to the trustee under the
Indenture, whereupon such designated rig or rigs shall cease to be covered by
this clause (s) and, if unencumbered by any Lien (other than Permitted Liens
described in clauses (g), (h) and (i) of this definition), the Appraised Value
of such designated rig or rigs as of any Measurement Date shall be included in
any determination of "Consolidated Asset Coverage Ratio" or (ii) the Property
described in clause (ii)(L) of the definition of "Asset Sale" and (t) Liens
resulting from the deposit of funds or evidences of Indebtedness in trust for
the purpose of defeasing Indebtedness of the Company or any of the Subsidiaries.
"Permitted Refinancing Indebtedness" means Indebtedness of the Company or a
Subsidiary, incurred in exchange for, or the proceeds of which are used to
renew, extend, refinance, refund or repurchase outstanding Indebtedness of the
Company or any Subsidiary which outstanding Indebtedness was incurred in
accordance with, or is otherwise permitted by, the terms of the Indenture, other
than any such Indebtedness permitted pursuant to clause (k) of the definition of
"Permitted Indebtedness"; provided that (i) if the Indebtedness being renewed,
extended, refinanced, refunded or repurchased is pari passu with or subordinated
in right of payment to the Senior Notes, then such new Indebtedness is pari
passu with or subordinated in right of payment to, as the case may be, the
Senior Notes at least to the same extent as the Indebtedness being renewed,
extended, refinanced, refunded or repurchased, (ii) such new Indebtedness is
scheduled to mature later than the Indebtedness being renewed, extended,
refinanced, refunded or repurchased, (iii) such new Indebtedness has an Average
Life at the time such Indebtedness is incurred that is greater than the Average
Life of the Indebtedness being renewed, extended, refinanced, refunded or
repurchased and (iv) such new Indebtedness is in an aggregate principal amount
(or, if such Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the maturity
thereof, the original issue price of such Indebtedness is) not in excess of the
aggregate principal amount then outstanding of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased (or if the Indebtedness being
renewed, extended, refinanced, refunded or repurchased provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof, the original issue price of such
Indebtedness plus any accreted value attributable thereto since the original
issuance of such Indebtedness) plus the amount of any premium required to be
paid in connection therewith pursuant to the terms of such Indebtedness or the
amount of any premium reasonably determined by the Company or the Subsidiary, as
applicable, as necessary to accomplish the foregoing by means of a tender or
exchange offer or privately negotiated purchase, plus the amount of fees and
expenses in connection therewith; provided, further that Permitted Refinancing
Indebtedness shall not include (a) Indebtedness of a Subsidiary that is incurred
to renew, extend, refinance, refund or repurchase Indebtedness of the Company
and (b) Indebtedness (other than Non-Recourse Indebtedness of the related
Non-Recourse Subsidiary) that is
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incurred to renew, extend, refinance, refund or repurchase Non-Recourse
Indebtedness of such Non-Recourse Subsidiary.
"Preferred Stock" means the $1.50 Convertible Preferred Stock of the
Company outstanding as of the Issue Date.
"Project Finance Indebtedness" of a Person means any Indebtedness the
proceeds of which will be used solely to make capital expenditures to repair,
refurbish, upgrade or improve one or more drilling rigs owned or acquired (or to
be owned or acquired) by such Person or an Affiliate thereof.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, excluding Capital Stock in any other Person.
"Redeemable Stock" means, with respect to any Person, any equity security
that by its terms or otherwise is required to be redeemed, or is redeemable at
the option of the holder thereof, at any time prior to one year following the
Stated Maturity of the Senior Notes or is exchangeable into Indebtedness of such
Person or any of its subsidiaries.
"Replacement Asset" means, with respect to any Asset Sale, a Property or
asset that, as determined by the Board of Directors as evidenced by a Board
Resolution, is used or is useful in a line of business of the Company or any
Subsidiary existing on the Issue Date.
"Restricted Payment" means to (i) declare or pay any dividend on, or make
any distribution in respect of, or purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company or any Affiliate of the Company, or
warrants, rights or options to acquire such Capital Stock, other than (x)
dividends payable solely in the Capital Stock (other than Redeemable Stock) of
the Company or such Affiliate, as the case may be, or in warrants, rights or
options to acquire such Capital Stock and (y) dividends or distributions by a
Subsidiary to the Company or to a Wholly Owned Subsidiary (except a Non-Recourse
Subsidiary); (ii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or other stated maturity, Indebtedness
of the Company or any Subsidiary which is subordinated in right of payment to
the Senior Notes; or (iii) make any Investment (other than Permitted Investments
and Investments made by the Company in its Wholly Owned Subsidiaries (or any
Person that will be a Wholly Owned Subsidiary as a result of such Investment)
except Non-Recourse Subsidiaries or by a Subsidiary in the Company or one or
more Wholly Owned Subsidiaries (or any Person that will be a Wholly Owned
Subsidiary as a result of such Investment) except Non-Recourse Subsidiaries) in
any Person.
"Sale and Lease-Back Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a subsidiary of such Person and is thereafter leased back from
the purchaser or transferee thereof by such Person or one of its subsidiaries.
"Stated Maturity", when used with respect to a Senior Note or any
installment of interest thereon, means the date specified in such Senior Note as
the fixed date on which the principal of such Senior Note or such installment of
interest is due and payable.
"Subordinated Indebtedness" means any Indebtedness of the Company that is
subordinated in right of payment to the Senior Notes and does not mature prior
to one year following the Stated Maturity of the Senior Notes.
"subsidiary" means, with respect to any Person, (i) any corporation more
than 50 percent of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person, (ii) any
general partnership, joint venture or similar entity, more than 50 percent of
the outstanding partnership or similar interests of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person and (iii)
any limited partnership of which such Person or any subsidiary of such Person is
a general partner.
"Subsidiary" means a subsidiary of the Company.
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"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) above, are not callable or redeemable at the option of the
issuer thereof or (iii) depository receipts issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligations or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of the
U.S. Government Obligation evidenced by such depository receipt.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Wholly Owned Subsidiary" means any Subsidiary of which 100 percent of the
total Voting Stock (other than directors' qualifying shares) is at the time
owned by the Company, either directly or indirectly through ownership of one or
more Subsidiaries.
BOOK-ENTRY DELIVERY AND FORM
The Senior Notes will be issued in the form of a fully registered Global
Certificate. The Global Certificate will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depositary") and registered
in the name of the Depositary's nominee.
Except as set forth below, the Global Certificate may be transferred, in
whole and not in part, only to another nominee of the Depositary or to a
successor of the Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows: It
is a limited-purpose trust company which was created to hold securities for its
participating organizations (the "Participants") and to facilitate the clearance
and settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("indirect participants"). Persons who are not Participants may beneficially own
securities held by the Depositary only through Participants or indirect
participants.
The Depositary has also advised that pursuant to procedures established by
it (i) upon the issuance by the Company of the Senior Notes, the Depositary will
credit the accounts of Participants designated by the Underwriters with the
principal amount of the Senior Notes purchased by the Underwriters, and (ii)
ownership of beneficial interests in the Global Certificate will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Depositary (with respect to Participants' interests), the
Participants and the indirect participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities which
they own. Consequently, the ability to transfer beneficial interests in the
Global Certificate is limited to such extent.
So long as a nominee of the Depositary is the registered owner of the
Global Certificate, such nominee will be considered the sole owner or holder of
the Senior Notes for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in the Global Certificate will not be entitled to
have Senior Notes registered in their names, will not receive or be entitled to
receive physical delivery of Senior Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture.
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Neither the Company, the Trustee, the paying agent nor the Senior Notes
registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Certificate, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Principal and interest payments on the Global Certificate registered in the
name of the Depositary's nominee will be made by the Company, either directly or
through a paying agent, to the Depositary's nominee as the registered owner of
the Global Certificate. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Senior Notes are registered as
the owners of such Senior Notes for the purpose of receiving payments of
principal and interest on such Senior Notes and for all other purposes
whatsoever. Therefore, neither the Company, the Trustee nor any paying agent has
any direct responsibility or liability for the payment of principal or interest
on the Senior Notes to owners of beneficial interests in the Global Certificate.
The Depositary has advised the Company and the Trustee that its present practice
is, upon receipt of any payment of principal or interest to credit immediately
the accounts of the Participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Certificate as shown on the records of the Depositary. Payments by Participants
and indirect participants to owners of beneficial interests in the Global
Certificate will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name" and will be the responsibility of such
Participants or indirect participants.
As long as the Senior Notes are represented by a Global Certificate, the
Depositary's nominee will be the holder of the Senior Notes and therefore will
be the only entity that can exercise a right to repayment or repurchase of the
Senior Notes. See "-- Change of Control" and "-- Certain Covenants -- Limitation
on Asset Sales." Notice by Participants or indirect participants or by owners of
beneficial interests in a Global Certificate held through such Participants or
indirect participants of the exercise of the option to elect repayment of
beneficial interests in Senior Notes represented by a Global Certificate must be
transmitted to the Depositary in accordance with its procedures on a form
required by the Depositary and provided to Participants. In order to ensure that
the Depositary's nominee will timely exercise a right to repayment with respect
to a particular Senior Note, the beneficial owner of such Senior Note must
instruct the broker or other Participant or indirect participant through which
it holds an interest in such Senior Note to notify the Depositary of its desire
to exercise a right to repayment. Different firms have cut-off times for
accepting instructions from their customers, and accordingly, each beneficial
owner should consult the broker or other Participant or indirect participant
through which it holds an interest in a Senior Note in order to ascertain the
cut-off time by which such an instruction must be given in order for timely
notice to be delivered to the Depositary. The Company will not be liable for any
delay in delivery of notices of the exercise of the option to elect repayment.
The Company will issue Senior Notes in definitive form in exchange for the
Global Certificate if, and only if, either (1) the Depositary is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, or (2) an Event of Default has occurred
and is continuing and the Senior Notes registrar has received a request from the
Depositary to issue Senior Notes in definitive form in lieu of all or a portion
of the Global Certificate. In either instance, an owner of a beneficial interest
in the Global Certificate will be entitled to have Senior Notes equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Senior Notes in definitive form. Senior
Notes so issued in definitive form will be issued in denominations of $1,000 and
integral multiples thereof and will be issued in registered form only, without
coupons.
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