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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CLIFFS DRILLING COMPANY
(and certain subsidiaries identified in footnote (*) below)
(Exact name of registrant as specified in its charter)
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DELAWARE 1381 76-0248934
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
EDWARD A. GUTHRIE
VICE PRESIDENT -- FINANCE
1200 SMITH STREET, SUITE 300 CLIFFS DRILLING COMPANY
HOUSTON, TEXAS 77002 1200 SMITH STREET, SUITE 300
(713) 651-9426 HOUSTON, TEXAS 77002
(Address, including zip code, and (713) 651-9426
telephone number, including area code, (Name, address, including zip code, and
of registrant's principal executive offices) telephone number, including area code,
of agent for service)
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Copies to:
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T. MARK KELLY
W. GARNEY GRIGGS, ESQ. VINSON & ELKINS L.L.P.
GRIGGS & HARRISON, P.C. 2300 FIRST CITY TOWER
1301 MCKINNEY, SUITE 3200 1001 FANNIN
HOUSTON, TEXAS 77010 HOUSTON, TEXAS 77002-6760
(713) 651-0600 (713) 758-4592
</TABLE>
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
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10.25% Senior Notes due 2003........... $50,000,000 107.75% $53,875,000 $16,326
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Guarantees (2)......................... -- -- -- --
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Guarantees by subsidiaries of the Registrant of the payment of the principal
and interest on the 10.25% Senior Notes due 2003. Pursuant to Rule 457(n),
no additional fee is required.
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(*) The following subsidiaries of Cliffs Drilling Company are co-registrants
incorporated in Delaware and having the I.R.S. Employer Identification
Numbers indicated: (i) Southwestern Offshore Corporation (76-0503027), (ii)
Cliffs Drilling International, Inc. (76-0236336), (iii) Cliffs Oil and Gas
Company (74-2139293), (iv) Cliffs Drilling Merger Company (76-0503026) and
(v) DRL, Inc. (76-0503389). The following subsidiaries of Cliffs Drilling
Company are co-registrants organized under the laws of Trinidad and Tobago
and have no I.R.S. Employer Identification Numbers: Cliffs Drilling Trinidad
Ltd. and West Indies Drilling Joint Venture.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
[CLIFFS DRILLING COMPANY LOGO]
OFFER TO EXCHANGE
10.25% SENIOR NOTES DUE 2003, SERIES D
FOR ALL OUTSTANDING 10.25% SENIOR NOTES DUE 2003, SERIES C
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON OCTOBER , 1997, UNLESS EXTENDED
---------------------
Cliffs Drilling Company, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $1,000 principal amount of its 10.25% Senior Notes due 2003, Series D
(the "Exchange Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined herein) of which this Prospectus constitutes a part, for each $1,000
principal amount of its outstanding 10.25% Senior Notes due 2003, Series C (the
"Old Notes"), of which $50,000,000 principal amount is outstanding. The form and
terms of the Exchange Notes are identical in all material respects to the form
and terms of the Old Notes except for certain transfer restrictions and
registration rights relating to the Old Notes. The Exchange Notes will evidence
the same debt as the Old Notes and will be issued under and be entitled to the
benefits of the Indenture (as defined herein). The Exchange Notes and the Old
Notes are collectively referred to herein as the "Notes."
The Notes are senior unsecured obligations of the Company, ranking pari
passu in right of payment with all senior Indebtedness (as defined) of the
Company, senior to all Subordinated Indebtedness (as defined) of the Company,
and on a parity with the Company's outstanding Series B Notes (as defined). The
Notes are unconditionally guaranteed (the "Subsidiary Guarantees") on a senior
unsecured basis by the Company's principal subsidiaries (the "Subsidiary
Guarantors"), and the Subsidiary Guarantees rank pari passu in right of payment
with all senior Indebtedness of the Subsidiary Guarantors and senior to all
Subordinated Indebtedness of the Subsidiary Guarantors. The obligations of the
Subsidiary Guarantors under the Notes rank on a parity with the obligations of
the Subsidiary Guarantors under the Company's outstanding Series B Notes. The
Subsidiary Guarantees may be released under certain circumstances. The Notes and
Subsidiary Guarantees are effectively subordinated to secured Indebtedness of
the Company and the Subsidiary Guarantors, respectively, with respect to the
assets securing such Indebtedness, including any Indebtedness under the
Revolving Credit Facility (as defined), which is secured by liens on
substantially all of the assets of the Company and the Subsidiary Guarantors. At
August 31, 1997, the Company and the Subsidiary Guarantors had no Indebtedness
outstanding other than (i) $50 million in principal amount of the Old Notes,
(ii) $2.4 million consisting of letters of credit, and (iii) $150 million in
principal amount of Series B Notes. The Indenture governing the Exchange Notes
will permit the Company and its subsidiaries to incur additional Indebtedness in
the future, subject to certain limitations. See "Description of the Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the date the Exchange
Offer expires, which will be October , 1997, unless the Exchange Offer is
extended. See "The Exchange Offer -- Expiration Date; Extensions; Amendment."
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the business day prior to the Expiration Date (as defined herein),
unless previously accepted for exchange. The minimum period of time that the
Exchange Offer will remain open is 30 days from the date the Registration
Statement is declared effective, including all extensions. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain conditions which
may be waived by the
(Cover continued on next two pages)
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SEE "RISK FACTORS" BEGINNING ON PAGE 14 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN
INVESTMENT IN THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is September , 1997.
<PAGE> 3
Company and to the terms and provisions of the Registration Rights Agreement (as
defined herein). Old Notes may be tendered only in denominations of $1,000
principal amount and integral multiples thereof. The Company has agreed to pay
the expenses of the Exchange Offer. See "The Exchange Offer."
The Exchange Notes will bear interest at the rate of 10.25% per annum,
payable semi-annually on May 15 and November 15 of each year, commencing
November 15, 1997, assuming the Exchange Offer is consummated prior to the
record date in respect of such interest payment. Holders of Exchange Notes of
record on November 1, 1997 will receive interest on November 15, 1997 from the
date of issuance of the Exchange Notes, plus an amount equal to the accrued
interest on the Old Notes from the date of issuance of the Old Notes, August 7,
1997, to the date of exchange thereof. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the Exchange Notes.
The Old Notes were sold by the Company on August 7, 1997 to the Initial
Purchasers (as defined herein) in a transaction not registered under the
Securities Act in reliance upon Section 4(2) of the Securities Act. The Old
Notes were thereupon offered and sold by the Initial Purchasers only to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), each of whom agreed to comply with certain transfer restrictions and other
conditions. Accordingly, the Old Notes may not be offered, resold or otherwise
transferred in the United States unless registered under the Securities Act or
unless an applicable exemption from the registration requirements of the
Securities Act is available. The Exchange Notes are being offered hereunder in
order to satisfy the obligations of the Company under the Registration Rights
Agreement entered into with the Initial Purchasers in connection with the
offering of the Old Notes. See "The Exchange Offer" and "Registration Rights
Agreement."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission" or "SEC") to third parties, including
Exxon Capital Holdings Corporation, SEC No-Action Letter (available April 13,
1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (available June 5, 1991)
(the "Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC No-Action Letter
(available June 5, 1991), the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by the respective holders thereof (other than a "Restricted Holder,"
being (i) a broker-dealer who purchased Old Notes exchanged for such Exchange
Notes directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (ii) a person that is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holder's business and such holder is not
participating in, and has no arrangement with any person to participate in, the
distribution (within the meaning of the Securities Act) of such Exchange Notes.
Eligible holders wishing to accept the Exchange Offer must represent to the
Company that such conditions have been met. Holders who tender Old Notes in the
Exchange Offer with the intention to participate in a distribution of the
Exchange Notes may not rely upon the Morgan Stanley Letter or similar no-action
letters. See "The Exchange Offer -- General." Each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer may be a
statutory underwriter and must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. A broker-dealer that delivers
such a prospectus to purchasers in connection with such resales will be subject
to certain of the civil liability provisions under the Securities Act and will
be bound by the provisions of the Registration Rights Agreement (including
certain indemnification rights and obligations). This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that it will make this Prospectus and any amendment or supplement to this
Prospectus available to any broker-dealer for use in connection with any such
resale for a period of up to 180 days after consummation of the Exchange Offer.
See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer.
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to the liquidity of
any markets that may develop for the Exchange Notes or as to
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the ability of or price at which the holders of Exchange Notes would be able to
sell their Exchange Notes. Future trading prices of the Exchange Notes will
depend on many factors, including, among others, prevailing interest rates, the
Company's operating results and the market for similar securities. The Company
does not intend to apply for listing of the Exchange Notes on any securities
exchange. Jefferies & Company, Inc. and ING Baring (U.S.) Securities, Inc.
(together, the "Initial Purchasers") have informed the Company that they
currently intend to make a market for the Exchange Notes. However, they are not
so obligated, and any such market making may be discontinued at any time without
notice. Accordingly, no assurance can be given that an active public or other
market will develop for the Exchange Notes or as to the liquidity of or the
trading market for the Exchange Notes.
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Note (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depositary"
or "DTC") and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global Note representing the Exchange Notes will be
shown on, and transfers thereof will be effected through, records maintained by
the Depositary and its participants. After the initial issuance of the Global
Note, Exchange Notes in certificated form will be issued in exchange for the
Global Note only on the terms set forth in the Indenture. See "Description of
the Notes -- Book-Entry; Delivery and Form."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
TABLE OF CONTENTS
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PAGE NO.
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Available Information....................................... 4
Incorporation of Certain Documents by Reference............. 4
Disclosure Regarding Forward-Looking Information............ 5
Prospectus Summary.......................................... 6
Risk Factors................................................ 14
The Company................................................. 19
Private Placement........................................... 21
Use of Proceeds............................................. 21
Capitalization.............................................. 21
Selected Consolidated Financial Information................. 22
The Exchange Offer.......................................... 24
Description of Existing Indebtedness........................ 30
Description of the Notes.................................... 30
Registration Rights Agreement............................... 58
Transfer Restrictions on Old Notes.......................... 60
Certain Federal Income Tax Considerations................... 61
Plan of Distribution........................................ 63
Experts..................................................... 64
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THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE COMPANY. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO JAMES E. MITCHELL
JR., SECRETARY, CLIFFS DRILLING COMPANY, 1200 SMITH STREET, SUITE 300, HOUSTON,
TEXAS 77002 (TELEPHONE NUMBER (713) 651-9426). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY OCTOBER , 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549; and at the following regional offices of the Commission:
7 World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
at prescribed rates. The Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The Company's common stock ("Common Stock") is traded on
the New York Stock Exchange. The Company's reports, proxy statements and other
information concerning the Company can be inspected and copied at the offices of
The New York Stock Exchange, Inc., Eleven Wall Street, New York, New York 10005.
While any Notes that are "restricted securities" within the meaning of Rule
144(a)(3) under the Exchange Act remain outstanding, the Company will make
available, upon request, to any holder and any prospective purchaser of Notes,
the information required pursuant to Rule 144A(d)(4) under the Securities Act
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act. Any such request should be directed to the Secretary of the
Company, 1200 Smith Street, Suite 300, Houston, Texas 77002, telephone number
(713) 651-9426.
This Prospectus constitutes part of a registration statement on Form S-4
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus omits certain of the information set forth in
the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the securities offered hereby. Statements contained
herein concerning the provisions of contracts or other documents are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the copy of the applicable contract or other document filed with
the Commission. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment of
the fee prescribed by the Commission, or may be examined without charge at the
public reference facilities of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-16703) and are incorporated herein by
reference:
(1) The Company's Current Report on Form 8-K dated May 23, 1996;
(2) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(4) The Company's Proxy Statement for the Annual Meeting of
Stockholders held on May 21, 1997;
(5) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997; and
(6) The Company's Current Report on Form 8-K dated September 19, 1997
(the "Form 8-K").
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
thereof. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by
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reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the documents incorporated by reference in this Prospectus (not including
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates by
reference). Requests for such copies should be directed to the Company at 1200
Smith Street, Suite 300, Houston, Texas 77002, Attention: James E. Mitchell Jr.,
Secretary (telephone number (713) 651-9426). In order to ensure timely delivery
of such documents prior to the Expiration Date, any request should be made by
October , 1997.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus and the documents incorporated by reference herein include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements of
historical facts included in this Prospectus and the documents incorporated by
reference herein, including without limitation, statements regarding the
Company's financial position, business strategy, budgets, and plans and
objectives of management for future operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such forward-
looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed under "Risk Factors" and elsewhere in this Prospectus
and the documents incorporated by reference herein, including without
limitation, in conjunction with the forward-looking statements included in this
Prospectus. All subsequent written and oral forward-looking statements
attributable to the Company, or persons acting on its behalf, are expressly
qualified in their entirety by the Cautionary Statements.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
consolidated financial statements (including the notes thereto) incorporated by
reference into this Prospectus. Unless the context otherwise requires, "Company"
refers to Cliffs Drilling Company and its consolidated subsidiaries.
THE COMPANY
Cliffs Drilling Company is an international contract drilling and
engineering company. The Company is primarily engaged in daywork drilling,
engineering services, and to a lesser extent, the development and operation of
mobile offshore production units ("MOPUs"). The Company has historically
deployed its assets in areas where it can achieve long-term growth and generate
stable cash flows and net income. This strategy has led to five consecutive
years of positive net income. The Company's domestic operations are concentrated
in the Texas/Louisiana Gulf Coast region and its foreign operations are
concentrated in Venezuela and the Middle East. The Company owns 14 jack-up
drilling rigs, 11 land rigs and 5 MOPUs.
The Company and its predecessors have been in the contract drilling
business since 1978. The Company entered the turnkey drilling business in 1982
in an effort to more fully utilize its existing fleet of rigs and complement its
daywork drilling operations. In response to the economic conditions which
adversely affected the domestic contract drilling business during the 1980s, the
Company undertook a strategic plan in 1989 to further diversify its scope of
operations and geographic concentration beyond the traditional domestic daywork
drilling market. The Company's management implemented a proactive approach to
identify, develop and exploit several market segments which provided higher
margins and more reliable operating income and cash flow. To achieve its
strategic objectives, the Company continued to emphasize its turnkey drilling
operations, expanded its well engineering and management services, became a
leader in the development and operation of MOPUs and deployed its drilling rigs
into selected international markets. With the implementation of this strategy,
the Company has positioned itself to benefit from increases in drilling and
production activities in several markets worldwide.
INDUSTRY CONDITIONS
Activity in the contract drilling industry and related oil service
businesses has improved over the last two years due to increased worldwide
demand for oil and natural gas. Over the past several years, the supply of
offshore drilling rigs has declined while the demand for such rigs has
increased, resulting in the highest utilization rates since 1985. In addition,
oil and gas companies have experienced decreases in exploration and production
costs from technological advances such as increased use of 3-D seismic surveys,
advances in drill bits and completion technologies and use of new production
techniques such as MOPUs and subsea completions. In an effort to more quickly
realize the significant gas revenues attainable from shallow water drilling in
the Gulf of Mexico, oil and gas companies are producing reserves at faster
rates. These enhanced production methods increase the net present value of the
reserves produced and significantly shorten the reserve life in the Gulf of
Mexico, thereby necessitating additional drilling. In addition, the U.S. natural
gas market has improved after experiencing weak market conditions throughout the
early 1990s. All of these factors have resulted in increased demand for offshore
drilling rigs and an increase in both utilization and dayrates for jack-up
drilling rigs. Management believes the current market dynamics in the Gulf of
Mexico, South America, the Middle East and other international areas will result
in greater utilization of the Company's rigs and services.
COMPANY STRATEGY
The Company's management has adopted a proactive approach to identify,
develop and exploit 3 market segments which the Company believes provide higher
margins and reliable operating income and cash flow. In addition, the Company
has sought to identify business opportunities that would expand its asset base,
increase profitability and enhance shareholder value. The Company's acquisition
criteria include, among others,
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transactions designed to increase operating leverage and diversify
geographically. The Company's 3 primary business segments are daywork drilling,
engineering services and MOPU operations.
Daywork Drilling. The Company began operations as a daywork contract
driller in the Gulf of Mexico and the Texas/Louisiana Gulf Coast region. Because
of depressed conditions in the domestic oil and gas industry during the 1980s
and early 1990s, the Company sold certain drilling rigs and deployed its
remaining rigs into selected international markets. These strategic decisions
were made to enable the Company to stabilize cash flows during an extended
market downturn. The Company currently has an established base of term contracts
in both drilling and production operations. The Company currently operates 8
land rigs in Venezuela, 8 jack-up rigs in the Gulf of Mexico, 2 jack-up rigs in
each of Venezuela and Qatar and one jack-up rig in each of Trinidad and Mexico.
In addition, the Company leases and has recently elected to exercise an option
to purchase a platform drilling rig which is currently operating in Brazil. Of
the Company's 14 jack-up rigs currently operated, 13 are cantilevered, 7 have
top drives and substantially all have been refurbished in the last five years.
Engineering Services. Turnkey drilling has been a key element in the
Company's long-term strategy since 1982. The Company believes that its downhole
engineering expertise, extensive operating experience, veteran personnel and
risk management capabilities have allowed the Company to reduce the risks
inherent in turnkey drilling operations. From 1982 through June 30, 1997, the
Company completed 277 turnkey drilling contracts with aggregate revenues of
$738.9 million, direct income before depreciation and allocated overhead of
$100.2 million and operating income of $70.3 million. The Company also began
providing well engineering and management services during 1993 as an expansion
of this business segment. Under these arrangements, the Company is responsible
for well design and well site supervision.
MOPU Operations. Since 1989, the Company has pioneered the development and
operation of MOPUs, which allow the Company to participate in the more stable
oil and gas production market. MOPUs are offshore production systems, usually
converted jack-up rigs, from which the drilling equipment is removed and
production equipment is installed. MOPUs generally are contracted on a term
basis for several years and are characterized by relatively high operating
margins, with most of the costs assumed by the customer. The Company currently
owns 5 MOPUs capable of operating in both domestic and foreign waters. Of the 5
MOPUs owned by the Company, 3 are currently working in the Gulf of Mexico and 2
are working internationally. Two of the MOPUs, the LANGLEY and CLIFFS DRILLING
10, are under term bareboat charters, pursuant to which the charterers have an
option to purchase the respective rigs at certain times and under certain
conditions.
The Company is a Delaware corporation with principal executive offices
located at 1200 Smith Street, Suite 300, Houston, Texas 77002 and its telephone
number is (713) 651-9426.
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<PAGE> 9
THE PRIVATE PLACEMENT
The Old Notes were sold by the Company on August 7, 1997 to the Initial
Purchasers and were thereupon offered and sold by the Initial Purchasers only to
certain qualified institutional buyers. The net proceeds to the Company from the
sale of the Old Notes was approximately $53.2 million, after deducting expenses.
The Company has used approximately $6 million of the net proceeds to acquire
substantially all of the remaining 50% interest of a Trinidad and Tobago joint
venture (the "WINDJV"), which owns the jackup drilling rig SOUTHWESTERN MARINE
4, and approximately $5.7 million to repay indebtedness owed by the WINDJV. The
Company intends to use approximately $4.3 million to purchase a platform
drilling rig in Brazil which is currently leased by the Company, and the
remainder to acquire additional assets, refurbish and renovate a portion of its
existing rig fleet and for other general corporate purposes. See
"Capitalization."
THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $50,000,000 principal
amount of Exchange Notes for up to $50,000,000 principal amount of Old Notes.
The form and terms of the Exchange Notes are identical in all material respects
to the form and terms of the Old Notes except that the Exchange Notes have been
registered under the Securities Act and will not contain certain transfer
restrictions and hence are not entitled to the benefits of the Registration
Rights Agreement relating to the contingent increases in the interest rate
provided for pursuant thereto. The Exchange Notes will evidence the same debt as
the Old Notes and will be issued under and be entitled to the benefits of the
Indenture governing the Old Notes. See "Description of Exchange Notes."
The Exchange Offer......... Each $1,000 principal amount of Exchange Notes will
be issued in exchange for each $1,000 principal
amount of outstanding Old Notes. As of the date
hereof, $50,000,000 principal amount of Old Notes
are issued and outstanding. The Company will
issue the Exchange Notes to tendering holders of
Old Notes on or promptly after the Expiration
Date.
Resale..................... The Company believes that the Exchange Notes issued
pursuant to the Exchange Offer generally will be
freely transferable by the holders thereof
without registration or any prospectus delivery
requirement under the Securities Act, except for
certain Restricted Holders who may be required to
deliver copies of this Prospectus in connection
with any resale of the Exchange Notes issued in
exchange for such Old Notes. See "The Exchange
Offer -- General" and "Plan of Distribution."
Expiration Date............ 5:00 p.m., New York City time, on October , 1997,
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date to which the Exchange Offer is extended. See
"The Exchange Offer -- Expiration Date;
Extensions; Amendments."
Interest on the Notes...... The Exchange Notes will bear interest payable
semi-annually on May 15 and November 15 of each
year, commencing November 15, 1997, assuming the
Exchange Offer is consummated prior to the record
date in respect of such interest payment. Holders
of Exchange Notes of record on November 1, 1997
will receive interest on November 15, 1997 from
the date of issuance of the Exchange Notes, plus
an amount equal to the accrued interest on the
Old Notes from the date of issuance of the Old
Notes, August 7, 1997, to the date of exchange
thereof. Consequently, assuming the Exchange
Offer is consummated prior to the record date in
respect of the November 15, 1997 interest payment
for the Old Notes, holders who exchange their Old
Notes for
8
<PAGE> 10
Exchange Notes will receive the same interest
payment on November 15, 1997 that they would have
received had they not accepted the Exchange
Offer. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of
the Exchange Notes. See "The Exchange
Offer -- Interest on the Exchange Notes."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile,
together with the Old Notes to be exchanged and
any other required documentation to the Exchange
Agent at the address set forth herein and therein
or effect a tender of Old Notes pursuant to the
procedures for book-entry transfer as provided
for herein. See "The Exchange Offer -- Procedures
for Tendering."
Special Procedures for
Beneficial Holders......... Any beneficial holder whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender in the Exchange Offer
should contact such registered holder promptly
and instruct such registered holder to tender on
the beneficial holder's behalf. If such
beneficial holder wishes to tender directly, such
beneficial holder must, prior to completing and
executing the Letter of Transmittal and
delivering the Old Notes, either make appropriate
arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly
completed bond power from the registered holder.
The transfer of record ownership may take
considerable time. See "The Exchange
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes
and a properly completed Letter of Transmittal or
any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely
basis, may tender their Old Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
business day prior to the Expiration Date, unless
previously accepted for exchange. See "The
Exchange Offer -- Withdrawal of Tenders."
Termination of the Exchange
Offer.................... The Company may terminate the Exchange Offer if it
determines that the Exchange Offer violates any
applicable law or interpretation of the staff of
the SEC. Holders of Old Notes will have certain
rights against the Company under the Registration
Rights Agreement should the Company fail to
consummate the Exchange Offer. See "The Exchange
Offer -- Termination" and "Registration Rights
Agreement."
9
<PAGE> 11
Acceptance of Old Notes and
Delivery of Exchange
Notes.................... Subject to certain conditions (as summarized above
in "Termination of the Exchange Offer" and
described more fully in "The Exchange
Offer -- Termination"), the Company will accept
for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The Exchange Notes issued pursuant to the
Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- General."
Exchange Agent............. State Street Bank and Trust Company is serving as
exchange agent (the "Exchange Agent") in
connection with the Exchange Offer. The mailing
address of the Exchange Agent is: State Street
Bank and Trust Company, Corporate Trust
Department, P.O. Box 778, Boston, Massachusetts
02102-0078. Hand deliveries and deliveries by
overnight courier should be addressed to State
Street Bank and Trust Company, Corporate Trust
Department, Fourth Floor, Two International
Place, Boston, Massachusetts 02110. For
information with respect to the Exchange Offer,
the telephone number for the Exchange Agent is
(800) 531-0368 or (617) 664-5314 and the
facsimile number for the Exchange Agent is (617)
664-5232. See "The Exchange Offer -- Exchange
Agent."
Certain Tax Consequences... The exchange pursuant to the Exchange Offer will
generally not be a taxable event for federal
income tax purposes. See "Certain Federal Income
Tax Considerations."
Use of Proceeds............ There will be no cash proceeds payable to the
Company from the issuance of the Exchange Notes
pursuant to the Exchange Offer. See "Use of
Proceeds." For a discussion of the use of the net
proceeds received by the Company from the sale of
the Old Notes, see "Private Placement."
TERMS OF THE OLD NOTES AND THE EXCHANGE NOTES
Securities Offered......... $50 million principal amount of 10.25% Senior Notes
due 2003.
Maturity Date.............. May 15, 2003.
Interest Rate and Payment
Dates.................... The Notes will bear interest at a rate of 10.25%
per annum. Interest on the Notes will accrue from
the date of issuance thereof and will be payable
semi-annually in cash in arrears on May 15 and
November 15 of each year, commencing November 15,
1997.
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after May 15, 2000, at the redemption prices set
forth herein, together with accrued and unpaid
interest to the date of redemption. In the event
the Company consummates a Public Equity Offering
on or prior to May 15, 1999, the Company may at
its option use all or a portion of the proceeds
from such offering to redeem up to $12.5 million
principal amount of the Notes at a redemption
price equal to 110% of the aggregate principal
amount thereof, together with accrued and unpaid
interest to the date of redemption, provided that
at least $37.5 million in aggregate principal
10
<PAGE> 12
amount of Notes remain outstanding immediately
after such redemption. See "Description of the
Notes -- Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, each
holder of Notes will have the right to require
the Company to purchase all or a portion of such
holder's Notes at a price equal to 101% of the
aggregate principal amount thereof, together with
accrued and unpaid interest to the date of
purchase. See "Description of the
Notes -- Certain Covenants -- Change of Control."
Certain Covenants.......... The Indenture relating to the Notes contains
certain covenants, including covenants which
limit: (i) indebtedness; (ii) restricted
payments; (iii) issuances and sales of capital
stock of restricted subsidiaries; (iv)
sale/leaseback transactions; (v) transactions
with affiliates; (vi) liens; (vii) asset sales;
(viii) dividends and other payment restrictions
affecting restricted subsidiaries; (ix) conduct
of business; and (x) mergers, consolidations and
sales of assets. See "Description of the
Notes -- Certain Covenants" and "-- Merger,
Consolidation and Sale of Assets."
Guarantees................. The Notes will be unconditionally guaranteed on a
senior unsecured basis by each of the Company's
principal subsidiaries, and such Subsidiary
Guarantees will rank pari passu in right of
payment with all senior Indebtedness of the
Subsidiary Guarantors and senior to all
Subordinated Indebtedness of the Subsidiary
Guarantors. The obligations of the Subsidiary
Guarantors under the Notes will rank on a parity
with the obligations of the Subsidiary Guarantors
under the Company's outstanding 10.25% Senior
Notes due 2003, Series B (the "Series B Notes").
At August 31, 1997, the Subsidiary Guarantors had
no outstanding indebtedness other than the
Subsidiary Guarantees of the outstanding Series B
Notes and the Old Notes. The Subsidiary
Guarantees may be released under certain
circumstances. See "Description of the
Notes -- Subsidiary Guarantees of Notes."
Ranking.................... The Notes will be senior unsecured obligations of
the Company, ranking pari passu in right of
payment with all senior Indebtedness of the
Company, senior to all Subordinated Indebtedness
of the Company, and on a parity with the
Company's outstanding Series B Notes. The Notes
and the Subsidiary Guarantees, however, will be
effectively subordinated to secured Indebtedness
of the Company and the Subsidiary Guarantors,
respectively, with respect to the assets securing
such Indebtedness, including any Indebtedness
under the Revolving Credit Facility, which is
secured by liens on substantially all of the
assets of the Company and the Subsidiary
Guarantors. At August 31, 1997, the Company and
the Subsidiary Guarantors had no outstanding
indebtedness other than (i) $50 million in
principal amount of the Old Notes, (ii) $2.4
million consisting of letters of credit, and
(iii) $150 million in principal amount of the
Series B Notes. Subject to certain limitations,
the Company and its Subsidiaries may incur
additional Indebtedness in the future. See
"Description of the Notes -- Ranking."
Transfer Restrictions...... The Old Notes have not been registered under the
Securities Act and unless so registered may not
be offered or sold except pursuant to an
exemption from, or in a transaction not subject
to, the registration
11
<PAGE> 13
requirements of the Securities Act. See "Transfer
Restrictions on Old Notes." The Exchange Notes
would in general be freely tradeable after the
Exchange Offer. See "The Exchange Offer" and
"Plan of Distribution."
Exchange Offer............. Pursuant to a registration rights agreement (the
"Registration Rights Agreement") by and among the
Company, the Subsidiary Guarantors and the
Initial Purchasers, the Company agreed (i) to
file a registration statement with the SEC (the
"Exchange Offer Registration Statement") with
respect to the Exchange Offer to exchange Old
Notes for Exchange Notes within 60 days after the
date of original issuance of the Old Notes (which
was August 7, 1997) and (ii) to use its best
efforts to cause such registration statement to
become effective under the Securities Act within
120 days after such issue date. The Registration
Statement of which this Prospectus is a part
constitutes such Exchange Offer Registration
Statement. In the event that applicable law or
interpretations of the staff of the SEC do not
permit the Company to file the Exchange Offer
Registration Statement or to effect the Exchange
Offer, or if certain holders of the Notes notify
the Company that they are not permitted to
participate in, or would not receive freely
tradeable Notes pursuant to, the Exchange Offer,
the Company will use its best efforts to cause to
become effective a registration statement (the
"Shelf Registration Statement") with respect to
the resale of the Notes and to keep the Shelf
Registration Statement effective until two years
after the date of original issuance of the Notes.
The interest rate on the Notes is subject to
increase under certain circumstances if the
Company is not in compliance with its obligations
under the Registration Rights Agreement. See
"Registration Rights Agreement."
RISK FACTORS
An investment in the Notes involves certain risks that a potential investor
should carefully evaluate prior to making an investment in the Notes. See "Risk
Factors."
12
<PAGE> 14
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
The following table sets forth selected historical consolidated financial
information of the Company and should be read in conjunction with the
Consolidated Financial Statements of the Company, including the notes thereto,
and Management's Discussion and Analysis of Financial Condition and Results of
Operations, incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues............................................... $83,693 $83,289 $133,109 $ 42,856 $121,346
Costs and Expenses:
Operating Expenses................................... 50,907 67,713 91,984 30,073 71,885
Depreciation, Depletion and Amortization............. 14,008 7,271 10,388 3,177 8,359
Contract Termination Provision....................... 5,193 -- -- -- --
General and Administrative Expense................... 5,114 5,289 6,300 2,814 4,159
------- ------- -------- -------- --------
Operating Income....................................... 8,471 3,016 24,437 6,792 36,943
Other Income (Expense)(1).............................. (2,415) 2,430 (10,015) (1,107) (16,357)
------- ------- -------- -------- --------
Net Income............................................. 6,056 5,446 14,422 5,685 20,586
Dividends Applicable to Preferred Stock(2)............. (2,659) (2,659) (31) (31) --
------- ------- -------- -------- --------
Net Income Applicable to Common and Common Equivalent
Shares............................................... $ 3,397 $ 2,787 $ 14,391 $ 5,654 $ 20,586
======= ======= ======== ======== ========
Net Income Per Share(3)................................ $ 0.40 $ 0.34 $ 1.04 $ 0.44 $ 1.34
======= ======= ======== ======== ========
Weighted Average Number of Common and Common Equivalent
Shares Outstanding(2)(3)............................. 8,446 8,216 13,852 12,726 15,365
OTHER FINANCIAL DATA:
EBITDA(4).............................................. $26,873 $15,322 $ 41,071 $ 13,509 $ 47,816
Capital Expenditures................................... $ 9,100 $13,437 $144,504 $118,621 $ 76,341
Ratio of EBITDA to Total Interest(5)................... 32.5x 77.0x 4.1x 7.5x 5.8x
Ratio of Earnings to Fixed Charges(5).................. 8.7x 31.8x 3.0x 5.6x 4.7x
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 AT JUNE 30, 1997
---------------------------- -------------------
<S> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Cash and Cash Equivalents.............................. $ 39,181 $ 2,702
Other Working Capital.................................. 29,040 33,314
Property and Equipment, Net............................ 216,474 282,456
Total Assets........................................... 339,546 372,627
10.25% Senior Notes.................................... 150,000 150,000
Total Shareholders' Equity(2)(6)....................... $142,168 $163,311
</TABLE>
- ---------------
(1) Includes items of other income and expense, interest expense and income
taxes. Includes net exchange rate losses of $1.2 million in 1994, net gains
on disposition of assets of $2.7 million and net exchange rate gains of $2.6
million in 1995, net gains on disposition of assets of $3.7 million in 1996
and net gains on disposition of assets of $2.6 million and $2.5 million in
the first six months of 1996 and 1997, respectively.
(2) On January 17, 1996, the Company issued 2,113,557 shares of Common Stock,
before effects of the Stock Split (as defined), upon conversion of 1,115,988
shares of its 1,150,000 outstanding shares of $2.3125 Convertible
Exchangeable Preferred Stock (the "Preferred Stock"). The remaining 34,012
shares were redeemed for cash in the amount of $25.69 per share plus $0.22
per share in accrued dividends thereon at a cost to the Company of
approximately $.9 million.
(3) On June 9, 1997, the Company effected a two-for-one stock split in the form
of a 100% stock dividend to holders of record on May 22, 1997 (the "Stock
Split"). All references to the weighted average number of common and common
equivalent shares outstanding and per share amounts have been restated to
reflect the Stock Split, unless otherwise indicated.
(4) EBITDA represents net income before depreciation, depletion, amortization,
contract termination provision, interest expense and income taxes. EBITDA is
frequently used by securities analysts and is presented here to provide
additional information about the Company's operations. EBITDA is not a
measurement presented in accordance with generally accepted accounting
principles ("GAAP") and should not be considered as an alternative to net
income as a measure of operating results or as an alternative to operating
cash flows as a better measure of liquidity.
(5) For purposes of these calculations, earnings consist of income before income
taxes plus fixed charges, excluding capitalized interest. Total interest
consists of interest expense plus capitalized interest. Fixed charges
consist of interest expense, including capitalized interest, and a portion
of rent considered to represent interest cost.
(6) The Company has not paid any cash dividends on its Common Stock.
13
<PAGE> 15
RISK FACTORS
In addition to the other information set forth elsewhere in this Prospectus
and the documents incorporated herein by reference, the following factors should
be carefully evaluated prior to making an investment in the Notes:
RELIANCE ON OIL AND GAS INDUSTRY
Demand for the Company's services depends primarily upon the level of
spending by oil and gas companies for exploration, development and production
activities. Activity in the contract drilling industry and related oil service
businesses was severely depressed from 1982 until 1992 due to volatility in oil
prices and depressed natural gas prices. As demonstrated during this period, any
prolonged reduction in oil and natural gas prices will depress the level of
exploration, development and production activity and result in a corresponding
decline in the demand for the Company's services and, therefore, have a material
adverse effect on the Company's revenues and profitability. It is not possible
to predict whether contract drilling rig utilization and dayrates will maintain
levels sufficient to ensure acceptable operating results in future periods. The
Company's future success will depend in part upon general economic conditions in
the oil and gas industry, which cannot be predicted with certainty.
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. The Company has
many competitors in all of the regions in which it operates, some of which have
substantially greater financial and other resources than the Company.
SUBSTANTIAL INDEBTEDNESS AND RESTRICTIONS
The Company has substantial indebtedness. At August 31, 1997, the Company
had $202.4 million of outstanding indebtedness, consisting of (i) $50 million in
principal amount of the Old Notes, (ii) $2.4 million consisting of letters of
credit and (iii) $150 million in principal amount of the Series B Notes. The
Company's level of indebtedness will have several important effects on its
future operations, including (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes, (ii) covenants
contained in the Indenture relating to the Notes (the "Indenture"), the Series
A/B Indenture (as defined) or the Revolving Credit Facility will require the
Company to meet certain financial tests, and other restrictions will limit its
ability to borrow additional funds or to dispose of assets and may affect the
Company's flexibility in planning for, and reacting to, changes in its business,
including possible acquisition activities, and (iii) the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate or other purposes may be impaired.
The Company's ability to meet its debt service obligations and to reduce its
total indebtedness will be dependent upon the Company's future performance,
which will be subject to general economic conditions and to financial, business
and other factors affecting the operations of the Company, many of which are
beyond its control. There can be no assurance that the Company's business will
continue to generate cash flow at or above current levels. If the Company is
unable to generate sufficient cash flow from operations in the future to service
its debt, it may be required to refinance all or a portion of its Indebtedness,
including the Notes, or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any additional
financing could be obtained.
EFFECTIVE SUBORDINATION
The Company has established a Revolving Credit Facility pursuant to which
it may currently borrow up to $35 million on a revolving credit basis. The
Revolving Credit Facility is secured by liens on substantially all of the assets
of the Company and the Subsidiary Guarantors. Accordingly, the lender under the
Revolving Credit Facility will have claims with respect to the assets
constituting collateral for any Indebtedness thereunder that will be prior to
the claims of holders of the Notes. See "Description of Existing Indebtedness."
In the event of a default on the Notes, or a bankruptcy, liquidation or
reorganization of the Company, such assets will be available to satisfy
obligations with respect to the Indebtedness secured thereby before any payment
therefrom could be made on the Notes. Thus, the Notes and the Subsidiary
Guarantees will be
14
<PAGE> 16
effectively subordinated to claims of the lender under the Revolving Credit
Facility to the extent of such pledged collateral. As of August 31, 1997, no
Indebtedness was outstanding under the Revolving Credit Facility.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL OR ASSET SALES
Upon the occurrence of a Change of Control, the Company must offer to
purchase all Notes then outstanding at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest to the date of
purchase. In addition, upon the occurrence of a Change of Control, the Company
must offer to purchase all Series B Notes then outstanding at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid interest
to the date of purchase. In the event of certain sales or dispositions of
assets, the Company may be required under certain limited circumstances to use
the Excess Proceeds (as defined) to effect a Net Proceeds Offer (as defined).
See "Description of the Notes -- Certain Covenants -- Change of
Control; -- Limitation on Asset Sales."
The events that constitute a Change of Control or require a Net Proceeds
Offer under the Indenture may result in lenders under the Revolving Credit
Facility having the right to require the Company to repay all Indebtedness
outstanding thereunder. There can be no assurance that the Company will have
available funds sufficient to repay all Indebtedness owing under the Revolving
Credit Facility, to fund the purchase of the Notes or the Series B Notes upon a
Change of Control or to make a Net Proceeds Offer. In the event a Change of
Control occurs at a time when the Company does not have available funds
sufficient to pay for all of the Notes delivered by Holders seeking to accept
the Company's repurchase offer, an Event of Default would occur under the
Indenture.
OPERATING HISTORY AND WORKING CAPITAL NEEDS
The Company was not profitable from 1988 through 1991 as a result of
depressed economic conditions in the oil and gas and oilfield service
industries. To the extent that cash in excess of cash on hand and cash generated
from operations is needed in the near term for working capital and capital
expenditures, it is expected that the Company would draw on the Revolving Credit
Facility or seek other debt or equity financing in the private or public
markets. Additional liquidity might also be generated through the sale of
operating assets or through the reduction of capital expenditures, although any
such sale or reduction may have an adverse effect on the Company's results of
operations. The ability of the Company to sell debt or equity securities or
assets would depend on conditions then prevailing in the relevant market and, in
the case of any offering of debt or equity securities, the Company's results of
operations, financial condition and business prospects. There can be no
assurance that the Company could, if the need arose, effect any such sale of
debt or equity securities or assets on terms that were acceptable to the
Company. In addition, the Indenture limits the ability of the Company to incur
additional Indebtedness or to enter into mergers, asset sales or consolidations.
See "Description of the Notes -- Certain Covenants" and "-- Merger,
Consolidation and Sale of Assets."
RISKS ASSOCIATED WITH TURNKEY DRILLING
Under a turnkey drilling contract, the Company contracts to drill a well to
a contract depth under specified conditions for a fixed price. In addition, the
Company provides technical expertise and engineering services, as well as most
of the equipment required for the well, and is compensated when the contract
terms have been satisfied. On a turnkey well, the Company from time to time
operates rigs subcontracted from other drilling contractors on a dayrate basis.
The Company also subcontracts substantially all of the related services and
manages the drilling process. The risks to the Company on a turnkey drilling
contract are substantially greater than on a well drilled on a daywork basis
because the Company assumes most of the risks associated with drilling
operations generally assumed by the operator in a daywork contract, including
risk of blowout, loss of hole, stuck drill stem, lost production or damage to
the reservoir, machinery breakdowns, abnormal drilling conditions and risks
associated with subcontractors' services, supplies and personnel. The Company
has obtained insurance coverage in the past to reduce these risks inherent in
turnkey drilling operations. Should such coverage not be available in the
future, it would have a material adverse effect on the Company's turnkey
drilling operations. See "-- Risks and Insurance."
15
<PAGE> 17
RISKS AND INSURANCE
The Company's operations are subject to the many hazards inherent in the
drilling business, including, for example, blowouts, cratering, fires,
explosions and adverse weather and seas. These hazards could cause personal
injury, suspend drilling operations or seriously damage or destroy the equipment
involved and could cause substantial damage to producing formations and
surrounding areas. Damage to the environment could also result from the
Company's operations, particularly through oil spillage and extensive,
uncontrolled fires. As a protection against operating hazards, the Company
maintains broad insurance coverage, including all risks physical damage,
employer's liability, comprehensive general liability and workers' compensation
insurance. The Company's third party liability insurance coverage is
approximately $100 million per occurrence. The Company also maintains insurance
coverage on an annual basis to protect against certain hazards inherent in its
turnkey contract drilling and oil and gas operations. This insurance was most
recently renewed on June 1, 1996, and is scheduled for renewal on October 1,
1997. The Company believes that it is adequately insured for public liability
and property damage to others with respect to its operations. However, such
insurance may not be sufficient to protect the Company against liability for all
consequences of well disasters, extensive fire damage or damage to the
environment. The Company also carries insurance to cover physical damage to or
loss of its drilling rigs and MOPUs. In view of difficulties that may be
encountered in renewing such insurance at reasonable rates, no assurance can be
given that the Company will be able to maintain the type and amount of coverage
that it considers adequate. The occurrence of a significant event for which the
Company is not fully insured could have a material adverse effect on the
Company's financial position and results of operations.
RISKS INHERENT IN FOREIGN OPERATIONS
A significant percentage of the Company's revenues is derived from foreign
sources or from services performed abroad. For the fiscal year ended December
31, 1996, 55% of the Company's consolidated revenues was derived from foreign
operations, principally in Venezuela. Foreign operations and export sales are
subject in varying degrees to risks inherent in doing business abroad. Such
risks include the possibility of unfavorable changes in tax or other laws;
partial or total expropriation; currency exchange rate fluctuations and
restrictions on currency repatriation; the disruption of operations from labor
and political disturbances, insurrection or war; and the requirements of partial
local ownership of operations in certain countries. Foreign governments may from
time to time suspend or curtail drilling operations or leasing activities when
such operations are considered to be detrimental to the environment or to
jeopardize public safety.
RELIANCE ON SIGNIFICANT CUSTOMERS
The Company's largest customer for the year ended December 31, 1996,
Corpoven, S.A.("Corpoven"), accounted for approximately 31% of the Company's
consolidated revenues. The Company's 3 largest customers for the year ended
December 31, 1995, Corpoven, Maraven, S.A. ("Maraven") and Texaco Exploration &
Production, Inc. accounted for approximately 66% of the Company's consolidated
revenues. The Company's 4 largest customers for the year ended December 31,
1994, Corpoven, Maraven, Dresser-Rand Company and Cliffs Neddrill Central
Turnkey International, a joint venture in which the Company has a 1/3 ownership
interest, accounted for approximately 78% of the Company's consolidated
revenues. The loss of any significant customer could, at least on a short term
basis, have a material adverse impact on the Company's results of operations.
GOVERNMENT REGULATION
The drilling of oil and gas wells is subject to various federal, state,
local and foreign laws, rules and regulations. The Company, as an owner or
operator of domestic offshore facilities, may be liable for the costs of removal
and damages arising out of a pollution incident to the extent set forth in the
Federal Water Pollution Control Act, as amended by the U.S. Oil Pollution Act of
1990 ("OPA '90") and the Outer Continental Shelf Lands Act. In addition, the
Company may also be subject to other civil claims arising out of any such
incident. Certain of the Company's facilities are also subject to regulations of
the Environmental Protection Agency ("EPA") that require the preparation and
implementation of spill prevention control and
16
<PAGE> 18
countermeasure plans relating to possible discharge of oil into navigable
waters. The Company supplements its activities in this regard by membership in
the Clean Gulf Association, which provides pollution control facilities to its
members. Other regulations of the EPA may require the Company to take certain
precautions in storing, handling and transporting certain hazardous wastes.
State statutory provisions relating to oil and natural gas generally include
requirements as to well spacing, waste prevention, production limitations,
pollution prevention and clean-up, obtaining drilling permits and similar
matters. The Company believes that it is in compliance in all material respects
with such laws, rules and regulations and that such compliance has not had any
material adverse effect on its operations or financial condition.
The drilling industry is dependent on the demand for services from the oil
and gas exploration industry and, accordingly, is affected by changing tax laws,
price controls and other laws relating to the energy business. The Company's
business is affected generally by political developments and by federal, state,
local and foreign laws, rules and regulations which may relate directly to the
oil and gas industry. The adoption of laws, rules and regulations, both domestic
and foreign, which curtail exploration and development drilling for oil and gas
for economic, environmental and other policy reasons may adversely affect the
Company's operations by limiting available drilling and production
opportunities.
MOPUs and MOPU operations are subject to certain federal, state, local and
foreign laws, rules and regulations relating to engineering, design, structural,
safety, operational and inspection standards or requirements, and changes in
such standards or requirements could adversely affect the Company's MOPU
operations.
FRAUDULENT CONVEYANCE
Various fraudulent conveyance laws enacted for the protection of creditors
may apply to the Subsidiary Guarantors' issuance of the Subsidiary Guarantees.
To the extent that a court were to find that (x) a Subsidiary Guarantee was
incurred by a Subsidiary Guarantor with intent to hinder, delay or defraud any
present or future creditor or the Subsidiary Guarantor contemplated insolvency
with a design to prefer one or more creditors to the exclusion in whole or in
part of others or (y) a Subsidiary Guarantor did not receive fair consideration
or reasonably equivalent value for issuing its Subsidiary Guarantee and such
Subsidiary Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of
the issuance of such Subsidiary Guarantee, (iii) was engaged or about to engage
in a business or transaction for which the remaining assets of such Subsidiary
Guarantor constituted unreasonably small capital to carry on its business or
(iv) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, the court could avoid or subordinate
such Subsidiary Guarantee in favor of the Subsidiary Guarantor's creditors.
Among other things, a legal challenge of a Subsidiary Guarantee on fraudulent
conveyance grounds may focus on the benefits, if any, realized by the Subsidiary
Guarantor as a result of the issuance by the Company of the Notes. The Indenture
contains a savings clause, which generally limits the obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee to the maximum amount as
will, after giving effect to all of the liabilities of such Subsidiary
Guarantor, result in such obligations not constituting a fraudulent conveyance.
To the extent a Subsidiary Guarantee of any Subsidiary Guarantor was avoided as
a fraudulent conveyance or held unenforceable for any other reason, holders of
the Notes would cease to have any claim against such Subsidiary Guarantor and
would be creditors solely of the Company and any Subsidiary Guarantor whose
Subsidiary Guarantee was not avoided or held unenforceable. In such event, the
claims of the holders of the Notes against the issuer of an invalid Subsidiary
Guarantee would be subject to the prior payment of all liabilities of such
Subsidiary Guarantor. There can be no assurance that, after providing for all
prior claims, there would be sufficient assets to satisfy the claims of the
holders of the Notes relating to any avoided portions of any of the Subsidiary
Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any such proceeding. Generally, however,
a Subsidiary Guarantor may be considered insolvent if the sum of its debts,
including contingent liabilities, was greater than the fair marketable value of
all of its assets at a fair valuation or if the present fair marketable value of
its assets was less than the amount that would be required to pay its probable
liability on its existing debts, including contingent liabilities, as they
become absolute and mature.
17
<PAGE> 19
Based upon financial and other information, the Company and the Subsidiary
Guarantors believe that the Subsidiary Guarantees are being incurred for proper
purposes and in good faith and that the Company and each Subsidiary Guarantor is
solvent and will continue to be solvent after issuing its Subsidiary Guarantee,
will have sufficient capital for carrying on its business after such issuance
and will be able to pay its debts as they mature. There can be no assurance,
however, that a court passing on such standards would agree with the Company.
See "Description of the Notes -- Subsidiary Guarantees of Notes."
ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to the liquidity of
any markets that may develop for the Exchange Notes or, the ability or price at
which the holders of Exchange Notes would be able to sell their Exchange Notes.
Future trading prices of the Exchange Notes will depend on many factors,
including, among others, prevailing interest rates, the Company's operating
results and the market for similar securities. The Company does not intend to
apply for listing of the Exchange Notes on any securities exchange or to seek
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. The Initial Purchasers have informed the Company
that they currently intend to make a market for the Exchange Notes. However,
they are not so obligated, and any such market making may be discontinued at any
time without notice. In addition, such market making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer or the pendency of the Shelf Registration Statement.
Accordingly, no assurance can be given that an active public or other market
will develop for the Exchange Notes or as to the liquidity of or the trading
market for the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Untendered Old Notes not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain subject to the existing restrictions upon transfer of
such Old Notes. See "Transfer Restrictions on Old Notes." Because the Company
anticipates that most holders of Old Notes will elect to exchange such Old Notes
for Exchange Notes due to the general lack of restrictions on the resale of
Exchange Notes under the Securities Act, the Company anticipates that the
liquidity of the market for any Old Notes remaining after the consummation of
the Exchange Offer may be substantially limited. Additionally, holders (other
than Restricted Holders) of any Old Notes not tendered in the Exchange Offer
prior to the Expiration Date will not be entitled to require the Company to file
the Shelf Registration Statement and the stated interest rate on such Old Notes
will remain at its initial level of 10.25%. See "Registration Rights Agreement."
DIFFICULTY TO EFFECT A CHANGE IN CONTROL
The Company's Certificate of Incorporation and Bylaws and the provisions of
the Delaware General Corporation Law limit the liability of directors and make
it more difficult to change control of the Company and replace incumbent
management. Also, the Indenture requires the Company to offer to redeem the
Notes upon a change of control (as defined therein). See "Description of the
Notes -- Certain Covenants -- Change of Control."
18
<PAGE> 20
THE COMPANY
Cliffs Drilling Company is an international contract drilling and
engineering company. The Company is primarily engaged in daywork drilling,
engineering services, and to a lesser extent, the development and operation of
mobile offshore production units. The Company has historically deployed its
assets in areas where it can achieve long-term growth and generate stable cash
flows and net income. This strategy has led to five consecutive years of
positive net income. The Company's domestic operations are concentrated in the
Texas/ Louisiana Gulf Coast region and its foreign operations are concentrated
in Venezuela and the Middle East. The Company owns 14 jack-up drilling rigs, 11
land rigs and 5 MOPUs.
The Company and its predecessors have been in the contract drilling
business since 1978. The Company entered the turnkey drilling business in 1982
in an effort to more fully utilize its existing fleet of rigs and complement its
daywork drilling operations. In response to the economic conditions which
adversely affected the domestic contract drilling business during the 1980s, the
Company undertook a strategic plan in 1989 to further diversify its scope of
operations and geographic concentration beyond the traditional domestic daywork
drilling market. The Company's management implemented a proactive approach to
identify, develop and exploit several market segments which provided higher
margins and more reliable operating income and cash flow. To achieve its
strategic objectives, the Company continued to emphasize its turnkey drilling
operations, expanded its well engineering and management services, became a
leader in the development and operation of MOPUs and deployed its drilling rigs
into selected international markets. With the implementation of this strategy,
the Company has positioned itself to benefit from increases in drilling and
production activities in several markets worldwide.
INDUSTRY CONDITIONS
Activity in the contract drilling industry and related oil service
businesses has improved over the last two years due to increased worldwide
demand for oil and natural gas. Over the past several years, the supply of
offshore drilling rigs has declined while the demand for such rigs has
increased, resulting in the highest utilization rates since 1985. In addition,
oil and gas companies have experienced decreases in exploration and production
costs from technological advances such as increased use of 3-D seismic surveys,
advances in drill bits and completion technologies and use of new production
techniques such as MOPUs and subsea completions. In an effort to more quickly
realize the significant gas revenues attainable from shallow water drilling in
the Gulf of Mexico, oil and gas companies are producing reserves at faster
rates. These enhanced production methods increase the net present value of the
reserves produced and significantly shorten the reserve life in the Gulf of
Mexico, thereby necessitating additional drilling. In addition, the U.S. natural
gas market has improved after experiencing weak market conditions throughout the
early 1990s. All of these factors have resulted in increased demand for offshore
drilling rigs and an increase in both utilization and dayrates for jack-up
drilling rigs. Management believes the current market dynamics in the Gulf of
Mexico, South America, the Middle East and other international areas will result
in greater utilization of the Company's rigs and services.
COMPANY STRATEGY
The Company's management has adopted a proactive approach to identify,
develop and exploit 3 market segments which the Company believes provide higher
margins and reliable operating income and cash flow. In addition, the Company
has sought to identify business opportunities that would expand its asset base,
increase profitability and enhance shareholder value. The Company's acquisition
criteria include, among others, transactions designed to increase operating
leverage and diversify geographically. The Company's 3 primary business segments
are daywork drilling, engineering services and MOPU operations.
Daywork Drilling. The Company began operations as a daywork contract
driller in the Gulf of Mexico and the Texas/Louisiana Gulf Coast region. Because
of depressed conditions in the domestic oil and gas industry during the 1980s
and early 1990s, the Company sold certain drilling rigs and deployed its
remaining rigs into selected international markets. These strategic decisions
were made to enable the Company to stabilize cash flows during an extended
market downturn. The Company currently has an established base of
19
<PAGE> 21
term contracts in both drilling and production operations. The Company currently
operates 8 land rigs in Venezuela, 8 jack-up rigs in the Gulf of Mexico, 2
jack-up rigs in each of Venezuela and Qatar and one jack-up rig in each of
Trinidad and Mexico. In addition, the Company leases and has recently elected to
exercise an option to purchase a platform drilling rig which is currently
operating in Brazil. Of the Company's 14 jack-up rigs currently operated, 13 are
cantilevered, 7 have top drives and substantially all have been refurbished in
the last five years.
Engineering Services. Turnkey drilling has been a key element in the
Company's long-term strategy since 1982. The Company believes that its downhole
engineering expertise, extensive operating experience, veteran personnel and
risk management capabilities have allowed the Company to reduce the risks
inherent in turnkey drilling operations. From 1982 through June 30, 1997, the
Company completed 277 turnkey drilling contracts with aggregate revenues of
$738.9 million, direct income before depreciation and allocated overhead of
$100.2 million and operating income of $70.3 million. The Company also began
providing well engineering and management services during 1993 as an expansion
of this business segment. Under these arrangements, the Company is responsible
for well design and well site supervision.
MOPU Operations. Since 1989, the Company has pioneered the development and
operation of MOPUs, which allow the Company to participate in the more stable
oil and gas production market. MOPUs are offshore production systems, usually
converted jack-up rigs, from which the drilling equipment is removed and
production equipment is installed. MOPUs generally are contracted on a term
basis for several years and are characterized by relatively high operating
margins, with most of the costs assumed by the customer. The Company currently
owns 5 MOPUs capable of operating in both domestic and foreign waters. Of the 5
MOPUs owned by the Company, 3 are currently working in the Gulf of Mexico and 2
are working internationally. Two of the MOPUs, the LANGLEY and CLIFFS DRILLING
10, are under term bareboat charters, pursuant to which the charterers have an
option to purchase the respective rigs at certain times and under certain
conditions.
The Company is a Delaware corporation with principal executive offices
located at 1200 Smith Street, Suite 300, Houston, Texas 77002 and its telephone
number is (713) 651-9426.
20
<PAGE> 22
PRIVATE PLACEMENT
On August 7, 1997, the Company completed the private sale to the Initial
Purchasers of $50,000,000 principal amount of the Old Notes at a price of
106.375% of the principal amount thereof in a transaction not registered under
the Securities Act in reliance upon Section 4(2) of the Securities Act. The
Initial Purchasers thereupon offered and resold the Old Notes only to qualified
institutional buyers at an initial price to such purchasers of 107.75% of the
principal amount thereof. The net proceeds to the Company from the sale of the
Old Notes was approximately $53.2 million, after deducting expenses. The Company
has used approximately $6 million of the net proceeds to acquire substantially
all of the remaining 50% interest of the WINDJV, and approximately $5.7 million
to repay indebtedness owed by the WINDJV. The Company intends to use
approximately $4.3 million to purchase a platform drilling rig in Brazil which
is currently leased by the Company, and the remainder to acquire additional
assets, refurbish and renovate a portion of its existing rig fleet and for other
general corporate purposes. See "Capitalization."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Company will receive in exchange a like
principal amount of Old Notes, the terms of which are identical in all material
respects to the Exchange Notes. The Old Notes surrendered in exchange for the
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any change in capitalization
of the Company.
CAPITALIZATION
The following table sets forth as of June 30, 1997 (i) the capitalization
of the Company and (ii) the as adjusted capitalization of the Company after
giving effect to the sale of the Old Notes. The table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements,
including the notes thereto, contained in the Company's (i) Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, (ii) Quarterly Report on
Form 10-Q for the three months ended March 31, 1997, and (iii) Quarterly Report
on Form 10-Q for the three months ended June 30, 1997, incorporated by reference
in this Prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
(UNAUDITED)
(IN THOUSANDS,
EXCEPT SHARE INFORMATION)
<S> <C> <C>
Current Portion of Long-Term Debt........................... $ -- $ --
Long-Term Debt
10.25% Senior Notes due 2003 (including premium of $3.9
million, As Adjusted).................................. 150,000 203,875
Shareholders' Equity
Common Stock, $.01 Par Value, 30,000,000 Shares
Authorized, 15,663,593 Shares Issued and 15,239,973
Shares Outstanding for Actual and As Adjusted,
Respectively........................................... 157 157
Paid-in Capital............................................. 156,693 156,693
Retained Earnings........................................... 14,869 14,869
Less: Notes Receivable from Officers for Restricted Stock... (159) (159)
Restricted Stock...................................... (3,022) (3,022)
Treasury Stock, at Cost, 423,620 Shares............... (5,227) (5,227)
-------- --------
Total Shareholders' Equity........................ 163,311 163,311
-------- --------
Total Capitalization.............................. $313,311 $367,186
======== ========
</TABLE>
21
<PAGE> 23
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE INFORMATION)
The historical financial data presented below for and as of the end of the
five years ended December 31, 1996 are derived from the Company's audited
Consolidated Financial Statements. Such financial statements were audited by
Ernst & Young LLP. The information in this table should be read in conjunction
with the Consolidated Financial Statements of the Company, including the notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations, incorporated herein by reference.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues................................. $76,838 $65,538 $83,693 $83,289 $133,109 $ 42,856 $121,346
Costs and Expenses:
Operating Expenses..................... 57,646 35,171 50,907 67,713 91,984 30,073 71,885
Depreciation, Depletion and
Amortization......................... 12,883 17,438 14,008 7,271 10,388 3,177 8,359
Contract Termination Provision......... -- 577 5,193 -- -- -- --
Write-down in Carrying Value of Oil and
Gas Properties....................... 1,500 -- -- -- -- -- --
General and Administrative Expense..... 4,512 4,807 5,114 5,289 6,300 2,814 4,159
------- ------- ------- ------- -------- -------- --------
Operating Income......................... 297 7,545 8,471 3,016 24,437 6,792 36,943
Other Income (Expense)(1)................ 2,721 (3,919) (2,415) 2,430 (10,015) (1,107) (16,357)
------- ------- ------- ------- -------- -------- --------
Net Income............................... 3,018 3,626 6,056 5,446 14,422 5,685 20,586
Dividends Applicable to Preferred
Stock(2)............................... (2,659) (2,659) (2,659) (2,659) (31) (31) --
------- ------- ------- ------- -------- -------- --------
Net Income Applicable to Common and
Common Equivalent Shares............... $ 359 $ 967 $ 3,397 $ 2,787 $ 14,391 $ 5,654 $ 20,586
======= ======= ======= ======= ======== ======== ========
Net Income per Share(3).................. $ 0.06 $ 0.11 $ 0.40 $ 0.34 $ 1.04 $ 0.44 $ 1.34
======= ======= ======= ======= ======== ======== ========
Weighted Average Number of Common and
Common Equivalent Shares
Outstanding(2)(3)...................... 6,514 9,028 8,446 8,216 13,852 12,726 15,365
OTHER FINANCIAL DATA:
EBITDA(4)................................ $18,766 $23,682 $26,873 $15,322 $ 41,071 $ 13,509 $ 47,816
Capital Expenditures..................... $21,878 $12,668 $ 9,100 $13,437 $144,504 $118,621 $ 76,341
Ratio of EBITDA to Total Interest(5)..... 7.1x 17.5x 32.5x 77.0x 4.1x 7.5x 5.8x
Ratio of Earnings to Fixed Charges(5).... 1.6x 4.0x 8.7x 31.8x 3.0x 5.6x 4.7x
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------- AT JUNE 30,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Working Capital........................... $ 24,830 $ 20,402 $ 19,331 $ 33,859 $ 68,221 $ 36,016
Property and Equipment, Net............... 101,178 86,506 71,248 65,950 216,474 282,456
Total Assets.............................. 150,203 133,523 120,167 128,962 339,546 372,627
10.25% Senior Notes....................... -- -- -- -- 150,000 150,000
Notes Payable, Long-Term.................. 28,348 13,108 -- -- -- --
Total Shareholders' Equity(2)(6).......... $ 71,446 $ 72,494 $ 70,881 $ 74,015 $142,168 $163,311
</TABLE>
- ---------------
(1) Includes items of other income and expense, interest expense and income
taxes. Includes net gains on disposition of assets of $5.0 million in 1992,
litigation settlement and expenses of $3.7 million in 1993, net exchange
rate losses of $1.2 million in 1994, net gains on disposition of assets of
$2.7 million and net exchange rate gains of $2.6 million in 1995, net gains
on disposition of assets of $3.7 million in 1996, and net gains on
disposition of assets of $2.6 million and $2.5 million in the first six
months of 1996 and 1997, respectively.
22
<PAGE> 24
(2) On January 17, 1996, the Company issued 2,113,557 shares of Common Stock,
before effects of the Stock Split, upon conversion of 1,115,988 shares of
its 1,150,000 outstanding shares of Preferred Stock. The remaining 34,012
shares were redeemed for cash in the amount of $25.69 per share plus $0.22
per share in accrued dividends thereon at a cost to the Company of
approximately $.9 million.
(3) On June 9, 1997, the Company effected a two-for-one Stock Split. All
references to the weighted average number of common and common equivalent
shares outstanding and per share amounts have been restated to reflect the
Stock Split, unless otherwise indicated.
(4) EBITDA represents net income before depreciation, depletion, amortization,
contract termination provision, write-down in carrying value of oil and gas
properties, interest expense and income taxes. EBITDA is frequently used by
securities analysts and is presented here to provide additional information
about the Company's operations. EBITDA is not a measurement presented in
accordance with GAAP and should not be considered as an alternative to net
income as a measure of operating results or as an alternative to operating
cash flows as a better measure of liquidity.
(5) For purposes of these calculations, earnings consist of income before income
taxes plus fixed charges, excluding capitalized interest. Total interest
consists of interest expense plus capitalized interest. Fixed charges
consist of interest expense, including capitalized interest, and a portion
of rent considered to represent interest cost.
(6) The Company has not paid any cash dividends on its Common Stock.
23
<PAGE> 25
THE EXCHANGE OFFER
GENERAL
In connection with the sale of the Old Notes, the purchasers thereof became
entitled to the benefits of certain registration rights under the Registration
Rights Agreement. The Exchange Notes are being offered hereunder in order to
satisfy the obligations of the Company under the Registration Rights Agreement.
See "Registration Rights Agreement."
For each $1,000 principal amount of Old Notes surrendered to the Company
pursuant to the Exchange Offer, the holder of such Old Notes will receive $1,000
principal amount of Exchange Notes. Upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, the
Company will accept all Old Notes properly tendered prior to 5:00 p.m., New York
City time, on the Expiration Date. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer in integral multiples of $1,000 principal
amount.
Under existing interpretations of the staff of the SEC, including Exxon
Capital Holdings Corporation, SEC No-Action Letter (available April 13, 1989),
the Morgan Stanley Letter and Mary Kay Cosmetics, Inc., SEC No-Action Letter
(available June 5, 1991), the Company believes that the Exchange Notes would in
general be freely transferable after the Exchange Offer without further
registration under the Securities Act by the respective holders thereof (other
than a Restricted Holder), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder is not participating in, and has no arrangement with any person to
participate in, the distribution (within the meaning of the Securities Act) of
such Exchange Notes. Eligible holders wishing to accept the Exchange Offer must
represent to the Company that such conditions have been met. Any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes could not rely on the interpretation by the
staff of the SEC enunciated in the Morgan Stanley Letter and similar no-action
letters, and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each holder of Old Notes who wishes to exchange Old Notes for Exchange
Notes in the Exchange Offer will be required to make certain representations,
including that (i) it is neither an affiliate of the Company nor a broker-dealer
tendering Old Notes acquired directly from the Company for its own account, (ii)
any Exchange Notes to be received by it are being acquired in the ordinary
course of its business and (iii) it is not participating in, and it has no
arrangement with any person to participate in, the distribution (within the
meaning of the Securities Act) of the Exchange Notes. In addition, in connection
with any resales of Exchange Notes, any broker-dealer (a "Participating
Broker-Dealer") who acquired Old Notes for its own account as a result of
market-making activities or other trading activities must acknowledge that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. The staff of the SEC has
taken the position in no-action letters issued to third parties including
Shearman & Sterling, SEC No-Action Letter (available July 2, 1993), that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the Exchange Notes (other than a resale of an unsold allotment
from the original sale of Old Notes) with this Prospectus, as it may be amended
or supplemented from time to time. Under the Registration Rights Agreement, the
Company is required to allow Participating Broker-Dealers to use this
Prospectus, as it may be amended or supplemented from time to time, in
connection with the resale of such Exchange Notes. See "Plan of Distribution."
The Exchange Offer shall be deemed to have been consummated upon the
earlier to occur of (i) the Company having exchanged Exchange Notes for all
outstanding Old Notes (other than Old Notes held by a Restricted Holder)
pursuant to the Exchange Offer and (ii) the Company having exchanged, pursuant
to the Exchange Offer, Exchange Notes for all Old Notes that have been tendered
and not withdrawn on the date that is 30 days following the commencement of the
Exchange Offer. In such event, holders of Old Notes seeking liquidity in their
investment would have to rely on exemptions to registration requirements under
the securities laws, including the Securities Act.
24
<PAGE> 26
As of the date of this Prospectus, $50,000,000 principal amount of Old
Notes are issued and outstanding. In connection with the issuance of the Old
Notes, the Company arranged for the Old Notes to be eligible for trading in the
Private Offering, Resale and Trading through Automated Linkages (PORTAL) Market,
the National Association of Securities Dealers' screen based, automated market
trading of securities eligible for resale under Rule 144A.
The Company shall be deemed to have accepted for exchange validly tendered
Old Notes when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. See "-- Exchange Agent." The Exchange Agent will act as
agent for the tendering holders of Old Notes for the purpose of receiving
Exchange Notes from the Company and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an invalid
tender or the occurrence of certain other events set forth herein, certificates
for any such unaccepted Old Notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after the Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"-- Fees and Expenses."
This Prospectus, together with the accompanying Letter of Transmittal, is
being sent to all registered holders as of the date of this Prospectus.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean October , 1997 unless the Company,
in its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Notes an announcement thereof, each prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that the Company is extending the
Exchange Offer for a specified period of time. The Company reserves the right
(i) to delay acceptance of any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Old Notes not previously
accepted, if any of the conditions set forth herein under "-- Termination" shall
have occurred and shall not have been waived by the Company (if permitted to be
waived by the Company), by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, and (ii) to amend the terms of
the Exchange Offer in any manner deemed by it to be advantageous to the holders
of the Old Notes. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment. Without limiting the manner in which the Company may
choose to make public announcements of any delay in acceptance, extension,
termination or amendment of the Exchange Offer, the Company shall have no
obligation to publish, advertise, or otherwise communicate any such public
announcement, other than by making a timely release to the Dow Jones News
Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest payable semi-annually on May 15 and
November 15 of each year, commencing November 15, 1997, assuming the Exchange
Offer is consummated prior to the record date in respect of such interest
payment. Holders of Exchange Notes of record on November 1, 1997 will receive
interest on November 15, 1997 from the date of issuance of the Exchange Notes,
plus an amount equal to the accrued interest on the Old Notes from the date of
issuance of the Old Notes, August 7, 1997, to the date of exchange thereof.
Consequently, assuming the Exchange Offer is consummated prior to the record
date in respect of the November 15, 1997 interest payment for the Old Notes,
holders who exchange their Old Notes for Exchange Notes will receive the same
interest payment on November 15, 1997 that they would have
25
<PAGE> 27
received had they not accepted the Exchange Offer. Interest on the Old Notes
accepted for exchange will cease to accrue upon issuance of the Exchange Notes.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. The tender by a holder of Old
Notes will constitute an agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal. Delivery of all documents must be made to the
Exchange Agent at its address set forth herein. Holders may also request that
their respective brokers, dealers, commercial banks, trust companies or nominees
effect such tender for such holders. The method of delivery of Old Notes and the
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the holders. Instead of delivery by mail, it is
recommended that holders use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Notes should be sent to the Company. Only a holder of Old
Notes may tender such Old Notes in the Exchange Offer. The term "holder" with
respect to the Exchange Offer means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed stock power from the registered holder.
Any beneficial holder whose Old Notes are registered in the name of such
holder's broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on behalf of the registered holder. If such
beneficial holder wishes to tender directly, such beneficial holder must, prior
to completing and executing the Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed bond power from the
registered holder. The transfer of record ownership may take considerable time.
If the Letter of Transmittal is signed by the record holder(s) of the Old Notes
tendered thereby, the signature must correspond with the name(s) written on the
face of the Old Notes without alteration, enlargement or any change whatsoever.
If the Letter of Transmittal is signed by a participant in DTC, the signature
must correspond with the name as it appears on the security position listing as
the holder of the Old Notes. Signatures on a Letter of Transmittal or a notice
of withdrawal, as the case may be, must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution")
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder (or by a participant in DTC whose name appears on a security position
listing as the owner) who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
and the Exchange Notes are being issued directly to such registered holder (or
deposited into the participant's account at DTC) or (ii) for the account of an
Eligible Institution. If the Letter of Transmittal is signed by a person other
than the registered holder of any Old Notes listed therein, such Old Notes must
be endorsed or accompanied by appropriate bond powers which authorize such
person to tender the Old Notes on behalf of the registered holder, in either
case signed as the name of the registered holder or holders appears on the Old
Notes. If the Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Old Notes
(or a timely confirmation received of a book-entry transfer of Old Notes into
the Exchange Agent's account at DTC) or a Notice of Guaranteed Delivery from an
Eligible Institution is received by the Exchange Agent. Issuances of Exchange
Notes in exchange for Old
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<PAGE> 28
Notes tendered pursuant to a Notice of Guaranteed Delivery by an Eligible
Institution will be made only against delivery of the Letter of Transmittal (and
any other required documents) and the tendered Old Notes (or a timely
confirmation received of a book-entry transfer of Old Notes into the Exchange
Agent's account at DTC) with the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of the Company or its counsel, be unlawful. The Company also
reserves the absolute right to waive any conditions of the Exchange Offer or
defects or irregularities in tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under any
duty to give notification of defects or irregularities with respect to tenders
of Old Notes nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the Exchange Agent to the tendering holder of such Old Notes unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date. In addition, the Company reserves the right in its sole
discretion to (i) purchase or make offers for any Old Notes that remain
outstanding subsequent to the Expiration Date, or, as set forth under
"-- Termination," to terminate the Exchange Offer and (ii) to the extent
permitted by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
may differ from the terms of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account with respect to the Old Notes
at DTC within two business days after the date of this Prospectus, and any
financial institution which is a participant in DTC may make book-entry delivery
of the Old Notes by causing DTC to transfer such Old Notes into the Exchange
Agent's account in accordance with DTC's procedure for such transfer. Although
delivery of Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must in any case be
transmitted to and received by the Exchange Agent on or prior to the Expiration
Date at one of its addresses set forth below under "-- Exchange Agent", or the
guaranteed delivery procedure described below must be complied with. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All
references in this Prospectus to deposit or delivery of Old Notes shall be
deemed to include DTC's book-entry delivery method.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and whose Old Notes are not
immediately available or who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or who cannot complete the procedure for book-entry transfer on
a timely basis, may effect a tender if: (i) the tender is made by or through an
Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Notes, the
registration number or numbers of such Old Notes (if applicable), and the total
principal amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five business days after the Expiration
Date, the Letter of Transmittal, together with the Old Notes in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange Agent's
account at DTC) and any other documents required by the Letter of Transmittal,
will be deposited by the Eligible Institution with the Exchange Agent; and (iii)
such properly completed and
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<PAGE> 29
executed Letter of Transmittal, together with the certificate(s) representing
all tendered Old Notes in proper form for transfer (or a confirmation of such a
book-entry transfer) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days after
the Expiration Date.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, certain terms and
conditions which are summarized below and are part of the Exchange Offer.
Each holder who participates in the Exchange Offer will be required to
represent that any Exchange Notes received by it will be acquired in the
ordinary course of its business, that such holder is not participating in, and
has no arrangement with any person to participate in, the distribution (within
the meaning of the Securities Act) of the Exchange Notes, and that such holder
is not a Restricted Holder.
Old Notes tendered in exchange for Exchange Notes (or a timely confirmation
of a book-entry transfer of such Old Notes into the Exchange Agent's account at
DTC) must be received by the Exchange Agent, with the Letter of Transmittal and
any other required documents, by the Expiration Date or within the time periods
set forth above pursuant to a Notice of Guaranteed Delivery from an Eligible
Institution. Each holder tendering the Old Notes for exchange sells, assigns and
transfers the Old Notes to the Exchange Agent, as agent of the Company, and
irrevocably constitutes and appoints the Exchange Agent as the holder's agent
and attorney-in-fact to cause the Old Notes to be transferred and exchanged. The
holder warrants that it has full power and authority to tender, exchange, sell,
assign and transfer the Old Notes and to acquire the Exchange Notes issuable
upon the exchange of such tendered Old Notes, that the Exchange Agent, as agent
of the Company, will acquire good and unencumbered title to the tendered Old
Notes, free and clear of all liens, restrictions, charges and encumbrances, and
that the Old Notes tendered for exchange are not subject to any adverse claims
when accepted by the Exchange Agent, as agent of the Company. The holder also
warrants and agrees that it will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment and transfer of the Old
Notes. All authority conferred or agreed to be conferred in the Letter of
Transmittal by the holder will survive the death, incapacity or dissolution of
the holder, and any obligation of the holder shall be binding upon the heirs,
personal representatives, successors and assigns of such holder.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the business day prior to
the Expiration Date, unless previously accepted for exchange. To withdraw a
tender of Old Notes in the Exchange Offer, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth herein prior to 5:00 p.m., New York City time, on the business day prior
to the Expiration Date and prior to acceptance for exchange thereof by the
Company. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn (including, if applicable, the registration number
or numbers and total principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
permit the Trustee with respect to the Old Notes to register the transfer of
such Old Notes into the name of the Depositor withdrawing the tender, (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor and (v) if applicable because the Old Notes have been
tendered pursuant to the book-entry procedures, specify the name and number of
the participant's account at DTC to be credited, if different than that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange
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<PAGE> 30
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange any Old Notes not theretofore accepted for
exchange, and may terminate the Exchange Offer if it determines that the
Exchange Offer violates any applicable law or interpretation of the staff of the
SEC.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Old Notes and return to
the holders thereof any Old Notes that have been tendered , (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration of the
Exchange Offer, subject to the rights of such holders of tendered Old Notes to
withdraw their tendered Old Notes, or (iii) waive such termination event with
respect to the Exchange Offer and accept all properly tendered Old Notes that
have not been withdrawn. If such waiver constitutes a material change in the
Exchange Offer, the Company will disclose such change by means of a supplement
to this Prospectus that will be distributed to each registered holder of Old
Notes, and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders of the Old Notes, if the Exchange Offer
would otherwise expire during such period. Holders of Old Notes will have
certain rights against the Company under the Registration Rights Agreement
should the Company fail to consummate the Exchange Offer. See "Registration
Rights Agreement."
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Fourth Floor
Boston, Massachusetts 02102-0078 Two International Place
Boston, Massachusetts 02110
Facsimile Transmission: (617) 664-5232
Confirm by Telephone: (617) 664-5314
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telegraph or telephone. The Company will not make any payments to brokers,
dealers or other persons soliciting acceptances of the Exchange Offer. The
Company, however, will pay the Exchange Agent reasonable and customary fees for
its services and will reimburse the Exchange Agent for its reasonable out-
of-pocket expenses in connection therewith. The Company may also pay brokerage
houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus,
Letters of Transmittal and related documents to the beneficial owners of the Old
Notes and in handling or forwarding tenders for exchange.
The other expenses incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees, will be paid by the Company. The Company will pay all transfer
taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange
Offer. If, however, Exchange Notes or Old Notes not tendered or accepted for
exchange are to be delivered to, or are to be registered or issued in the name
of, any person other than the registered holder of the Old Notes tendered,
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<PAGE> 31
or if tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the Company
upon the consummation of the Exchange Offer. The expenses of the Exchange Offer
will be amortized by the Company over the term of the Exchange Notes under
generally accepted accounting principles.
DESCRIPTION OF EXISTING INDEBTEDNESS
REVOLVING CREDIT FACILITY
The Company has established a credit facility (the "Revolving Credit
Facility") with ING (U.S.) Capital Corporation ("ING") to fund its working
capital requirements and other obligations and to support the issuance of
letters of credit. The Company may borrow from time to time up to $35 million
under the Revolving Credit Facility, subject to certain borrowing base
limitations. All advances to the Company under the Revolving Credit Facility
bear interest at 1/4% per annum plus the greater of the prevailing Federal
Funds Rate plus 1/2% or a referenced average prime rate; or at the adjusted
LIBOR rate plus 2% per annum. The foregoing rates are subject to an increase of
1/2% in the event certain financial criteria are not met. The Company is also
obligated to pay ING (i) a commitment fee equal to 1/2% per annum on the
average daily unadvanced portion of the commitments and (ii) a letter of credit
fee of 2% per annum on the average daily undrawn and unexpired amount of each
letter of credit during the period that sum remains outstanding. The Revolving
Credit Facility expires on May 31, 1998.
The Revolving Credit Facility is secured by accounts receivable, rig
inventory, equipment, certain oil and gas properties and the stock of certain
subsidiaries of the Company, including, but not limited to, certain of the
Subsidiary Guarantors. The Revolving Credit Facility requires the Company to
comply with various covenants including, but not limited to, the maintenance of
various financial ratios, and restricts the Company from declaring, making or
paying any dividends on its Common Stock.
At August 31, 1997, the Company had no outstanding borrowings under the
Revolving Credit Facility.
SERIES B NOTES
In May, 1996, the Company issued $150 million in principal amount of Series
A Notes (as defined), which were exchanged for Series B Notes, all of which is
outstanding as of August 31, 1997. The terms of the Notes are substantially
identical to the terms of the Series B Notes, except that the Company is
required to make a Net Proceeds Offer (as defined) to the holders of the Notes
only if Excess Proceeds (as defined) from an Asset Sale (as defined) remain
after making a Series B Net Proceeds Offer (as defined). See "Description of the
Notes -- Certain Covenants -- Limitation on Asset Sales."
DESCRIPTION OF THE NOTES
The Exchange Notes will be issued, and the Old Notes were issued, under an
indenture entered into among the Company, as issuer, Southwestern Offshore
Corporation (formerly known as Cliffs Drilling Asset Acquisition Company),
Cliffs Drilling Merger Company, Cliffs Drilling International, Inc., Cliffs Oil
and Gas Company and DRL, Inc., as Subsidiary Guarantors, and State Street Bank
and Trust Company, as trustee (the "Trustee") dated as of August 7, 1997, as
amended and supplemented by First Supplemental Indenture dated as of August 29,
1997 (such indenture, as so amended and supplemented, the "Indenture"), which
added Cliffs Drilling Trinidad Limited and West Indies Drilling Joint Venture as
Subsidiary Guarantors. Old
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<PAGE> 32
Notes were issued under the Indenture on August 7, 1997 in an aggregate
principal amount of $50,000,000. References to the Notes include the Old Notes
and the Exchange Notes unless the context otherwise requires. Upon the
effectiveness of the Exchange Offer Registration Statement, the Indenture will
be subject to and governed by the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The following summary of certain provisions of the
Indenture and of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Indenture, including the definitions of certain
terms contained therein and those terms that are made a part of the Indenture by
reference to the Trust Indenture Act and of the Registration Rights Agreement,
respectively. Copies of the Indenture and the Registration Rights Agreement are
available from the Company upon request. Capitalized terms not otherwise defined
below or elsewhere in this Prospectus have the meanings given to them in the
Indenture. The definitions of certain capitalized terms used in the following
summary are set forth below under "-- Certain Definitions."
GENERAL
The Notes will be senior unsecured obligations of the Company limited to
$50 million aggregate principal amount. The Notes will be issued only in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. Principal of, premium, if any, and interest on the Notes will
be payable, and the Notes will be transferable, at the office or agency of the
Company in the City of New York maintained for such purposes, which initially
will be the corporate trust office or agency of the Trustee maintained at State
Street Bank and Trust Company N.A., 61 Broadway, Concourse Level, New York, New
York 10006. In addition, in the event the Notes do not remain in book-entry
form, interest may be paid, at the option of the Company, by check mailed to the
registered holders of the Notes at their respective addresses as shown on the
Note Register, subject to the right of any holder of Notes in the principal
amount of $500,000 or more to request payment by wire transfer. No service
charge will be made for any transfer, exchange or redemption of the Notes, but
the Company or the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge that may be payable in connection therewith.
The obligations of the Company under the Notes will be guaranteed on a
senior unsecured basis by the Subsidiary Guarantors, and the obligations of the
Subsidiary Guarantors under the notes will rank on a parity with the obligations
of the Subsidiary Guarantors under the Company's outstanding Series B Notes. See
"-- Subsidiary Guarantees of Notes."
Any Notes that remain outstanding after the completion of the Exchange
Offer, together with the Exchange Notes issued in connection with the Exchange
Offer, will be treated as a single class of securities under the Indenture.
MATURITY, INTEREST AND PRINCIPAL PAYMENTS
The Notes will mature on May 15, 2003. Interest on the Notes will accrue
from August 7, 1997 at the rate of 10.25% per annum and will be payable
semiannually in cash in arrears on May 15 and November 15, of each year,
commencing November 15, 1997, to the Persons in whose name the Notes are
registered in the Note Register at the close of business on the May 1 or
November 1 next preceding such interest payment date. Holders of Exchange Notes
of record on November 1, 1997 will receive interest on November 15, 1997 from
the date of issuance of the Exchange Notes, plus an amount equal to the accrued
interest on the Old Notes from their date of issuance, August 7, 1997, to the
date of exchange thereof. The interest rate on the Notes is subject to increase
if the Company fails to satisfy certain provisions of the Registration Rights
Agreement. See "-- Exchange Offer; Registration Rights Agreement." Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
REDEMPTION
Optional Redemption. The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after May 15, 2000, upon not
less than 30 or more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below, plus accrued and unpaid
interest, if any,
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<PAGE> 33
to the date of redemption (subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that is
on or prior to the date of redemption), if redeemed during the 12-month period
beginning on May 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000........................................................ 105.00%
2001........................................................ 102.50%
2002 and thereafter......................................... 100.00%
</TABLE>
In the event that less than all of the Notes are to be redeemed, the
particular Notes (or any portion thereof that is an integral multiple of $1,000)
to be redeemed shall be selected not less than 30 or more than 60 days prior to
the date of redemption by the Trustee, from the outstanding Notes not previously
called for redemption, pro rata, by lot or by any other method the Trustee shall
deem fair and appropriate.
Notwithstanding the foregoing, at any time on or prior to May 15, 1999, up
to $12.5 million in aggregate principal amount of Notes will be redeemable, at
the option of the Company, upon not less than 30 or more than 60 days' notice,
from the Net Cash Proceeds of a Public Equity Offering, at a redemption price
equal to 110% of the principal amount thereof, together with accrued and unpaid
interest to the date of redemption, provided that at least $37.5 million in
aggregate principal amount of Notes remains outstanding immediately after such
redemption and that such redemption occurs within 60 days following the closing
of such Public Equity Offering.
Offers to Purchase. As described below, (a) upon the occurrence of a
Change of Control, the Company will be obligated to make an offer to purchase
all outstanding Notes at a purchase price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
purchase and (b) upon certain sales or other dispositions of assets, the Company
may be obligated to make offers to purchase Notes with a portion of the Net
Available Proceeds of such sales or other dispositions at a purchase price equal
to 100% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the date of purchase. See "-- Certain Covenants -- Change
of Control" and "-- Limitation on Asset Sales."
RANKING
The Notes will be senior unsecured obligations of the Company and will rank
pari passu in right of payment with all senior Indebtedness of the Company,
senior in right of payment to all Subordinated Indebtedness of the Company and
on a parity with the Company's outstanding Series B Notes. The Notes and the
Subsidiary Guarantees, however, will be effectively subordinated to secured
Indebtedness of the Company and the Subsidiary Guarantors, respectively, with
respect to the assets securing such Indebtedness, including any Indebtedness
under the Revolving Credit Facility, which is secured by liens on substantially
all of the assets of the Company and the Subsidiary Guarantors. At August 31,
1997, the Company and the Subsidiary Guarantors had no Indebtedness outstanding
other than (i) $50 million in principal amount of Old Notes, (ii) $2.4 million
consisting of letters of credit and (iii) $150 million in principal amount of
Series B Notes. See "Capitalization." Subject to certain limitations, the
Company and its Subsidiaries may incur additional Indebtedness in the future.
See "-- Certain Covenants -- Limitation on Indebtedness and Disqualified Capital
Stock."
SUBSIDIARY GUARANTEES OF NOTES
Each Subsidiary Guarantor will unconditionally guarantee, jointly and
severally, to each Holder and the Trustee, the full and prompt performance of
the Company's obligations under the Indenture and the Notes, including the
payment of principal of, premium, if any, and interest on the Notes pursuant to
its Subsidiary Guarantee. The Subsidiary Guarantors are currently the Company's
principal subsidiaries. In addition to the current Subsidiary Guarantors, the
Company will cause each Restricted Subsidiary that becomes, or comes into
existence as, a Restricted Subsidiary after the date of the Indenture and has
assets, businesses, divisions, real property or equipment with a fair market
value (as determined in good faith by the Board of Directors of the Company) in
excess of $1 million to execute and deliver a supplement to the Indenture
pursuant to which
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<PAGE> 34
such Restricted Subsidiary will guarantee the payment of the Notes on the same
terms and conditions as the Subsidiary Guarantees by the initial Subsidiary
Guarantors.
The Subsidiary Guarantees will be senior unsecured obligations of each
respective Subsidiary Guarantor and will rank pari passu in right of payment
with all senior Indebtedness of such Subsidiary Guarantor, senior in right of
payment to all Subordinated Indebtedness of such Subsidiary Guarantor and on a
parity with the Company's outstanding Series B Notes. However, the Subsidiary
Guarantees will be effectively subordinated to secured Indebtedness of the
Subsidiary Guarantors, with respect to the assets securing such Indebtedness,
including Indebtedness of the Subsidiary Guarantors under the Revolving Credit
Facility, which is secured by liens on substantially all of their assets. At
August 31, 1997, the Subsidiary Guarantors had no Indebtedness outstanding other
than the Subsidiary Guarantees of the Company's outstanding Series B Notes and
the Old Notes. See "Capitalization."
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into or sell or
otherwise dispose of all or substantially all of its properties and assets to
the Company or another Subsidiary Guarantor without limitation, except to the
extent any such transaction is subject to the "Merger, Consolidation and Sale of
Assets" covenant of the Indenture. Each Subsidiary Guarantor may consolidate
with or merge into or sell all or substantially all of its properties and assets
to a Person other than the Company or another Subsidiary Guarantor (whether or
not Affiliated with the Subsidiary Guarantor), provided that (a) if the
surviving Person is not the Subsidiary Guarantor, the surviving Person agrees to
assume such Subsidiary Guarantor's Subsidiary Guarantee and all its obligations
pursuant to the Indenture (except to the extent the following paragraph would
result in the release of such Subsidiary Guarantee) and (b) such transaction
does not (i) violate any of the covenants described below under "-- Certain
Covenants" or (ii) result in a Default or Event of Default immediately
thereafter that is continuing.
Upon the sale or other disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its properties and assets) to a Person
other than the Company or another Subsidiary Guarantor and pursuant to a
transaction that is otherwise in compliance with the Indenture (including as
described in the foregoing paragraph), such Subsidiary Guarantor shall be deemed
released from its Subsidiary Guarantee and the related obligations set forth in
the Indenture; provided, however, that any such termination shall occur only to
the extent that all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, other Indebtedness of the Company or any other
Restricted Subsidiary shall also terminate or be released upon such sale or
other disposition. Each Subsidiary Guarantor that is designated as an
Unrestricted Subsidiary in accordance with the Indenture shall be released from
its Subsidiary Guarantee and related obligations set forth in the Indenture for
so long as it remains an Unrestricted Subsidiary.
Separate financial statements of the Subsidiary Guarantors have not been
provided because the Subsidiary Guarantors are jointly and severally liable for
the obligations of the Company under the Notes, and the aggregate assets,
earnings and equity of the Subsidiary Guarantors are substantially equivalent to
the consolidated assets, earnings and equity of the Company.
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CERTAIN COVENANTS
The Indenture contains, among others, the covenants described below.
Limitation on Indebtedness and Disqualified Capital Stock. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, create,
incur, issue, assume, guarantee or in any manner become directly or indirectly
liable for the payment of (collectively, "incur") any Indebtedness (including
any Acquired Indebtedness but excluding any Permitted Indebtedness) or any
Disqualified Capital Stock, unless, on a pro forma basis after giving effect to
such incurrence and the application of the proceeds therefrom, the Consolidated
EBITDA Coverage Ratio for the four full quarters immediately preceding such
event, taken as one period, would have been equal to or greater than 2.25 to
1.0.
(b) The Company will not incur any Indebtedness that is expressly
subordinated to any other Indebtedness of the Company unless such Indebtedness,
by its terms or the terms of any agreement or instrument pursuant to which such
Indebtedness is issued or outstanding, is also expressly made subordinate to the
Notes at least to the extent it is subordinated to such other Indebtedness.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any other distribution to
holders of, any shares of Capital Stock of the Company (other than
dividends or distributions payable solely in shares of Qualified Capital
Stock of the Company or in options, warrants or other rights to purchase
Qualified Capital Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any
Restricted Subsidiary) or any options, warrants or other rights to acquire
such Capital Stock;
(iii) make any principal payment on or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness, except in any case out of the net cash proceeds of Permitted
Refinancing Indebtedness; or
(iv) make any Restricted Investment;
(such payments or other actions described in clauses (i) through (iv) being
collectively referred to as "Restricted Payments"), unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the amount determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution),
(1) no Default or Event of Default shall have occurred and be continuing,
(2) the Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in accordance with paragraph (a) of the "-- Limitation
on Indebtedness and Disqualified Capital Stock" covenant, and
(3) the aggregate amount of all Restricted Payments declared or made after
the date of the Series A/B Indenture shall not exceed the sum (without
duplication) of the following:
(A) 50% of the Consolidated Net Income of the Company accrued on a
cumulative basis during the period beginning on April 1, 1996 and ending on
the last day of the Company's last fiscal quarter ending prior to the date
of such proposed Restricted Payment (or, if such Consolidated Net Income is
a loss, minus 100% of such loss),
(B) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company from the issuance or sale (other than
to any of its Restricted Subsidiaries) of shares of Qualified Capital Stock
of the Company or any options, warrants or rights to purchase such shares
of Qualified Capital Stock of the Company,
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(C) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company,
(D) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company from the issuance or sale (other than
to any of its Restricted Subsidiaries) of Indebtedness or shares of
Disqualified Capital Stock that have been converted into or exchanged for
Qualified Capital Stock of the Company, together with the aggregate cash
received by the Company at the time of such conversion or exchange,
(E) to the extent not otherwise included in Consolidated Net Income,
the net reduction in Investments in Unrestricted Subsidiaries resulting
from dividends, repayments of loans or advances, or other transfers of
assets, in each case to the Company or a Restricted Subsidiary after the
date of the Series A/B Indenture from any Unrestricted Subsidiary or from
the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary
(valued in each case as provided in the definition of Investment), not to
exceed in the case of any Unrestricted Subsidiary the total amount of
Investments (other than Permitted Investments) in such Unrestricted
Subsidiary made by the Company and its Restricted Subsidiaries in such
Unrestricted Subsidiary after the date of the Series A/B Indenture, and
(F) $10 million.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions so long as (in the case of clauses
(ii) and (iii) below) no Default or Event of Default shall have occurred and be
continuing:
(i) the payment of any dividend on any Capital Stock of the Company or
any Restricted Subsidiary within 60 days after the date of declaration
thereof, if at such declaration date such declaration complied with the
provisions of paragraph (a) above (and such payment shall be deemed to have
been paid on such date of declaration for purposes of any calculation
required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or any Restricted
Subsidiary, in exchange for, or out of the aggregate Net Cash Proceeds
from, a substantially concurrent issuance and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the Company;
and
(iii) the repurchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness in
exchange for, or out of the aggregate Net Cash Proceeds from, a
substantially concurrent issuance and sale (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock of the Company.
The actions described in clauses (i), (ii) and (iii) of this paragraph (b)
shall be Restricted Payments that shall be permitted to be made in accordance
with this paragraph (b) but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (3) of paragraph (a), provided
that any dividend paid pursuant to clause (i) of this paragraph (b) shall reduce
the amount that would otherwise be available under clause (3) of paragraph (a)
when declared, but not also when subsequently paid pursuant to such clause (i).
Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries. The Company (i) will not permit any Restricted Subsidiary to
issue or sell any Capital Stock to any Person other than the Company or a Wholly
Owned Restricted Subsidiary and (ii) will not permit any Person other than the
Company or a Wholly Owned Restricted Subsidiary to own any Capital Stock of any
Restricted Subsidiary, in each case except with respect to a Wholly Owned
Restricted Subsidiary as described in clause (i) or (ii) of the definition of
"Wholly Owned Restricted Subsidiary".
Limitation on Sale/Leaseback Transactions. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into,
assume, guarantee or otherwise become liable with respect to any Sale/Leaseback
Transaction unless the Company or such Restricted Subsidiary, as the case may
be,
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<PAGE> 37
would be able to incur Indebtedness (not including the incurrence of Permitted
Indebtedness) in an amount equal to the Attributable Indebtedness with respect
to such Sale/Leaseback Transaction pursuant to paragraph (a) of the "Limitation
on Indebtedness and Disqualified Capital Stock" covenant, the Company or such
Restricted Subsidiary receives proceeds from such Sale/Leaseback Transaction at
least equal to the fair market value of the property or assets subject thereto
(as determined in good faith by the Company's Board of Directors, whose
determination in good faith and evidenced by a Board Resolution will be
conclusive) and the Company applies an amount in cash equal to the Net Available
Proceeds of the Sale/Leaseback Transaction in accordance with the provisions of
the "Limitation on Asset Sales" covenant as if such Sale/Leaseback Transaction
were an Asset Sale.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets or property
or the rendering of any services) with, or for the benefit of, any Affiliate of
the Company (other than the Company or a Restricted Subsidiary), unless (i) such
transaction or series of transactions is on terms that are no less favorable to
the Company or such Restricted Subsidiary, as the case may be, than those that
would be available in a comparable arm's length transaction with unrelated third
parties, (ii) with respect to any one transaction or series of related
transactions involving aggregate payments in excess of $1 million, the Company
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (i) above,
(iii) with respect to a transaction or series of related transactions involving
payments in excess of $5 million but less than $15 million in the aggregate, the
Company delivers an Officers' Certificate to the Trustee certifying that (A)
such transaction or series of related transactions complies with clause (i)
above and (B) such transaction or series of related transactions has been
approved by a majority of the Disinterested Directors of the Company, and (iv)
with respect to any one transaction or series of related transactions involving
aggregate payments in excess of $15 million, the Company delivers an Officers'
Certificate to the Trustee certifying to the two matters referred to in clause
(iii) above and that the Company has obtained a written opinion from an
independent nationally recognized investment banking firm or appraisal firm
specializing or having a speciality in the type and subject matter of the
transaction or series of related transactions at issue, which opinion shall be
to the effect set forth in clause (i) above or shall state that such transaction
or series of related transactions is fair from a financial point of view to the
Company or such Restricted Subsidiary; provided, however, that the foregoing
restriction shall not apply to (w) loans or advances to officers, directors and
employees of the Company or any Restricted Subsidiary made in the ordinary
course of business and consistent with past practices of the Company and its
Restricted Subsidiaries in an aggregate amount not to exceed $1 million
outstanding at any one time, (x) indemnities of officers, directors and
employees of the Company or any Restricted Subsidiary permitted by bylaw or
statutory provisions, (y) the payment of reasonable and customary regular fees
to directors of the Company or any of its Restricted Subsidiaries who are not
employees of the Company or any Affiliate and (z) the Company's employee
compensation and other benefit arrangements.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume, affirm
or suffer to exist or become effective any Lien of any kind, except for
Permitted Liens, upon any of their respective property or assets, whether now
owned or acquired after the date of the Series A/B Indenture, or any income,
profits or proceeds therefrom, to secure (a) any Indebtedness of the Company or
such Restricted Subsidiary (if it is not also a Subsidiary Guarantor), unless
prior to, or contemporaneously therewith, the Notes are equally and ratably
secured, or (b) any Indebtedness of any Subsidiary Guarantor, unless prior to,
or contemporaneously therewith, the Subsidiary Guarantees are equally and
ratably secured; provided, however, that if such Indebtedness is expressly
subordinated to the Notes or the Subsidiary Guarantees, the Lien securing such
Indebtedness will be subordinated and junior to the Lien securing the Notes or
the Subsidiary Guarantees, as the case may be, with the same relative priority
as such Indebtedness has with respect to the Notes or the Subsidiary Guarantees.
The foregoing covenant will not apply to any Lien securing Acquired
Indebtedness, provided that any such Lien extends only to the property or assets
that were subject to such Lien prior to the related acquisition by the Company
or such Restricted Subsidiary and was not created, incurred or assumed in
contemplation of such transaction. The incurrence of additional secured
Indebtedness by the Company and its Restricted Subsidiaries is subject to
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further limitations on the incurrence of Indebtedness as described under
"-- Limitation on Indebtedness and Disqualified Capital Stock."
Change of Control. Upon the occurrence of a Change of Control, the Company
will be obligated to make an offer to purchase all of the then outstanding Notes
(a "Change of Control Offer"), and will purchase, on a Business Day (the "Change
of Control Purchase Date") not more than 60 nor less than 30 days following such
Change of Control, all of the then outstanding Notes validly tendered pursuant
to such Change of Control Offer and not withdrawn, at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date. The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the fifth Business Day
prior to the Change of Control Purchase Date.
In order to effect such Change of Control Offer, the Company will, not
later than the 30th day after the Change of Control, mail to the Trustee and
each Holder a notice of the Change of Control Offer, which notice shall govern
the terms of the Change of Control Offer and shall state, among other things,
the procedures that Holders must follow to accept the Change of Control Offer.
The occurrence of a Change of Control may result in the lender under the
Revolving Credit Facility having the right to require the Company to repay all
Indebtedness outstanding thereunder. There can be no assurance that the Company
will have available funds sufficient to repay all Indebtedness owing under the
Revolving Credit Facility or to fund the purchase of the Notes or the Series B
Notes upon a Change of Control. In the event a Change of Control occurs at a
time when the Company does not have available funds sufficient to pay the Change
of Control Purchase Price for all of the Notes delivered by Holders seeking to
accept the Change of Control Offer, an Event of Default would occur under the
Indenture. The definition of Change of Control includes an event by which the
Company sells, conveys, transfers, leases or otherwise disposes of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries, taken as a whole; the phrase "all or substantially all" is subject
to applicable legal precedent and, as a result, in the future there may be
uncertainty as to whether or not a Change of Control has occurred.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if another Person makes the Change of Control Offer at the
same purchase price, at the same time and otherwise in substantial compliance
with the requirements applicable to a Change of Control Offer to be made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder, if applicable, in the event
that a Change of Control occurs and the Company is required to purchase Notes as
described above. The existence of a Holder's right to require, subject to
certain conditions, the Company to repurchase its Notes upon a Change of Control
may deter a third party from acquiring the Company in a transaction that
constitutes, or results in, a Change of Control.
Limitation on Asset Sales. (a) The Company will not, and will not permit
any Restricted Subsidiary to, engage in any Asset Sale unless (i) the Company or
such Restricted 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 assets
and properties sold or otherwise disposed of pursuant to the Asset Sale (as
determined by the Board of Directors of the Company, whose determination in good
faith shall be conclusive and evidenced by a Board Resolution), (ii) at least
75% of the consideration received by the Company or the Restricted Subsidiary,
as the case may be, in respect of such Asset Sale consists of cash or Cash
Equivalents and (iii) the Company delivers to the Trustee an Officers'
Certificate certifying that such Asset Sale complies with clauses (i) and (ii).
The amount (without duplication) of any Indebtedness (other than Subordinated
Indebtedness) of the Company or such Restricted Subsidiary that is expressly
assumed by the transferee in such Asset Sale and with respect to which the
Company or such Restricted Subsidiary, as the case may be, is unconditionally
released by the holder of such Indebtedness, shall be deemed to be cash or Cash
Equivalents for purposes of clause (ii) and shall also be deemed to constitute a
repayment of, and a permanent reduction in, the amount of such Indebtedness for
purposes of the following paragraph.
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(b) If the Company or any Restricted Subsidiary engages in an Asset Sale or
incurs an Event of Loss, the Company or such Restricted Subsidiary may either,
no later than 365 days after such Asset Sale or such Event of Loss, (i) apply
all or any of the Net Available Proceeds therefrom to repay Indebtedness (other
than Subordinated Indebtedness) of the Company or any Restricted Subsidiary,
provided, in each case, that the related loan commitment (if any) is thereby
permanently reduced by the amount of such Indebtedness so repaid, or (ii) invest
all or any part of the Net Available Proceeds thereof in properties and assets
that replace the properties or assets that were the subject of such Asset Sale
or such Event of Loss, as the case may be, or in other properties or assets that
will be used in the business of the Company and its Restricted Subsidiaries. The
amount of such Net Available Proceeds not applied or invested as provided in
this paragraph will constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $10
million, the Company will be required to make an offer to purchase (a "Series B
Net Proceeds Offer") from all Holders of the outstanding Series B Notes in
accordance with the procedures set forth in the Series A/B Indenture the maximum
principal amount (expressed as a multiple of $1,000) of outstanding Series B
Notes that may be purchased out of the amount of such Excess Proceeds.
(d) To the extent that any Excess Proceeds are not applied to the Series B
Net Proceeds Offer, the Company will be required to make an offer to purchase
from all Holders of the Notes an aggregate principal amount of Notes equal to
such Excess Proceeds as follows:
(i) The Company will make an offer to purchase (a "Net Proceeds
Offer") from all Holders of Notes in accordance with the procedures set
forth in the Indenture the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased out of the amount (the
"Payment Amount") of such Excess Proceeds.
(ii) The offer price for the Notes will be payable in cash in an
amount equal to 100% of the principal amount of the 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 Notes tendered pursuant to a Net
Proceeds Offer is less than the Payment Amount relating thereto (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 limitations of the "Limitation on Restricted
Payments" covenant.
(iii) If the aggregate Offered Price of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Payment Amount, Notes to be
purchased will be selected on a pro rata basis.
(iv) Upon completion of such Net Proceeds Offer, the amount of Excess
Proceeds shall be reset to zero.
The Company will not permit any Restricted Subsidiary to enter into or suffer to
exist any agreement that would place any restriction of any kind (other than
pursuant to law or regulation) on the ability of the Company to make a Net
Proceeds Offer following any Asset Sale. The Company will comply with Rule 14e-1
under the Exchange Act, and any other securities laws and regulations
thereunder, if applicable, in the event that an Asset Sale occurs and the
Company is required to purchase Notes as described above.
Limitation on Guarantees by Subsidiary Guarantors. The Company will not
permit any Subsidiary Guarantor to guarantee the payment of any Subordinated
Indebtedness of the Company unless such guarantee shall be subordinated to such
Subsidiary Guarantor's Subsidiary Guarantee at least to the same extent as such
Subordinated Indebtedness is subordinated to the Notes; provided, however, that
this covenant will not be applicable to any guarantee of any Subsidiary
Guarantor that (i) existed at the time such Person became a Subsidiary of the
Company and (ii) was not incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary of the Company.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or suffer to
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exist or allow to become effective any consensual encumbrance or restriction of
any kind on the ability of any Restricted Subsidiary (a) to pay dividends, in
cash or otherwise, or make any other distributions on its Capital Stock, or make
payments on any Indebtedness owed, to the Company or any other Restricted
Subsidiary, (b) to make loans or advances to the Company or any other Restricted
Subsidiary, (c) to transfer any of its property or assets to the Company or any
other Restricted Subsidiary or (d) to guarantee the Notes (any such restrictions
being collectively referred to herein as a "Payment Restriction"), except in any
such case for such encumbrances or restrictions existing under or by reason of
(i) the Indenture, the Revolving Credit Facility or any other agreement in
effect or entered into on the date of the Series A/B Indenture, or (ii) any
agreement, instrument or charter of or in respect of a Restricted Subsidiary
entered into prior to the date on which such Restricted Subsidiary became a
Restricted Subsidiary and outstanding on such date and not entered into in
connection with or in contemplation of becoming a Restricted Subsidiary,
provided such consensual encumbrance or restriction is not applicable to any
properties or assets other than those owned or held by the Restricted Subsidiary
at the time it became a Restricted Subsidiary or subsequently acquired by such
Restricted Subsidiary other than from the Company or any other Restricted
Subsidiary, or (iii) pursuant to an agreement effecting a modification, renewal,
refinancing, replacement or extension of any agreement, instrument or charter
(other than the Indenture) referred to in clause (i) or (ii) above, provided,
however, that the provisions relating to such encumbrance or restriction are not
materially less favorable to the Holders of the Notes than those under or
pursuant to the agreement, instrument or charter so modified, renewed,
refinanced, replaced or extended, or (iv) customary provisions restricting the
subletting or assignment of any lease or the transfer of copyrighted or patented
materials, or (v) provisions in agreements that restrict the assignment of such
agreements or rights thereunder, or (vi) the sale or other disposition of any
properties or assets subject to a Lien securing Indebtedness.
Limitation on Conduct of Business. The Company will not, and will not
permit any of its Restricted Subsidiaries to, engage in the conduct of any
business other than the businesses being conducted on the date of the Series A/B
Indenture (and described therein and herein) and such other businesses as are
reasonably necessary or desirable to facilitate the conduct and operation of
such businesses.
Reports. The Company will file on a timely basis with the Commission, to
the extent such filings are accepted by the Commission and whether or not the
Company has a class of securities registered under the Exchange Act, the annual
reports, quarterly reports and other documents that the Company would be
required to file if it were subject to Section 13 or 15 of the Exchange Act. The
Company will also be required (a) to file with the Trustee (with exhibits), and
provide to each Holder of Notes (without exhibits), without cost to such Holder,
copies of such reports and documents within 15 days after the date on which the
Company files such reports and documents with the Commission or the date on
which the Company would be required to file such reports and documents if the
Company were so required and (b) if filing such reports and documents with the
Commission is not accepted by the Commission or is prohibited under the Exchange
Act, to supply at its cost copies of such reports and documents (including any
exhibits thereto) to any Holder of Notes, securities analyst or prospective
investor promptly upon written request.
Future Designation of Restricted and Unrestricted Subsidiaries. The
foregoing covenants (including calculation of financial ratios and the
determination of limitations on the incurrence of Indebtedness and Liens) may be
affected by the designation by the Company of any existing or future Subsidiary
of the Company as an Unrestricted Subsidiary. The definition of "Unrestricted
Subsidiary" set forth under the caption "-- Certain Definitions" describes the
circumstances under which a Subsidiary of the Company may be designated as an
Unrestricted Subsidiary by the Board of Directors of the Company.
MERGER, CONSOLIDATION AND SALE OF ASSETS
The Company will not, in any single transaction or series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of the properties and assets of the Company and its Restricted Subsidiaries on a
consolidated basis to any Person or group of Affiliated Persons, and the Company
will not permit any of its Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or other disposition of all or
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substantially all of the properties and assets of the Company and its Restricted
Subsidiaries on a consolidated basis to any other Person or group of Affiliated
Persons, unless at the time and after giving effect thereto: (i) either (A) if
the transaction is a merger or consolidation, the Company shall be the surviving
Person of such merger or consolidation, or (B) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or to
which the properties and assets of the Company or its Restricted Subsidiaries,
as the case may be, are sold, assigned, conveyed, transferred, leased or
otherwise disposed of (any such surviving Person or transferee Person being the
"Surviving Entity") shall be a corporation organized and existing under the laws
of the United States of America, any state thereof or the District of Columbia
and shall, in either case, expressly assume by a supplemental indenture to the
Indenture executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture,
and, in each case, the Indenture shall remain in full force and effect; (ii)
immediately before and immediately after giving effect to such transaction or
series of transactions on a pro forma basis (and treating any Indebtedness not
previously an obligation of Company or any of its Restricted Subsidiaries which
becomes an obligation of the Company or any of its Restricted Subsidiaries in
connection with or as a result of such transaction or transactions as having
been incurred at the time of such transaction or transactions), no Default or
Event of Default shall have occurred and be continuing; (iii) except in the case
of the consolidation or merger of any Restricted Subsidiary with or into the
Company, immediately after giving effect to such transaction or transactions on
a pro forma basis, the Consolidated Net Worth of the Company (or the Surviving
Entity if the Company is not the continuing obligor under the Indenture) is at
least equal to the Consolidated Net Worth of the Company immediately before such
transaction or transactions; (iv) except in the case of the consolidation or
merger of the Company with or into a Restricted Subsidiary or any Restricted
Subsidiary with or into the Company or another Restricted Subsidiary,
immediately before and immediately after giving effect to such transaction or
transactions on a pro forma basis (assuming that the transaction or transactions
occurred on the first day of the period of four fiscal quarters ending
immediately prior to the consummation of such transaction or transactions, with
the appropriate adjustments with respect to the transaction or transactions
being included in such pro forma calculation), the Company (or the Surviving
Entity if the Company is not the continuing obligor under the Indenture) could
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the first paragraph of the "-- Limitation on Indebtedness and
Disqualified Capital Stock" covenant; (v) if the Company is not the continuing
obligor under the Indenture, then each Subsidiary Guarantor, unless it is the
Surviving Entity, shall have by supplemental indenture to the Indenture
confirmed that its Subsidiary Guarantee of the Notes shall apply to the
Surviving Entity's obligations under the Indenture and the Notes; (vi) if any of
the properties or assets of the Company or any of its Restricted Subsidiaries
would upon such transaction or series of related transactions become subject to
any Lien (other than a Permitted Lien), the creation and imposition of such Lien
shall have been in compliance with the "Limitation on Liens" covenant; and (vii)
the Company (or the Surviving Entity if the Company is not the continuing
obligor under the Indenture) shall have delivered to the Trustee, in form and
substance reasonably satisfactory to the Trustee, (a) an Officers' Certificate
stating that such consolidation, merger, transfer, lease or other disposition
and any supplemental indenture in respect thereto comply with the requirements
under the Indenture and (b) an Opinion of Counsel stating that the requirements
of clause (i) of this paragraph have been satisfied.
Upon any consolidation or merger or any sale, assignment, lease,
conveyance, transfer or other disposition of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
consolidated basis in accordance with the foregoing, in which the Company is not
the continuing corporation, the Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if the Surviving Entity had been named as
the Company therein, and thereafter the Company, except in the case of a lease,
will be discharged from all obligations and covenants under the Indenture and
the Notes and may be liquidated and dissolved.
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EVENTS OF DEFAULT
The following will be "Events of Default" under the Indenture:
(i) default in the payment of the principal of or premium, if any, on
any of the Notes, whether such payment is due at Stated Maturity, upon
redemption, upon repurchase pursuant to a Change of Control Offer or a Net
Proceeds Offer, upon acceleration or otherwise; or
(ii) default in the payment of any installment of interest on any of
the Notes, when due, and the continuance of such default for a period of 30
days; or
(iii) default in the performance or breach of the provisions of the
"Merger, Consolidation and Sale of Assets" section of the Indenture, the
failure to make or consummate a Change of Control Offer in accordance with
the provisions of the "Change of Control" covenant or the failure to make
or consummate a Net Proceeds Offer in accordance with the provisions of the
"Limitation on Asset Sales" covenant; or
(iv) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in the Notes, any
Subsidiary Guarantee or the Indenture (other than a default specified in
(i), (ii) or (iii) above) for a period of 45 days after written notice of
such failure stating that it is a "notice of default" under the Indenture
and requiring the Company or such Subsidiary Guarantor to remedy the same
shall have been given (x) to the Company by the Trustee or (y) to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding; or
(v) the occurrence and continuation beyond any applicable grace period
of any default in the payment of the principal of, premium, if any, or
interest on any Indebtedness of the Company (other than the Notes) or any
Subsidiary Guarantor or any other Restricted Subsidiary for money borrowed
when due, or any other default resulting in acceleration of any
Indebtedness of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary for money borrowed, provided that the aggregate
principal amount of such Indebtedness shall exceed $5 million and provided,
further, that if any such default is cured or waived or any such
acceleration rescinded, or such Indebtedness is repaid, within a period of
10 days from the continuation of such default beyond the applicable grace
period or the occurrence of such acceleration, as the case may be, such
Event of Default under the Indenture and any consequential acceleration of
the Notes shall be automatically rescinded, so long as such rescission does
not conflict with any judgment or decree; or
(vi) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to
be, in full force and effect (except pursuant to the release of any such
Subsidiary Guarantee in accordance with the Indenture); or
(vii) final judgments or orders rendered against the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary that are
unsatisfied and that require the payment in money, either individually or
in an aggregate amount, that is more than $5 million over the coverage
under applicable insurance policies and either (A) commencement by any
creditor of an enforcement proceeding upon such judgment (other than a
judgment that is stayed by reason of pending appeal or otherwise) or (B)
the occurrence of a 60-day period during which a stay of such judgment or
order, by reason of pending appeal or otherwise, was not in effect; or
(viii) the entry of a decree or order by a court having jurisdiction
in the premises (A) for relief in respect of the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) adjudging the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary bankrupt or
insolvent, or approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary under any applicable federal or state law, or
appointing under any such law a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any
Subsidiary Guarantor or any
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other Restricted Subsidiary or of a substantial part of its consolidated
assets, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 60 consecutive days; or
(ix) the commencement by the Company or any Subsidiary Guarantor or
any other Restricted Subsidiary of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or the consent by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary to the entry of a decree or order for relief in
respect thereof in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary of a petition or consent
seeking reorganization or relief under any applicable federal or state law,
or the consent by it under any such law to the filing of any such petition
or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or other similar official)
of the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary or of any substantial part of its consolidated assets, or the
making by it of an assignment for the benefit of creditors under any such
law, or the admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by the Company
or any Subsidiary Guarantor or any other Restricted Subsidiary in
furtherance of any such action.
If an Event of Default (other than as specified in clause (viii) or (ix)
above) shall occur and be continuing, the Trustee, by written notice to the
Company, or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding, by written notice to the Trustee and the Company, may,
and the Trustee upon the request of the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding shall, declare the
principal of, premium, if any, and accrued and unpaid interest on all of the
Notes due and payable immediately, upon which declaration all amounts payable in
respect of the Notes shall be immediately due and payable. If an Event of
Default specified in clause (viii) or (ix) above occurs and is continuing, then
the principal of, premium, if any, and accrued and unpaid interest on all of the
Notes shall become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee or any Holder of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company, the Subsidiary Guarantors
and the Trustee, may rescind and annul such declaration if (a) the Company or
any Subsidiary Guarantor has paid or deposited with the Trustee a sum sufficient
to pay (i) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, (iii) the
principal of and premium, if any, on any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Notes, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by the
Notes (without duplication of any amount paid or deposited pursuant to clause
(ii) or (iii)); (b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction; and (c) all Events of Default,
other than the non-payment of principal of, premium, if any, or interest on the
Notes that has become due solely by such declaration of acceleration, have been
cured or waived.
No Holder will have any right to institute any proceeding with respect to
the Indenture or any remedy thereunder, unless such Holder has notified the
Trustee of a continuing Event of Default and the Holders of at least 25% in
aggregate principal amount of the outstanding Notes have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee under the Notes and the Indenture, the Trustee has failed to institute
such proceeding within 60 days after receipt of such notice and the Trustee,
within such 60-day period, has not received directions inconsistent with such
written request by Holders of a majority in aggregate principal amount of the
outstanding Notes. Such limitations will not apply,
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however, to a suit instituted by the Holder of a Note for the enforcement of the
payment of the principal of, premium, if any, or interest on such Note on or
after the respective due dates expressed in such Note.
During the existence of an Event of Default, the Trustee will be required
to exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default shall occur and be continuing, the Trustee will not
be under any obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee reasonable security or indemnity. Subject to
certain provisions concerning the rights of the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee under the Indenture.
If a Default occurs and is continuing and is known to the Trustee, the
Trustee shall mail to each Holder notice of the Default within 60 days after the
occurrence thereof. Except in the case of a Default in payment of principal of,
premium, if any, or interest on any Notes, the Trustee may withhold the notice
to the Holders of the Notes if the Trustee determines in good faith that
withholding the notice is in the interest of the Holders of the Notes.
The Company will be required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company of its obligations under the
Indenture and as to any default in such performance. The Company will also be
required to notify the Trustee within 10 days of any Default or Event of
Default.
LEGAL DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, terminate the obligations
of the Company and the Subsidiary Guarantors with respect to the outstanding
Notes (such action being a "legal defeasance"). Such legal defeasance means that
the Company and the Subsidiary Guarantors shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes and to
have been discharged from all their other obligations with respect to the Notes
and the Subsidiary Guarantees, except for (i) the rights of Holders of
outstanding Notes to receive payment in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (ii) the Company's
obligations to replace any temporary Notes, register the transfer or exchange of
any Notes, replace mutilated, destroyed, lost or stolen Notes and maintain an
office or agency for payments in respect of the Notes, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and (iv) the legal defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to terminate the obligations of the Company and each Subsidiary
Guarantor with respect to certain covenants that are set forth in the Indenture,
some of which are described under "-- Certain Covenants" above, and any omission
to comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Notes (such action being a "covenant defeasance").
In the event covenant defeasance occurs, certain events (not including
nonpayment, bankruptcy, insolvency and reorganization events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either legal defeasance or covenant defeasance, (i)
the Company or any Subsidiary Guarantor must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, cash in United
States dollars, U.S. Government Obligations (as defined in the Indenture), or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes to
redemption or maturity; (ii) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such legal defeasance or covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such legal defeasance or covenant defeasance had not
occurred (in the case of legal defeasance, such opinion must refer to and be
based upon a published ruling of the Internal Revenue Service or a change in
applicable federal
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income tax laws); (iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit or insofar as clauses (viii) and (ix)
under the first paragraph of "Events of Default" are concerned, at any time
during the period ending on the 91st day after the date of deposit; (iv) such
legal defeasance or covenant defeasance shall not cause the Trustee to have a
conflicting interest under the Indenture or the Trust Indenture Act with respect
to any securities of the Company or any Subsidiary Guarantor; (v) such legal
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a default under, any material agreement or instrument to which the
Company or any Subsidiary Guarantor is a party or by which it is bound; and (vi)
the Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel satisfactory to the Trustee, which, taken together, state
that all conditions precedent under the Indenture to either legal defeasance or
covenant defeasance, as the case may be, have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen, mutilated or destroyed Notes which have been replaced or
paid and Notes for whose payment money or certain United States government
obligations have theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust) have been delivered to the Trustee for cancellation or (b) all Notes
not theretofore delivered to the Trustee for cancellation have become due and
payable or will become due and payable at their Stated Maturity within one year,
or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the serving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit (in the case
of Notes which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be, together with instructions from the Company
irrevocably directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (ii) the Company has paid all other
sums payable under the Indenture by the Company; and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
which, taken together, state that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
AMENDMENTS AND WAIVERS
From time to time, the Company, the Subsidiary Guarantors and the Trustee
may, without the consent of the Holders of the Notes, amend or supplement the
Indenture or the Notes for certain specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act,
adding or releasing any Subsidiary Guarantor pursuant to the terms of the
Indenture, or making any change that does not materially adversely affect the
rights of any Holder of Notes. Other amendments and modifications of the
Indenture or the Notes may be made by the Company, the Subsidiary Guarantors and
the Trustee with the consent of the Holders of not less than a majority of the
aggregate principal amount of the outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, premium, if any, or interest on any Note, (c) change the
coin or currency of payment of principal of, premium, if any, or interest on,
any Note, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (e) reduce the above-stated percentage
of aggregate principal amount of outstanding Notes necessary to modify or amend
the Indenture, (f) reduce the percentage of aggregate principal amount of
outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults, (g) modify any provisions of
the Indenture relating to the modification and amendment of the Indenture or the
waiver of past defaults or covenants, except as otherwise specified, (h) change
the ranking of the Notes or the Subsidiary Guarantees in a manner
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adverse to the Holders or expressly subordinate in right of payment the Notes or
the Subsidiary Guarantees to any other Indebtedness or (i) amend, change or
modify the obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net Proceeds
Offer with respect to any Asset Sale or modify any of the provisions or
definitions with respect thereto.
The Holders of not less than a majority in aggregate principal amount of
the outstanding Notes may, on behalf of the Holders of all Notes, waive any past
default under the Indenture, except a default in the payment of principal of,
premium, if any, or interest on the Notes, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Note outstanding.
THE TRUSTEE
State Street Bank and Trust Company serves as trustee under the Indenture.
The Indenture (including provisions of the Trust Indenture Act incorporated
by reference therein) contains limitations on the rights of the Trustee
thereunder, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Indenture permits the
Trustee to engage in other transactions; provided, however, if it acquires any
conflicting interest (as defined in the Trust Indenture Act) it must eliminate
such conflict or resign.
GOVERNING LAW
The Indenture, the Notes and the Subsidiary Guarantees are governed by the
laws of the State of New York.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Restricted Subsidiary or (b) assumed in connection
with acquisitions of properties or assets from such Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or such acquisition). Acquired Indebtedness
shall be deemed to be incurred on the date the acquired Person becomes a
Restricted Subsidiary or the date of the related acquisition of properties or
assets from such Person.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the properties and assets of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of this definition, beneficial ownership of 10% or more of the voting
common equity (on a fully diluted basis) or options or warrants to purchase such
equity (but only if exercisable at the date of determination or within 60 days
thereof) of a Person shall be deemed to constitute control of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by means of a Sale/Leaseback
Transaction or a merger or consolidation) (collectively, for purposes of this
definition, a "transfer"), directly or indirectly, in one or a series of related
transactions, of (a) any Capital Stock of any Restricted Subsidiary held by the
Company or any other Restricted Subsidiary, (b) all or substantially all of the
properties and assets of any division or line of business of the Company or any
of its Restricted
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Subsidiaries or (c) any other properties or assets of the Company or any of its
Restricted Subsidiaries other than transfers of cash, Cash Equivalents, accounts
receivable, hydrocarbons or other properties or assets in the ordinary course of
business or transfers in accordance with the proviso to clause (vi) of the
definition of Permitted Investments. For the purposes of this definition, the
term "Asset Sale" also shall not include any of the following: (i) any transfer
of properties or assets (including Capital Stock) that is governed by, and made
in accordance with, the provisions described under "-- Merger, Consolidation and
Sale of Assets"; (ii) any transfer of properties or assets to an Unrestricted
Subsidiary, if permitted under the "Limitation on Restricted Payments" covenant;
(iii) sales of damaged, worn-out or obsolete equipment or assets that, in the
Company's reasonable judgment, are either (x) no longer used or (y) no longer
useful in the business of the Company or its Restricted Subsidiaries; (iv) any
charter (bareboat or otherwise) or other lease of any property entered into in
the ordinary course of business and with respect to which the Company or any
Restricted Subsidiary is the lessor, except any such charter or lease that
provides for the acquisition of such property by the lessee during or at the end
of the term thereof for an amount that is less than the fair market value
thereof at the time the right to acquire such property is granted; (v) any trade
or exchange by the Company or any Restricted Subsidiary of one or more offshore
drilling rigs for one or more other offshore drilling rigs owned or held by
another Person, provided that (x) the fair value of the offshore drilling rig or
rigs traded or exchanged by the Company or such Restricted Subsidiary (including
any cash or Cash Equivalents to be delivered by the Company or such Restricted
Subsidiary) is reasonably equivalent to the fair value of the offshore drilling
rig or rigs (together with any cash or Cash Equivalents) to be received by the
Company or such Restricted Subsidiary as determined by written appraisal by a
nationally recognized investment banking firm or appraisal firm, in either case
specializing or having a specialty in offshore drilling rigs, and (y) such
exchange is approved by a majority of the Disinterested Directors of the
Company; (vi) any transfer by the Company or any Restricted Subsidiary to its
customers of drill pipe and associated drilling equipment utilized in connection
with a drilling contract for the employment of a drilling rig in the ordinary
course of business and consistent with past practice; and (vii) any transfers
that, but for this clause (vii), would be Asset Sales, if (A) the Company elects
to designate such transfers as not constituting Asset Sales and (B) after giving
effect to such transfers, the aggregate fair market value of the properties or
assets transferred in such transaction or any such series of related
transactions so designated by the Company does not exceed $500,000.
"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount of
rent required to be paid by such Person under the lease during the primary term
thereof, without giving effect to any renewals at the option of the lessee,
discounted from the respective due dates thereof to such date of determination
at a rate per annum equal to the discount rate which would be applicable to a
Capitalized Lease Obligation with a like term in accordance with GAAP. As used
in the preceding sentence, the "net amount of rent" under any such lease for any
such period shall mean the sum of rental and other payments required to be paid
with respect to such period by the lessee thereunder, excluding any amounts
required to be paid by such lessee on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges. In the case of
any lease which is terminable by the lessee upon payment of a penalty, such net
amount of rent shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years (and any portion thereof) from the date of determination
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund or mandatory redemption payment
requirements) of such Indebtedness multiplied by (ii) the amount of each such
principal payment by (b) the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights or other equivalents in the equity interests
(however designated) in such Person, and any rights (other than debt securities
convertible into an equity interest), warrants or options exercisable for,
exchangeable for or convertible into such an equity interest in such Person.
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"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP and, for the purpose of
the Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500 million; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-1 by S&P or at
least P-1 by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above, provided all such deposits do not
exceed $5 million in the aggregate at any one time; (vii) demand and time
deposits and certificates of deposit with any commercial bank organized in the
United States not meeting the qualifications specified in clause (ii) above,
provided that such deposits and certificates support bond, letter of credit and
other similar types of obligations incurred in the ordinary course of business;
and (viii) investments in money market or other mutual funds substantially all
of whose assets comprise securities of the types described in clauses (i)
through (v) above.
"Change of Control" means the occurrence of any event or series of events
by which: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of
the total Voting Stock of the Company; (b) the Company consolidates with or
merges into another Person or any Person consolidates with, or merges into, the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction where (i) the outstanding Voting
Stock of the Company is changed into or exchanged for Voting Stock of the
surviving or resulting Person that is Qualified Capital Stock and (ii) the
holders of the Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of the
surviving or resulting Person immediately after such transaction; (c) the
Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of, all or substantially all of the properties and assets of
the Company and its Restricted Subsidiaries, taken as a whole (either in one
transaction or a series of related transactions), including Capital Stock of the
Restricted Subsidiaries, to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary); (d) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of two-thirds of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
or (e) the liquidation or dissolution of the Company.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding-up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated EBITDA Coverage Ratio" means, for any period, the ratio on a
pro forma basis of (a) the sum of Consolidated Net Income, Consolidated Interest
Expense, Consolidated Income Tax Expense and
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Consolidated Non-cash Charges deducted in computing Consolidated Net Income, in
each case, for such period, of the Company and its Restricted Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, to (b) the sum of
such Consolidated Interest Expense for such period; provided, however, that (i)
the Consolidated EBITDA Coverage Ratio shall be calculated on a pro forma basis
assuming that (A) the Indebtedness to be incurred (and all other Indebtedness
incurred after the first day of such period of four full fiscal quarters
referred to in the covenant described in paragraph (a) under "-- Certain
Covenants -- Limitation on Indebtedness and Disqualified Capital Stock" through
and including the date of determination), and (if applicable) the application of
the net proceeds therefrom (and from any other such Indebtedness), including to
refinance other Indebtedness, had been incurred on the first day of such four-
quarter period and, in the case of Acquired Indebtedness, on the assumption that
the related transaction (whether by means of purchase, merger or otherwise) also
had occurred on such date with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation and (B) any acquisition
or disposition by the Company or any Restricted Subsidiary of any properties or
assets outside the ordinary course of business, or any repayment of any
principal amount of any Indebtedness of the Company or any Restricted Subsidiary
prior to the Stated Maturity thereof, in either case since the first day of such
period of four full fiscal quarters through and including the date of
determination, had been consummated on such first day of such four-quarter
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness required to be computed on a pro
forma basis in accordance with the covenant described in paragraph (a) under
"-- Certain Covenants -- Limitation on Indebtedness and Disqualified Capital
Stock" and (A) bearing a floating interest rate shall be computed as if the rate
in effect on the date of computation had been the applicable rate for the entire
period and (B) which was not outstanding during the period for which the
computation is being made but which bears, at the option of the Company, a fixed
or floating rate of interest, shall be computed by applying, at the option of
the Company, either the fixed or floating rate, (iii) in making such
computation, the Consolidated Interest Expense attributable to interest on any
Indebtedness under a revolving credit facility required to be computed on a pro
forma basis in accordance with the covenant described in paragraph (a) under
"-- Certain Covenants -- Limitation on Indebtedness and Disqualified Capital
Stock" shall be computed based upon the average daily balance of such
Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iv) notwithstanding clauses (ii) and (iii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements, and (v) if after the
first day of the period referred to in clause (a) of this definition the Company
has permanently retired any Indebtedness out of the Net Cash Proceeds of the
issuance and sale of shares of Qualified Capital Stock of the Company within 30
days of such issuance and sale, Consolidated Interest Expense shall be
calculated on a pro forma basis as if such Indebtedness had been retired on the
first day of such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including state franchise taxes
accounted for as income taxes in accordance with GAAP) of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
(i) the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (A) any amortization of debt discount,
(B) the net cost under Interest Rate Protection Obligations (including any
amortization of discounts), (C) the interest portion of any deferred payment
obligation constituting Indebtedness, (D) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (E) all accrued interest, in each case to the extent attributable
to such period, (b) to the extent any Indebtedness of any Person (other than the
Company or a Restricted Subsidiary) is guaranteed by the Company or any
Restricted Subsidiary, the aggregate amount of interest paid (to the extent not
accrued in a prior period) or accrued by such other Person during such period
attributable to any such
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Indebtedness, in each case to the extent attributable to that period, (c) the
aggregate amount of the interest component of Capitalized Lease Obligations paid
(to the extent not accrued in a prior period), accrued or scheduled to be paid
or accrued by the Company and its Restricted Subsidiaries during such period and
(d) the aggregate amount of dividends paid (to the extent not accrued in a prior
period) or accrued on Preferred Stock or Disqualified Capital Stock of the
Company and its Restricted Subsidiaries, to the extent such Preferred Stock or
Disqualified Capital Stock is owned by Persons other than the Company or any
Restricted Subsidiary, less (ii), to the extent included in clause (i) above,
amortization of capitalized debt issuance costs of the Company and its
Restricted Subsidiaries during such period.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid to
the Company or any of its Restricted Subsidiaries in cash by such other Person
during such period (regardless of whether such cash dividends or distributions
are attributable to net income (or net loss) of such Person during such period
or during any prior period), (d) net income (or net loss) of any Person combined
with the Company or any of its Restricted Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(e) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of its net income is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, and (f)
income resulting from transfers of assets received by the Company or any
Restricted Subsidiary from an Unrestricted Subsidiary.
"Consolidated Net Worth" means, at any date, the consolidated stockholders'
equity of the Company less the amount of such stockholders' equity attributable
to Disqualified Capital Stock or treasury stock of the Company and its
Restricted Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the Company
and its Restricted Subsidiaries reducing Consolidated Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge for which an accrual of or reserve for cash charges for
any future period is required).
"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 futures contract or other similar agreement or arrangement designed to
protect against or manage such Person's or any of its Subsidiaries' exposure to
fluctuations in foreign currency exchange rates.
"Default" means any event, act or condition that is, or after notice or
passage of time or both would become, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a resolution of the Board of Directors under the Indenture,
a member of the Board of Directors of the Company who does not have any material
direct or indirect financial interest (other than an interest arising solely
from the beneficial ownership of Capital Stock of the Company) in or with
respect to such transaction or series of transactions.
"Disqualified Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed or repurchased prior to the final Stated
Maturity of the Notes or is redeemable at the option of the holder thereof at
any time prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final Stated
Maturity. For purposes of the covenant described in paragraph (a) under
"-- Certain Covenants --
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Limitation on Indebtedness and Disqualified Capital Stock", Disqualified Capital
Stock shall be valued at the greater of its voluntary or involuntary maximum
fixed redemption or repurchase price plus accrued and unpaid dividends. For such
purposes, the "maximum fixed redemption or repurchase price" of any Disqualified
Capital Stock which does not have a fixed redemption or repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were redeemed or repurchased on the date of
determination, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
Disqualified Capital Stock; provided, however, that if such Disqualified Capital
Stock is not at the date of determination permitted or required to be redeemed
or repurchased, the "maximum fixed redemption or repurchase price" shall be the
book value of such Disqualified Capital Stock.
"Event of Default" has the meaning set forth above under the caption
"Events of Default."
"Event of Loss" means, with respect to any drilling rig, MOPU or related
property or asset of the Company or any Restricted Subsidiary, (i) any damage to
such drilling rig, MOPU or related property or asset which results in an
insurance settlement with respect thereto on the basis of a total loss or a
constructive or compromised total loss or (ii) the confiscation, condemnation or
requisition of title to such drilling rig, MOPU or related property or asset by
any government or any instrumentality or agency thereof. An Event of Loss shall
be deemed to occur as of the date of the insurance settlement, confiscation,
condemnation or requisition of title, as applicable.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which are
applicable as of the date of the Series A/B Indenture.
The term "guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down under letters of credit. When used as a verb,
"guarantee" has a corresponding meaning.
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person, contingent or otherwise, for borrowed money or
for the deferred purchase price of property or services (excluding any trade
accounts payable and other accrued current liabilities incurred in the ordinary
course of business) and all liabilities of such Person incurred in connection
with any letters of credit, bankers' acceptances or other similar credit
transactions or any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Capital Stock of such Person, or any warrants,
rights or options to acquire such Capital Stock, outstanding on the date of the
Series A/B Indenture or thereafter, if, and to the extent, any of the foregoing
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, if, and to the extent, any of
the foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) the Attributable Indebtedness
respecting all Capitalized Lease Obligations of such Person (e) all Indebtedness
referred to in the preceding clauses of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the
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payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or the amount of the obligation so
secured), (f) all guarantees by such Person of Indebtedness referred to in this
definition and (g) all obligations of such Person under or in respect of
Currency Hedge Obligations and Interest Rate Protection Obligations.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's or any of its Subsidiaries exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the fair
market value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by the Company in such Unrestricted Subsidiary
at such time. "Investments" shall exclude (a) extensions of trade credit or
other advances to customers on commercially reasonable terms in accordance with
normal trade practices or otherwise in the ordinary course of business, (b)
Interest Rate Protection Obligations and Currency Hedge Obligations, but only to
the extent that the same constitute Permitted Indebtedness and (c) endorsements
of negotiable instruments and documents in the ordinary course of business.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim or similar type
of encumbrance (including, without limitation, any agreement to give or grant
any lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing) upon or with
respect to any property of any kind. A Person shall be deemed to own subject to
a Lien any property which such Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Maturity" means, with respect to any Note, the date on which any principal
of such Note becomes due and payable as therein or in the Indenture provided,
whether at the Stated Maturity with respect to such principal or by declaration
of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents 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 the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of legal counsel, accountants and investment banks) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset Sale, (iii)
amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the properties or assets
subject to the Asset Sale or having a Lien thereon and (iv) appropriate amounts
to be provided by the Company or any Restricted Subsidiary, as the case may be,
as a reserve required in accordance with GAAP against any liabilities associated
with such Asset Sale and retained by the Company or any Restricted Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as reflected in an Officers' Certificate
delivered to the Trustee; provided, however, that any amounts remaining after
adjustments, revaluations or liquidations of such reserves shall constitute Net
Available Proceeds. "Net Available Proceeds" means, with respect to any Event of
Loss, the proceeds to the Company or any Restricted Subsidiary as a result
thereof in the form of cash or Cash Equivalents, including insurance proceeds
paid to the Company or any Restricted Subsidiary, and all
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payments received by the Company or any Restricted Subsidiary from any
government or any instrumentality or agency thereof by way of compensation for
the requisition of title to property, net of all fees and expenses incurred by
the Company or any Restricted Subsidiary related to the collection or receipt of
such proceeds, all as reflected in an Officers' Certificate delivered to the
Trustee.
"Net Cash Proceeds," with respect to any issuance or sale of Qualified
Capital Stock or other securities, means the cash proceeds of such issuance or
sale net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or any Restricted Subsidiary incurred in connection
with the acquisition by the Company or such Restricted Subsidiary of any
property or assets and as to which (a) the holders of such Indebtedness agree
that they will look solely to the property or assets so acquired and securing
such Indebtedness for payment on or in respect of such Indebtedness, and neither
the Company nor any Subsidiary (other than an Unrestricted Subsidiary) (i)
provides credit support, including any undertaking, agreement or instrument
which would constitute Indebtedness or (ii) is directly or indirectly liable for
such Indebtedness, and (b) no default with respect to such Indebtedness would
permit (after notice or passage of time or both), according to the terms
thereof, any holder of any Indebtedness of the Company or a Restricted
Subsidiary to declare a default on such Indebtedness or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity.
"Note Register" means the register maintained by or for the Company in
which the Company shall provide for the registration of the Notes and the
transfer of the Notes.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness (and any guarantee thereof) under one or more credit
facilities with banks and other financial institutions in an aggregate
principal amount at any one time outstanding not to exceed $35 million,
less any amounts derived from Asset Sales and applied to the permanent
reduction of the Indebtedness under any such credit facilities as
contemplated by the "Limitation on Asset Sales" covenant (the "Maximum Bank
Credit Amount"), and any renewals, amendments, extensions, supplements,
modifications, deferrals, refinancing or replacements (each, for purposes
of this clause (i), a "refinancing") thereof, including any successive
refinancing thereof, so long as the aggregate principal amount of any such
new Indebtedness, together with the aggregate principal amount of all other
Indebtedness outstanding pursuant to this clause (i), shall not at any one
time exceed the Maximum Bank Credit Amount;
(ii) Indebtedness under the Notes and any Exchange Notes issued in
exchange for Notes of an equal principal amount;
(iii) Indebtedness outstanding or in effect on the date of the
Indenture (and not repaid or defeased with the proceeds of the offering of
the Notes), including Indebtedness of the WINDJV being guaranteed by the
Company and Indebtedness outstanding under the Company's Series B Notes as
defined in the Series A/B Indenture.
(iv) Indebtedness under Interest Rate Protection Obligations, provided
that (1) such Interest Rate Protection Obligations are related to payment
obligations on Permitted Indebtedness or Indebtedness otherwise permitted
by paragraph (a) of the "Limitation on Indebtedness and Disqualified
Capital Stock" covenant, and (2) the notional principal amount of such
Interest Rate Protection Obligations does not exceed the principal amount
of such Indebtedness to which such Interest Rate Protection Obligations
relate;
(v) Indebtedness under Currency Hedge Obligations, provided that (1)
such Currency Hedge Obligations are related to payment obligations on
Permitted Indebtedness or Indebtedness otherwise permitted by paragraph (a)
of the "Limitation on Indebtedness and Disqualified Capital Stock" covenant
or to the foreign currency cash flows reasonably expected to be generated
by the Company and its Restricted Subsidiaries, and (2) the notional
principal amount of such Currency Hedge Obligations does
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not exceed the principal amount of such Indebtedness and the amount of such
foreign currency cash flows to which such Currency Hedge Obligations
relate;
(vi) the Subsidiary Guarantees of the Company's outstanding Series B
Notes and the Notes (and any assumption of the obligations guaranteed
thereby);
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the Company or
a Wholly Owned Restricted Subsidiary; provided, however, that upon any
subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Wholly Owned Restricted Subsidiary ceasing to be
a Wholly Owned Restricted Subsidiary or any other subsequent transfer of
any such Indebtedness (except to the Company or a Wholly Owned Restricted
Subsidiary), such Indebtedness shall be deemed, in each case, to be
incurred and shall be treated as an incurrence for purposes of paragraph
(a) of the "Limitation on Indebtedness and Disqualified Capital Stock"
covenant at the time the Wholly Owned Restricted Subsidiary in question
ceased to be a Wholly Owned Restricted Subsidiary or the time such
subsequent transfer occurred;
(viii) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary in the
ordinary course of business, including guaranties or obligations of the
Company or any Restricted Subsidiary with respect to letters of credit
supporting such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed);
(ix) Non-Recourse Indebtedness;
(x) any renewals, substitutions, refinancing or replacements (each,
for purposes of this clause (x), a "refinancing") by the Company or a
Restricted Subsidiary of any Indebtedness incurred pursuant to clause (ii)
or (iii) of this definition, including any successive refinancing by the
Company or such Restricted Subsidiary, so long as (A) any such new
Indebtedness shall be in a principal amount that does not exceed the
principal amount (or, if such Indebtedness being refinanced provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date of
determination) so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium reasonably determined
by the Company or such Restricted Subsidiary as necessary to accomplish
such refinancing, plus the amount of expenses of the Company or such
Restricted Subsidiary incurred in connection with such refinancing, (B) in
the case of any refinancing of Indebtedness (including the Notes) that is
pari passu with or subordinated in right of payment to either the Notes or
the Subsidiary Guarantees, then such new Indebtedness is either pari passu
with or subordinated in right of payment to the Notes or the Subsidiary
Guarantees, as the case may be, at least to the same extent as the
Indebtedness being refinanced and (C) such new Indebtedness has an Average
Life equal to or longer than the Average Life of the Indebtedness being
refinanced and a final Stated Maturity that is at least 91 days later than
the final Stated Maturity of the Indebtedness being refinanced; and
(xi) any additional Indebtedness in an aggregate principal amount not
in excess of $75 million at any one time outstanding and any guarantee
thereof.
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in the Company or any of its Wholly Owned
Restricted Subsidiaries; (iii) Investments by the Company or any of its
Restricted Subsidiaries in another Person, if as a result of such Investment (A)
such other Person becomes a Wholly Owned Restricted Subsidiary or (B) such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all of its properties and assets to, the Company or a Wholly Owned
Restricted Subsidiary; (iv) Investments permitted under the "Limitation on Asset
Sales" covenant or the "Limitation on Transactions with Affiliates" covenant;
(v) Investments made in the ordinary course of business in prepaid expenses,
lease, utility, workers' compensation, performance and other similar deposits;
(vi) Investments in stock, obligations or securities received in settlement of
debts owing to the Company or any Restricted Subsidiary as a result of
bankruptcy or insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of the Company or any Restricted Subsidiary, in
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each case as to debt owing to the Company or any Restricted Subsidiary that
arose in the ordinary course of business of the Company or any such Restricted
Subsidiary, provided that any stocks, obligations or securities received in
settlement of debts that arose in the ordinary course of business (and received
other than as a result of bankruptcy or insolvency proceedings or upon
foreclosure, perfection or enforcement of any Lien) that are, within 30 days of
receipt, converted into cash or Cash Equivalents shall be treated as having been
cash or Cash Equivalents at the time received; (vii) other Investments in joint
ventures, corporations, limited liability companies or partnerships formed with
or organized by third Persons, which joint ventures, corporations, limited
liability companies or partnerships, engage in a business substantially similar,
or related, to the business conducted by the Company and its Restricted
Subsidiaries, provided such Investments do not, in the aggregate, exceed the sum
of (1) $15 million and (2) the aggregate amount of principal repayments,
interest on Indebtedness, dividends, distributions or other return of capital
received by the Company or a Restricted Subsidiary from any Person (other than
the Company or any Restricted Subsidiary) in which the Company or any of its
Restricted Subsidiaries has an ownership interest (including any return of
capital resulting from redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary).
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date of the Series A/B Indenture;
(b) Liens securing the Notes or the Subsidiary Guarantees;
(c) Liens in favor of the Company;
(d) Liens securing Indebtedness that constitutes Permitted
Indebtedness pursuant to clause (i) of the definition of "Permitted
Indebtedness";
(e) Liens for taxes, assessments and governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(g) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds,
bids, government contracts and leases, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(h) judgment Liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the
period within which such proceeding may be initiated shall not have
expired;
(i) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(j) purchase money Liens; provided, however, that (i) the related
purchase money Indebtedness shall not be secured by any property or assets
of the Company or any Restricted Subsidiary other than the property or
assets so acquired and any proceeds therefrom and (ii) the Lien securing
such Indebtedness shall be created within 90 days of such acquisition;
(k) Liens securing obligations under or in respect of either Currency
Hedge Obligations or Interest Rate Protection Obligations;
(l) Liens upon specific items of inventory or other goods of any
Person securing such Person's obligations in respect of bankers acceptances
issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
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(m) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property or
assets relating to such letters of credit and products and proceeds
thereof;
(n) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(o) Liens on, or related to, properties or assets to secure all or
part of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof; and
(p) Liens securing Non-Recourse Indebtedness; provided, however, that
the related Non-Recourse Indebtedness shall not be secured by any property
or assets of the Company or any Restricted Subsidiary other than the
property and assets acquired by the Company or any Restricted Subsidiary
with the proceeds of such Non-Recourse Indebtedness.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of the Series A/B Indenture, including, without limitation, all classes
and series of preferred or preference stock of such Person.
"Public Equity Offering" means an offer and sale of Common Stock of the
Company pursuant to a registration statement that has been declared effective by
the Commission pursuant to the Securities Act (other than a registration
statement on Form S-8 or otherwise relating to equity securities issuable under
any employee benefit plan of the Company).
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Disqualified Capital Stock.
"Restricted Investment" means (without duplication) (i) the designation of
a Subsidiary as an Unrestricted Subsidiary in the manner described in the
definition of "Unrestricted Subsidiary" and (ii) any Investment other than a
Permitted Investment or an Investment in the WINDJV.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of the Series A/B Indenture, unless such
Subsidiary of the Company is an Unrestricted Subsidiary or is designated as an
Unrestricted Subsidiary pursuant to the terms of the Indenture.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Sale/Leaseback Transaction" means any direct or indirect arrangement
pursuant to which properties or assets are sold or transferred by the Company or
a Restricted Subsidiary and are thereafter leased back from the purchaser or
transferee thereof by the Company or one of its Restricted Subsidiaries.
"Series A/B Indenture" means the Indenture dated as of May 15, 1996, as
amended, among the Company, the "Subsidiary Guarantors" (as defined therein) and
State Street Bank and Trust Company (successor to Fleet National Bank), as
trustee, and providing for the issue of the Series A Notes and the Series B
Notes which were issued in exchange therefor in the aggregate principal amount
of $150 million.
"Series A Notes" means the 10.25% Senior Notes due 2003, Series A issued by
the Company pursuant to the Series A/B Indenture.
"Series B Notes" means the 10.25% Senior Notes Due 2003, Series B issued by
the Company pursuant to the Series A/B Indenture.
"Stated Maturity" means, when used with respect to any Indebtedness or any
installment of interest thereon, the date specified in the instrument evidencing
or governing such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of interest is due and payable.
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"Subordinated Indebtedness" means any Indebtedness of the Company or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Notes or the Subsidiary Guarantees, as the case may be.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Person performing
similar functions).
"Subsidiary Guarantee" means any guarantee of the Notes by any Subsidiary
Guarantor in accordance with the provisions described under "-- Subsidiary
Guarantees of Notes."
"Subsidiary Guarantor" means (i) Southwestern Offshore Corporation
(formerly known as Cliffs Drilling Asset Acquisition Company), (ii) Cliffs
Drilling Merger Company, (iii) Cliffs Drilling International, Inc., (iv) Cliffs
Oil and Gas Company, (v) DRL, Inc., (vi) Cliffs Drilling Trinidad Ltd., (vii)
the West Indies Drilling Joint Venture, (viii) each of the Company's other
Restricted Subsidiaries, if any, executing a supplemental indenture in which
such Subsidiary agrees to be bound by the terms of the Indenture and (ix) any
Person that becomes a successor guarantor of the Notes in compliance with the
provisions described under "-- Subsidiary Guarantees of Notes."
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company as an Unrestricted Subsidiary so long as (a)
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable pursuant to the terms of any Indebtedness of such Subsidiary; (b) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) such designation as an Unrestricted Subsidiary would be
permitted under the "Limitation on Restricted Payments" covenant; and (d) such
designation shall not result in the creation or imposition of any Lien on any of
the properties or assets of the Company or any Restricted Subsidiary (other than
any Permitted Lien or any Lien the creation or imposition of which shall have
been in compliance with the "Limitation on Liens" covenant); provided, however,
that with respect to clause (a), the Company or a Restricted Subsidiary may be
liable for Indebtedness of an Unrestricted Subsidiary if (x) such liability
constituted a Permitted Investment or a Restricted Payment permitted by the
"Limitation on Restricted Payments" covenant, in each case at the time of
incurrence, or (y) the liability would be a Permitted Investment at the time of
designation of such Subsidiary as an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving effect to such
designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation on a pro forma basis, (i) no Default or Event of
Default shall have occurred and be continuing, (ii) the Company could incur
$1.00 of additional Indebtedness (not including the incurrence of Permitted
Indebtedness) under the first paragraph of the "Limitation on Indebtedness and
Disqualified Capital Stock" covenant and (iii) if any of the properties and
assets of the Company or any of its Restricted Subsidiaries would upon such
designation become subject to any Lien (other than a Permitted Lien), the
creation or imposition of such Lien shall have been in compliance with the
"Limitation on Liens" covenant.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying
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shares mandated by applicable law, is owned directly or indirectly by the
Company or (ii) such Restricted Subsidiary is organized in a foreign
jurisdiction and is required by the applicable laws and regulations of such
foreign jurisdiction to be partially owned by the government of such foreign
jurisdiction or individual or corporate citizens of such foreign jurisdiction in
order for such Restricted Subsidiary to transact business in such foreign
jurisdiction, provided that the Company, directly or indirectly, owns the
remaining Capital Stock or ownership interest in such Restricted Subsidiary and,
by contract or otherwise, controls the management and business of such
Restricted Subsidiary and derives the economic benefits of ownership of such
Restricted Subsidiary to substantially the same extent as if such Restricted
Subsidiary were a wholly owned Subsidiary.
BOOK ENTRY; DELIVERY AND FORM
The Exchange Notes initially will be represented by a single, permanent
global certificate in definitive, fully registered form (the "Global Note"). The
Global Note will be deposited on the Closing Date with, or on behalf of, DTC and
registered in the name of a nominee of DTC.
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Note, DTC or its custodian will credit, on its
internal system, the principal amount of Exchange Notes of the individual
beneficial interests represented by such Global Note to the respective accounts
for persons who have accounts with DTC and (ii) ownership of beneficial
interests in the Global Note will be shown on, and the transfer of such
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Ownership of beneficial interests in the Global Note will be limited to persons
who have accounts with DTC ("participants") or persons who own interests through
participants. Owners of beneficial interests in the Global Note will hold their
interests in the Global Note directly through DTC, if they are participants in
such system, or indirectly through organizations which are participants in such
system.
So long as DTC or its nominee is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Note for all
purposes under the Indenture. No beneficial owner of an interest in the Global
Note will be able to transfer that interest except in accordance with DTC's
procedures in addition to those provided for under the Indenture.
Payments of the principal of, premium, if any, and interest on, the Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee, the Exchange Agent or any
paying agent of the Company 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 Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same day funds. The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in the Global Note.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Old Notes for exchange
for Exchange Notes) only at the direction of one or more participants to whose
account the interests in the Global Note are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants have given such direction. However, if there is an
Event of Default under the Indenture, DTC will exchange the Global
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Note for certificated Notes in registered form ("Certificated Securities"),
which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is 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.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. None of the Company, the Initial Purchasers, the
Trustee or the Exchange Agent will have any responsibility for the performance
by DTC or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Note and a successor depositary is not appointed by the Company
within 90 days, or at the Company's election at any time, Certificated
Securities will be issued in exchange for the Global Note.
REGISTRATION RIGHTS AGREEMENT
Pursuant to the Registration Rights Agreement, the Company agreed to file
with the SEC the Exchange Offer Registration Statement on the appropriate form
under the Securities Act with respect to an offer to exchange the Old Notes for
the Exchange Notes. The Registration Statement of which this Prospectus is a
part constitutes such Exchange Offer Registration Statement, and pursuant to the
Exchange Offer described herein the Company is offering to the holders of Notes
who are able to make certain representations the opportunity to exchange their
Old Notes for Exchange Notes.
If (i) the Company is not permitted to file the Exchange Offer Registration
Statement or to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or interpretation of the staff of the SEC or (ii)
any holder of Old Notes notifies the Company within the specified time period
that (A) due to a change in law or policy it is not entitled to participate in
the Exchange Offer, (B) due to a change in law or policy it may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
holder or (C) it is a broker-dealer and owns Old Notes acquired directly from
the Company or an affiliate of the Company, the Company will file with the SEC
the Shelf Registration Statement to cover resales of the Transfer Restricted
Notes (as defined) by the holders thereof. The Company will use its best efforts
to cause the applicable registration statement to be declared effective by the
SEC within specified periods. For purposes of the foregoing, "Transfer
Restricted Notes" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for an Exchange Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of an Old Note for an Exchange Note, the date on which such Exchange Note
is sold to a purchaser who receives from such broker-dealer on or prior to the
date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Note is distributed to the
public pursuant to Rule 144 under the Securities Act.
Under existing SEC interpretations, the Transfer Restricted Notes would, in
general, be freely transferable after the Exchange Offer without further
registration under the Securities Act; provided, however, that in
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the case of broker-dealers participating in the Exchange Offer, a prospectus
meeting the requirements of the Securities Act will be delivered upon resale by
such broker-dealers in connection with resales of Exchange Notes. The Company
has agreed, for a period of 180 days after consummation of the Exchange Offer,
to make available a prospectus meeting the requirements of the Securities Act to
any broker-dealer for use in connection with any resale of Exchange Notes
acquired in the Exchange Offer (other than a resale of any unsold allotment from
the original sale of the Old Notes). A broker-dealer which delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
The Registration Rights Agreement provides that: (i) unless the Exchange
Offer would not be permitted by applicable law or SEC policy, the Company will
file an Exchange Offer Registration Statement with the SEC on or prior to 60
days after the date of original issuance of the Notes (the "Closing Date," which
was August 7, 1997), (ii) unless the Exchange Offer would not be permitted by
applicable law or SEC policy, the Company will use its best efforts to have the
Exchange Offer Registration Statement declared effective by the SEC on or prior
to 120 days after the Closing Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, the Company will commence the
Exchange Offer and use its best efforts to issue, on or prior to 30 business
days after the date on which the Exchange Offer Registration Statement was
declared effective by the SEC, Exchange Notes in exchange for all Old Notes
tendered prior thereto in the Exchange Offer and (iv) if obligated to file the
Shelf Registration Statement, the Company will file on or prior to the later of
(x) 90 days after the Closing Date or (y) 30 days after such filing obligation
arises, and use its best efforts to cause the Shelf Registration Statement to be
declared effective by the SEC on or prior to 90 days after such obligation
arises; provided that if the Company has not consummated the Exchange Offer
within 180 days of the Closing Date, then the Company will file the Shelf
Registration Statement with the SEC on or prior to the 181st day after the
Closing Date and use its best efforts to cause the Shelf Registration Statement
to be declared effective within 60 days after such filing. The Company shall use
its best efforts to keep such Shelf Registration Statement continuously
effective, supplemented and amended until the second anniversary of the Closing
Date or such shorter period that will terminate when all the Transfer Restricted
Notes covered by the Shelf Registration Statement have been sold pursuant
thereto.
If (i) the Company fails to file any of the registration statements
required by the Registration Rights Agreement on or before the date specified
for such filing, (ii) any of such registration statements are not declared
effective by the SEC on or prior to the date specified for such effectiveness,
(iii) the Company fails to consummate the Exchange Offer within 30 business days
of the effective date of the Exchange Offer Registration Statement, or (iv) the
Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter, subject to certain exceptions, ceases to be
effective or usable in connection with the Exchange Offer or resales of Transfer
Restricted Notes, as the case may be, during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (i)
through (iv) above, a "Registration Default"), then the interest rate on
Transfer Restricted Notes will increase ("Additional Interest"), with respect to
the first 90-day period immediately following the occurrence of such
Registration Default by 0.50% per annum and will increase by an additional 0.50%
per annum with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of 2% per annum with respect to
all Registration Defaults. Following the cure of all Registration Defaults, the
accrual of Additional Interest will cease and the interest rate will revert to
the original rate.
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TRANSFER RESTRICTIONS ON OLD NOTES
The Old Notes have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Accordingly,
the Old Notes were offered and sold only to "Qualified Institutional Buyers" (as
defined in Rule 144A under the Securities Act) in compliance with Rule 144A.
Each purchaser of Old Notes was deemed to have acknowledged, represented
and agreed as follows:
(1) it is purchasing the Old Notes for its own account or an account
with respect to which it exercises sole investment discretion and that it
and any such account is a Qualified Institutional Buyer, for investment and
not with a view to distribution;
(2) the Old Notes have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except as set forth below;
(3) if it should resell or otherwise transfer the Old Notes within two
years after the original issuance of the Old Notes, it will do so only (a)
to the Company or any of its subsidiaries, (b) inside the United States to
a Qualified Institutional Buyer in compliance with Rule 144A, (c) inside
the United States to an Accredited Investor (as defined in Rule 501(a)(1),
(2) (3) or (7) under the Securities Act) that, prior to such transfer,
furnishes to the Trustee a signed letter containing certain representations
and agreements relating to the restrictions on transfer of the Notes (the
form of which letter can be obtained from such Trustee), (d) outside the
United States in compliance with Rule 904 of Regulation S under the
Securities Act, (e) pursuant to Rule 144 under the Securities Act, or (f)
pursuant to an effective registration statement under the Securities Act;
(4) it will give to each transferee of the Old Notes notice of any
restrictions on transfer of such Old Notes;
(5) none of the Company or the Initial Purchasers or any person
representing the Company or the Initial Purchasers has made any
representation to it with respect to the Company or the offering or sale of
any Old Notes, other than the information contained in the Offering
Memorandum provided with such Old Notes, which has been delivered to it and
upon which it is relying in making its investment decision with respect to
the Old Notes, accordingly it acknowledges that no representation or
warranty is made by the Company or the Initial Purchasers as to the
accuracy or completeness of such materials;
(6) it has had access to such financial and other information
concerning the Company and the Old Notes as it has deemed necessary in
connection with its decision to purchase the Old Notes, including an
opportunity to ask questions of and request information from the Company
and the Initial Purchasers;
(7) the Trustee will not be required to accept for registration of
transfer any Old Notes acquired by it, except upon presentation of evidence
satisfactory to the Company and the Trustee that the restrictions set forth
herein have been complied with;
(8) the Company, the Trustee, the Initial Purchasers and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that, if any of the
acknowledgments, representations or agreements deemed to have been made by
its purchase of the Old Notes are no longer accurate, it shall promptly
notify the Initial Purchasers; and
(9) if it is acquiring the Old Notes as a fiduciary or agent for one
or more investor accounts, it represents that it has sole investment
discretion with respect to each such account and it has full power to make
the foregoing acknowledgments, representations and agreements on behalf of
each account.
Each certificate respecting the Old Notes bears the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS
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ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D)
OUTSIDE THE UNITED STATES TO FOREIGN PURCHASERS IN OFFSHORE TRANSACTIONS MEETING
THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM IN
REGULATION S UNDER THE SECURITIES ACT.
Any Old Notes not exchanged in the Exchange Offer for Exchange Notes will
continue to be subject to the transfer restrictions described above.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain federal income tax consequences
associated with the Exchange Offer, and also with respect to the acquisition,
ownership, and disposition of the Exchange Notes. The following summary does not
discuss all of the aspects of federal income taxation that may be relevant to a
prospective holder of Exchange Notes in light of his or her particular
circumstances, or to certain types of holders which are subject to special
treatment under the federal income tax laws (including persons who hold Exchange
Notes as part of a conversion, straddle or hedge, dealers in securities,
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers and S corporations). Further, the summary pertains only to
holders that are citizens or residents of the United States, corporations,
partnerships or other entities created in or under the laws of the United States
or any political subdivision thereof, or estates or trusts the income of which
is subject to United States federal income taxation regardless of its source. In
addition, this summary does not describe any tax consequences under state,
local, or foreign tax laws.
The discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Regulations (the "Regulations"), rulings and
pronouncements issued by the Internal Revenue Service ("IRS") and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect holders of Exchange Notes.
The Company has not sought and will not seek any rulings from the IRS or
opinions from counsel with respect to the matters discussed below. There can be
no assurance that the IRS will not take positions concerning the tax
consequences of the valuation, purchase, ownership or disposition of the
Exchange Notes which are different from those discussed herein.
THIS SUMMARY DOES NOT PURPORT TO COVER ALL THE POSSIBLE TAX CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES, AND IS NOT
INTENDED AS TAX ADVICE. PROSPECTIVE PURCHASERS OF EXCHANGE NOTES SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES THAT MAY BE SPECIFIC TO THEM OF
61
<PAGE> 63
ACQUIRING, OWNING AND DISPOSING OF EXCHANGE NOTES, AS WELL AS THE APPLICATION OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
EXCHANGE OFFER
Under federal income tax law, a holder of Old Notes will not recognize gain
or loss upon an exchange of the Old Notes for Exchange Notes pursuant to the
Exchange Offer. A holder's basis and holding period for the Exchange Notes
received pursuant to the Exchange Offer will be the same as such holder's basis
and holding period for the Old Notes exchanged therefor.
Each exchanging holder should consult with its individual tax advisor as to
any foreign, state and local tax consequences of the Exchange Offer as well as
to the effect of such holder's particular facts and circumstances on the matters
discussed herein.
TAXATION OF QUALIFIED STATED INTEREST ON EXCHANGE NOTES
Absent some special circumstances that may be particular to a holder,
qualified stated interest paid on an Exchange Note will be taxable to a holder
as ordinary interest income at the time it accrues or is received, in accordance
the holder's regular method of accounting for federal income tax purposes.
The Company will annually furnish to certain record holders of the Exchange
Notes and to the IRS information with respect to qualified stated interest paid
during the calendar year as may be required under applicable regulations.
SALE OR OTHER TAXABLE DISPOSITION OF EXCHANGE NOTES
The sale, redemption, or other taxable disposition of an Exchange Note will
result in the recognition of gain or loss to the holder in an amount equal to
the difference between (a) the amount of cash and fair market value of property
received (except to the extent attributable to the payment of accrued stated
interest) in exchange therefor and (b) the holder's adjusted tax basis in such
Exchange Note.
A holder's initial tax basis in an Exchange Note purchased by such holder
will be equal to the portion of the issue price allocable to the Exchange Notes,
as discussed above. The holder's initial tax basis in an Exchange Note will be
increased by the amount of any original issue discount included in gross income
with respect to such Exchange Note to the date of disposition.
Any gain or loss on the sale, redemption, or other taxable disposition of
an Exchange Note will be capital gain or loss, assuming the owner of the
Exchange Note holds such security as a "capital asset" (generally property held
for investment) within the meaning of Section 1221 of the Code. Any capital gain
or loss will be long-term capital gain or loss if the Exchange Note is held for
more than one year and otherwise will be short-term capital gain or loss.
Payments on such disposition for accrued stated interest not previously included
in income will be treated as ordinary interest income.
If the Exchange Offer is not consummated within the required period of time
(and in certain other circumstances), then Additional Interest may become
payable with respect to the Notes. See "Registration Rights Agreement." This
rate increase should not result in a deemed taxable exchange of the Notes.
PURCHASERS OF NOTES AT OTHER THAN ORIGINAL ISSUANCE PRICE OR DATE
The foregoing does not discuss special rules which may affect the treatment
of purchasers that acquired Old Notes either (a) other than at the time of
original issuance or (b) at the time of original issuance other than at the
issue price, including those provisions of the Code relating to the treatment of
"market discount," "acquisition premium" and "amortizable bond premium." Any
such purchaser should consult its tax advisor as to the consequences to such
purchaser of the acquisition, ownership, and disposition of Notes.
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<PAGE> 64
BACKUP WITHHOLDING
The backup withholding rules require a payor to deduct and withhold a tax
if (a) the payee fails to properly furnish a taxpayer identification number
("TIN") to the payor, (b) the IRS notifies the payor that the TIN furnished by
the payee is incorrect, (c) the payee has failed to report properly the receipt
of "reportable payments" and the IRS has notified the payor that withholding is
required, or (d) there has been a failure of the payee to certify under the
penalty of perjury that a payee is not subject to withholding under Section 3406
of the Code. As a result, if any one of the events discussed above occurs with
respect to a holder of Notes, the Company, its paying agent or other withholding
agent will be required to withhold a tax equal to 31% of any "reportable
payment" made in connection with the Notes of such holder. A "reportable
payment" includes, among other things, amounts paid in respect of interest or
original issue discount and amounts paid through brokers in retirement of
securities. Any amounts withheld from a payment to a holder under the backup
withholding rules will be allowed as a refund or credit against such holder's
federal income tax, provided, that the required information is furnished to the
IRS. Certain holders (including, among others, corporations and certain
tax-exempt organizations) are not subject to the backup withholding rules.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer may be a statutory underwriter and must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Old Notes where such Old Notes were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale for a period of 180 days after consummation of the Exchange Offer, or
such shorter period as will terminate when all Old Notes acquired by
broker-dealers for their own accounts as a result of market-making activities or
other trading activities have been exchanged for Exchange Notes and resold by
such broker-dealers. A broker-dealer that delivers such a prospectus to
purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. For a period of 180 days after consummation of the Exchange Offer, or such
shorter period as will terminate when all Old Notes acquired by broker-dealers
for their own accounts as a result of market-making activities or other trading
activities have been exchanged for Exchange Notes and resold by such
broker-dealers, the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed in the Registration Rights Agreement to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act.
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<PAGE> 65
EXPERTS
The validity of the issuance of the Notes offered hereby will be passed
upon for the Company by Griggs & Harrison, P.C., Houston, Texas.
The Consolidated Financial Statements and schedule of the Company appearing
in the Company's Annual Report (Form 10-K) for the year ended December 31, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein. Such Consolidated Financial Statements
and schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The Consolidated Financial Statements of Southwestern Offshore Corporation
and Subsidiaries at December 31, 1995 and 1994 and for the years ended December
31, 1995 and 1994 and for the period from inception (July 19, 1993) through
December 31, 1993 included in the Company's Current Report on Form 8-K dated May
23, 1996, incorporated by reference in this Prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
64
<PAGE> 66
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
GENERAL
Article Ninth of the Company's Certificate of Incorporation ("Article
Ninth") requires the Company to indemnify its directors, officers and certain
other individuals to the full extent permitted by the Delaware General
Corporation Law ("Delaware GCL") or other applicable laws and allows the Company
to enter into agreements with any person to provide greater or different
indemnification than that provided in Article Ninth or the Delaware GCL.
Article Tenth of the Company's Certificate of Incorporation ("Article
Tenth") limits the personal liability of the Company's directors to the Company
or its stockholders to the full extent permitted by the Delaware GCL, which
currently permits directors to be protected from monetary damages for breach of
their fiduciary duty of care. This limitation has no effect on claims arising
under the federal securities laws.
INDEMNIFICATION AND INSURANCE
Under the Delaware GCL, directors and officers as well as other employees
and individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation such
as a derivative action) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of actions by or in the right of the corporation,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and the
Delaware GCL requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the
corporation.
Article Ninth provides that each person who is or was or had agreed to
become a director or officer of the Company, and each such person who is or was
serving or who had agreed to serve at the request of the Board of Directors or
an officer of the Company as an employee or agent of the Company, or as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company to
the full extent permitted by the Delaware GCL or any other applicable laws as
presently or hereafter in effect. Under Article Ninth, subject to the
limitations on indemnification imposed by the Delaware GCL, a large award
against an officer or director or other appropriate individual could be paid by
the Company, which could affect the assets of the Company.
Article Ninth provides that, without limiting the generality or effect of
the foregoing, the Company may enter into one or more agreements with any person
which provide for indemnification greater or different than that provided in
Article Ninth. Finally, Article Ninth and Article Tenth each provide that any
repeal or modification of such article shall not adversely affect any right or
protection existing thereunder immediately prior to such repeal or modification.
The Company has entered into agreements with each of its directors and
certain officers providing for indemnification broader than that provided by
Article Ninth. Each of the directors and certain officers are entitled to
indemnification pursuant to the indemnification agreements whether his or her
acts, failures to act, neglect or breach of duty giving rise to the right to
indemnity thereunder occurred prior or subsequent to the date of such agreement.
Such right, however, would not be available with respect to acts, failures to
act, neglect or breaches of duty of a director or officer occurring prior to the
date such person became a director or officer of the Company.
II-1
<PAGE> 67
One of the purposes of entering into such indemnification agreements was to
specify the extent to which the directors and certain officers may receive
indemnification under circumstances in which indemnity would not otherwise be
provided by Article Ninth. Such agreements entitle the directors and officers to
indemnification as expressly provided by Article Ninth and to indemnification
for any amount which a director or officer is or becomes legally obligated to
pay relating to or arising out of any claim made against such director or
officer because of any act, failure to act or neglect or breach of duty,
including, without limitation, any actual or alleged error, misstatement or
misleading statement, which such director or officer commits, suffers, permits
or acquiesces in while acting in the director's or officer's position with the
Company. The right to receive payments under the proposed indemnification
agreements in excess of those expressly provided in Article Ninth would not be
permitted, however, in connection with any claim against a director or officer:
(i) which results in a final, nonappealable order against the director
or officer to pay a fine or similar governmental imposition which the
Company is prohibited by applicable law from paying; or
(ii) to the extent based upon or attributable to the director or
officer gaining in fact a personal profit to which he or she was not
legally entitled, including, without limitation, profits made from the
purchase and sale of equity securities of the Company which are recoverable
by the Company pursuant to Section 16(b) of the Securities Exchange Act of
1934 and profits arising from transactions in publicly traded securities of
the Company which were effected by the director or officer in violation of
Section 10(b) of the Securities Exchange Act of 1934, including rule 10b-5
promulgated thereunder.
Another purpose of the indemnification agreements is to provide the
directors or officers with increased assurance of indemnification by prohibiting
the Company from adopting any amendment to the Company's Certificate of
Incorporation or Bylaws which would have the effect of denying, diminishing or
encumbering their rights to indemnification pursuant thereto or to the Delaware
GCL or any other law as applied to any act or failure to act occurring in whole
or in part prior to the effective date of such amendment.
At present there is no pending litigation or proceeding involving a
director or officer of the Company in which indemnification would be required or
permitted by the proposed indemnification agreements. The Board of Directors is
not aware of any threatened litigation or proceeding which may result in a claim
for indemnification under any such indemnification agreement.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
Under the Delaware GCL, Article Tenth would protect the Company's directors
against monetary damages for breaches of their duty of care, except as set forth
below. The inclusion of Article Tenth in the Company's Certificate of
Incorporation means that the Company and its stockholders would forego the
ability to bring a cause of action against a director for monetary damages for
certain breaches of fiduciary duty, including actions in connection with
proposals for the acquisition of control of the Company. Directors remain liable
for breaches of their duty of loyalty to the Company and its stockholders as
well as acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law and transactions from which a director
derives improper personal benefit. Also, Article Tenth does not eliminate
director liability under Section 174 of the Delaware GCL, which makes directors
personally liable for unlawful dividends or unlawful stock repurchases or
redemptions and expressly sets forth a negligence standard with respect to such
liability.
Although Article Tenth provides directors with protection from awards of
monetary damages for breaches of the duty of care, it does not eliminate the
directors' duty of care. Accordingly, Article Tenth will have no effect on the
availability of equitable remedies such as an injunction or rescission based
upon a director's breach of the duty of care. The provisions of Article Tenth
which eliminate liability as described above will apply to officers of the
Company only if they are directors of the Company and are acting in their
capacity as directors, and will not apply to officers of the Company who are not
directors.
II-2
<PAGE> 68
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are so indicated by
parenthetical information.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
2.1 -- Reorganization and Distribution Agreement dated as of
June 8, 1988 among Cleveland-Cliffs Inc, The
Cleveland-Cliffs Iron Company, Cliffs Drilling Company,
now Cliffs Resources, Inc., Cliffs Exploration Company,
now Cliffs Oil and Gas Company, Cliffs Drilling
International, Inc. and New Cliffs Drilling Company, now
Cliffs Drilling Company, the Registrant (the "Company")
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-1, No.
33-23508, filed under the Securities Act).
2.2 -- Acquisition Agreement dated as of May 13, 1996 by and
among Southwestern Offshore Corporation, Viking Supply
Ships A.S., Ocean Master III Inc., Production Partner
Inc., Trivium Investments Limited, Helge Ringdal and the
Company, Cliffs Drilling Asset Acquisition Company and
Cliffs Drilling Merger Company (incorporated by reference
to Exhibit 2.2 to the Company's Current Report on Form
8-K dated May 23, 1996).
3.1.1 -- Certificate of Incorporation of New Cliffs Drilling
Company (incorporated by reference to Exhibit 3.1.1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
3.1.2 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.3 -- Certificate of Designations of $2.3125 Convertible
Exchangeable Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.4 -- Certificate of Amendment of Certificate of Incorporation
of Cliffs Drilling Company (incorporated by reference to
Exhibit 3.1.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).
3.1.5 -- Certificate of Elimination of $2.3125 Convertible
Exchangeable Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.5 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.6 -- Certificate of Designations of Series A Junior
Participating Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.6 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
4.1 -- Certificate of Incorporation of Cliffs Drilling Company
(included as Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5
and 3.1.6).
4.2 -- By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-1, No. 33-23508, filed under the Securities Act).
4.3 -- Indenture dated as of May 15, 1996 among the Company, as
issuer, Cliffs Drilling Asset Acquisition Company, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc. and Cliffs Oil and Gas Company, as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee, including a
Form of the Company's 10.25% Senior Notes due 2003
(incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K dated May 23, 1996).
II-3
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ------------------------- ------------------------------------------------------------------------------------------
<C> <S>
4.3.1 -- First Supplemental Indenture dated as of July 11, 1996 among the Company, as issuer,
Southwestern Offshore Corporation (f/k/a Cliffs Drilling Asset Acquisition Company),
Cliffs Drilling Merger Company, Cliffs Drilling International, Inc., Cliffs Oil and Gas
Company, and DRL, Inc., as subsidiary guarantors, and Fleet National Bank, predecessor
of State Street Bank and Trust Company, as trustee (incorporated by reference to
Exhibit 4.3.1 to the Company's Registration Statement on Form S-4, No. 333-08273 filed
July 17, 1996).
4.3.2 -- Second Supplemental Indenture dated as of January 24, 1997 among the Company, as
issuer, Southwestern Offshore Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling International, Inc., Cliffs
Oil and Gas Company, DRL, Inc., and Greenbay Drilling Company Ltd., as subsidiary
guarantors, and Fleet National Bank, predecessor of State Street Bank and Trust
Company, as trustee (incorporated by reference to Exhibit 4.6.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996).
4.3.3* -- Third Supplemental Indenture dated as of August 29, 1997 among the Company, as issuer,
Southwestern Offshore Corporation (f/k/a Cliffs Drilling Asset Acquisition Company),
Cliffs Drilling Merger Company, Cliffs Drilling International, Inc., Cliffs Oil and Gas
Company, DRL, Inc., Cliffs Drilling Trinidad Ltd. and the West Indies Drilling Joint
Venture, as subsidiary guarantors, and State Street Bank and Trust Company, successor
to Fleet National Bank, as trustee.
4.4* -- Indenture dated as of August 7, 1997 among the Company, as issuer, Southwestern
Offshore Corporation, Cliffs Drilling Merger Company, Cliffs Drilling International,
Inc., Cliffs Oil and Gas Company and DRL, Inc., as subsidiary guarantors, and State
Street Bank and Trust Company, as trustee, including a form of the Company's 10.25%
Senior Notes due 2003.
4.4.1* -- First Supplemental Indenture dated as of August 29, 1997 among the Company, as issuer,
Southwestern Offshore Corporation, Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL, Inc., Cliffs Drilling Trinidad
Ltd. and the West Indies Drilling Joint Venture, as subsidiary guarantors, and State
Street Bank and Trust Company, as trustee.
4.5* -- Registration Rights Agreement dated as of July 31, 1997 by and among the Company,
Southwestern Offshore Corporation, Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL, Inc., Jefferies & Company, Inc.
and ING Baring (U.S.) Securities, Inc.
5.1* -- Opinion of Griggs & Harrison, P.C.
12.1* -- Statement re Computation of Ratio of Earnings to Fixed Charges.
23.1* -- Consent of Ernst & Young LLP.
23.2* -- Consent of Arthur Andersen, LLP.
23.3* -- Consent of Griggs & Harrison, P.C. (included in Exhibit 5.1).
24.1* -- Powers of Attorney (included on the signature pages of this Registration Statement).
25.1 -- Statement of Eligibility of Fleet National Bank, predecessor of State Street Bank and
Trust Company, dated July 15, 1996 (incorporated by reference to Exhibit 25.1 to the
Company's Registration Statement on Form S-4, No. 333-08273 filed July 17, 1996).
25.2* -- Statement of Eligibility of State Street Bank and Trust Company dated September 22,
1997.
99.1* -- Form of Letter of Transmittal.
</TABLE>
- ---------------
* Filed herewith
II-4
<PAGE> 70
ITEM 22. UNDERTAKINGS
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 20 above, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless, in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-5
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
CLIFFS DRILLING COMPANY
By: /s/ DOUGLAS E. SWANSON
--------------------------------
Douglas E. Swanson
Chairman of the Board, President,
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Chairman of the Board, President and September 24, 1997
- ----------------------------------------------------- Chief Executive Officer (Principal
Douglas E. Swanson Executive Officer)
/s/ M. M. CONE Director September 24, 1997
- -----------------------------------------------------
M. M. Cone
/s/ H. ROBERT HIRSCH Director September 24, 1997
- -----------------------------------------------------
H. Robert Hirsch
/s/ DONALD W. KELLER Director September 24, 1997
- -----------------------------------------------------
Donald W. Keller
/s/ ROBERT M. MCINNES Director September 24, 1997
- -----------------------------------------------------
Robert M. McInnes
/s/ JOSEPH E. REID Director September 24, 1997
- -----------------------------------------------------
Joseph E. Reid
/s/ JOHN D. WEIL Director September 24, 1997
- -----------------------------------------------------
John D. Weil
/s/ EDWARD A. GUTHRIE Vice President -- Finance and Chief September 24, 1997
- ----------------------------------------------------- Financial Officer (Principal
Edward A. Guthrie Financial Officer)
/s/ CINDY B. TAYLOR Vice President -- Controller September 24, 1997
- ----------------------------------------------------- (Principal Accounting Officer)
Cindy B. Taylor
</TABLE>
II-6
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
SOUTHWESTERN OFFSHORE CORPORATION
(f/k/a Cliffs Drilling Asset
Acquisition Company)
By: /s/ CHARLES M. McCALL
--------------------------------------
Charles M. McCall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Chairman of the Board September 24, 1997
- -----------------------------------------------------
Douglas E. Swanson
/s/ CHARLES M. McCALL Director and President (Principal September 24, 1997
- ----------------------------------------------------- Executive Officer)
Charles M. McCall
/s/ JIM R. WISE Executive Vice President -- September 24, 1997
- ----------------------------------------------------- Operations
Jim R. Wise
/s/ EDWARD A. GUTHRIE Director, Vice President -- September 24, 1997
- ----------------------------------------------------- Finance and Secretary (Principal
Edward A. Guthrie Financial Officer and Principal
Accounting Officer)
</TABLE>
II-7
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
CLIFFS DRILLING MERGER COMPANY
By: /s/ DOUGLAS E. SWANSON
------------------------------------
Douglas E. Swanson
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Director and President September 24, 1997
- ----------------------------------------------------- (Principal Executive
Douglas E. Swanson Officer)
/s/ EDWARD A. GUTHRIE Director and Vice President September 24, 1997
- ----------------------------------------------------- (Principal Financial
Edward A. Guthrie Officer)
/s/ CINDY B. TAYLOR Controller (Principal September 24, 1997
- ----------------------------------------------------- Accounting Officer)
Cindy B. Taylor
</TABLE>
II-8
<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
CLIFFS DRILLING INTERNATIONAL, INC.
By: /s/ DOUGLAS E. SWANSON
------------------------------------
Douglas E. Swanson
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Director and President September 24, 1997
- ----------------------------------------------------- (Principal Executive
Douglas E. Swanson Officer)
/s/ EDWARD A. GUTHRIE Director and Vice September 24, 1997
- ----------------------------------------------------- President -- Finance
Edward A. Guthrie (Principal Financial
Officer)
/s/ CINDY B. TAYLOR Controller (Principal September 24, 1997
- ----------------------------------------------------- Accounting Officer)
Cindy B. Taylor
</TABLE>
II-9
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
CLIFFS OIL AND GAS COMPANY
By: /s/ DOUGLAS E. SWANSON
-------------------------------
Douglas E. Swanson
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Director and President (Principal September 24, 1997
- ----------------------------------------------------- Executive Officer)
Douglas E. Swanson
/s/ EDWARD A. GUTHRIE Director and Vice President -- September 24, 1997
- ----------------------------------------------------- Finance (Principal Financial
Edward A. Guthrie Officer)
/s/ CINDY B. TAYLOR Controller (Principal Accounting September 24, 1997
- ----------------------------------------------------- Officer)
Cindy B. Taylor
</TABLE>
II-10
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
DRL, INC.
By: /s/ DOUGLAS E. SWANSON
-----------------------------------
Douglas E. Swanson
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Director and President (Principal September 24, 1997
- ----------------------------------------------------- Executive Officer)
Douglas E. Swanson
/s/ EDWARD A. GUTHRIE Director and Vice President September 24, 1997
- ----------------------------------------------------- (Principal Financial Officer)
Edward A. Guthrie
/s/ CINDY B. TAYLOR Controller (Principal Accounting September 24, 1997
- ----------------------------------------------------- Officer)
Cindy B. Taylor
</TABLE>
II-11
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
CLIFFS DRILLING TRINIDAD LTD.
By: /s/ JIM R. WISE
------------------------------------
Jim R. Wise
Managing Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JIM R. WISE Managing Director (Principal September 24, 1997
- ----------------------------------------------------- Executive Officer)
Jim R. Wise
/s/ DOUGLAS E. SWANSON Director September 24, 1997
- -----------------------------------------------------
Douglas E. Swanson
/s/ EDWARD A. GUTHRIE Director and Vice President September 24, 1997
- ----------------------------------------------------- (Principal Financial Officer and
Edward A. Guthrie Principal Accounting Officer)
</TABLE>
II-12
<PAGE> 78
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on September 24, 1997.
WEST INDIES DRILLING JOINT VENTURE
By: CLIFFS DRILLING TRINIDAD LTD.,
Partner and Firm Manager
By: /s/ JIM R. WISE
------------------------------------
Jim R. Wise
Managing Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JIM R. WISE Managing Director (Principal September 24, 1997
- ----------------------------------------------------- Executive Officer) of Cliffs
Jim R. Wise Drilling Trinidad Ltd., Firm
Manager
/s/ DOUGLAS E. SWANSON Director of Cliffs Drilling Trinidad September 24, 1997
- ----------------------------------------------------- Ltd., Firm Manager
Douglas E. Swanson
/s/ EDWARD A. GUTHRIE Director and Vice President of Cliffs September 24, 1997
- ----------------------------------------------------- Drilling Trinidad Ltd., Firm
Edward A. Guthrie Manager (Principal Financial
Officer and Principal Accounting
Officer)
</TABLE>
II-13
<PAGE> 79
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
2.1 -- Reorganization and Distribution Agreement dated as of
June 8, 1988 among Cleveland-Cliffs Inc, The
Cleveland-Cliffs Iron Company, Cliffs Drilling Company,
now Cliffs Resources, Inc., Cliffs Exploration Company,
now Cliffs Oil and Gas Company, Cliffs Drilling
International, Inc. and New Cliffs Drilling Company, now
Cliffs Drilling Company, the Registrant (the "Company")
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-1, No.
33-23508, filed under the Securities Act).
2.2 -- Acquisition Agreement dated as of May 13, 1996 by and
among Southwestern Offshore Corporation, Viking Supply
Ships A.S., Ocean Master III Inc., Production Partner
Inc., Trivium Investments Limited, Helge Ringdal and the
Company, Cliffs Drilling Asset Acquisition Company and
Cliffs Drilling Merger Company (incorporated by reference
to Exhibit 2.2 to the Company's Current Report on Form
8-K dated May 23, 1996).
3.1.1 -- Certificate of Incorporation of New Cliffs Drilling
Company (incorporated by reference to Exhibit 3.1.1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
3.1.2 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.3 -- Certificate of Designations of $2.3125 Convertible
Exchangeable Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.4 -- Certificate of Amendment of Certificate of Incorporation
of Cliffs Drilling Company (incorporated by reference to
Exhibit 3.1.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).
3.1.5 -- Certificate of Elimination of $2.3125 Convertible
Exchangeable Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.5 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.6 -- Certificate of Designations of Series A Junior
Participating Preferred Stock of Cliffs Drilling Company
(incorporated by reference to Exhibit 3.1.6 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
4.1 -- Certificate of Incorporation of Cliffs Drilling Company
(included as Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5
and 3.1.6).
4.2 -- By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-1, No. 33-23508, filed under the Securities Act).
4.3 -- Indenture dated as of May 15, 1996 among the Company, as
issuer, Cliffs Drilling Asset Acquisition Company, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc. and Cliffs Oil and Gas Company, as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee, including a
Form of the Company's 10.25% Senior Notes due 2003
(incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K dated May 23, 1996).
4.3.1 -- First Supplemental Indenture dated as of July 11, 1996
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, and DRL,
Inc., as subsidiary guarantors, and Fleet National Bank,
predecessor of State Street Bank and Trust Company, as
trustee (incorporated by reference to Exhibit 4.3.1 to
the Company's Registration Statement on Form S-4, No.
333-08273 filed July 17, 1996).
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
4.3.2 -- Second Supplemental Indenture dated as of January 24,
1997 among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., and Greenbay Drilling Company Ltd., as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee (incorporated
by reference to Exhibit 4.6.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1996).
4.3.3* -- Third Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., Cliffs Drilling Trinidad Ltd. and the West Indies
Drilling Joint Venture, as subsidiary guarantors, and
State Street Bank and Trust Company, successor to Fleet
National Bank, as trustee.
4.4* -- Indenture dated as of August 7, 1997 among the Company,
as issuer, Southwestern Offshore Corporation, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc., Cliffs Oil and Gas Company and DRL, Inc., as
subsidiary guarantors, and State Street Bank and Trust
Company, as trustee, including a form of the Company's
10.25% Senior Notes due 2003.
4.4.1* -- First Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Cliffs Drilling Trinidad Ltd. and the West
Indies Drilling Joint Venture, as subsidiary guarantors,
and State Street Bank and Trust Company, as trustee.
4.5* -- Registration Rights Agreement dated as of July 31, 1997
by and among the Company, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Jefferies & Company, Inc. and ING Baring
(U.S.) Securities, Inc.
5.1* -- Opinion of Griggs & Harrison, P.C.
12.1* -- Statement re Computation of Ratio of Earnings to Fixed
Charges.
23.1* -- Consent of Ernst & Young LLP.
23.2* -- Consent of Arthur Andersen, LLP.
23.3* -- Consent of Griggs & Harrison, P.C. (included in Exhibit
5.1).
24.1* -- Powers of Attorney (included on the signature pages of
this Registration Statement).
25.1 -- Statement of Eligibility of Fleet National Bank,
predecessor of State Street Bank and Trust Company, dated
July 15, 1996 (incorporated by reference to Exhibit 25.1
to the Company's Registration Statement on Form S-4, No.
333-08273 filed July 17, 1996).
25.2* -- Statement of Eligibility of State Street Bank and Trust
Company dated September 22, 1997.
99.1* -- Form of Letter of Transmittal.
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 4.3.3
________________________________________________________________________________
CLIFFS DRILLING COMPANY,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
STATE STREET BANK AND TRUST COMPANY
SUCCESSOR TO FLEET NATIONAL BANK
Trustee
______________
THIRD SUPPLEMENTAL INDENTURE
(SERIES A/B SECURITIES)
Dated as of August 29, 1997
___________
Supplementing and Amending the Indenture
dated as of May 15, 1996
as amended by the First Supplemental Indenture
dated as of July 11, 1996
and the Second Supplemental Indenture
dated as of January 24, 1997
<PAGE> 2
THIRD SUPPLEMENTAL INDENTURE
THIS THIRD SUPPLEMENTAL INDENTURE dated as of August 29, 1997, is
between CLIFFS DRILLING COMPANY, a Delaware corporation (the "Company"), the
SUBSIDIARY GUARANTORS (as defined herein) and STATE STREET BANK AND TRUST
COMPANY, SUCCESSOR TO FLEET NATIONAL BANK, a national banking association (the
"Trustee").
RECITALS OF THE COMPANY
A. The Company has duly authorized the creation of an issue of
10.25% Senior Notes due 2003, Series A (the "Series A Securities") and an issue
of 10.25% Senior Notes due 2003, Series B (the "Series B Securities" and the
Series A Securities and the Series B Securities, as amended or supplemented
from time to time in accordance with the terms of the Indenture (as defined
herein), being herein collectively called the "Securities"), of substantially
the tenor and in the aggregate principal amount set forth in the Indenture.
B. The Company and the Subsidiary Guarantors have heretofore
made, executed and delivered to the Trustee an Indenture dated as of May 15,
1996 (referred to herein as the "Original Indenture") pursuant to which the
Securities are issuable, and a First Supplemental Indenture dated as of July
11, 1996 and a Second Supplemental Indenture dated as of January 24, 1997 (the
Original Indenture as supplemented by the First Supplemental Indenture and the
Second Supplemental Indenture being referred to herein as the "Original
Supplemented Indenture").
C. The Securities are guaranteed by the Subsidiary Guarantors (as
defined in the Indenture) on the terms provided in the Indenture.
D. It is deemed desirable to supplement and amend the Original
Supplemented Indenture to add two Restricted Subsidiaries of the Company as
Subsidiary Guarantors (the Original Supplemented Indenture, as so supplemented
and amended by this Third Supplemental Indenture, being sometimes referred to
herein as the "Indenture").
E. Article IX, Section 9.1 of the Original Indenture provides
that under certain conditions the Company, the Subsidiary Guarantors and
Trustee, may, without the consent of any Holders, from time to time and at any
time, enter into an indenture or indentures supplemental thereto, for the
purpose, inter alia, of adding any Restricted Subsidiary as an additional
Subsidiary Guarantor (subsection (g)).
F. In addition, Article X, Section 10.13 of the Original
Indenture provides that certain Restricted Subsidiaries of the Company shall
become Subsidiary Guarantors by executing and delivering a supplemental
indenture agreeing to be bound by the terms of the Original Indenture.
-1-
<PAGE> 3
G. The Series A Securities were issued on May 23, 1996 under the
Original Indenture, and the Series B Securities were issued in exchange for the
Series A Securities on August 30, 1996.
H. Greenbay Drilling Company Ltd., which was added as a
Subsidiary Guarantor pursuant to the Second Supplemental Indenture, has been
merged with and into the Company.
I. All things necessary to authorize the execution and delivery
of this Third Supplemental Indenture, to effect the modifications of the
Original Supplemented Indenture provided for in this Third Supplemental
Indenture, and to make the Original Supplemented Indenture, as further
supplemented and amended by this Third Supplemental Indenture, a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities by the Holders, the Company, the Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
the respective Holders from time to time of the Securities as follows:
ARTICLE I
MODIFICATION OF THE ORIGINAL INDENTURE
SECTION 1.1 AMENDMENT OF ARTICLE I OF THE ORIGINAL INDENTURE.
Section 1.1 of the Original Supplemented Indenture is amended by changing the
definition of "Subsidiary Guarantor" to read as follows:
"'Subsidiary Guarantor' means (i) Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition Company), a
Delaware corporation, (ii) Cliffs Drilling Merger Company, a Delaware
corporation, (iii) Cliffs Drilling International, Inc., a Delaware
corporation, (iv) Cliffs Oil and Gas Company, a Delaware corporation,
(v) DRL, Inc., a Delaware corporation, (vi) Cliffs Drilling Trinidad
Ltd., a company organized under the laws of Trinidad and Tobago, (vii)
West Indies Drilling Joint Venture, a joint venture partnership
organized under the laws of Trinidad and Tobago, and (viii) each of
the Company's other Restricted Subsidiaries, if any, executing a
supplemental indenture in compliance with the provisions of Section
10.13(a) hereof and (ix) any Person that becomes a successor guarantor
of the Securities in compliance with the provisions of Section 13.2
hereof."
- 2 -
<PAGE> 4
ARTICLE II
ADDITIONAL SUBSIDIARY GUARANTOR
SECTION 2.1 ADDITION OF SUBSIDIARY GUARANTORS. Cliffs Drilling
Trinidad Ltd., a company organized under the laws of Trinidad and Tobago and a
wholly-owned subsidiary of the Company, and West Indies Drilling Joint Venture,
a joint venture partnership organized under the laws of Trinidad and Tobago, by
execution of this Third Supplemental Indenture each hereby agree to be bound by
the terms of the Indenture as a Subsidiary Guarantor.
SECTION 2.2 SUBSIDIARY GUARANTEE OF THE SECURITIES. Exhibit A,
attached hereto and incorporated herein by reference, sets forth the form of
Subsidiary Guarantee from the Original Indenture to which Cliffs Drilling
Trinidad Ltd. and West Indies Drilling Joint Venture agree to be bound by
execution and delivery of this Third Supplemental Indenture.
ARTICLE III
PARTICULAR REPRESENTATIONS
AND COVENANTS OF THE COMPANY
SECTION 3.1 AUTHORITY OF THE COMPANY. The Company is duly
authorized by a resolution of the Board of Directors to execute and deliver this
Third Supplemental Indenture, and all corporate action on its part required for
the execution and delivery of this Third Supplemental Indenture has been duly
and effectively taken.
SECTION 3.2 AUTHORITY OF THE SUBSIDIARY GUARANTORS. Each of the
Subsidiary Guarantors is duly authorized by a resolution of its respective
Board of Directors to execute and deliver this Third Supplemental Indenture,
and all corporate action on the part of each required for the execution and
delivery of this Third Supplemental Indenture has been duly and effectively
taken.
SECTION 3.3 TRUTH OF RECITALS AND STATEMENTS. The Company
warrants that the recitals of fact and statements contained in this Third
Supplemental Indenture are true and correct, and that the recitals of fact and
statements contained in all certificates and other documents furnished
hereunder will be true and correct.
ARTICLE IV
CONCERNING THE TRUSTEE
SECTION 4.1 ACCEPTANCE OF TRUSTS. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and
conditions set forth in the Original Supplemented Indenture and in this Third
Supplemental Indenture, to all of which the Company,
- 3 -
<PAGE> 5
Subsidiary Guarantors and the respective Holders of Securities at any time
hereafter outstanding agree by their acceptance thereof.
SECTION 4.2 RESPONSIBILITY OF TRUSTEE FOR RECITALS, ETC. The
recitals and statements contained in this Third Supplemental Indenture shall be
taken as the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Third Supplemental
Indenture, except that the Trustee is duly authorized to execute and deliver
this Third Supplemental Indenture.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1 RELATION TO THE INDENTURE. The provisions of this
Third Supplemental Indenture shall become effective immediately upon the
execution and delivery hereof. This Third Supplemental Indenture and all the
terms and provisions herein contained shall form a part of the Indenture as
fully and with the same effect as if all such terms and provisions had been set
forth in the Original Indenture. The Original Indenture is hereby ratified and
confirmed and shall remain and continue in full force and effect in accordance
with the terms and provisions thereof, as supplemented and amended by the First
Supplemental Indenture, the Second Supplemental Indenture and this Third
Supplemental Indenture; and the Original Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture and this Third Supplemental
Indenture shall be read, taken and construed together as one instrument.
SECTION 5.2 MEANING OF TERMS. Any capitalized term used in this
Third Supplemental Indenture and not defined herein that is defined in the
Original Indenture shall have the meaning specified in the Original Indenture,
unless the context shall otherwise require.
SECTION 5.3 COUNTERPARTS OF THIRD SUPPLEMENTAL INDENTURE. This
Third Supplemental Indenture may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
SECTION 5.4 GOVERNING LAW. This Third Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.
- 4 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have cause this Third
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
Company: CLIFFS DRILLING COMPANY
By: /s/ Edward A. Guthrie
------------------------------------------
Edward A. Guthrie
Vice President - Finance
Subsidiary Guarantors: CLIFFS DRILLING MERGER COMPANY
CLIFFS DRILLING INTERNATIONAL, INC.
CLIFFS OIL AND GAS COMPANY
SOUTHWESTERN OFFSHORE CORPORATION
(f/k/a Cliffs Drilling Asset Acquisition
Company)
By: /s/ Edward A. Guthrie
------------------------------------------
Edward A. Guthrie
Vice President - Finance
DRL, INC.
By: /s/ Edward A. Guthrie
------------------------------------------
Edward A. Guthrie, Vice President
CLIFFS DRILLING TRINIDAD LTD.
By: /s/ Edward A. Guthrie
------------------------------------------
Edward A. Guthrie, Director
-5-
<PAGE> 7
WEST INDIES DRILLING JOINT VENTURE
By: CLIFFS DRILLING TRINIDAD LTD.,
Partner and Firm Manager
By: /s/ Edward A. Guthrie
------------------------------------------
Edward A. Guthrie, Director
Trustee: STATE STREET BANK AND TRUST COMPANY,
SUCCESSOR TO FLEET NATIONAL BANK
By: /s/ Susan C. Merker
------------------------------------------
Susan C. Merker
Assistant Vice President
- 6 -
<PAGE> 8
EXHIBIT A
FORM OF SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Series ____ Security upon which
this notation is endorsed and each being hereinafter referred to as a
"Subsidiary Guarantor," which term includes any additional or successor
Subsidiary Guarantor under the Indenture) have, jointly and severally,
unconditionally guaranteed (a) the due and punctual payment of the principal
(and premium, if any) of and interest on the Securities, whether at maturity,
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms set forth in the Indenture, and (d) in case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Subsidiary Guarantor that
makes a payment or distribution under a Subsidiary Guarantee shall be entitled
to a contribution from each other Subsidiary Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor.
No stockholder, officer, director, employee, incorporator or Affiliate
as such, past, present or future, of any Subsidiary Guarantor shall have any
personal liability under its Subsidiary Guarantee by reason of his or its
status as such stockholder, officer, director, employee, incorporator or
Affiliate, or any liability for any obligations of any Subsidiary Guarantor
under the Securities or the Indenture or for any claim based on, in respect of,
or by reason of such obligations or their creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee
upon the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are
defined in the Indenture referred to in this Series ____ Security upon which
this notation of Subsidiary Guarantees is endorsed shall have the meanings
assigned to them in such Indenture.
<PAGE> 9
The Subsidiary Guarantees shall be binding upon the Subsidiary
Guarantors and shall inure to the benefit of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee respecting the Series _____ Security upon which the foregoing
Subsidiary Guarantees are noted, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof and in the
Indenture.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Series ____ Security
upon which the foregoing Subsidiary Guarantees are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized signatories.
<PAGE> 1
EXHIBIT 4.4
- --------------------------------------------------------------------------------
CLIFFS DRILLING COMPANY,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
STATE STREET BANK AND TRUST COMPANY
Trustee
--------------------------
INDENTURE
Dated as of August 7, 1997
--------------------------
$50,000,000
10.25% Senior Notes due 2003, Series C
10.25% Senior Notes due 2003, Series D
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . 23
Section 1.3 Incorporation by Reference of Trust Indenture Act . . . 23
Section 1.4 Rules of Construction . . . . . . . . . . . . . . . . . 24
ARTICLE II
SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . 25
Section 2.2 Form of Face of Security . . . . . . . . . . . . . . . 26
Section 2.3 Form of Reverse of Security . . . . . . . . . . . . . . 28
Section 2.4 Form of Notation Relating to Subsidiary Guarantee . . . 32
Section 2.5 Form of Trustee's Certificate of Authentication . . . . 34
ARTICLE III
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.1 Title and Terms . . . . . . . . . . . . . . . . . . . . 34
Section 3.2 Denominations . . . . . . . . . . . . . . . . . . . . . 36
Section 3.3 Execution, Authentication, Delivery and Dating . . . . 36
Section 3.4 Temporary Securities . . . . . . . . . . . . . . . . . 37
Section 3.5 Registration of Transfer and Exchange . . . . . . . . . 38
Section 3.6 Book-Entry Provisions for Global Securities . . . . . . 41
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities . . . 42
Section 3.8 Payment of Interest; Interest Rights Preserved . . . . 43
Section 3.9 Persons Deemed Owners . . . . . . . . . . . . . . . . . 44
Section 3.10 Cancellation . . . . . . . . . . . . . . . . . . . . . 44
Section 3.11 Computation of Interest . . . . . . . . . . . . . . . . 45
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . 45
Section 4.1 Satisfaction and Discharge of Indenture . . . . . . . . 45
Section 4.2 Application of Trust Money . . . . . . . . . . . . . . 46
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.1 Events of Default. . . . . . . . . . . . . . . . . . . 47
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.2 Acceleration of Maturity; Rescission and Annulment . . 48
Section 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . 50
Section 5.4 Trustee May File Proofs of Claim . . . . . . . . . . . 51
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.6 Application of Money Collected . . . . . . . . . . . . 52
Section 5.7 Limitation on Suits . . . . . . . . . . . . . . . . . . 52
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . 53
Section 5.9 Restoration of Rights and Remedies . . . . . . . . . . 53
Section 5.10 Rights and Remedies Cumulative . . . . . . . . . . . . 53
Section 5.11 Delay or Omission Not Waiver . . . . . . . . . . . . . 53
Section 5.12 Control by Holders . . . . . . . . . . . . . . . . . . 54
Section 5.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . 54
Section 5.14 Waiver of Stay, Extension or Usury Laws . . . . . . . . 54
ARTICLE VI
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.2 Certain Rights of Trustee . . . . . . . . . . . . . . . 55
Section 6.3 Trustee Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.4 May Hold Securities . . . . . . . . . . . . . . . . . . 57
Section 6.5 Money Held in Trust . . . . . . . . . . . . . . . . . . 57
Section 6.6 Compensation and Reimbursement . . . . . . . . . . . . 57
Section 6.7 Corporate Trustee Required; Eligibility . . . . . . . . 58
Section 6.8 Conflicting Interests . . . . . . . . . . . . . . . . . 58
Section 6.9 Resignation and Removal; Appointment of Successor . . . 59
Section 6.10 Acceptance of Appointment by Successor . . . . . . . . 60
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.12 Preferential Collection of Claims Against Company . . . 61
Section 6.13 Notice of Defaults . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . . 61
Section 7.1 Holders' Lists; Holder Communications; Disclosures
Respecting Holders . . . . . . . . . . . . . . . . . . 61
Section 7.2 Reports By Trustee . . . . . . . . . . . . . . . . . . 62
Section 7.3 Reports by Company . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . 63
Section 8.1 Company May Consolidate, etc., Only on Certain Terms . 63
Section 8.2 Successor Substituted . . . . . . . . . . . . . . . . . 64
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.1 Supplemental Indentures Without Consent of Holders . . 65
Section 9.2 Supplemental Indentures with Consent of Holders . . . . 66
Section 9.3 Execution of Supplemental Indentures . . . . . . . . . 66
Section 9.4 Effect of Supplemental Indentures . . . . . . . . . . . 67
Section 9.5 Conformity with Trust Indenture Act . . . . . . . . . . 67
Section 9.6 Reference in Securities to Supplemental Indentures . . 67
Section 9.7 Notice of Supplemental Indentures and Waivers . . . . . 67
ARTICLE X
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.1 Payment of Principal, Premium, if any, and Interest . . 67
Section 10.2 Maintenance of Office or Agency . . . . . . . . . . . . 68
Section 10.3 Money for Security Payments to Be Held in Trust . . . . 68
Section 10.4 Corporate Existence . . . . . . . . . . . . . . . . . . 69
Section 10.5 Payment of Taxes; Maintenance of Properties;
Insurance . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.6 Limitation on Sale-Leaseback Transactions . . . . . . . 71
Section 10.7 Limitation on Conduct of Business . . . . . . . . . . . 71
Section 10.8 Statement by Officers as to Default . . . . . . . . . . 71
Section 10.9 Provision of Financial Information . . . . . . . . . . 72
Section 10.10 Limitation on Restricted Payments . . . . . . . . . . . 72
Section 10.11 Limitation on Guarantees by Subsidiary Guarantors . . . 74
Section 10.12 Limitation on Indebtedness and Disqualified Capital
Stock . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.13 Additional Subsidiary Guarantors . . . . . . . . . . . 75
Section 10.14 Limitation on Issuances and Sales of Capital Stock by
Restricted Subsidiaries . . . . . . . . . . . . . . . . 76
Section 10.15 Limitation on Liens . . . . . . . . . . . . . . . . . . 76
Section 10.16 Purchase of Securities Upon Change of Control . . . . . 76
Section 10.17 Limitation on Asset Sales . . . . . . . . . . . . . . . 78
Section 10.18 Limitation on Transactions with Affiliates . . . . . . 81
Section 10.19 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries . . . . . . . . . . . 81
Section 10.20 Waiver of Certain Covenants . . . . . . . . . . . . . . 82
ARTICLE XI
REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 83
Section 11.1 Right of Redemption . . . . . . . . . . . . . . . . . . 83
Section 11.2 Applicability of Article . . . . . . . . . . . . . . . 83
Section 11.3 Election to Redeem; Notice to Trustee . . . . . . . . . 83
Section 11.4 Selection by Trustee of Securities to Be Redeemed . . . 84
Section 11.5 Notice of Redemption . . . . . . . . . . . . . . . . . 84
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 11.6 Deposit of Redemption Price . . . . . . . . . . . . . . 85
Section 11.7 Securities Payable on Redemption Date. . . . . . . . . 85
Section 11.8 Securities Redeemed in Part . . . . . . . . . . . . . . 85
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . 86
Section 12.1 Company's Option to Effect Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . 86
Section 12.2 Defeasance and Discharge . . . . . . . . . . . . . . . 86
Section 12.3 Covenant Defeasance . . . . . . . . . . . . . . . . . . 86
Section 12.4 Conditions to Defeasance or Covenant Defeasance . . . . 87
Section 12.5 Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions . . . 89
Section 12.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE XIII
SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.1 Unconditional Guarantee . . . . . . . . . . . . . . . . 90
Section 13.2 Subsidiary Guarantors May Consolidate, etc., on
Certain Terms . . . . . . . . . . . . . . . . . . . . . 91
Section 13.3 Release of Subsidiary Guarantors . . . . . . . . . . . 92
Section 13.4 Limitation of Subsidiary Guarantors' Liability . . . . 92
Section 13.5 Contribution . . . . . . . . . . . . . . . . . . . . . 93
Section 13.6 Execution and Delivery of Notations of Subsidiary
Guarantees . . . . . . . . . . . . . . . . . . . . . . 93
Section 13.7 Severability . . . . . . . . . . . . . . . . . . . . . 93
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 14.1 Compliance Certificates and Opinions . . . . . . . . . 94
Section 14.2 Form of Documents Delivered to Trustee . . . . . . . . 94
Section 14.3 Acts of Holders . . . . . . . . . . . . . . . . . . . . 95
Section 14.4 Notices, etc. to Trustee, Company and Subsidiary
Guarantors . . . . . . . . . . . . . . . . . . . . . . 96
Section 14.5 Notice to Holders; Waiver . . . . . . . . . . . . . . . 96
Section 14.6 Effect of Headings and Table of Contents . . . . . . . 97
Section 14.7 Successors and Assigns . . . . . . . . . . . . . . . . 97
Section 14.8 Severability . . . . . . . . . . . . . . . . . . . . . 97
Section 14.9 Benefits of Indenture . . . . . . . . . . . . . . . . . 97
Section 14.10 Governing Law; Trust Indenture Act Controls . . . . . . 97
Section 14.11 Legal Holidays . . . . . . . . . . . . . . . . . . . . 98
Section 14.12 No Recourse Against Others . . . . . . . . . . . . . . 98
Section 14.13 Duplicate Originals . . . . . . . . . . . . . . . . . . 98
Section 14.14 No Adverse Interpretation of Other Agreements . . . . . 98
</TABLE>
Exhibit A - Form of Legend for Global Securities
Exhibit B - Transfer or Exchange Certificate
Exhibit C - Transferee Certificate for Institutional Accredited
Investors
Exhibit D - Transferee Certificate for Regulation S Transfers
iv
<PAGE> 6
Reconciliation and Tie between Trust Indenture Act
of 1939 and Indenture, dated as of August 7, 1997
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . 6.7
(a)(2) . . . . . . . . . . . . . . . . . . . 6.7
(b) . . . . . . . . . . . . . . . . . . . 6.7,6.8, 6.9
Section 311 (a) . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . 6.12
Section 312 . . . . . . . . . . . . . . . . . . . 7.1
Section 313 . . . . . . . . . . . . . . . . . . . 7.2
Section 314 (a) . . . . . . . . . . . . . . . . . . . 7.3
(a)(4) . . . . . . . . . . . . . . . . . . . 10.8(a)
(c)(1) . . . . . . . . . . . . . . . . . . . 14.1
(c)(2) . . . . . . . . . . . . . . . . . . . 14.1
(e) . . . . . . . . . . . . . . . . . . . 14.1
Section 315 (a) . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . 6.13
(c) . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . 6.1
Section 316 (a) (last
sentence) . . . . . . . . . . . . . . . . . . . 1.1("Outstanding")
(a)(1)(A) . . . . . . . . . . . . . . . . . . . 5.2,5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 5.13
(b) . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . 14.3(d)
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . 10.3
Section 318 (a) . . . . . . . . . . . . . . . . . . . 14.10(b)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE> 7
THIS INDENTURE, dated as of August 7, 1997, is between CLIFFS DRILLING
COMPANY, a Delaware corporation (hereinafter called the "Company"), the
SUBSIDIARY GUARANTORS (as defined hereinafter) and STATE STREET BANK AND TRUST
COMPANY, a national banking association (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 10.25%
Senior Notes due 2003, Series C and an issue of 10.25% Senior Notes due 2003,
Series D (such two issues, as amended or supplemented from time to time in
accordance with the terms hereof, being herein collectively called the
"Securities"), of substantially the tenor and in the aggregate principal amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
The 10.25% Senior Notes due 2003, Series C are to be issued and sold in
transactions exempt from registration under the Securities Act, pursuant to the
Purchase Agreement, and the 10.25% Senior Notes due 2003, Series D are to be
issued in exchange for the 10.25% Senior Notes due 2003, Series C, pursuant to
the Registration Rights Agreement.
The Company owns, directly or indirectly, all of the equity ownership of
the outstanding Voting Stock of each initial Subsidiary Guarantor, and each
initial Subsidiary Guarantor is a member of the Company's consolidated group of
companies that are engaged in related businesses. Each initial Subsidiary
Guarantor will derive direct and indirect benefit from the issuance of the
Securities; accordingly, each initial Subsidiary Guarantor has authorized its
guarantee of the Company's obligations under this Indenture and the Securities,
and to provide therefor the initial Subsidiary Guarantors have duly authorized
the execution and delivery of this Indenture.
All things necessary have been done on the part of the Company and the
initial Subsidiary Guarantors to make the Securities, when issued and executed
by the Company and authenticated and delivered by the Trustee as herein
provided, the valid obligations of the Company, to make the Subsidiary
Guarantees, when the notations thereof on the Securities are executed by the
initial Subsidiary Guarantors, the valid obligation of the initial Subsidiary
Guarantors and to make this Indenture a valid agreement of the Company, the
initial Subsidiary Guarantors and the Trustee, in accordance with their
respective terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities (together with the related Subsidiary Guarantees) by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities (together with the related Subsidiary
Guarantees), without preference of one series of Securities over the other, as
follows:
1
<PAGE> 8
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at
the time such Person becomes a Restricted Subsidiary or (b) assumed in
connection with acquisitions of Properties from such Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or such acquisition). Acquired Indebtedness
shall be deemed to be incurred on the date the acquired Person becomes a
Restricted Subsidiary or the date of the related acquisition of Properties from
such Person.
"Act," when used with respect to any Holder, has the meaning specified
in Section 14.3.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean
the amount by which the fair value of the Properties of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at
such date.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of this definition, beneficial ownership of 10% or
more of the voting common equity (on a fully diluted basis) or options or
warrants to purchase such equity (but only if exercisable at the date of
determination or within 60 days thereof) of a Person shall be deemed to
constitute control of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by means of a Sale/Leaseback
Transaction or a merger or consolidation) (collectively, for purposes of this
definition, a "transfer"), directly or indirectly, in one or a series of
related transactions, of (a) any Capital Stock of any Restricted Subsidiary
held by the Company or any other Restricted Subsidiary, (b) all or
substantially all of the Properties of any division or line of business of the
Company or any of its Restricted Subsidiaries or (c) any other Properties of
the Company or any of its Restricted Subsidiaries other than transfers of cash,
Cash Equivalents, accounts receivable, hydrocarbons or other Properties in the
ordinary course of business or transfers in accordance with the proviso to
clause (vi) of the definition of Permitted Investments. For the purposes of
this definition, the term "Asset Sale" also shall not include any of the
following: (i) any transfer of Properties (including Capital Stock) which is
governed by, and made in accordance with, the provisions of Article VIII
hereof; (ii) any transfer of Properties to an
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<PAGE> 9
Unrestricted Subsidiary, if permitted under Section 10.10 hereof; (iii) sales
of damaged, worn-out or obsolete equipment or assets that, in the Company's
reasonable judgment, are either (x) no longer used or (y) no longer useful in
the business of the Company or its Restricted Subsidiaries; (iv) any charter
(bareboat or otherwise) or other lease of any Property entered into in the
ordinary course of business and with respect to which the Company or any
Restricted Subsidiary is the lessor, except any such charter or lease that
provides for the acquisition of such Property by the lessee during or at the
end of the term thereof for an amount that is less than the fair market value
thereof at the time the right to acquire such property is granted; (v) any
trade or exchange by the Company or any Restricted Subsidiary of one or more
offshore drilling rigs for one or more other offshore drilling rigs owned or
held by another Person, provided that (x) the fair value of the offshore
drilling rig or rigs traded or exchanged by the Company or such Restricted
Subsidiary (including any cash or Cash Equivalents to be delivered by the
Company or such Restricted Subsidiary) is reasonably equivalent to the fair
value of the offshore drilling rig or rigs (together with any cash or Cash
Equivalents) to be received by the Company or such Restricted Subsidiary as
determined by written appraisal by a nationally recognized investment banking
firm or appraisal firm, in either case specializing or having a specialty in
offshore drilling rigs, and (y) such exchange is approved by a majority of the
Disinterested Directors of the Company; (vi) any transfer by the Company or any
Restricted Subsidiary to its customers of drill pipe and associated drilling
equipment utilized in connection with a drilling contract for the employment of
a drilling rig in the ordinary course of business and consistent with past
practice; and (vii) any transfers that, but for this clause (vii), would be
Asset Sales, if (A) the Company elects to designate such transfers as not
constituting Asset Sales and (B) after giving effect to such transfers, the
aggregate fair market value of the Properties transferred in such transaction
or any such series of related transactions so designated by the Company does
not exceed $500,000.
"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount
of rent required to be paid by such Person under the lease during the primary
term thereof, without giving effect to any renewals at the option of the
lessee, discounted from the respective due dates thereof to such date of
determination at a rate of interest per annum equal to the discount rate which
would be applicable to a Capitalized Lease Obligation with a like term in
accordance with GAAP. As used in the preceding sentence, the "net amount of
rent" under any such lease for any such period shall mean the sum of rental and
other payments required to be paid with respect to such period by the lessee
thereunder, excluding any amounts required to be paid by such lessee on account
of maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges. In the case of any lease which is terminable by the lessee
upon payment of a penalty, such net amount of rent shall also include the
amount of such penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated.
"Average Life" means, with respect to any Indebtedness, as at any date
of determination, the quotient obtained by dividing (a) the sum of the products
of (i) the number of years (and any portion thereof) from the date of
determination to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund or mandatory
redemption
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<PAGE> 10
payment requirements) of such Indebtedness multiplied by (ii) the amount of
each such principal payment by (b) the sum of all such principal payments.
"Board of Directors" means, with respect to the Company, either the
board of directors of the Company or any duly authorized committee of such
board of directors, and, with respect to any Subsidiary, either the board of
directors of such Subsidiary or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
its Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and with respect to a Subsidiary,
a copy of a resolution certified by the Secretary or an Assistant Secretary of
such Subsidiary to have been duly adopted by its Board of Directors and to be
in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or Hartford, Connecticut are authorized or obligated by law or executive order
to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options
exercisable for, exchangeable for or convertible into such an equity interest
in such Person.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
Property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of this Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with
GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a
maturity of 180 days or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) demand and time deposits and certificates of
deposit or acceptances with a maturity of 180 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of 180 days or less issued by a corporation
that is not an Affiliate of the Company and is organized under the laws of any
state of the United States or the District of Columbia and rated at least A-l
by S&P or at least P-l by Moody's; (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any commercial bank meeting the
specifications of clause (ii) above; (v) overnight bank deposits and bankers'
acceptances at any commercial bank meeting the qualifications specified in
clause (ii) above; (vi) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in
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<PAGE> 11
clause (ii) above, provided all such deposits do not exceed $5,000,000 in the
aggregate at any one time; (vii) demand and time deposits and certificates of
deposit with any commercial bank organized in the United States not meeting the
qualifications specified in clause (ii) above, provided that such deposits and
certificates support bond, letter of credit and other similar types of
obligations incurred in the ordinary course of business; and (viii) investments
in money market or other mutual funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of any event or series of
events by which: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; (b) the
Company consolidates with or merges into another Person or any Person
consolidates with, or merges into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is changed
into or exchanged for cash, securities or other Property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is changed
into or exchanged for Voting Stock of the surviving or resulting Person that is
Qualified Capital Stock and (ii) the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or indirectly, not less
than a majority of the Voting Stock of the surviving or resulting Person
immediately after such transaction; (c) the Company, either individually or in
conjunction with one or more Restricted Subsidiaries, sells, assigns, conveys,
transfers, leases or otherwise disposes of, or the Restricted Subsidiaries
sell, assign, convey, transfer, lease or otherwise dispose of, all or
substantially all of the Properties of the Company and the Restricted
Subsidiaries, taken as a whole (either in one transaction or a series of
related transactions), including Capital Stock of the Restricted Subsidiaries,
to any Person (other than the Company or a Wholly Owned Restricted Subsidiary);
(d) during any consecutive two-year period, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Company was approved by a vote of a
two-thirds of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; or (e) the liquidation or
dissolution of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as now
or hereafter in effect, together with all regulations thereunder issued by the
Internal Revenue Service.
"Commission" or "SEC" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or
5
<PAGE> 12
involuntary liquidation, dissolution or winding-up of such Person, to shares of
Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture, until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated EBITDA Coverage Ratio" means, for any period, the ratio on
a pro forma basis of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges deducted in computing Consolidated Net Income, in each case, for such
period, of the Company and its Restricted Subsidiaries on a consolidated basis,
all determined in accordance with GAAP, to (b) the sum of such Consolidated
Interest Expense for such period; provided, however, that (i) the Consolidated
EBITDA Coverage Ratio shall be calculated on a pro forma basis assuming that
(A) the Indebtedness to be incurred (and all other Indebtedness incurred after
the first day of such period of four full fiscal quarters referred to in
Section 10.12(a) hereof through and including the date of determination), and
(if applicable) the application of the net proceeds therefrom (and from any
other such Indebtedness), including to refinance other Indebtedness, had been
incurred on the first day of such four-quarter period and, in the case of
Acquired Indebtedness, on the assumption that the related transaction (whether
by means of purchase, merger or otherwise) also had occurred on such date with
the appropriate adjustments with respect to such acquisition being included in
such pro forma calculation and (B) any acquisition or disposition by the
Company or any Restricted Subsidiary of any Properties outside the ordinary
course of business, or any repayment of any principal amount of any
Indebtedness of the Company or any Restricted Subsidiary prior to the Stated
Maturity thereof, in either case since the first day of such period of four
full fiscal quarters through and including the date of determination, had been
consummated on such first day of such four-quarter period, (ii) in making such
computation, the Consolidated Interest Expense attributable to interest on any
Indebtedness required to be computed on a pro forma basis in accordance with
Section 10.12(a) hereof and (A) bearing a floating interest rate shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period and (B) which was not outstanding during
the period for which the computation is being made but which bears, at the
option of the Company, a fixed or floating rate of interest, shall be computed
by applying, at the option of the Company, either the fixed or floating rate,
(iii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with Section
10.12(a) hereof shall be computed based upon the average daily balance of such
Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iv) notwithstanding clauses (ii) and (iii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by
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<PAGE> 13
agreements relating to Interest Rate Protection Obligations, shall be deemed to
have accrued at the rate per annum resulting after giving effect to the
operation of such agreements, and (v) if after the first day of the period
referred to in clause (a) of this definition the Company has permanently
retired any Indebtedness out of the Net Cash Proceeds of the issuance and sale
of shares of Qualified Capital Stock of the Company within 30 days of such
issuance and sale, Consolidated Interest Expense shall be calculated on a pro
forma basis as if such Indebtedness had been retired on the first day of such
period.
"Consolidated Income Tax Expense" means, for any period, the provision
for federal, state, local and foreign income taxes (including state franchise
taxes accounted for as income taxes in accordance with GAAP) of the Company and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, (i) the sum of (a) the interest expense of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis
in accordance with GAAP, including, without limitation, (A) any amortization of
debt discount, (B) the net cost under Interest Rate Protection Obligations
(including any amortization of discounts), (C) the interest portion of any
deferred payment obligation constituting Indebtedness, (D) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (E) all accrued interest, in each case to the
extent attributable to such period, (b) to the extent any Indebtedness of any
Person (other than the Company or a Restricted Subsidiary) is guaranteed by the
Company or any Restricted Subsidiary, the aggregate amount of interest paid (to
the extent not accrued in a prior period) or accrued by such other Person
during such period attributable to any such Indebtedness, in each case to the
extent attributable to that period, (c) the aggregate amount of the interest
component of Capitalized Lease Obligations paid (to the extent not accrued in a
prior period), accrued or scheduled to be paid or accrued by the Company and
its Restricted Subsidiaries during such period and (d) the aggregate amount of
dividends paid (to the extent not accrued in a prior period) or accrued on
Preferred Stock or Disqualified Capital Stock of the Company and its Restricted
Subsidiaries, to the extent such Preferred Stock or Disqualified Capital Stock
is owned by Persons other than the Company or its Restricted Subsidiaries, less
(ii), to the extent included in clause (i) above, amortization of capitalized
debt issuance costs of the Company and its Restricted Subsidiaries during such
period.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto),
(b) net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid
to the Company or any of its Restricted Subsidiaries in cash by such other
Person during such period (regardless of whether such cash dividends or
distributions is attributable to net income (or net loss) of such Person during
such period or during any prior period), (d) net income (or net loss) of any
Person combined with the Company or any of its
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<PAGE> 14
Restricted Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, (e) the net income of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of its net income is not at
the date of determination permitted, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, and (f) income resulting from transfers of
assets received by the Company or any Restricted Subsidiary from an
Unrestricted Subsidiary.
"Consolidated Net Worth" means, at any date, the consolidated
stockholders' equity of the Company less the amount of such stockholders'
equity attributable to Disqualified Capital Stock or treasury stock of the
Company and its Restricted Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the
Company and its Restricted Subsidiaries reducing Consolidated Net Income for
such period, determined on a consolidated basis in accordance with GAAP
(excluding any such non-cash charge for which an accrual of or reserve for cash
charges for any future period is required).
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Indenture is
located at 777 Main Street, Hartford, Connecticut 06115.
"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 futures contract or other similar agreement or arrangement designed to
protect against or manage such Person's or any of its Subsidiaries' exposure to
fluctuations in foreign currency exchange rates.
"Default" means any event, act or condition that is, or after notice or
passage of time or both would become, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.8 hereof.
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors of the
Company is required to deliver a Board Resolution hereunder, a member of the
Board of Directors of the Company who does not have any material direct or
indirect financial interest (other than an interest arising solely from the
beneficial ownership of Capital Stock of the Company) in or with respect to
such transaction or series of transactions.
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<PAGE> 15
"Disqualified Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or
exchangeable or by contract or otherwise, is, or upon the happening of an event
or passage of time would be, required to be redeemed or repurchased prior to
the final Stated Maturity of the Securities or is redeemable at the option of
the holder thereof at any time prior to such final Stated Maturity, or is
convertible into or exchangeable for debt securities at any time prior to such
final Stated Maturity. For purposes of Section 10.12(a) hereof, Disqualified
Capital Stock shall be valued at the greater of its voluntary or involuntary
maximum fixed redemption or repurchase price plus accrued and unpaid dividends.
For such purposes, the "maximum fixed redemption or repurchase price" of any
Disqualified Capital Stock which does not have a fixed redemption or repurchase
price shall be calculated in accordance with the terms of such Disqualified
Capital Stock as if such Disqualified Capital Stock were redeemed or
repurchased on the date of determination, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such
fair market value shall be determined in good faith by the board of directors
of the issuer of such Disqualified Capital Stock; provided, however, that if
such Disqualified Capital Stock is not at the date of determination permitted
or required to be redeemed or repurchased, the "maximum fixed redemption or
repurchase price" shall be the book value of such Disqualified Capital Stock.
"Event of Default" has the meaning specified in Section 5.1 hereof.
"Event of Loss" means, with respect to any drilling rig, MOPU or related
Property of the Company or any Restricted Subsidiary, (i) any damage to such
drilling rig, MOPU or related Property which results in an insurance settlement
with respect thereto on the basis of a total loss or a constructive or
compromised total loss or (ii) the confiscation, condemnation or requisition of
title to such drilling rig, MOPU or related Property by any government or any
instrumentality or agency thereof. An Event of Loss shall be deemed to occur as
of the date of the insurance settlement, confiscation, condemnation or
requisition of title, as applicable.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor act thereto.
"Exchange Offer" means the offer by the Company, pursuant to an
effective registration statement filed with the SEC, to exchange Series D
Securities for Outstanding Series C Securities in accordance with the terms and
provisions of the Registration Rights Agreement.
"Exchange Offer Consummation Date" means the date on which the Exchange
Offer is consummated in accordance with the terms and provisions of the
Registration Rights Agreement.
"Fair Market Value" means the fair market value of a Property (including
shares of Capital Stock) as determined in good faith by the Board of Directors
of the Company and evidenced by a Board Resolution, which determination shall
be conclusive for purposes of this Indenture; provided, however, that unless
otherwise specified herein, the Board of Directors shall be under no obligation
to obtain any valuation or assessment from any investment banker, appraiser or
other third party.
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"Federal Bankruptcy Code" means the United States Bankruptcy Code of
Title 11 of the United States Code, as amended from time to time.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States of America, which are applicable as of the date of the Series A/B
Indenture.
The term "guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments or documents for
collection in the ordinary course of business), direct or indirect, in any
manner, of any part or all of such obligation and (ii) an agreement, direct or
indirect, contingent or otherwise, the practical effect of which is to assure
in any way the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down under letters of
credit. When used as a verb, "guarantee" has a corresponding meaning.
"Holder" means a Person in whose name a Security is registered in a
Security Register.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person, contingent or otherwise, for borrowed money
or for the deferred purchase price of Property or services (excluding any trade
accounts payable and other accrued current liabilities incurred in the ordinary
course of business) and all liabilities of such Person incurred in connection
with any letters of credit, bankers' acceptances or other similar credit
transactions or any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Capital Stock of such Person, or any warrants,
rights or options to acquire such Capital Stock, outstanding on the date of the
Series A/B Indenture or thereafter, if, and to the extent, any of the foregoing
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, if, and to the extent, any of
the foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such Property), but excluding trade accounts payable
arising in the ordinary course of business, (d) the Attributable Indebtedness
respecting all Capitalized Lease Obligations of such Person, (e) all
Indebtedness referred to in the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon Property (including, without
limitation, accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser of
the value of such Property or the amount of the obligation so secured), (f) all
guarantees by such Person of Indebtedness referred to in this definition and (g)
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<PAGE> 17
all obligations of such Person under or in respect of Currency Hedge
Obligations and Interest Rate Protection Obligations.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (a) an insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or similar case or proceeding in
connection therewith, relative to such Person or its creditors, as such, or its
assets or (b) any liquidation, dissolution or other winding-up proceeding of
such Person, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of such Person.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements or arrangements designed to
protect against or manage such Person's and any of its Subsidiaries' exposure
to fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or
capital contribution to (by means of any transfer of cash or other Property to
others or any payment for Property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by the Company in such Unrestricted
Subsidiary at such time. "Investments" shall exclude (a) extensions of trade
credit or other advances to customers on commercially reasonable terms in
accordance with normal trade practices or otherwise in the ordinary course of
business, (b) Interest Rate Protection Obligations and Currency Hedge
Obligations, but only to the extent that the same constitute Permitted
Investments, and (c) endorsements of negotiable instruments and documents in
the ordinary course of business.
"Issue Date" means the date of first issuance of the Series C Securities
under this Indenture.
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"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim or similar
type of encumbrance (including, without limitation, any agreement to give or
grant any lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing) upon or with
respect to any Property of any kind. A Person shall be deemed to own subject to
a Lien any Property which such Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Maturity" means, with respect to any Security, the date on which any
principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents 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 the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of legal counsel, accountants and investment banks) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset Sale, (iii)
amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the Property subject to
the Asset Sale or having a Lien thereon and (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be, as a
reserve required in accordance with GAAP consistently applied against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an Officers' Certificate delivered to the Trustee; provided, however, that
any amounts remaining after adjustments, revaluations or liquidations of such
reserves shall constitute Net Available Proceeds. "Net Available Proceeds@
means, with respect to any Event of Loss, the proceeds to the Company or any
Restricted Subsidiary as a result thereof in the form of cash or Cash
Equivalents, including insurance proceeds paid to the Company or any Restricted
Subsidiary, and all payments received by the Company or any Restricted
Subsidiary from any government or any instrumentality or agency thereof by way
of compensation for the requisition of title to Property, net of all fees and
expenses incurred by the Company or any Restricted Subsidiary related to the
collection or receipt of such proceeds, all as reflected in an Officers'
Certificate delivered to the Trustee.
"Net Cash Proceeds," with respect to any issuance or sale of Qualified
Capital Stock or other securities, means the cash proceeds of such issuance or
sale net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
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"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or any Restricted Subsidiary incurred in connection
with the acquisition by the Company or such Restricted Subsidiary of any
Property and as to which (a) the holders of such Indebtedness agree that they
will look solely to the Property so acquired and securing such Indebtedness for
payment on or in respect of such Indebtedness, and neither the Company nor any
Subsidiary (other than an Unrestricted Subsidiary) (i) provides credit support,
including any undertaking, agreement or instrument which would constitute
Indebtedness or (ii) is directly or indirectly liable for such Indebtedness,
and (b) no default with respect to such Indebtedness would permit (after notice
or passage of time or both), according to the terms thereof, any holder of any
Indebtedness of the Company or a Restricted Subsidiary to declare a default on
such Indebtedness or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Offering Memorandum" means the Offering Memorandum of the Company dated
July 31, 1997, pursuant to which the Series C Securities are offered by the
Initial Purchasers to Qualified Institutional Buyers.
"Officers" means, with respect to any Person, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer and the
Treasurer of such Person.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company (or any Subsidiary Guarantor), including an employee of
the Company (or any Subsidiary Guarantor), and who shall be reasonably
acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company
shall act as its own Paying Agent) for the Holders of such Securities,
provided that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections 12.2
and 12.3 hereof, with respect to which the Company has effected legal
defeasance or covenant defeasance as provided in Article XII hereof; and
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<PAGE> 20
(iv) Securities which have been paid pursuant to Section 3.7
hereof or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such securities are held by a
bona fide purchaser in whose hands the Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities
owned by the Company, any Subsidiary Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, consent, notice or waiver, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company, any Subsidiary
Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Subsidiary Guarantor or such other obligor.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any,
on) or interest on any Securities on behalf of the Company.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness (and any guarantee thereof) under one or more
credit facilities with banks and other financial institutions in an
aggregate principal amount at any one time outstanding not to exceed
$35,000,000, less any amounts derived from Asset Sales and applied to
the permanent reduction of the Indebtedness under any such credit
facilities as contemplated by Section 10.17 hereof (the "Maximum Bank
Credit Amount"), and any renewals, amendments, extensions, supplements,
modifications, deferrals, refinancings or replacements (each, for
purposes of this clause (i), a "refinancing") thereof, including any
successive refinancings thereof, so long as the aggregate principal
amount of any such new Indebtedness, together with the aggregate
principal amount of all other Indebtedness outstanding pursuant to this
clause (i), shall not at any one time exceed the Maximum Bank Credit
Amount;
(ii) Indebtedness under the Series C Securities and any Series
D Securities issued in exchange for Series C Securities of an equal
principal amount;
(iii) Indebtedness outstanding or in effect on the date of this
Indenture (and not repaid or defeated with the proceeds of the offering
of the Securities), including Indebtedness of a Trinidad and Tobago
joint venture (the "WINDJV") being guaranteed by
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<PAGE> 21
the Company and Indebtedness outstanding under the Company's Series B
Securities as defined in the Series A/B Indenture;
(iv) Indebtedness under Interest Rate Protection Obligations,
provided that (1) such Interest Rate Protection Obligations are related
to payment obligations on Permitted Indebtedness or Indebtedness
otherwise permitted by Section 10.12(a) hereof, and (2) the notional
principal amount of such Interest Rate Protection Obligations does not
exceed the principal amount of such Indebtedness to which such Interest
Rate Protection Obligations relate;
(v) Indebtedness under Currency Hedge Obligations, provided
that (1) such Currency Hedge Obligations are related to payment
obligations on Permitted Indebtedness or Indebtedness otherwise
permitted by Section 10.12(a) hereof, or to the foreign currency cash
flows reasonably expected to be generated by the Company and its
Restricted Subsidiaries, and (2) the notional principal amount of such
Currency Hedge Obligations does not exceed the principal amount of such
Indebtedness and the amount of such foreign currency cash flows to which
such Currency Hedge Obligations relate;
(vi) the Subsidiary Guarantees of the Company's outstanding
Series B Securities and the Securities (and any assumption of the
obligations guarantees thereby);
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the Company
or a Wholly Owned Restricted Subsidiary; provided, however, that upon
any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Wholly Owned Restricted Subsidiary
ceasing to be a Wholly Owned Restricted Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Company or a
Wholly Owned Restricted Subsidiary), such Indebtedness shall be deemed,
in each case, to be incurred and shall be treated as an incurrence for
purposes of Section 10.12(a) hereof at the time the Wholly Owned
Restricted Subsidiary in question ceased to be a Wholly Owned Restricted
Subsidiary or the time such subsequent transfer occurred;
(viii) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any Restricted Subsidiary
in the ordinary course of business, including guaranties or obligations
of the Company or any Restricted Subsidiary with respect to letters of
credit supporting such bid, performance or surety obligations (in each
case other than for an obligation for money borrowed);
(ix) Non-Recourse Indebtedness;
(x) any renewals, substitutions, refinancings or replacements
(each, for purposes of this clause (x), a "refinancing") by the Company
or a Restricted Subsidiary of any Indebtedness incurred pursuant to
clause (ii) or (iii) of this definition, including any successive
refinancings by the Company or such Restricted Subsidiary, so long as
(A) any such new Indebtedness shall be in a principal
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<PAGE> 22
amount that does not exceed the principal amount (or, if such new
Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of
determination) so refinanced plus the amount of any premium required to
be paid in connection with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium reasonably
determined by the Company or such Restricted Subsidiary as necessary to
accomplish such refinancing, plus the amount of expenses of the Company
or such Restricted Subsidiary incurred in connection with such
refinancing, (B) in the case of any refinancing of Indebtedness
(including the Securities) that is pari passu with or subordinated in
right of payment to either the Securities or the Subsidiary Guarantees,
then such new Indebtedness is either pari passu with or subordinated in
right of payment to the Securities or the Subsidiary Guarantees, as the
case may be, at least to the same extent as the Indebtedness being
refinanced and (C) such new Indebtedness has an Average Life equal to or
longer than the Average Life of the Indebtedness being refinanced and a
final Stated Maturity that is at lease 91 days later than the final
Stated Maturity of the Indebtedness being refinanced; and
(xi) any additional Indebtedness in an aggregate principal
amount not in excess of $75,000,000 at any one time outstanding and any
guarantee thereof.
"Permitted Investments" means any of the following: (i) Investments in
Cash Equivalents; (ii) Investments in the Company or any of its Wholly Owned
Restricted Subsidiaries; (iii) Investments by the Company or any of its
Restricted Subsidiaries in another Person, if as a result of such Investment
(A) such other Person becomes a Wholly Owned Restricted Subsidiary or (B) such
other Person is merged or consolidated with or into, or transfers or conveys
all or substantially all of its Properties to, the Company or a Wholly Owned
Restricted Subsidiary; (iv) Investments permitted under Section 10.17 or 10.18
hereof; (v) Investments made in the ordinary course of business in prepaid
expenses, lease, utility, workers' compensation, performance and other similar
deposits; (vi) Investments in stock, obligations or securities received in
settlement of debts owing to the Company or any Restricted Subsidiary as a
result of bankruptcy or insolvency proceedings or upon the foreclosure,
perfection or enforcement of any Lien in favor of the Company or any Restricted
Subsidiary, in each case as to debt owing to the Company or any Restricted
Subsidiary that arose in the ordinary course of business of the Company or any
such Restricted Subsidiary, provided that any stocks, obligations or securities
received in settlement of debts that arose in the ordinary course of business
(and received other than as a result of bankruptcy or insolvency proceedings or
upon foreclosure, perfection or enforcement of any Lien) that are, within 30
days of receipt, converted into cash or Cash Equivalents shall be treated as
having been cash or Cash Equivalents at the time received; (vii) other
Investments in joint ventures, corporations, limited liability companies or
partnerships formed with or organized by third Persons, which joint ventures,
corporations, limited liability companies or partnerships engage in a business
substantially similar, or related to the business conducted by the Company and
its Restricted Subsidiaries, provided such Investments do not, in the
aggregate, exceed the sum of (1) $15,000,000 and (2) the aggregate amount of
principal repayments, interest on Indebtedness, dividends, distributions or
other return of capital received by the Company or a Restricted Subsidiary from
any Person (other than the Company or any Restricted Subsidiary) in which the
Company or any of its Restricted Subsidiaries has an ownership interest
(including any return of capital resulting from redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary).
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<PAGE> 23
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date of the Series A/B Indenture;
(b) Liens securing the Securities or the Subsidiary
Guarantees;
(c) Liens in favor of the Company;
(d) Liens securing Indebtedness that constitutes Permitted
Indebtedness pursuant to clause (i) of the definition of "Permitted
Indebtedness";
(e) Liens for taxes, assessments and governmental charges or
claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(f) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
(g) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the payment
or performance of tenders, statutory or regulatory obligations, surety
and appeal bonds, bids, government contracts and leases, performance and
return of money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(h) judgment Liens not giving rise to an Event of Default so
long as any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated
shall not have expired;
(i) any interest or title of a lessor under any Capitalized
Lease Obligation or operating lease;
(j) purchase money Liens; provided, however, that (i) the
related purchase money Indebtedness shall not be secured by any Property
of the Company or any Restricted Subsidiary other than the Property so
acquired and the proceeds thereof and (ii) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(k) Liens securing obligations under or in respect of either
Currency Hedge Obligations or Interest Rate Protection Obligations;
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<PAGE> 24
(l) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(m) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other Property
relating to such letters of credit and products and proceeds thereof;
(n) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements
of the Company or any of its Restricted Subsidiaries, including rights
of offset and set-off;
(o) Liens on, or related to, Properties to secure all or part
of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof; and
(p) Liens securing Non-Recourse Indebtedness; provided,
however, that the related Non-Recourse Indebtedness shall not be secured
by any Property of the Company or any Restricted Subsidiary other than
the Property acquired by the Company or any Restricted Subsidiary with
the proceeds of such Non-Recourse Indebtedness.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security, including any Security of a different series, evidencing all or a
portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered
under Section 3.7 hereof in exchange for a mutilated security or in lieu of a
lost, destroyed or stolen Security shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of the Series A/B Indenture, including, without limitation, all
classes and series of preferred or preference stock of such Person.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in Section 2.2 hereof.
"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, including, without limitation, Capital Stock in any
other Person.
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<PAGE> 25
"Public Equity Offering" means an offer and sale of Common Stock of the
Company pursuant to a registration statement that has been declared effective
by the Commission pursuant to the Securities Act (other than a registration
statement on Form S-8 or otherwise relating to equity securities issuable under
any employee benefit plan of the Company).
"Purchase Agreement" means the Purchase Agreement dated July 31, 1997,
among the Company, the Subsidiary Guarantors and the Purchasers.
"Purchaser" means an initial purchaser of Series C Securities named in
the Purchase Agreement.
"Qualified Capital Stock" of any Person means any and all Capital Stock
of such Person other than Disqualified Capital Stock.
"Qualified Institutional Buyer" has the meaning attributed thereto in
Rule 144A under the Securities Act.
"Record Date" means a Regular Record Date or an Additional Record Date.
"Redemption Date," when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Default" shall have the meaning ascribed thereto in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
to be dated on or about the Issue Date, among the Company, the Subsidiary
Guarantors and the Purchasers.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the May 1 or November 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Department of the Trustee, and also means, with
respect to a particular corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
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"Restricted Investment" means (without duplication) (i) the designation
of a Subsidiary as an Unrestricted Subsidiary in the manner described in the
definition of "Unrestricted Subsidiary" and (ii) any Investment other than a
Permitted Investment or an Investment in the WINDJV.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of the Series A/B Indenture, unless such
Subsidiary of the Company is an Unrestricted Subsidiary or is designated as an
Unrestricted Subsidiary pursuant to the terms of this Indenture.
"Revolving Credit Facility" means that certain Second Restated Credit
Agreement dated as of March 28, 1994 by and among the Company, Cliffs Oil and
Gas Company, Cliffs Drilling International, Inc. and Internationale Nederlanden
(U.S.) Capital Corporation, as amended by the First, Second, Third and Fourth
Amendments thereto dated as of May 17, 1994, September 26, 1995, December 19,
1995 and June 27, 1996, respectively.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Sale/Leaseback Transaction" means any direct or indirect arrangement
pursuant to which Properties are sold or transferred by the Company or a
Restricted Subsidiary and are thereafter leased back from the purchaser or
transferee thereof by the Company or one of its Restricted Subsidiaries.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Series C Securities or any Series D
Securities authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor act thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5 hereof.
"Series A Securities" means the 10.25% Senior Notes due 2003, Series A,
issued pursuant to the Series A/B Indenture.
"Series A/B Indenture" means the Indenture dated as of May 15, 1996, as
amended, among the Company, the "Subsidiary Guarantors" (as defined therein)
and State Street Bank and Trust Company (formerly known as Fleet National
Bank), as trustee, and providing for the issue of the Series A Securities and
the Series B Securities.
"Series B Net Proceeds Offer" means the Net Proceeds Offer as defined in
the Series A/B Indenture.
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<PAGE> 27
"Series B Net Proceeds Payment Date" means the Net Proceeds Payment Date
as defined in the Series A/B Indenture.
"Series B Securities" means the 10.25% Senior Notes due 2003, Series B,
issued pursuant to the Series A/B Indenture.
"Series C Securities" means the 10.25% Senior Notes due 2003, Series C,
being issued and sold pursuant to the Purchase Agreement and this Indenture.
"Series D Securities" means the 10.25% Senior Notes due 2003, Series D,
to be issued in exchange for the Series C Securities pursuant to the
Registration Rights Agreement and this Indenture.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8 hereof.
"Stated Maturity" means, when used with respect to any Indebtedness or
any installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date an which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Securities or the Subsidiary Guarantees, as the case may be.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons
performing similar functions).
"Subsidiary Guarantee" has the meaning specified in Section 13.1 hereof.
"Subsidiary Guarantor" means (i) Southwestern Offshore Corporation, a
Delaware corporation, (ii) Cliffs Drilling Merger Company, a Delaware
corporation, (iii) Cliffs Drilling International, Inc., a Delaware corporation,
(iv) Cliffs Oil and Gas Company, a Delaware corporation, (v) DRL, Inc., a
Delaware corporation, (vi) each of the Company's other Restricted Subsidiaries,
if any, executing a supplemental indenture in compliance with the provisions of
Section 10.13(a) hereof and (vi) any Person that becomes a successor guarantor
of the Securities in compliance with the provisions of Section 13.2 hereof.
"Transfer Restricted Security" has the meaning attributed thereto in the
Registration Rights Agreement; provided, however, that the Trustee shall be
entitled to request and conclusively rely
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upon an Opinion of Counsel with respect to whether or not any Security is a
Transfer Restricted Security.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended and in force at the date as of which this Indenture was executed until
such time as this Indenture is qualified under the TIA, and thereafter as in
effect on the date on which this Indenture is qualified under the TIA, except
as provided in Section 9.5 hereof.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination will be designated an Unrestricted Subsidiary by
the Board of Directors of the Company as provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors of the Company may
designate any Subsidiary of the Company as an Unrestricted Subsidiary so long
as (a) neither the Company nor any Restricted Subsidiary is directly or
indirectly liable pursuant to the terms of any Indebtedness of such Subsidiary;
(b) no default with respect to any Indebtedness of such Subsidiary would permit
(upon notice, lapse of time or otherwise) any holder of any other Indebtedness
of the Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) such designation as an Unrestricted Subsidiary would
be permitted under Section 10.10 hereof; and (d) such designation shall not
result in the creation or imposition of any Lien on any of the Properties of
the Company or any Restricted Subsidiary (other than any Permitted Lien or any
Lien the creation or imposition of which shall have been in compliance with
Section 10.15 hereof); provided, however, that with respect to clause (a), the
Company or a Restricted Subsidiary may be liable for Indebtedness of an
Unrestricted Subsidiary if (x) such liability constituted a Permitted
Investment or a Restricted Payment permitted by Section 10.10 hereof, in each
case at the time of incurrence, or (y) the liability would be a Permitted
Investment at the time of designation of such Subsidiary as an Unrestricted
Subsidiary. Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing a Board Resolution with the Trustee
giving effect to such designation. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if,
immediately after giving effect to such designation, on a pro forma basis (i)
no Default or Event of Default shall have occurred and be continuing, (ii) the
Company could incur $1.00 of additional Indebtedness (not including the
incurrence of Permitted Indebtedness) under Section 10.12(a) hereof and (iii)
if any of the Properties of the Company or any of its Restricted Subsidiaries
would upon such designation become subject to any Lien (other than a Permitted
Lien), the creation or imposition of such Lien shall have been in compliance
with Section 10.15 hereof.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the
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<PAGE> 29
board of directors, managers or trustees of any Person (irrespective of whether
or not, at the time, stock of any other class or classes shall have, or might
have, voting power by reason of the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to
the extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii) such
Restricted Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be
partially owned by the government of such foreign jurisdiction or individual or
corporate citizens of such foreign jurisdiction in order for such Restricted
Subsidiary to transact business in such foreign jurisdiction, provided that the
Company, directly or indirectly, owns the remaining Capital Stock or ownership
interest in such Restricted Subsidiary and, by contract or otherwise, controls
the management and business of such Restricted Subsidiary and derives the
economic benefits of ownership of such Restricted Subsidiary to substantially
the same extent as if such Restricted Subsidiary were a wholly owned
Subsidiary.
Section 1.2 Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Additional Interest" . . . . . . . . . . . . . . . . . . . . 3.1
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . 3.6
"Change of Control Notice" . . . . . . . . . . . . . . . . . 10.16(c)
"Change of Control Offer" . . . . . . . . . . . . . . . . . . 10.16(a)
"Change of Control Purchase Date" . . . . . . . . . . . . . . 10.16(c)
"Change of Control Purchase Price" . . . . . . . . . . . . . 10.16(a)
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . 3.8
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . 10.17(b)
"Funding Guarantor" . . . . . . . . . . . . . . . . . . . . . 13.5
"Global Security" . . . . . . . . . . . . . . . . . . . . . . 2.1
"MOPUs" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7
"Net Proceeds Deficiency" . . . . . . . . . . . . . . . . . . 10.17(d)
"Net Proceeds Offer" . . . . . . . . . . . . . . . . . . . . 10.17(d)
"Net Proceeds Payment Date" . . . . . . . . . . . . . . . . . 10.17(d)
"Offered Price" . . . . . . . . . . . . . . . . . . . . . . . 10.17(d)
"Payment Amount" . . . . . . . . . . . . . . . . . . . . . . 10.17(d)
"Payment Restriction" . . . . . . . . . . . . . . . . . . . 10.19
"Physical Securities" . . . . . . . . . . . . . . . . . . . . 2.1
"Purchase Notice" . . . . . . . . . . . . . . . . . . . . . . 10.17(d)
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . 10.10(a)
"Surviving Entity" . . . . . . . . . . . . . . . . . . . . . 8.1(a)
"Trigger Date" . . . . . . . . . . . . . . . . . . . . . . . 10.17(d)
"U.S. Government Obligations" . . . . . . . . . . . . . . . . 12.4(a)
</TABLE>
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
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<PAGE> 30
"indenture securities" means the Securities,
"indenture security holder" means a Holder,
"indenture to be qualified" means this Indenture,
"indenture trustee" or "institutional trustee" means the Trustee,
and
"obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
Section 1.4 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP and all accounting
calculations will be determined in accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(d) the masculine gender includes the feminine and the neuter;
(e) a "day" means a calendar day;
(f) when used with reference to the Securities, the expression "of
like tenor" refers to Securities of the same series;
(g) the term "merger" includes a statutory share exchange and the
term "merged" has a correlative meaning; and
(h) references to agreements and other instruments include subsequent
amendments and waivers but only to the extent not prohibited by this Indenture.
24
<PAGE> 31
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally.
The definitive Securities shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities or notations of Subsidiary
Guarantees, as the case may be, as evidenced by their execution of such
Securities or notations of Subsidiary Guarantees, as the case may be.
Except as indicated in the next succeeding paragraph, Securities
(including the notations thereon relating to the Subsidiary Guarantees and the
Trustee's certificate of authentication) shall be issued initially in the form
of one or more permanent global Securities substantially in the form set forth
in Sections 2.2 through 2.5 hereof (each being herein called a "Global
Security") deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided, and each shall bear the legend set forth on Exhibit A hereto. Subject
to the limitation set forth in Section 3.1, the principal amounts of the Global
Securities may be increased or decreased from time to time by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities (including the notations thereon relating to the Subsidiary
Guarantees and the Trustee's certificate of authentication) originally issued
and sold in reliance on any exemption from registration under the Securities
Act other than Rule 144A shall be issued, and Securities originally offered and
sold in reliance on Rule 144A may be issued, in the form of permanent
certificated securities in registered form in substantially the form set forth
in Sections 2.2 through 2.5 hereto ("Physical Securities").
The Series C Securities and the Series D Securities, the notations
thereon relating to the Subsidiary Guarantees and the Trustee's certificate of
authentication shall be in substantially the respective forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, CUSIP or other numbers or other marks of identification and such
legends or endorsements placed thereon as may be required by this Section or
Section 3.12 or to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities
or notations of Subsidiary Guarantees, as the case may be, as evidenced by
their execution of the Securities or notations of Subsidiary Guarantees, as the
case may be. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security. In addition to the requirements of Section 2.3, the Securities may
also have set forth on the reverse side thereof a form of assignment and forms
to elect purchase by the Company pursuant to Section 10.16 or 10.17 hereof.
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<PAGE> 32
Section 2.2 Form of Face of Security.
[If a Series C Security or a Series D Security constituting a Transfer
Restricted Security--THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (D) OUTSIDE THE UNITED STATES TO FOREIGN PURCHASERS IN OFFSHORE
TRANSACTIONS MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.]
CLIFFS DRILLING COMPANY
10.25% Senior Note due 2003, Series ____
No._____ $____________
CUSIP No.18682C_ _
Cliffs Drilling Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________ or registered assigns the principal sum of _________ Dollars on May
15, 2003, at the office or agency of the Company referred to below, and to pay
interest thereon, commencing [if a Series C Security--on November 15, 1997 and
continuing semiannually thereafter,
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<PAGE> 33
on May 15 and November 15 in each year, from August 7, 1997] [if a Series D
Security--on the first May 15 or November 15 following the original issuance of
the Series D Securities and continuing semiannually thereafter, on May 15 and
November 15 in each year, from the date of original issuance of the Series D
Securities], or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of 10.25% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to
pay on demand interest on any overdue interest at the rate borne by the Series
____ Securities from the date on which such overdue interest becomes payable to
the date payment of such interest has been made or duly provided for. The
Company also promises to pay any Additional Interest required by Section 4 of
the Registration Rights Agreement, upon the conditions, at the rates and for
the periods specified therein. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Series ___ Security (or one
or more Predecessor Securities) is registered on the Security Register at the
close of business on the Regular Record Date for such interest, which shall be
the May 1 or November 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date, and such Defaulted Interest, and (to the extent
lawful) interest on such Defaulted Interest at the rate borne by the Series
____ Securities, may be paid to the Person in whose name this Series ____
Security (or one or more Predecessor Securities) is registered on the Security
Register at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Series ____ Securities not less than 10 days prior to such
Special Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Series ____ Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Accrued but
unpaid interest on any Series C Security that is exchanged for a Series D
Security pursuant to the Registration Rights Agreement shall be paid on or
before the first Interest Payment Date on the Series D Securities.
Payment of the principal of (and premium, if any, on) and interest on
this Series ____ Security will be made at the office or agency of the Company
maintained for that purpose in The City of New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made on Physical Securities at the option of the Company on or
before the due date (i) by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register or (ii) with
respect to any Holder owning Series ____ Securities in the principal amount of
$500,000 or more, by wire transfer to an account maintained by the Holder
located in the United States, as specified in a written notice to the Trustee
by any such Holder requesting payment by wire transfer and specifying the
account to which transfer is requested.
Reference is hereby made to the further provisions of this Series ____
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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<PAGE> 34
Unless the certificate of authentication hereon has been duly executed
by the trustee referred to on the reverse hereof by manual signature, this
Series ____ Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CLIFFS DRILLING COMPANY
By:
---------------------------
President
Attest:
- -------------------------------
Secretary
Section 2.3 Form of Reverse of Security.
This Series ____ Security is one of a duly authorized issue of
securities of the Company designated as its 10.25% Senior Notes due 2003,
Series ____ (herein called the "Series ____ Securities"and, together with the
Series ____ Securities, the "Securities"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$50,000,000, which may be issued under an indenture (herein called the
"Indenture") dated as of August 7, 1997 between the Company, the initial
Subsidiary Guarantors named therein and State Street Bank and Trust Company
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Subsidiary Guarantors, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
The Securities are subject to redemption, at the option of the Company,
in whole or in part, at any time on or after May 15, 2000, upon not less than
30 or more than 60 days' notice at the following Redemption Prices (expressed
as percentages of principal amount) set forth below if redeemed during the
12-month period beginning May 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . 105.00%
2001 . . . . . . . . . . . . . . . . . 102.50%
2002 and thereafter . . . . . . . . . . 100.00%
</TABLE>
28
<PAGE> 35
together in the case of any such redemption with accrued and unpaid interest,
if any, to the Redemption Date (subject to the right of Holders of record on
the relevant Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date), all as provided in the Indenture.
Notwithstanding the foregoing, at any time on or prior to May 15, 1999,
up to $12,500,000 in aggregate principal amount of Securities may be redeemed,
at the option of the Company, upon not less than 30 or more than 60 days'
notice, from the Net Cash Proceeds of a Public Equity Offering, at a Redemption
Price equal to 110.00% of the principal amount thereof, together with accrued
and unpaid interest to the Redemption Date, provided that at least $37,500,000
in aggregate principal amount of Securities remains Outstanding immediately
after such redemption and that such redemption occurs within 60 days following
the closing of such Public Equity Offering.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Series __ Security in part only, a new Series __ Security or Securities
for the unredeemed or unpurchased portion hereof shall be issued in the name of
the Holder hereof upon the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to
certain conditions and limitations provided in the Indenture, the Company will
be obligated to make an offer to purchase, on a Business Day not more than 60
or less than 30 days following the occurrence of a Change of Control of the
Company, all of the then Outstanding Securities at a purchase price equal to
101% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the Change of Control Purchase Date, all as provided in
the Indenture.
In the event of Asset Sales, under certain circumstances, the Company
will be obligated to make a Net Proceeds Offer to purchase all or a specified
portion of each Holder's Securities at a purchase price equal to 100% of the
principal amount of the Securities, together with accrued and unpaid interest,
if any, to the Net Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (i)
failure to pay principal upon maturity, redemption or otherwise (including
pursuant to a Change of Control Offer or a Net Proceeds Offer); (ii) default
for 30 days in payment of interest on any of the Securities; (iii) default in
the performance of agreements relating to mergers, consolidations and sales of
all or substantially all assets or the failure to make or consummate a Change
of Control Offer or a Net Proceeds Offer; (iv) failure for 45 days after notice
to comply with any other covenants in the Indenture, any Subsidiary Guarantee
or the Securities; (v) certain payment defaults under, and the acceleration
prior to the maturity of, certain Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount in excess of $5,000,000; (vi) the
failure of any Subsidiary Guarantee to be in full
29
<PAGE> 36
force and effect (except as permitted by the Indenture); (vii) certain final
judgments or orders against the Company or any Restricted Subsidiary in an
aggregate amount of more than $5,000,000 over the coverage under applicable
insurance policies which remain unsatisfied and either become subject to
commencement of enforcement proceedings or remain unstayed for a period of 60
days; and (viii) certain events of bankruptcy, insolvency or reorganization of
the Company or any Restricted Subsidiary. If any Event of Default occurs and
is continuing, the Trustee or the holders of at least 25% in aggregate
principal amount of the Outstanding Securities may declare the principal amount
of all the Securities to be due and payable immediately, except that (i) in the
case of an Event of Default arising from certain events of bankruptcy,
insolvency or reorganization of the Company or any Restricted Subsidiary, the
principal amount of the Securities will become due and payable immediately
without further action or notice, and (ii) in the case of an Event of Default
which relates to certain payment defaults or acceleration with respect to
certain Indebtedness, any such Event of Default and any consequential
acceleration of the Securities will be automatically rescinded if any such
Indebtedness is repaid or if the default relating to such Indebtedness is cured
or waived and if the holders thereof have accelerated such Indebtedness then
such holders have rescinded their declaration of acceleration. No Holder may
pursue any remedy under the Indenture unless the Trustee shall have failed to
act after notice from such Holder of an Event of Default and written request by
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities, and the offer to the Trustee of indemnity reasonably satisfactory
to it; however, such provision does not affect the right to sue for enforcement
of any overdue payment on a Security by the Holder thereof. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders.
The Company is required to file annual and quarterly reports with the Trustee
as to the absence or existence of defaults.
The Indenture contains provisions for (i) defeasance at any time of the
entire indebtedness of the Company on this Series ____ Security and (ii)
discharge from certain restrictive covenants and the related Defaults and
Events of Default, upon compliance by the Company with certain conditions set
forth therein, which provisions apply to this Series ____ Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the Holder of this Series ____
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Series ____ Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Series ____
Security. Without the consent of any Holder, the Company, the Subsidiary
Guarantors and the Trustee may amend or
30
<PAGE> 37
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to qualify or maintain the qualification of the Indenture under
the Trust Indenture Act, to add or release any Subsidiary Guarantor pursuant to
the Indenture and to make certain other specified changes and other changes
that do not materially adversely affect the interests of any Holder in any
material respect.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any,
on) and interest on this Series ____ Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Series ____ Security is registerable on the
Security Register of the Company, upon surrender of this Series ____ Security
for registration of transfer at the office or agency of the Company maintained
for such purpose duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Series ____ Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Series ____ Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
the Series ____ Securities are exchangeable for a like aggregate principal
amount of Series ____ Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
[If a Series C Security--At the option of the Holders thereof, the
Series C Securities may be exchanged, pursuant to the Registration Rights
Agreement, for a like aggregate principal amount of Series D Securities.]
No service charge shall be made for any registration of transfer or
exchange of Series ____ Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
A director, officer, employee, incorporator, stockholder or Affiliate of
the Company or any Subsidiary Guarantor, as such, past, present or future shall
not have any personal liability under this Series ____ Security or any other
Security or the Indenture by reason of his or its status as such director,
officer, employee, incorporator, stockholder or Affiliate, or any liability for
any obligations of the Company or any Subsidiary Guarantor under the Securities
or the Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder, by accepting this Series ____
Security with the notation of Subsidiary Guarantee endorsed hereon, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Series ____ Security with the notation
of Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent
of the Company or the Trustee may treat the
31
<PAGE> 38
Person in whose name this Series ____ Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Subsidiary Guarantors, the Trustee nor any agent shall be
affected by notice to the contrary.
All terms used in this Series ____ Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture. Requests may be made to the Company at 1200 Smith
Street, Suite 300, Houston, Texas 77002, Attention: Chief Financial Officer (or
such other address as the Company may have furnished in writing to the
Trustee).
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Series ____ Securities as a convenience to the Holders thereof.
No representation is made as to the accuracy of such numbers as printed on the
Series ____ Securities and reliance may be placed only on the other identifying
information printed hereon.
Interest on this Series ____ Security shall be computed on the basis of
a 360-day year comprised of twelve 30-day months.
This Series ____ Security shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts
of law principles.
Section 2.4 Form of Notation Relating to Subsidiary Guarantees.
The form of notation to be set forth on each Security relating to the
Subsidiary Guarantees shall be in substantially the following form:
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Series ____ Security upon which
this notation is endorsed and each being hereinafter referred to as a
"Subsidiary Guarantor," which term includes any additional or successor
Subsidiary Guarantor under the Indenture) have, jointly and severally,
unconditionally guaranteed (a) the due and punctual payment of the principal
(and premium, if any) of and interest on the Securities, whether at maturity,
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms set forth in the Indenture, and (d) in case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after
32
<PAGE> 39
giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under the Indenture, result in the obligations of such
Subsidiary Guarantor under the Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. Each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.
No stockholder, officer, director, employee, incorporator or Affiliate
as such, past, present or future, of any Subsidiary Guarantor shall have any
personal liability under its Subsidiary Guarantee by reason of his or its
status as such stockholder, officer, director, employee, incorporator or
Affiliate, or any liability for any obligations of any Subsidiary Guarantor
under the Securities or the Indenture or for any claim based on, in respect of,
or by reason of such obligations or their creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee
upon the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are
defined in the Indenture referred to in this Series ____ Security upon which
this notation of Subsidiary Guarantees is endorsed shall have the meanings
assigned to them in such Indenture.
The Subsidiary Guarantees shall be binding upon the Subsidiary
Guarantors and shall inure to the benefit of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee respecting the Series _____ Security upon which the foregoing
Subsidiary Guarantees are noted, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof and in the
Indenture.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Series ____ Security
upon which the foregoing Subsidiary Guarantees are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized signatories.
CLIFFS DRILLING MERGER COMPANY,
CLIFFS DRILLING INTERNATIONAL, INC.,
CLIFFS OIL AND GAS COMPANY, and
DRL, INC.
By:
------------------------------------
President
SOUTHWESTERN OFFSHORE CORPORATION
By:
------------------------------------
President
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Section 2.5 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series ____ Securities referred to in the within
mentioned Indenture.
Dated: State Street Bank and Trust Company,
---------------- Trustee
By:
-----------------------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
The aggregate principal amount of Series C Securities which may be
authenticated and delivered under this Indenture for original issue is limited
to $50,000,000, and the aggregate principal amount of Series D Securities which
may be authenticated and delivered under this Indenture for original issue is
limited to $50,000,000. The aggregate principal amount of Securities
Outstanding at any one time may not exceed $50,000,000 except as provided in
Section 3.7 hereof.
The Series C Securities shall be known and designated as the "10.25%
Senior Notes due 2003, Series C" of the Company. Their Stated Maturity shall be
May 15, 2003, and they shall bear interest at the rate of 10.25% per annum from
August 7, 1997, or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, payable semiannually on May 15 and November
15 in each year, commencing November 15, 1997, and at said Stated Maturity,
until the principal thereof is paid or duly provided for.
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The Series D Securities shall be known and designated as the "10.25%
Senior Notes due 2003, Series D" of the Company. Their Stated Maturity shall
be May 15, 2003, and they shall bear interest at the rate of 10.25% per annum
from the date of original issuance of the Series D Securities, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, payable semiannually on May 15 and November 15 in each year, commencing on
the first May 15 or November 15 following the original issuance of the Series D
Securities, and at said Stated Maturity, until the principal thereof is paid or
duly provided for.
Upon the occurrence of a Registration Default, the interest rate on
Transfer Restricted Securities shall increase ("Additional Interest"), with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, by 0.50% per annum and shall increase by an additional
0.50% per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of 2.0% per annum
with respect to all Registration Defaults. Following the cure of a
Registration Default, the accrual of Additional Interest with respect to such
Registration Default shall cease and upon the cure of all Registration Defaults
the interest rate shall revert to the original rate. Any Additional Interest
due on any Security shall be payable on the appropriate Interest Payment Date
to the Holder entitled to receive the interest payment to be made on such date.
Each obligation to pay Additional Interest shall be deemed to accrue from and
including the date of the applicable Registration Default.
Accrued but unpaid interest on any Series C Security that is exchanged
for a Series D Security pursuant to the Registration Rights Agreement shall be
paid on or before the first Interest Payment Date on the Series D Securities.
The Series C Securities and the Series D Securities shall be considered
collectively to be a single class for all purposes of this Indenture,
including, without limitation, waivers, amendments, redemptions and offers to
purchase.
The principal of (and premium, if any, on) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York; provided, however, that, at the
option of the Company, interest may be paid on Physical Securities on or before
the due date (i) by check mailed to addresses of the Persons entitled thereto
as such addresses shall appear on the Security Register, or (ii) with respect
to any Holder owning Securities in the principal amount of $500,000 or more, by
wire transfer to an account maintained by the Holder located in the United
States, as specified in a written notice to the Trustee by any such Holder
requesting payment by wire transfer and specifying the account to which
transfer is requested.
As provided in the Registration Rights Agreement and subject to the
limitations set forth therein, at the option of the Holders, the Series C
Securities shall be exchangeable for Series D Securities of like aggregate
principal amount pursuant to the Exchange Offer.
The Securities shall be redeemable as provided in Article XI hereof.
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The Securities shall be subject to defeasance at the option of the
Company as provided in Article XII hereof.
The Securities shall be guaranteed by the Subsidiary Guarantors as
provided in Article XIII hereof.
Section 3.2 Denominations.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or a Vice President of the Company, under
its corporate seal reproduced thereon and attested by its Secretary or an
Assistant Secretary of the Company. The signature of any of these officers on
the Securities may be manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time after the execution and delivery of this Indenture, the
Company may deliver Series C Securities executed by the Company and having the
notations of Subsidiary Guarantees executed by the Subsidiary Guarantors to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Series C Securities, and the Trustee in
accordance with such Company Order shall authenticate and deliver such Series C
Securities with the notations of Subsidiary Guarantees thereon as provided in
this Indenture. Such Company Order shall specify the principal amount of the
Series C Securities to be authenticated and the date on which the original
issue of Series C Securities is to be authenticated. In addition, on or prior
to the Exchange Offer Consummation Date, the Company may deliver Series D
Securities executed by the Company and having the notations of Subsidiary
Guarantees executed by the Subsidiary Guarantors to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Series D Securities, and the Trustee in accordance with such
Company Order shall authenticate and deliver such Series D Securities with the
notations of Subsidiary Guarantees thereon as provided in this Indenture. Such
Company Order shall specify the principal amount of the Series D Securities to
be authenticated and the date on which the Series D Securities are to be
exchanged for an equal principal amount of Series C Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially
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in the form provided for herein duly executed by the Trustee by manual
signature of an authorized signatory, and such certificate upon any Security
shall be conclusive evidence, and the only evidence, that such Security has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Indenture.
In case the Company, pursuant to and in compliance with Article VIII
hereof, shall be consolidated or merged with or into any other Person or shall
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its Properties to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a sale, conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article VIII hereof,
any of the Securities authenticated or delivered prior to such sale,
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Request of the successor
Person, shall authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer
of any Securities, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Securities at
the time Outstanding for Securities authenticated and delivered in such new
name.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and having
the notations of Subsidiary Guarantees thereon and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities and notations of Subsidiary Guarantees may determine,
as conclusively evidenced by their execution of such Securities and notations
of Subsidiary Guarantees.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 10.2
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of like tenor and of authorized denominations having the
notations of Subsidiary Guarantees thereon. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
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Section 3.5 Registration of Transfer and Exchange.
The Company shall cause to be kept a register (the "Security Register")
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers of
Securities. The Security Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. At all
reasonable times and during normal business hours, the Security Register shall
be open to inspection by the Trustee. The Trustee is hereby initially appointed
as security registrar (the "Security Registrar") for the purpose of registering
Securities and transfers of Securities as herein provided.
Subject to the provisions of this Section 3.5 and Section 3.6 hereof,
upon surrender for registration of transfer of any Security at the office or
agency of the Company designated pursuant to Section 10.2 hereof, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of like
tenor and of any authorized denomination and of a like aggregate principal
amount, each such Security having the notation of Subsidiary Guarantees
thereon.
Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, be deemed to have agreed that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in a Global Security shall be required to be reflected in a
book entry.
At the option of any Holder, Securities may be exchanged for other
Securities of like tenor and of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
the office or agency of the Company designated pursuant to Section 10.2 hereof.
Further, at the option of any Holder, Series C Securities may be exchanged,
pursuant to the Exchange Offer and subject to the terms and conditions thereof,
for Series D Securities of like aggregate principal amount, upon surrender of
the Series C Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, the
Subsidiary Guarantors shall execute notations of Subsidiary Guarantees on, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities and the Subsidiary Guarantees noted thereon issued upon
any registration of transfer or exchange of Securities shall be the valid
obligations of the Company and the respective Subsidiary Guarantors, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing. As a special
condition to registration of transfer or exchange of any Transfer Restricted
Securities
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involving removal of a Private Placement Legend (other than pursuant to an
effective registration statement under the Securities Act), the Holder
requesting such registration of transfer or exchange shall furnish the Opinion
of Counsel called for by Section 3.12 hereof. The following additional special
conditions shall apply to the indicated types of transfers or exchanges:
(a) Respecting any requested registration of transfer or exchange of
Transfer Restricted Securities in the form of Physical Securities, such
Physical Securities shall be accompanied, in the sole discretion of the
Company, by the following additional information and documents, as applicable:
(1) if such Physical Security is being delivered to the
Security Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit B hereto); or
(2) if such Physical Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(3) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to that
effect (in substantially the form of Exhibit B hereto), a Transferee
Certificate for Institutional Accredited Investors in the form of
Exhibit C hereto and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
(4) if such Physical Security is being transferred in reliance
on Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto), a Transferor
Certificate for Regulation S Transfers in the form of Exhibit D hereto
and an Opinion of Counsel to the effect that such transfer is in
compliance with the Securities Act; or
(5) if such Physical Security is being transferred in reliance
on Rule 144, delivery of a certification to that effect (substantially
in the form of Exhibit B hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act; or
(6) if such Physical Security is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto) and an Opinion of Counsel to the effect that
such transfer is in compliance with the Securities Act.
(b) Respecting any requested exchange of a Physical Security for a
beneficial interest in a Global Security, such Physical Security shall be
accompanied, in the sole discretion of the Company, by the following additional
information and documents:
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(1) a certification, substantially in the form of Exhibit B
hereto, that such Physical Security is being transferred to a Qualified
Institutional Buyer; and
(2) written instructions directing the Security Registrar to
make, or to direct the Depository to make, an endorsement on the Global
Security to reflect an increase in the aggregate amount of the
Securities represented by the Global Security;
whereupon the Security Registrar shall cancel such Physical Security and cause,
or direct the Depository to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Security Registrar, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Security is then outstanding, the
Company shall issue and the Trustee shall upon Company Order authenticate a new
Global Security in the appropriate amount.
(c) Any Person having a beneficial interest in a Global Security may
upon request to the Security Registrar exchange such beneficial interest for a
Physical Security. Upon receipt by the Security Registrar of written
instructions (or such other form of instructions as is customary for the
Depository) from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Security and upon receipt by the Security
Registrar of a written order or such other form of instructions as is customary
for the Depository or the Person designated by the Depository as having such a
beneficial interest containing registration instructions and, in the case of
any such transfer or exchange of a beneficial interest in Transfer Restricted
Securities, the following additional information and documents:
(1) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such Person to that effect (in substantially the form
of Exhibit B hereto); or
(2) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(3) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a certification to that
effect (substantially in the form of Exhibit B hereto), a Transferee
Certificate for Institutional Accredited Investors in the form of
Exhibit C hereto and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
(4) if such beneficial interest is being transferred in
reliance on Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto), a Transferor
Certificate for Regulation S Transfers in the form of Exhibit D hereto
and an Opinion of Counsel to the effect that such transfer is in
compliance with the Securities Act; or
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(5) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act, delivery of a
certification to that effect (substantially in the form of Exhibit B
hereto) and an Opinion of Counsel to the effect that such transfer is in
compliance with the Securities Act; or
(6) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto) and an Opinion of Counsel to the effect that
such transfer is in compliance with the Securities Act,
then the Security Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Security
Registrar, the aggregate principal amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon receipt of a
Company Order, the Trustee will authenticate and deliver to the transferee a
Physical Security. Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 3.5(c) shall be registered in such
names and in such authorized denominations as the Depository, pursuant to
instructions from Agent Members or otherwise, shall instruct the Security
Registrar in writing. The Security Registrar shall deliver such Physical
Securities to the Persons in whose names such Physical Securities are so
registered.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to the Exchange Offer or Section 3.4,
9.6 or 11.8 hereof not involving any transfer.
Neither the Trustee, the Security Registrar nor the Company shall be
required (i) to issue, register the transfer of or exchange any Physical
Security during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption of Securities selected for redemption
under Section 11.4 hereof and ending at the close of business on the day of
such mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Physical Security so selected for redemption in
whole or in part, except the unredeemed portion of any such Security being
redeemed in part.
Section 3.6 Book-Entry Provisions for Global Securities.
Each Global Security shall be (i) registered in the name of the
Depository for such Global Security or the nominee of such Depository, (ii)
delivered to the Trustee as custodian for such Depository and (iii) bear the
legend set forth in Exhibit A hereto.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under such
Global Security, and the Depository may be treated by the Company, the
Subsidiary Guarantors, the Trustee and any agent of the Company, the Subsidiary
Guarantors or the Trustee as the absolute owner of such Global Security for all
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purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Subsidiary Guarantors, the Trustee or any agent of the
Company, the Subsidiary Guarantors or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or shall impair, as between the Depository and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
Transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in a Global Security
may be transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 3.5
hereof. In addition, Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if, and only if, either (1) the Depository notifies the Company that
it is unwilling or unable to continue as depositary for the Global Security and
a successor depositary is not appointed by the Company within 90 days of such
notice, or (2) the Company determines not to have the Securities represented by
the Global Security and notifies the Depository and the Security Registrar
thereof.
In connection with the transfer of an entire Global Security to
beneficial owners pursuant to this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon Company Order authenticate and deliver, to
each beneficial owner identified by the Depository, in exchange for its
beneficial interest in the Global Security, an equal aggregate principal amount
of Physical Securities of authorized denominations.
The Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, the Subsidiary Guarantors and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has been acquired by
a bona fide purchaser, the Company shall execute, the Subsidiary Guarantors
shall execute the notation of Subsidiary Guarantees, and upon Company Order the
Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, having the notation of Subsidiary
Guarantees thereon, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the respective Subsidiary
Guarantors, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Securities of like tenor duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.8 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
10.2 hereof.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease
to be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, and
such money when deposited shall be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date, and in the name and at
the expense of the
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<PAGE> 50
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be given in the manner provided for in
Section 14.5 hereof, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so given, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.9 Persons Deemed Owners.
Prior to the due presentment of a Security for registration of transfer,
the Company, the Subsidiary Guarantors, the Security Registrar, the Trustee and
any agent of the Company, the Subsidiary Guarantors or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any, on) and (subject to Section 3.8 hereof) interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
none of the Company, the Subsidiary Guarantors, the Security Registrar, the
Trustee or any agent of the Company, the Subsidiary Guarantors or the Trustee
shall be affected by notice to the contrary.
Section 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities held
by the Trustee shall be disposed of as directed by a Company Order or in
accordance with the Trustee's usual practice; provided, however, that the
Trustee shall not be required to destroy canceled Securities.
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Section 3.11 Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Section 3.12 Private Placement Legend.
(a) All Series C Securities issued hereunder on the Issue Date shall
bear the Private Placement Legend. Upon the transfer, exchange or replacement
of Securities bearing the Private Placement Legend, the Security Registrar
shall deliver only Securities that bear the Private Placement Legend unless,
and the Trustee is hereby authorized to deliver Securities without the Private
Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act or (ii) such Security has been sold pursuant to an effective
registration statement under the Securities Act. Upon the transfer, exchange
or replacement of Securities not bearing the Private Placement Legend, the
Security Registrar shall deliver Securities that do not bear the Private
Placement Legend.
(b) By its acceptance of any Security bearing the Private Placement
Legend, each Holder of such a Security acknowledges the restrictions on
transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of
Securities, as expressly provided for in this Indenture) as to all Outstanding
Securities, and the Trustee, at the expense of the Company, shall, upon payment
of all amounts due the Trustee under Section 6.6 hereof, execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
(a) either
(1) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.7 hereof and
(ii) Securities for whose payment money or United States governmental
obligations of the type described in clause (i) of the definition of
Cash Equivalents have theretofore been deposited in trust with the
Trustee or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 10.3 hereof) have been delivered to the
Trustee for cancellation, or
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(2) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,
and the Company, in the case of clause (2)(i), (2)(ii) or (2)(iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be, together with instructions from the Company irrevocably
directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be;
(b) the Company has paid or caused to be paid all other sums
then due and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that
all conditions precedent herein relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.6 hereof and, if
money shall have been deposited with the Trustee pursuant to this Section, the
obligations of the Trustee under Section 4.2 hereof and the last paragraph of
Section 10.3 hereof shall survive.
Section 4.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3 hereof,
all money deposited with the Trustee pursuant to Section 4.1 hereof shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
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ARTICLE V
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of the principal of or premium, if any, on
any of the Securities when the same becomes due and payable, whether such
payment is due at Stated Maturity, upon redemption, upon repurchase pursuant to
a Change of Control Offer or a Net Proceeds Offer, upon acceleration or
otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities, when it becomes due and payable, and the continuance of such
default for a period of 30 days; or
(c) default in the performance or breach of the provisions of Article
VIII hereof, the failure to make or consummate a Change of Control Offer in
accordance with the provisions of Section 10.16 or the failure to make or
consummate a Net Proceeds Offer in accordance with the provisions of Section
10.17; or
(d) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in the Securities, any
Subsidiary Guarantee or this Indenture (other than a default specified in
subparagraph (a), (b) or (c) above) for a period of 45 days after written
notice of such failure stating that it is a "notice of default" hereunder and
requiring the Company or such Subsidiary Guarantor, as the case may be, to
remedy the same shall have been given (x) to the Company by the Trustee or (y)
to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Securities then Outstanding; or
(e) the occurrence and continuation beyond any applicable grace
period of any default in the payment of the principal of or premium, if any, on
or interest on any Indebtedness of the Company (other than the Securities) or
any Subsidiary Guarantor or any other Restricted Subsidiary for money borrowed
when due, or any other default resulting in acceleration of any Indebtedness of
the Company or any Subsidiary Guarantor or any other Restricted Subsidiary for
money borrowed, provided that the aggregate principal amount of such
Indebtedness shall exceed $5,000,000; or
(f) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect (except pursuant to the release of any such Subsidiary
Guarantee in accordance with this Indenture); or
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(g) final judgments or orders rendered against the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary that are unsatisfied
and that require the payment in money, either individually or in an aggregate
amount, that is more than $5,000,000 over the coverage under applicable
insurance policies and either (A) commencement by any creditor of an
enforcement proceeding upon such judgment (other than a judgment that is stayed
by reason of pending appeal or otherwise) or (B) the occurrence of a 60-day
period during which a stay of such judgment or order, by reason of pending
appeal or otherwise, was not in effect: or
(h) the entry of a decree or order by a court having jurisdiction in
the premises (A) for relief in respect of the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or (B)
adjudging the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary under the Federal
Bankruptcy Code or any applicable federal or state law, or appointing under any
such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary or of a substantial part of its consolidated assets, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(i) the commencement by the Company or any Subsidiary Guarantor or
any other Restricted Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or any other case or proceeding
to be adjudicated bankrupt or insolvent, or the consent by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary to the entry of a
decree or order for relief in respect thereof in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary of a petition or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it under any such law to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or other
similar official) of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary or of any substantial part of its consolidated assets, or
the making by it of an assignment for the benefit of creditors under any such
law, or the admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by the Company or
any Subsidiary Guarantor or any other Restricted Subsidiary in furtherance of
any such action.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(h) or (i) hereof) occurs and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding, by written notice to the Company (and to the
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Trustee if such notice is given by the Holders), may, and the Trustee upon the
request of the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall, by a notice in writing to the Company,
declare all unpaid principal of, premium, if any, and accrued and unpaid
interest on all the Securities to be due and payable immediately, upon which
declaration all amounts payable in respect of the Securities shall be
immediately due and payable. If an Event of Default specified in Section 5.1(h)
or (i) hereof occurs and is continuing, the amounts described above shall
become and be immediately due and payable without any declaration, notice or
other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in
aggregate principal amount of the Securities Outstanding, by written notice to
the Company, the Subsidiary Guarantors and the Trustee, may rescind and annul
such declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited
with the Trustee a sum sufficient to pay,
(1) all overdue interest on all Outstanding Securities,
(2) all unpaid principal of (and premium, if any, on) any
Outstanding Securities which have become due otherwise than by such
declaration of acceleration, including any Securities required to have
been purchased on a Change of Control Date or a Net Proceeds Payment
Date pursuant to a Change of Control Offer or a Net Proceeds Offer, as
applicable, and interest on such unpaid principal at the rate borne by
the Securities,
(3) to the extent that payment of such interest is lawful,
interest on overdue interest and overdue principal at the rate borne by
the Securities (without duplication of any amount paid or deposited
pursuant to clauses (1) and (2) above), and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
(b) the rescission would not conflict with any judgment or decree of
a court of competent jurisdiction as certified to the Trustee by the Company;
and
(c) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
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Notwithstanding the foregoing, if an Event of Default specified in
Section 5.1(e) hereof shall have occurred and be continuing, such Event of
Default and any consequential acceleration shall be automatically rescinded if
the Indebtedness that is the subject of such Event of Default has been repaid,
or if the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded
their declaration of acceleration in respect of such Indebtedness (provided, in
each case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration), and written notice of
such repayment, or cure or waiver and rescission, as the case may be, shall
have been given to the Trustee by the Company and countersigned by the holders
of such Indebtedness or a trustee, fiduciary or agent for such holders or other
evidence satisfactory to the Trustee of such events is provided to the Trustee,
within 30 days after any such acceleration in respect of the Securities, and so
long as such rescission of any such acceleration of the Securities does not
conflict with any judgment or decree as certified to the Trustee by the
Company.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof or with respect to any
Security required to have been purchased by the Company on the Change of
Control Purchase Date or the Net Proceeds Payment Date pursuant to a Change of
Control Offer or Net Proceeds Offer, as applicable,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
and interest on any overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any overdue
installment of interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
money adjudged or decreed to be payable in the manner provided by law out of
the Property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights,
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whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities, their creditors or the Property of the
Company, any Subsidiary Guarantor or of such other obligor, the Trustee
(irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company, the Subsidiary
Guarantors or such other obligor for the payment of overdue principal, premium,
if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents and take any other actions including
participation as a full member of any creditor or other committee as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any money or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.6 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the Subsidiary Guarantees or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
or the Subsidiary Guarantees may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation,
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expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 5.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under
Section 6.6 hereof;
SECOND: to the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
THIRD: the balance, if any, to the Company.
Section 5.7 Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority or
more in aggregate principal amount of the Outstanding Securities;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article XII hereof) and
in such Security of the principal of (and premium if any, on) and (subject to
Section 3.8 hereof) interest on, such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
Section 5.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Subsidiary Guarantors, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereunder and all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.7 hereof, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given
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by this Article or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or
by the Holders, as the case may be.
Section 5.12 Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders not joining therein.
Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities may on behalf of the Holders of all the Securities
waive any existing Default or Event of Default hereunder and its consequences,
except a Default or Event of Default
(a) in respect of the payment of the principal of (or premium, if
any, on) or interest on any Security, or
(b) in respect of a covenant or provision hereof which under Article
IX hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected thereby.
Upon any such waiver, such Default or Event of Default shall cease to
exist for every purpose under this Indenture, but no such waiver shall extend
to any subsequent or other fault or Event of Default or impair any right
consequent thereon.
Section 5.14 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Subsidiary Guarantors covenants (to the
extent that each may lawfully do so) that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension, or usury law or other law wherever enacted, now or at any
time hereafter in force, which would prohibit or forgive the Company or any
Subsidiary Guarantor from paying all or any portion of the principal of
(premium, if any, on) or interest on the Securities as contemplated herein, or
which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) each of the Company and the Subsidiary
Guarantors hereby expressly waives all benefit or advantage of any such law,
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and covenant that they will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, and shall be fully protected in so relying, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided, however, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph shall not limit the effect of Section 6.1(b);
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 5.12.
Section 6.2 Certain Rights of Trustee.
Subject to the provisions of Section 6.1 hereof:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
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direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may reasonably see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it in good faith to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture; and
(i) the Trustee shall not be deemed to have notice or knowledge of
any matter unless a Responsible Officer has actual knowledge thereof or unless
written notice thereof is received by the Trustee at its Corporate Trust Office
and such notice references the Securities generally, the Company or this
Indenture.
The Trustee shall not be required to advance, expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise
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of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
Section 6.3 Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities and the notations of
Subsidiary Guarantees thereon, except for the Trustee's certificates of
authentication, shall be taken as the statements of the Company or the
Subsidiary Guarantors, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture, the Subsidiary Guarantees or
the Securities, except that the Trustee represents that it is duly authorized
to execute and deliver this Indenture, authenticate the Securities and perform
its obligations hereunder. The Trustee shall not be accountable for the use or
application by the Company of any Securities or the proceeds thereof.
Section 6.4 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other agent
of the Company, the Subsidiary Guarantors or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to TIA Sections 310(b) and 311 in the case of the Trustee, may
otherwise deal with the Company and the Subsidiary Guarantors with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 6.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as
otherwise agreed with the Company or any Subsidiary Guarantor.
Section 6.6 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the Trustee's wilful misconduct,
negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without wilful misconduct, negligence
or bad faith on its part, (i) arising out of
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or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder or (ii) in connection with enforcing this indemnification provision.
The obligations of the Company under this Section 6.6 to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding. As security for the performance of such obligations of
the Company, the Trustee shall have a claim and lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for payment of principal of (and premium, if any, on) or
interest on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in paragraph (h) or (i) of Section
5.1 of this Indenture, such expenses and the compensation for such services are
intended to constitute expenses of administration under any Insolvency or
Liquidation Proceeding.
Section 6.7 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible
to act as Trustee under TIA Section 310(a)(1) and shall have a combined capital
and surplus of at least $50,000,000. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 6.7, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.8 Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act; provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
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Section 6.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10 hereof.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 hereof shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall cease to be eligible under Section 6.7
hereof and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security
for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the
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Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee. The evidence of such successorship may, but need not be, evidenced by
a supplemental indenture.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Securities in the manner provided for in Section 14.5 hereof. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 6.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of all amounts
due it under Section 6.6 hereof, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all money and other Property held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities of like tenor or in this Indenture provided;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name
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of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 6.12 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.13 Notice of Defaults.
Within 60 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of (or premium, if any, on)
or interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Holders' Lists; Holder Communications; Disclosures
Respecting Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. Neither the Company, any Subsidiary Guarantor nor the Trustee
shall be under any responsibility with regard to the accuracy of such list. If
the Trustee is not the Security Registrar, the Company shall furnish to the
Trustee semi-annually before each Regular Record Date, and at such other times
as the Trustee may reasonably request in writing, a list, in such form as the
Trustee may reasonably request, as of such date of the names and addresses of
the Holders then known to the Company. The Company and the Trustee shall also
satisfy any other requirements imposed upon each of them by TIA Section 312(a).
Holders may communicate pursuant to Section 312(b) of the TIA with other
Holders with respect to their rights under this Indenture or the Securities.
Every Holder of Securities, by receiving and holding the same, agrees with the
Company, the Subsidiary Guarantors, the Security Registrar and the Trustee that
none of the Company, the Subsidiary Guarantors, the Security Registrar or the
Trustee, or any agent of any of them, shall be held accountable by reason of
the disclosure of any information as to the names and addresses of the Holders
in accordance with TIA Section 312, regardless of the source from which such
information was derived, that each of such
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Persons shall have the protection of TIA Section 312(c) and that the Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under TIA Section 312(b).
Section 7.2 Reports By Trustee.
Within 60 days after May 15 of each year commencing with May 15, 1997,
the Trustee shall transmit by mail to the Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such May 15 in
accordance with and to the extent required under TIA Section 313(a). The
Trustee shall also comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
Commencing at the time this Indenture is qualified under the Trust
Indenture Act, a copy of each Trustee's report, at the time of its mailing to
Holders of Securities, shall be mailed to the Company and filed with the
Commission and each stock exchange, if any, on which the Securities are listed.
Section 7.3 Reports by Company.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then the Company shall file with the Trustee such
information, documents or reports as required pursuant to Section 10.9 hereof;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information, documents
and reports (without exhibits except to the extent required by TIA Section
313(c)) required to be filed by the Company pursuant to paragraph (a) or (b) of
this Section as may be required by rules and regulations prescribed from time
to time by the Commission.
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, etc., Only on Certain Terms.
The Company shall not, in any single transaction or a series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially
all the Properties of the Company and its Restricted Subsidiaries on a
consolidated basis to any Person or group of Affiliated Persons, and the
Company shall not permit any of its Restricted Subsidiaries to enter into any
such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any other Person or group of Affiliated Persons, unless at the time
and after giving affect thereto:
(a) either (i) if the transaction is a merger or consolidation, the
Company shall be the surviving Person of such merger or consolidation, or (ii)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or to which the Properties of the Company or its
Restricted Subsidiaries, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of (any such surviving Person or
transferee Person being called the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia and shall, in either case, expressly
assume by a supplemental indenture to this Indenture executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture, and, in each case, this
Indenture shall remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default shall have
occurred and be continuing;
(c) except in the case of the consolidation or merger of any
Restricted Subsidiary with or into the Company, immediately after giving effect
to such transaction or transactions on a pro forma basis, the Consolidated Net
Worth of the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) is at least equal to the Consolidated
Net Worth of the Company immediately before such transaction or transactions;
(d) except in the case of the consolidation or merger of the Company
with or into a Restricted Subsidiary or any Restricted Subsidiary with or into
the Company or another Restricted Subsidiary, immediately before and
immediately after giving effect to such transaction or transactions on a pro
forma basis (assuming that the transaction or transactions occurred on the
first day of the period of four full fiscal quarters ending immediately prior
to the consummation
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of such transaction or transactions, with the appropriate adjustments with
respect to the transaction or transactions being included in such pro forma
calculation), the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) under Section 10.12(a) hereof;
(e) if the Company is not the continuing obligor under this
Indenture, then each Subsidiary Guarantor, unless it is the Surviving Entity,
shall have by supplemental indenture confirmed that its Subsidiary Guarantee of
the Securities shall apply to the Surviving Entity's obligations under this
Indenture and the Securities:
(f) if any of the Properties of the Company or any of its Restricted
Subsidiaries would upon such transaction or series of related transactions
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien shall have been in compliance with Section 10.15
hereof; and
(g) the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) shall have delivered to the Trustee,
in form and substance reasonably satisfactory to the Trustee, (i) an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer,
lease or other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with this
Indenture and (ii) an Opinion of Counsel stating that the requirements of
Section 8.1(a) have been satisfied.
Section 8.2 Successor Substituted.
Upon any consolidation of the Company with or merger of the Company into
any other corporation or any sale, assignment, lease, conveyance, transfer or
other disposition of all or substantially all of the Properties of the Company
and its Restricted Subsidiaries on a consolidated basis in accordance with
Section 8.1 hereof, the Surviving Entity shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such Surviving Entity had been named as
the Company herein, and in the event of any such sale, assignment, lease,
conveyance, transfer or other disposition, the Company (which term shall for
this purpose mean the Person named as the "Company" in the first paragraph of
this Indenture or any successor Person which shall theretofore become such in
the manner described in Section 8.1 hereof), except in the case of a lease,
shall be discharged of all obligations and covenants under this Indenture and
the Securities, and the Company may be dissolved and liquidated and such
dissolution and liquidation shall not cause a Change of Control under clause
(e) of the definition thereof to occur unless the sale, assignment, lease,
conveyance, transfer or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any Person otherwise results in a Change of Control.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, each of the Subsidiary Guarantors, when authorized by a Board
Resolution, and the Trustee upon Company Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company contained
herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
or
(c) to comply with any requirement of the SEC in connection with
qualifying this Indenture under the TIA or maintaining such qualification
thereafter; or
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Sections 6.9
and 6.10 hereof; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture provided that such action shall not adversely affect the
interests of the Holders in any material respect; or
(f) to secure the Securities or the Subsidiary Guarantees pursuant to
the requirements of Section 10.15 hereof or otherwise; or
(g) to add any Restricted Subsidiary as an additional Subsidiary
Guarantor as provided in Section 10.13(a) hereof or to evidence the succession
of another Person to any Subsidiary Guarantor pursuant to Section 13.2(b)
hereof and the assumption by any such successor of the covenants and agreements
of such Subsidiary Guarantor contained herein, in the Securities and in the
Subsidiary Guarantee of such Subsidiary Guarantor; or
(h) to release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 13.3 hereof; or
(i) to provide for uncertified Securities in addition to or in place
of certificated Securities.
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Section 9.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, each of the Subsidiary Guarantors, when authorized by a Board
Resolution, and the Trustee upon Company Request may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium thereon, or change the
coin or currency in which principal of any Security or any premium or the
interest on any Security is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date); or
(b) reduce the percentage of aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder or the consequences of a default provided for in this
Indenture; or
(c) modify any of the provisions of this Section or Sections 5.13 and
10.20 hereof, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
(d) change the ranking of the Securities or the Subsidiary Guarantees
in a manner adverse to the Holders or expressly subordinate in right of payment
the Securities or the Subsidiary Guarantees to any other Indebtedness; or
(e) amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control, or to
make and consummate a Net Proceeds Offer with respect to any Asset Sale, or
modify any of the provisions or definitions with respect thereto.
It shall not be necessary for any Act of the Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by
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this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company, with the notations of Subsidiary Guarantees thereon executed by the
Subsidiary Guarantors, and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of like tenor.
Section 9.7 Notice of Supplemental Indentures and Waivers.
Promptly after (i) the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 9.2 hereof or (ii)
a waiver under Section 5.13 or 10.20 hereof becomes effective, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section 14.5 hereof, setting forth in general
terms the substance of such supplemental indenture or waiver, as the case may
be.
ARTICLE X
COVENANTS
Section 10.1 Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of (and premium, if any, on) and
interest (including Additional Interest) on the Securities in accordance with
the terms of the Securities and this Indenture. The Company shall notify the
Trustee and any Paying Agent immediately upon the occurrence of any
Registration Default and, with respect to Additional Interest payments pursuant
to Section 4 of the
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Registration Rights Agreement, the Company shall notify the Trustee and any
Paying Agent prior to any Interest Payment Date of the amount of Additional
Interest payable to each Holder.
Section 10.2 Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities, the Subsidiary Guarantees and this
Indenture may be served. The Corporate Trust Office shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the aforementioned office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind any such
designation. Further, if at any time there shall be no such office or agency
in The City of New York where the Securities may be presented or surrendered
for payment, the Company shall forthwith designate and maintain such an office
or agency in The City of New York, in order that the Securities shall at all
times be payable in The City of New York. The Company will give prompt written
notice to the Trustee of any such designation or rescission and any change in
the location of any such other office or agency.
Section 10.3 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it shall,
on or before 11:00 a.m., Eastern time, on each due date of the principal of
(and premium, if any, on) or interest on any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal (and premium, if any) or interest so becoming due until
such sum shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will on or before 11:00 a.m., Eastern time, on each due date of
the principal of (and premium, if any, on), or interest on, any Securities,
deposit with a Paying Agent immediately available funds sufficient to pay the
principal (and premium, if any) or interest so becoming due, such funds to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
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(a) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
(and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
Section 10.4 Corporate Existence.
Except as expressly permitted by Article VIII hereof, Section 10.17
hereof or other provisions of this Indenture, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and each Restricted Subsidiary; provided, however, that the Company
shall not be required to preserve any such existence of its Restricted
Subsidiaries, rights or franchises, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted
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Subsidiaries, taken as a whole, and that the loss thereof is not
disadvantageous in any material respect to the Holders.
Section 10.5 Payment of Taxes; Maintenance of Properties; Insurance.
The Company shall or, as applicable, shall cause its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the Property of the
Company or any Restricted Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which
appropriate provision has been made in accordance with GAAP.
The Company shall or, as applicable, shall cause its Restricted
Subsidiaries to, cause all material Properties owned by the Company or any
Restricted Subsidiary and used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted), all as
in the judgment of the Company or such Restricted Subsidiary may be necessary
so that its business may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or
any Restricted Subsidiary from discontinuing the maintenance of any of such
Properties if such discontinuance is, in the judgment of the Company or such
Restricted Subsidiary, as the case may be, desirable in the conduct of the
business of the Company or such Restricted Subsidiary and not disadvantageous
in any material respect to the Holders. Notwithstanding the foregoing, nothing
contained in this Section 10.5 shall limit or impair in any way the right of
the Company and its Restricted Subsidiaries to sell, divest and otherwise to
engage in transactions that are otherwise permitted by this Indenture.
The Company shall at all times keep all of its, and cause its Restricted
Subsidiaries to keep their, Properties which are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or
damage to the extent that property of similar character and in a similar
location is usually so insured by corporations similarly situated and owning
like Properties.
The Company or any Restricted Subsidiary may adopt such other plan or
method of protection, in lieu of or supplemental to insurance with insurers,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good losses from casualties, or otherwise, conforming to the
systems of self-insurance maintained by corporations similarly situated and in
a similar location and owning like Properties, as may be determined by the
Board of Directors of the Company or such Restricted Subsidiary.
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Section 10.6 Limitation on Sale-Leaseback Transactions.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into, assume, guarantee or otherwise become
liable with respect to any Sale/Leaseback Transaction unless (a) the Company or
such Restricted Subsidiary, as the case may be, would be able to incur
Indebtedness (not including the incurrence of Permitted Indebtedness) in an
amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction pursuant to Section 10.12(a) hereof, (b) the Company
or such Restricted Subsidiary receives proceeds from such Sale/Leaseback
Transaction at least equal to the Fair Market Value of the Property subject
thereto and (c) the Company applies an amount in cash equal to the Net
Available Proceeds of the Sale/Leaseback Transaction in accordance with the
provisions of Section 10.17 hereof as if such Sale/Leaseback Transaction were
an Asset Sale.
Section 10.7 Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the
businesses being conducted on the date of the Series A/B Indenture (such
businesses being predominantly daywork drilling for oil and natural gas,
engineering services and the development and operation of mobile offshore
production units ("MOPUs")) and such other businesses as are reasonably
necessary or desirable to facilitate the conduct and operation of such
businesses.
Section 10.8 Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company and within 45 days of the end of
each of the first, second and third quarters of each fiscal year of the
Company, an Officers' Certificate stating that a review of the activities of
the Company and its Restricted Subsidiaries during the preceding fiscal quarter
or fiscal year, as applicable, has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of such Officer's knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and no Default or
Event of Default has occurred and is continuing (or, if a Default or Event of
Default shall have occurred to either such Officer's knowledge, describing all
such Defaults or Events of Default of which such Officer may have knowledge and
what action the Company is taking or proposes to take with respect thereto).
Such Officers' Certificate shall comply with TIA Section 314(a)(4). For
purposes of this Section 10.8(a), such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
(b) The Company shall, so long as any of the Securities is
outstanding, deliver to the Trustee, upon any of its Officers becoming aware of
any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company proposes to take with
respect thereto, within 10 days of its occurrence.
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Section 10.9 Provision of Financial Information.
The Company shall file on a timely basis with the SEC, to the extent
such filings are accepted by the Commission and whether or not the Company has
a class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to
file if it were subject to Section 13 or 15 of the Exchange Act. The Company
shall also file with the Trustee (with exhibits), and provide to each Holder of
Securities (without exhibits), without cost to such Holder, copies of such
reports and documents within 15 days after the date on which the Company files
such reports and documents with the Commission or the date on which the Company
would be required to file such reports and documents if the Company were so
required and, if filing such reports and documents with the Commission is not
accepted by the Commission or is prohibited under the Exchange Act, the Company
shall supply at its cost copies of such reports and documents (including any
exhibits thereto) to any Holder of Securities, securities analyst or
prospective investor promptly upon written request given in accordance with
Section 14.4 hereof.
Section 10.10 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any other
distribution to holders of, any shares of Capital Stock of the Company
(other than dividends or distributions payable solely in shares of
Qualified Capital Stock of the Company or in options, warrants or other
rights to purchase Qualified Capital Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company or any Affiliate thereof (other than
any Restricted Subsidiary) or any options, warrants or other rights to
acquire such Capital Stock;
(iii) make any principal payment on or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any scheduled
principal payment, scheduled sinking fund payment or maturity, any
Subordinated Indebtedness, except in any case out of the proceeds of
Permitted Refinancing Indebtedness, or
(iv) make any Restricted Investment;
(such payments or other actions described in clauses (i) through (iv) being
collectively referred to as "Restricted Payments"), unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the amount determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (A) no Default or Event of Default shall have
occurred and be continuing, (B) the Company could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) in accordance with Section
10.12(a) hereof and (C) the
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aggregate amount of all Restricted Payments declared or made after the date of
the Series A/B Indenture shall not exceed the sum (without duplication) of the
following:
(1) 50% of the Consolidated Net Income of the Company accrued on a
cumulative basis during the period beginning on April 1, 1996 and ending
on the last day of the Company's last fiscal quarter ending prior to the
date of such proposed Restricted Payment (or, if such Consolidated Net
Income shall be a loss, minus 100% of such loss), plus
(2) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company from the issuance or sale (other
than to any of its Restricted Subsidiaries) of shares of Qualified
Capital Stock of the Company or any options, warrants or rights to
purchase such shares of Qualified Capital Stock of the Company, plus
(3) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company (other than from any of its
Restricted Subsidiaries) upon the exercise of any options, warrants or
rights to purchase shares of Qualified Capital Stock of the Company,
plus
(4) the aggregate Net Cash Proceeds received after the date of the
Series A/B Indenture by the Company from the issuance or sale (other
than to any of its Restricted Subsidiaries) of Indebtedness or shares of
Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company, together with the aggregate
cash received by the Company at the time of such conversion or exchange,
plus
(5) to the extent not otherwise included in Consolidated Net Income,
the net reduction in Investments in Unrestricted Subsidiaries resulting
from dividends, repayments of loans or advances, or other transfers of
assets, in each case to the Company or a Restricted Subsidiary after the
date of the Series A/B Indenture from any Unrestricted Subsidiary or
from the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of
Investment), not to exceed in the case of any Unrestricted Subsidiary
the total amount of Investments (other than Permitted Investments) in
such Unrestricted Subsidiary made by the Company and its Restricted
Subsidiaries in such Unrestricted Subsidiary after the date of the
Series A/B Indenture, plus
(6) $10,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as (in the case
of clauses (ii) and (iii) below) no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend on any Capital Stock of the
Company or any Restricted Subsidiary within 60 days after the date of
declaration thereof, if at such declaration date such declaration
complied with the provisions of paragraph (a) above (and such payment
shall be deemed to have been paid on such date of declaration for
purposes of any calculation required by the provisions of paragraph (a)
above);
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(ii) the repurchase, redemption or other acquisition or
retirement of any shares of any class of Capital Stock of the Company or
any Restricted Subsidiary, in exchange for, or out of the aggregate Net
Cash Proceeds of, a substantially concurrent issue and sale (other than
to a Restricted Subsidiary) of shares of Qualified Capital Stock of the
Company; and
(iii) the repurchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness in
exchange for, or out of the aggregate Net Cash Proceeds from, a
substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock of the Company.
The actions described in clauses (i), (ii) and (iii) of this paragraph (b)
shall be Restricted Payments that shall be permitted to be made in accordance
with this paragraph (b) but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (C) of paragraph (a), provided
that any dividend paid pursuant to clause (i) of this paragraph (b) shall
reduce the amount that would otherwise be available under clause (C) of
paragraph (a) when declared, but not also when subsequently paid pursuant to
such clause (i).
(c) In computing Consolidated Net Income under paragraph (a) above,
(1) the Company shall use audited financial statements for the portions of the
relevant period for which audited financial statements are available on the
date of determination and unaudited financial statements and other current
financial data based on the books and records of the Company for the remaining
portion of such period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data derived from the
books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
Section 10.11 Limitation on Guarantees by Subsidiary Guarantors.
The Company shall not permit any Subsidiary Guarantor to guarantee the
payment of any Subordinated Indebtedness of the Company unless such guarantee
shall be subordinated to such Subsidiary Guarantor's Subsidiary Guarantee at
least to the same extent as such Subordinated Indebtedness is subordinated to
the Securities; provided, however, that this Section 10.11 shall not be
applicable to any guarantee of any Subsidiary Guarantor that (i) existed at the
time such Person became a Subsidiary of the Company and (ii) was not incurred
in connection with, or in contemplation of, such Person's becoming a Subsidiary
of the Company.
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Section 10.12 Limitation on Indebtedness and Disqualified Capital Stock.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume, guarantee or in any manner become
directly or indirectly liable for the payment of (collectively, "incur") any
Indebtedness (including any Acquired Indebtedness but excluding any Permitted
Indebtedness), or any Disqualified Common Stock, unless, on a pro forma basis
after giving effect to such incurrence and the application of the proceeds
therefrom, the Consolidated EBITDA Coverage Ratio for the four full fiscal
quarters immediately preceding such event, taken as one period, would have been
equal to or greater than 2.25 to 1.0.
(b) The Company shall not incur any Indebtedness that is expressly
subordinated to any other Indebtedness of the Company unless such Indebtedness,
by its terms or the terms of any agreement or instrument pursuant to which such
Indebtedness is issued or outstanding, is also expressly made subordinate to
the Securities at least to the extent it is subordinated to such other
Indebtedness.
(c) The amount of any guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Company or one or more Restricted
Subsidiaries shall not be deemed to be outstanding or incurred for purposes of
this Section 10.12 hereof in addition to the amount of Indebtedness which it
guarantees.
(d) For purposes of this Section 10.12, Indebtedness of any Person
that becomes a Restricted Subsidiary by merger, consolidation or other
acquisition shall be deemed to have been incurred by the Company and the
Restricted Subsidiary at the time such Person becomes a Restricted Subsidiary.
Section 10.13 Additional Subsidiary Guarantors.
(a) The Company shall cause each Restricted Subsidiary that becomes,
or comes into existence as, a Restricted Subsidiary after the date of the
Series A/B Indenture and has assets, businesses, divisions, real property or
equipment with a Fair Market Value in excess of $1,000,000 to execute and
deliver a supplemental indenture to this Indenture agreeing to be bound by its
terms applicable to a Subsidiary Guarantor and providing for a Subsidiary
Guarantee of the Securities by such Restricted Subsidiary.
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary
pursuant to this Section 10.13 shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon the terms and
conditions set forth in Section 13.3 hereof.
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Section 10.14 Limitation on Issuances and Sales of Capital Stock by
Restricted Subsidiaries.
The Company (a) shall not permit any Restricted Subsidiary to issue or
sell any Capital Stock to any Person other than to the Company or a Wholly
Owned Restricted Subsidiary and (b) shall not permit any Person other than
the Company or a Wholly Owned Restricted Subsidiary to own any Capital Stock of
any Restricted Subsidiary, in each case except with respect to a Wholly Owned
Restricted Subsidiary as described in clause (i) or (ii) of the definition of
"Wholly Owned Restricted Subsidiary."
Section 10.15 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume, affirm or suffer to exist or
become effective any Lien of any kind, except for Permitted Liens, upon any of
their respective Properties, whether now owned or acquired after the date of
the Series A/B Indenture, or any income or profits therefrom, to secure (a) any
Indebtedness of the Company or such Restricted Subsidiary (if it is not also a
Subsidiary Guarantor), unless prior to, or contemporaneously therewith, the
Securities are equally and ratably secured or (b) any Indebtedness of any
Subsidiary Guarantor, unless prior to, or contemporaneously therewith, the
Subsidiary Guarantees are equally and ratably secured; provided, however, that
if such Indebtedness is expressly subordinated to the Securities or the
Subsidiary Guarantees, the Lien securing such Indebtedness shall be
subordinated and junior to the Lien securing the Securities or the Subsidiary
Guarantees, as the case may be, with the same relative priority as such
Indebtedness has with respect to the Securities or the Subsidiary Guarantees.
The foregoing covenant shall not apply to any Lien securing Acquired
Indebtedness, provided that any such Lien extends only to the Properties that
were subject to such Lien prior to the related acquisition by the Company or
such Restricted Subsidiary and was not created, incurred or assumed in
contemplation of such transaction.
Section 10.16 Purchase of Securities Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer") all of the
then Outstanding Securities, in whole or in part, from the Holders of such
Securities in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the principal amount of such
Securities, plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date (as defined below), in accordance with the procedures set forth
in paragraphs (b), (c) and (d) of this Section. The Company shall, subject to
the provisions described below, be required to purchase all Securities properly
tendered into the Change of Control Offer and not withdrawn. The Company will
not be required to make a Change of Control Offer upon a Change of Control if
another Person makes the Change of Control Offer at the same purchase price, at
the same times and otherwise in substantial compliance with the requirements
applicable to a Change of Control Offer to be made by the Company and purchases
all Securities validly tendered and not withdrawn under such Change of Control
Offer.
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(b) The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the fifth Business
Day prior to the Change of Control Purchase Date (as defined below).
(c) Not later than the 30th day following any Change of Control, the
Company shall give to the Trustee in the manner provided in Section 14.4 and
each Holder of the Securities in the manner provided in Section 14.5, a notice
(the "Change of Control Notice") governing the terms of the Change of Control
Offer and stating:
(1) that a Change in Control has occurred and that such Holder
has the right to require the Company to repurchase such Holder's
Securities, or portion thereof, at the Change of Control Purchase Price;
(2) any information regarding such Change of Control required
to be furnished pursuant to Rule 13e-1 under the Exchange Act and any
other securities laws and regulations thereunder;
(3) a purchase date (the "Change of Control Purchase Date")
which shall be on a Business Day and no earlier than 30 days nor later
than 60 days from the date the Change of Control occurred;
(4) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest:
(5) that unless the Company defaults in depositing money with
the Paying Agent in accordance with the last paragraph of clause (d) of
this Section 10.16, or payment is otherwise prevented, any Security, or
portion thereof, accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control
Purchase Date; and
(6) the instructions a Holder must follow in order to have his
Securities repurchased in accordance with paragraph (d) of this Section.
(d) Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Change of Control Notice at least five Business Days prior to the Change of
Control Purchase Date. Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days prior to the
Change of Control Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the certificate number(s) (in the
case of Physical Securities) and principal amount of the Securities delivered
for purchase by the Holder as to which his election is to be withdrawn and a
statement that such Holder is withdrawing his election to have such Securities
purchased. Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
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On the Change of Control Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof validly tendered pursuant to a Change of
Control Offer, (ii) irrevocably deposit with the Paying Agent money sufficient
to pay the purchase price of all Securities or portions thereof so tendered,
and (iii) deliver or cause to be delivered to the Trustee the Securities so
accepted. The Paying Agent shall promptly mail or deliver to Holders of the
Securities so tendered payment in an amount equal to the purchase price for the
Securities, and the Company shall execute and the Trustee shall authenticate
and mail or make available for delivery to such Holders a new Security having
the notation of Subsidiary Guarantees thereon executed by the Subsidiary
Guarantors and equal in principal amount to any unpurchased portion of the
Security which any such Holder did not surrender for purchase. The Company
shall announce the results of a Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date. For purposes of this
Section 10.16, the Trustee will act as the Paying Agent.
(e) The Company shall comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that a Change of Control
occurs and the Company is required to purchase Securities as described in this
Section 10.16.
Section 10.17 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted 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 Properties
sold or otherwise disposed of pursuant to the Asset Sale, (ii) at least 75% of
the consideration received by the Company or the Restricted Subsidiary, as the
case may be, in respect of such Asset Sale consists of cash or Cash Equivalents
and (iii) the Company delivers to the Trustee an Officers' Certificate
certifying that such Asset Sale complies with clauses (i) and (ii) of this
Section 10.17(a). The amount (without duplication) of any Indebtedness (other
than Subordinated Indebtedness) of the Company or such Restricted Subsidiary
that is expressly assumed by the transferee in such Asset Sale and with respect
to which the Company or such Restricted Subsidiary, as the case may be, is
unconditionally released by the holder of such Indebtedness, shall be deemed to
be cash or Cash Equivalents for purposes of clause (ii) and shall also be
deemed to constitute a repayment of, and a permanent reduction in, the amount
of such Indebtedness for purposes of the following paragraph.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale or incurs an Event of Loss, the Company or such Restricted Subsidiary may
either, no later than 365 days after such Asset Sale or such Event of Loss, (i)
apply all or any of the Net Available Proceeds therefrom to repay Indebtedness
(other than Subordinated Indebtedness) of the Company or any Restricted
Subsidiary, provided, in each case, that the related loan commitment (if any)
is thereby permanently reduced by the amount of such Indebtedness so repaid, or
(ii) invest all or any part of the Net Available Proceeds thereof in Properties
that replace the Properties that were the subject of such Asset Sale or such
Event of Loss, as the case may be, or in other Properties that will be used in
the business of the Company and its Restricted Subsidiaries. The amount of
such Net
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Available Proceeds not applied or invested as provided in this paragraph shall
constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000, the Company shall make a Series B Net Proceeds Offer, from all
Holders of the outstanding Series B Securities, in accordance with the
procedures set forth in the Series A/B Indenture, the maximum principal amount
of outstanding Series B Securities that may be purchased out of the amount of
such Excess Proceeds.
(d) To the extent that any Excess Proceeds are not applied to the
Series B Net Proceeds Offer, the Company shall make an offer to purchase from
all Holders of the Securities, an aggregate principal amount of Securities
equal to such Excess Proceeds as follows:
(1) Not later than the 30th day following the Series B Net
Proceeds Payment Date for the Series B Net Proceeds Offer (the "Trigger
Date"), the Company shall give to the Trustee in the manner provided in
Section 14.4 hereof and each Holder of the Securities in the manner
provided in Section 14.5 hereof, a notice (a "Purchase Notice") offering
to purchase (a "Net Proceeds Offer") from all Holders of the Securities
the maximum principal amount (expressed as a multiple of $1,000) of
Securities that may be purchased out of an amount (the "Payment Amount")
equal to such Excess Proceeds.
(2) The offer price for the Securities shall be payable in
cash in an amount equal to 100% of the principal amount of the
Securities 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 paragraph (e) of this Section. To the extent that the aggregate
Offered Price of the Securities tendered pursuant to a Net Proceeds
Offer is less than the Payment Amount relating thereto (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 limitations of Section 10.10 hereof.
(3) If the aggregate Offered Price of Securities validly
tendered and not withdrawn by Holders thereof exceeds the Payment
Amount, Securities to be purchased will be selected on a pro rata basis
by the Trustee based on the aggregate principal amount of Securities so
tendered. Upon completion of a Net Proceeds Offer, the amount of Excess
Proceeds shall be reset to zero.
(4) The Purchase Notice shall set forth a purchase date (the
"Net Proceeds Payment Date"), which shall be on a Business Day no
earlier than 30 days nor later than 60 days from the Trigger Date. The
Purchase Notice shall also state (i) that a Trigger Date with respect to
one or more Asset Sales has occurred and that such Holder has the right
to require the Company to repurchase such Holder's Securities at the
Offered Price, subject to the limitations described in the foregoing
paragraph (3), (ii) any information regarding such Net Proceeds Offer
required to be furnished pursuant to Rule 13e-1 under the Exchange Act
and any other securities laws and regulations thereunder, (iii) that any
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Security, or portion thereof, not tendered or accepted for payment will
continue to accrue interest, (iv) that, unless the Company defaults in
depositing money with the Paying Agent in accordance with the last
paragraph of clause (e) of this Section 10.17, or payment is otherwise
prevented, any Security, or portion thereof, accepted for payment
pursuant to the Net Proceeds Offer shall cease to accrue interest after
the Net Proceeds Payment Date, and (v) the instructions a Holder must
follow in order to have his Securities repurchased in accordance with
paragraph (e) of this Section.
(e) Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Purchase Notice at least five Business Days prior to the Net Proceeds Payment
Date. Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than three Business Days prior to the Net Proceeds Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the certificate number(s) (in the case of Physical
Securities) and principal amount of the Securities delivered for purchase by
the Holder as to which his election is to be withdrawn and a statement that
such Holder is withdrawing his election to have such Securities purchased.
Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
On the Net Proceeds Payment Date, the Company shall (i) accept for
payment Securities or portions thereof validly tendered pursuant to a Net
Proceeds Offer in an aggregate principal amount equal to the Payment Amount or
such lesser amount of Securities as has been tendered, (ii) irrevocably deposit
with the Paying Agent money sufficient to pay the purchase price of all
Securities or portions thereof so tendered in an aggregate principal amount
equal to the Payment Amount or such lesser amount and (iii) deliver or cause to
be delivered to the Trustee the Securities so accepted. The Paying Agent shall
promptly mail or deliver to Holders of the Securities so accepted payment in an
amount equal to the purchase price, and the Company shall execute and the
Trustee shall authenticate and mail or make available for delivery to such
Holders a new Security having the notation of Subsidiary Guarantees thereon
executed by the Subsidiary Guarantors and equal in principal amount to any
unpurchased portion of the Security which any such Holder did not surrender for
purchase. Any Securities not so accepted will be promptly mailed or delivered
to the Holder thereof. The Company shall announce the results of a Net Proceeds
Offer on or as soon as practicable after the Net Proceeds Payment Date. For
purposes of this Section 10.17, the Trustee will act as the Paying Agent.
(f) The Company shall not permit any Restricted Subsidiary to enter
into or suffer to exist any agreement that would place any restriction of any
kind (other than pursuant to law or regulation) on the ability of the Company
to make a Net Proceeds Offer following any Asset Sale. The Company shall comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder, if applicable, in the event that an Asset Sale occurs
and the Company is required to purchase Securities as described in this Section
10.17.
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Section 10.18 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of Property or the rendering of any
services) with, or for the benefit of, any Affiliate of the Company (other than
the Company or a Restricted Subsidiary), unless (i) such transaction or series
of related transactions is on terms that are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction in arm's-length dealings with an unrelated third party,
(ii) with respect to any one transaction or series of related transactions
involving aggregate payments in excess of $1,000,000, the Company delivers an
Officers' Certificate to the Trustee certifying that such transaction or series
of related transactions complies with clause (i) above, (iii) with respect to a
transaction or series of related transactions involving payments in excess of
$5,000,000 but less than $15,000,000 in the aggregate, the Company delivers an
Officers' Certificate to the Trustee certifying that (A) such transaction or
series of related transactions complies with clause (i) above and (B) such
transaction or series of related transactions has been approved by a majority
of the Disinterested Directors of the Company, and (iv) with respect to any one
transaction or series of related transactions involving aggregate payments in
excess of $15,000,000, the Company delivers an Officers' Certificate to the
Trustee certifying to the two matters referred to in clause (iii) above and
that the Company has obtained a written opinion from an independent nationally
recognized investment banking firm or appraisal firm specializing or having a
speciality in the type and subject matter of the transaction or series of
related transactions at issue, which opinion shall be to the effect set forth
in clause (i) above or shall state that such transaction or series of related
transactions is fair from a financial point of view to the Company or such
Restricted Subsidiary; provided, however, that the foregoing restriction shall
not apply to (w) loans or advances to officers, directors and employees of the
Company or any Restricted Subsidiary made in the ordinary course of business
and consistent with past practices of the Company and its Restricted
Subsidiaries in an aggregate amount not to exceed $1,000,000 outstanding at any
one time, (x) indemnities of officers, directors and employees of the Company
or any Restricted Subsidiary permitted by bylaw or statutory provisions, (y)
the payment of reasonable and customary regular fees to directors of the
Company or any of its Restricted Subsidiaries who are not employees of the
Company or any Affiliate and (z) the Company's employee compensation and other
benefit arrangements.
Section 10.19 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or suffer to exist or allow to become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary (a) to pay dividends, in cash or otherwise, or
make any other distributions on its Capital Stock, or make payments on any
Indebtedness owed, to the Company or any other Restricted Subsidiary, (b) to
make loans or advances to the Company or any other Restricted Subsidiary, (c)
to transfer any of its Property to the Company or any other Restricted
Subsidiary or (d) to guarantee the Securities (any such restrictions being
collectively referred to herein as a "Payment Restriction"), except in any such
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case for such encumbrances or restrictions existing under or by reason of (i)
this Indenture, the Revolving Credit Facility or any other agreement in effect
or entered into on the date of the Series A/B Indenture, or (ii) any agreement,
instrument or charter of or in respect of a Restricted Subsidiary entered into
prior to the date on which such Restricted Subsidiary became a Restricted
Subsidiary and outstanding on such date and not entered into in connection with
or in contemplation of becoming a Restricted Subsidiary, provided such
consensual encumbrance or restriction is not applicable to any Properties other
than those owned or held by the Restricted Subsidiary at the time it became a
Restricted Subsidiary or subsequently acquired by such Restricted Subsidiary
other than the Company or any other Restricted Subsidiary, or (iii) pursuant to
an agreement effecting a modification, renewal, refinancing, replacement or
extension of any agreement, instrument or charter (other than this Indenture)
referred to in clause (i) or (ii) above, provided, however, that the provisions
relating to such encumbrance or restriction are not materially less favorable
to the Holders of the Securities than those under or pursuant to the agreement,
instrument or charter so modified, renewed, refinanced, replaced or extended,
or (iv) customary provisions restricting the subletting or assignment of any
lease or the transfer of copyrighted or patented materials, or (v) provisions
in agreements that restrict the assignment of such agreements or rights
thereunder, or (vi) the sale or other disposition of any Properties subject to
a Lien securing Indebtedness.
Section 10.20 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 10.5 through 10.12, Sections 10.14
and 10.15 and Sections 10.18 through 10.19 hereof if, before or after the time
for such compliance, the Holders of at least a majority in aggregate principal
amount of the Outstanding Securities and the Subsidiary Guarantors, by Act of
such Holders and written agreement of the Subsidiary Guarantors, waive such
compliance in such instance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to
the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
Section 10.21 Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall
pay all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith. In connection with any such
qualification of this Indenture under the TIA, the Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request.
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ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right of Redemption.
The Securities may be redeemed, at the election of the Company, as a
whole or from time to time in part, at any time on or after May 15, 2000, upon
not less than 30 or more than 60 days' notice to each Holder of Securities to
be redeemed, subject to the conditions and at the Redemption Prices (expressed
as percentages of principal amount) specified in the form of Security, together
with accrued and unpaid interest, if any, to the Redemption Date (subject to
the right of Holders on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
In addition, at any time on or prior to May 15, 1999, up to $12,500,000
in aggregate principal amount of Securities may be redeemed, at the election of
the Company, upon not less than 30 or more than 60 days' notice to each Holder
of Securities to be redeemed, from the Net Cash Proceeds of a Public Equity
Offering, at the Redemption Price (expressed as a percentage of principal
amount) specified in the form of Security, together with accrued and unpaid
interest, if any, to the Redemption Date, provided that at least $37,500,000 in
aggregate principal amount of Securities remains Outstanding immediately after
such redemption and that such redemption occurs within 60 days following the
closing of such Public Equity Offering.
Section 11.2 Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 11.3 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to Section
11.1 hereof shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select
the Securities to be redeemed pursuant to Section 11.4 hereof. Any election to
redeem Securities shall be revocable until the Company gives a notice of
redemption pursuant to Section 11.5 hereof to the Holders of Securities to be
redeemed.
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Section 11.4 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not less than 30 days nor more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, pro rata, by lot or by any
other method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the principal of
Securities; provided, however, that any such partial redemption shall be in
integral multiples of $1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs of this Section 11.4
shall not apply with respect to any redemption affecting only a Global
Security, whether such Global Security is to be redeemed in whole or in part.
In the case of any such redemption in part, the unredeemed portion of the
principal amount of the Global Security shall be in an authorized denomination.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
Section 11.5 Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 14.5 hereof not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) in the case of a partial redemption of Physical Securities, the
identification of the particular Securities to be redeemed, and, if any Global
Security or Physical Security is to be redeemed in part, the portion of the
principal amount thereof to be redeemed;
(d) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in Section
11.7 hereof) will become due and payable upon each such Security, or the
portion thereof, to be redeemed, and that, unless the Company shall default in
the payment of the Redemption Price and any applicable accrued and unpaid
interest, interest thereon will cease to accrue on and after said date; and
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(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Failure to give such
notice by mailing to any Holder of Securities or any defect therein shall not
affect the validity of any proceedings for the redemption of other Securities.
Section 11.6 Deposit of Redemption Price.
On or before 11:00 a.m., Eastern time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3 hereof) immediately available funds in an amount
sufficient to pay the Redemption Price of, and accrued and unpaid interest on,
all the Securities which are to be redeemed on such Redemption Date.
Section 11.7 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued and unpaid interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued and unpaid interest, if any, to the Redemption Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.8 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
Section 11.8 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at the office or agency of the Company maintained for such purpose pursuant to
Section 10.2 hereof (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal
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amount equal to and in exchange for the unredeemed portion of the principal
amount of the Security so surrendered.
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
Section 12.1 Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 12.2 or Section 12.3
hereof be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this Article XII.
Section 12.2 Defeasance and Discharge.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.2, the Company and the Subsidiary Guarantors
shall be deemed to have been discharged from their respective obligations with
respect to all Outstanding Securities on the date the conditions set forth in
Section 12.4 hereof are satisfied (hereinafter, "legal defeasance"). For this
purpose, such legal defeasance means that the Company and the Subsidiary
Guarantors shall be deemed (i) to have paid and discharged their respective
obligations under the Outstanding Securities, provided, however, that the
Securities shall continue to be deemed to be "Outstanding" for purposes of
Section 12.5 hereof and the other Sections of this Indenture referred to in
clauses (A) and (B) below, and (ii) to have satisfied all their other
obligations with respect to such Securities and this Indenture (and the
Trustee, at the expense and direction of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities to receive, solely from the trust fund
described in Section 12.4 hereof and as more fully set forth in such Section,
payments in respect of the principal of (and premium if any, on) and interest
on such Securities when such payments are due (or at such time as the
Securities would be subject to redemption at the option of the Company in
accordance with this Indenture), (B) the respective obligations of the Company
and the Subsidiary Guarantors under Sections 3.3, 3.4, 3.5, 3.6, 3.7, 5.8, 6.6,
6.9, 6.10, 10.2, 10.3, 10.21, 13.1 (to the extent it relates to the foregoing
Sections and this Article XII), 13.4 and 13.5 hereof, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder, and (D) the obligations
of the Company and the Subsidiary Guarantors under this Article XII. Subject to
compliance with this Article XII, the Company may exercise its option under
this Section 12.2 notwithstanding the prior exercise of its option under
Section 12.3 hereof with respect to the Securities.
Section 12.3 Covenant Defeasance.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.3, (i) the Company and each Subsidiary Guarantor
shall be released from their respective obligations under any covenant
contained in Article VIII, in Sections 10.5 through
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10.19 and in Sections 10.21 and 13.2 hereof and (ii) the occurrence of any
event specified in Section 5.1(c) or 5.1(d) hereof (with respect to any of
Article VIII, Sections 10.5 through 10.19, Section 10.21 and Section 13.2)
shall be deemed not to be or result in an Event of Default, in each case with
respect to the Outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities shall thereafter be deemed not to be "Outstanding" for the purposes
of any direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities, the Company and each Subsidiary Guarantor may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such Article or Section (to the extent so specified in the case of
Sections 5.1(c) and 5.1(d) hereof), whether directly or indirectly, by reason
of any reference elsewhere herein to any such Article or Section or by reason
of any reference in any such Article or Section to any other provision herein
or in any other document, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon
the Company's exercise under Section 12.1 hereof of the option applicable to
this Section 12.3, subject to the satisfaction of the conditions set forth in
Section 12.4 hereof, Sections 5.1(e) and 5.1(g) hereof shall not constitute
Events of Default.
Section 12.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
12.2 or Section 12.3 hereof to the Outstanding Securities:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 6.7 hereof who shall agree to comply
with the provisions of this Article XII applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of such
Securities, (A) cash in United States dollars in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(C) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of (and premium, if any, on) and interest on the
Outstanding Securities on the Stated Maturity thereof (or Redemption Date, if
applicable), provided that the Trustee shall have been irrevocably instructed
in writing by the Company to apply such money or the proceeds of such U.S.
Government Obligations to said payments with respect to the Securities. Before
such a deposit, the Company may give to the Trustee, in accordance with Section
11.3 hereof, a notice of its election to redeem all of the Outstanding
Securities at a future date in accordance with Article XI hereof, which notice
shall be irrevocable. Such irrevocable redemption notice, if given, shall be
given effect in applying the foregoing. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or
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supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
(b) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar
as Sections 5.1(h) and 5.1(i) are concerned, at any time during the period
ending on the 91st day after the date of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company or any Subsidiary
Guarantor.
(d) Such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 12.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of the Series A/B Indenture there has
been a change in the applicable federal income tax laws, in either case
providing that the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such legal
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such legal
defeasance had not occurred (it being understood that (x) such Opinion of
Counsel shall also state that such ruling or applicable law is consistent with
the conclusions reached in such Opinion of Counsel and (y) the Trustee shall be
under no obligation to investigate the basis or correctness of such ruling).
(f) In the case of an election under Section 12.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred.
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(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent provided for relating to either the legal defeasance under
Section 12.2 hereof or the covenant defeasance under Section 12.3 (as the case
may be) have been complied with.
Section 12.5 Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3 hereof,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively for
purposes of this Section 12.5, the "Trustee") pursuant to Section 12.4 hereof
in respect of the Outstanding Securities shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against all taxes, fees
or other charges imposed on or assessed against the U.S. Governmental
Obligations deposited pursuant to Section 12.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Securities.
Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or
covenant defeasance, as applicable, in accordance with this Article.
Section 12.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 12.2 or 12.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 12.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any Security following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money held by the Trustee or Paying Agent.
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ARTICLE XIII
SUBSIDIARY GUARANTEES
Section 13.1 Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and severally,
guarantees (each such guarantee being referred to herein as this "Subsidiary
Guarantee," with all such guarantees being referred to herein as the
"Subsidiary Guarantees") to each Holder of Securities authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, the
full and prompt performance of the Company's obligations under this Indenture
and the Securities and that:
(a) the principal of (and premium, if any, on) and interest on the
Securities will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Securities, if any, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise;
subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 13.4 hereof.
Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly
and severally obligated to pay the same immediately. Each Subsidiary Guarantor
hereby agrees that its obligations hereunder shall, to the extent permitted by
law, be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Subsidiary Guarantor hereby waives, to the extent permitted by
law, diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in the Securities,
this Indenture and in this Subsidiary Guarantee. If any Holder or the Trustee
is required by any court or otherwise to return to the Company, any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Subsidiary Guarantor, any amount paid
by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and
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effect. Each Subsidiary Guarantor agrees it shall not be entitled to enforce
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between
each Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article V hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article V
hereof, such obligations (whether or not due and payable) shall forthwith
become due and payable by each Subsidiary Guarantor for the purpose of this
Subsidiary Guarantee.
Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain
Terms.
(a) Except as set forth in Article VIII hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor or shall prevent any sale, conveyance or other disposition of all or
substantially all the Properties of a Subsidiary Guarantor to the Company or
another Subsidiary Guarantor.
(b) Except as set forth in Article VIII hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into a Person other than the Company
or another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor), or successive consolidations or mergers in which a Subsidiary
Guarantor or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance or other disposition of all or substantially all
the Properties of a Subsidiary Guarantor to a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor) authorized to acquire and operate the same; provided, however, that
(i) immediately after such transaction, and giving effect thereto, no Default
or Event of Default shall have occurred as a result of such transaction and be
continuing, (ii) such transaction shall not violate any of the covenants of
Sections 10.1 through 10.19 hereof, and (iii) each Subsidiary Guarantor hereby
covenants and agrees that, upon any such consolidation, merger, sale,
conveyance or other disposition, such Subsidiary Guarantor's Subsidiary
Guarantee set forth in this Article XIII and in a notation to the Securities,
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by such Subsidiary Guarantor,
shall be expressly assumed (in the event that the Subsidiary Guarantor is not
the surviving corporation in a merger), by supplemental indenture satisfactory
in form to the Trustee, executed and delivered to the Trustee, by such Person
formed by such consolidation, or into which the Subsidiary Guarantor shall have
merged, or by the Person that shall have acquired such Property (except to the
extent the following Section 13.3 would result in the release of such
Subsidiary Guarantee, in which case such surviving Person or transferee of such
Property shall not have to execute any such supplemental indenture and shall
not have to assume such Subsidiary Guarantor's Subsidiary Guarantee). In the
case of any such consolidation, merger, sale, conveyance or other disposition
and upon the assumption by the successor Person, by supplemental indenture
executed and delivered to the Trustee and satisfactory in form to the Trustee
of the due and punctual performance of all of the covenants and conditions of
this
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Indenture to be performed by the Subsidiary Guarantor, such successor Person
shall succeed to and be substituted for the Subsidiary Guarantor with the same
effect as if it had been named herein as the initial Subsidiary Guarantor.
Section 13.3 Release of Subsidiary Guarantors.
Upon the sale or disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its Properties) to a Person other
than the Company or another Subsidiary Guarantor and pursuant to a transaction
that is otherwise in compliance with the terms of this Indenture, including but
not limited to the provisions of Section 13.2 hereof or pursuant to Article
VIII hereof, such Subsidiary Guarantor shall be deemed released from its
Subsidiary Guarantee and all related obligations under this Indenture;
provided, however, that any such termination shall occur only to the extent
that all obligations of such Subsidiary Guarantor under all of its guarantees
of, and under all of its pledges of assets or other security interests which
secure, other Indebtedness of the Company or any other Restricted Subsidiary
shall also terminate or be released upon such sale or other disposition. The
Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a Company Request accompanied by an Officers' Certificate and an
Opinion of Counsel certifying that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture. Each
Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in
accordance with the provisions of this Indenture shall be released from its
Subsidiary Guarantee and all related obligations under this Indenture for so
long as it remains an Unrestricted Subsidiary. The Trustee shall deliver an
appropriate instrument evidencing such release upon its receipt of the Board
Resolution designating such Unrestricted Subsidiary. Any Subsidiary Guarantor
not released in accordance with this Section 13.3 shall remain liable for the
full amount of principal of (and premium, if any, on) and interest on the
Securities as provided in this Article XIII.
Section 13.4 Limitation of Subsidiary Guarantors' Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Federal
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree
that the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to the maximum amount as will, after giving effect
to all other contingent and fixed liabilities of such Subsidiary Guarantor and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to Section 13.5
hereof, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting such a fraudulent conveyance or
fraudulent transfer. This Section 13.4 is for the benefit of the creditors of
each Subsidiary Guarantor, and, for purposes of the Federal Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and
each other similar federal or state law, any Indebtedness of a Subsidiary
Guarantor that (a) constitutes Permitted Indebtedness pursuant
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to clause (i) of the definition of "Permitted Indebtedness", and (b) is secured
by Liens permitted pursuant to clause (d) of the definition of "Permitted
Liens" shall be deemed to have been incurred prior to the incurrence by such
Subsidiary Guarantor of liability under its Subsidiary Guarantee.
Section 13.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 13.6 Execution and Delivery of Notations of Subsidiary
Guarantees.
To evidence its Subsidiary Guarantee set forth in Section 13.1 hereof,
each Subsidiary Guarantor hereby agrees to execute the notations of Subsidiary
Guarantees in substantially the form set forth in Section 2.4 hereof to be
endorsed on all Securities ordered to be authenticated and delivered by the
Trustee, and each Subsidiary Guarantor agrees that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents. Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 13.1 hereof shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of
such Subsidiary Guarantee. Each such notation of Subsidiary Guarantee shall be
signed on behalf of each Subsidiary Guarantor by its President or one of its
Vice Presidents (each of whom shall, in each case, have been duly authorized by
all requisite corporate action) prior to the authentication of the Security on
which it is endorsed, and the delivery of such Security by the Trustee, after
the authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of such Subsidiary
Guarantor. Such signatures upon the notation of Subsidiary Guarantee may be by
manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Subsidiary Guarantee, and in case any such officer
who shall have signed the notation of Subsidiary Guarantee shall cease to be
such officer before the Security on which such notation of Subsidiary Guarantee
is endorsed shall have been authenticated and delivered by the Trustee or
disposed of by the Company, such Security nevertheless may be authenticated and
delivered or disposed of as though the person who signed the notation of
Subsidiary Guarantee had not ceased to be such officer of the Subsidiary
Guarantor.
Section 13.7 Severability.
In case any provision of this Subsidiary Guarantee shall be invalid,
illegal or unenforceable, that portion of such provision that is not invalid,
illegal or unenforceable shall remain in effect, and the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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ARTICLE XIV
MISCELLANEOUS
Section 14.1 Compliance Certificates and Opinions.
Upon any application or request by the Company or any Subsidiary
Guarantor to the Trustee to take any action under any provision of this
Indenture, the Company or such Subsidiary Guarantor, as the case may be, shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act or this Indenture. Each such certificate and each such
opinion shall be in the form of an Officers' Certificate or an Opinion of
Counsel, as applicable, and shall comply with the requirements of this
Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 14.1 and
the statements required by this Section 14.1 shall comply in all respects with
TIA Sections 314(c) and (e).
Section 14.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in
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the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel may be based,
insofar as it relates to factual matters, upon an officers' certificate, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate with respect to such matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 14.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Securities
held by any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act, but the Company shall have no obligation to do so. Notwithstanding TIA
Section 316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally in connection
therewith and not later than the date such solicitation is completed. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act
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may be given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date, provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
including, without limitation, any Series B Security exchanged for a Series A
Security, in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
Section 14.4 Notices, etc. to Trustee, Company and Subsidiary
Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to or filed with,
(1) the Trustee by any Holder, the Company or any Subsidiary
Guarantor shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing (in the English language) and
delivered in person or mailed by certified or registered mail (return
receipt requested) to the Trustee at its Corporate Trust Office; or
(2) the Company or any Subsidiary Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing (in the English language) and
delivered in person or mailed by certified or registered mail (return
receipt requested) to the Company or such Subsidiary Guarantor, as
applicable, addressed to it at the Company's offices located at 1200
Smith Street, Suite 300, Houston, Texas 77002, Attention: Chief
Financial Officer, or at any other address otherwise furnished in
writing to the Trustee by the Company.
Section 14.5 Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by the
Company, the Trustee or any Paying Agent, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing (in the
English language) and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Any notice mailed to a Holder in the
manner herein
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prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice for every purpose hereunder.
Section 14.6 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 14.7 Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 14.8 Severability.
In case any provision in this Indenture or in the Securities or the
Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefor against
any party hereto.
Section 14.9 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder, the Holders and, to the
extent set forth in Section 13.4 hereof, creditors of Subsidiary Guarantors)
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 14.10 Governing Law; Trust Indenture Act Controls.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK. THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN THE
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BOROUGH OF MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE SUBSIDIARY
GUARANTEES, AND THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED BY ANY SUCH COURT.
(b) Effective upon and subject to the qualification of this Indenture
pursuant to the provisions of the Trust Indenture Act, if and to the extent
that any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by operation of Section 318(c) of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision") required by or
deemed to be included in this Indenture by operation of such Trust Indenture
Act section, such imposed duties or incorporated provision shall control.
Section 14.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities or
the Subsidiary Guarantee) payment of interest or principal (and premium, if
any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date or at the Stated Maturity or Maturity; provided, however,
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
Section 14.12 No Recourse Against Others.
A director, officer, employee, stockholder, incorporator or Affiliate,
as such, past, present or future, of the Company or any Subsidiary Guarantor
shall not have any personal liability under the Securities or this Indenture by
reason of his or its status as a director, officer, employee, stockholder,
incorporator or Affiliate or any liability for any obligations of the Company
or any Subsidiary Guarantor under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder, by accepting any of the Securities, waives and releases
all such liability to the extent permitted by applicable law.
Section 14.13 Duplicate Originals.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 14.14 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the day and year first above written.
ISSUER:
CLIFFS DRILLING COMPANY
By:/s/ Douglas E. Swanson
----------------------------------
Name: Douglas E. Swanson
------------------------
Title: President
------------------------
SUBSIDIARY GUARANTORS:
CLIFFS DRILLING MERGER COMPANY,
CLIFFS DRILLING INTERNATIONAL, INC.,
AND CLIFFS OIL AND GAS COMPANY, AND
DRL, INC.
By: /s/ Douglas E. Swanson
----------------------------------
Name: Douglas E. Swanson
-------------------------
Title: President
------------------------
SOUTHWESTERN OFFSHORE CORPORATION
By: /s/ Edward A. Guthrie
----------------------------------
Name: Edward A. Guthrie
-------------------------
Title:Vice President - Finance
------------------------
TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
By: /s/ Susan C. Merker
----------------------------------
Name: Susan C. Merker
------------------------
Title:Assistant Vice President
------------------------
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EXHIBIT A
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend in addition to the Private Placement Legend, if required by Section 3.12
hereof, in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OF ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
A-1
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EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 10.25% Senior Notes due 2003, Series C, and
10.25% Senior Notes due 2003, Series D
(the "Securities"), of Cliffs Drilling Company
This Certificate relates to $_________ principal amount of Securities
held in the form of *[ ] a beneficial interest in a Global Security or *[ ]
Physical Securities by _________________ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Security Registrar deliver
in exchange for its beneficial interest in the Global Security held by the
Depository a Physical Security or Physical Securities in definitive, registered
form of authorized denominations and in an aggregate principal amount equal to
its beneficial interest in such Global Security (or the portion thereof
indicated above); or
[ ] has requested that the Security Registrar by written order exchange
or register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 3.5 of such Indenture,
and that the transfer of these Securities does not require registration under
the Securities Act of 1933, as amended (the "Act") because *:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of subparagraph (a)(1) or (c)(1) of Section
3.5 of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
[ ] Such Security is being transferred in reliance on Regulation S under
the Act.
[ ] Such Security is being transferred in reliance on Rule 144 under the
Act.
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
-----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
[Authorized Signatory]
Date:
---------------------------------
*Check applicable box.
B-1
<PAGE> 108
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
,
---------------- -----
State Street Bank and Trust Company, Trustee
777 Main Street
Hartford, Connecticut 06115
Re: Cliffs Drilling Company Indenture (the "Indenture")
relating to 10.25% Senior Notes due 2003,
Series C, or 10.25% Senior Notes due 2003, Series D
Ladies and Gentlemen:
In connection with our proposed purchase of 10.25% Senior Notes due
2003, Series C, or 10.25% Series Notes due 2003, Series D (the "Securities"),
of Cliffs Drilling Company (the "Company"), we confirm that:
1. We have received such information as we deem necessary in order
to make our investment decision.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee a signed letter substantially in the form hereof, (D) outside the
United States in accordance with Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing Securities from us a notice advising such purchaser that
resales of the Securities are restricted as stated herein.
C-1
<PAGE> 109
4. We understand that, on any proposed resale of Securities, we will
be required to furnish to you and the Company, such certification, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Securities purchased by us will bear a legend to
the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be, for an indefinite
period.
6. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion, for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act.
You and the Company and yours and their respective counsel are entitled
to rely upon this letter and are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-------------------------------
[Authorized Signatory]
C-2
<PAGE> 110
EXHIBIT D
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
,
---------------- -----
State Street Bank and Trust Company, Trustee
777 Main Street
Hartford, Connecticut 06115
Re: Cliffs Drilling Company ("the Company")
10.25% Senior Notes due 2003, Series C, and 10.25%
Senior Notes due 2003, Series D (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $______________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in
the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knew that the transaction had been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
D-1
<PAGE> 111
You and the Company and yours and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to
the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------
[Authorized Signature]
D-2
<PAGE> 1
EXHIBIT 4.4.1
- --------------------------------------------------------------------------------
CLIFFS DRILLING COMPANY,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
STATE STREET BANK AND TRUST COMPANY
Trustee
-------------
FIRST SUPPLEMENTAL INDENTURE
(SERIES C/D SECURITIES)
Dated as of August 29, 1997
-------------
Supplementing and Amending the Indenture
dated as of August 7, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE dated as of August 29, 1997, is
between CLIFFS DRILLING COMPANY, a Delaware corporation (the "Company"), the
SUBSIDIARY GUARANTORS (as defined herein) and STATE STREET BANK AND TRUST
COMPANY, a national banking association (the "Trustee").
RECITALS OF THE COMPANY
A. The Company has duly authorized the creation of an issue of
10.25% Senior Notes due 2003, Series C (the "Series C Securities") and an issue
of 10.25% Senior Notes due 2003, Series D (the "Series D Securities" and the
Series C Securities and the Series D Securities, as amended or supplemented
from time to time in accordance with the terms of the Indenture (as defined
herein), being herein collectively called the "Securities"), of substantially
the tenor and in the aggregate principal amount set forth in the Indenture.
B. The Company and the Subsidiary Guarantors have heretofore
made, executed and delivered to the Trustee an Indenture dated as of August 7,
1997 (referred to herein as the "Original Indenture") pursuant to which the
Securities are issuable.
C. The Securities are guaranteed by the Subsidiary Guarantors (as
defined in the Indenture) on the terms provided in the Indenture.
D. It is deemed desirable to supplement and amend the Original
Indenture to add two Restricted Subsidiaries of the Company as Subsidiary
Guarantors (the Original Indenture, as so supplemented and amended by this
First Supplemental Indenture, being sometimes referred to herein as the
"Indenture").
E. Article IX, Section 9.1 of the Original Indenture provides
that under certain conditions the Company, the Subsidiary Guarantors and
Trustee, may, without the consent of any Holders, from time to time and at any
time, enter into an indenture or indentures supplemental thereto, for the
purpose, inter alia, of adding any Restricted Subsidiary as an additional
Subsidiary Guarantor (subsection (g)).
F. In addition, Article X, Section 10.13 of the Original
Indenture provides that certain Restricted Subsidiaries of the Company shall
become Subsidiary Guarantors by executing and delivering a supplemental
indenture agreeing to be bound by the terms of the Original Indenture.
G. The Series C Securities were issued on August 7, 1997 under
the Original Indenture, and the Company is obligated to issue the Series D
Securities in exchange for the Series C Securities within certain specified
periods thereafter.
-1-
<PAGE> 3
I. All things necessary to authorize the execution and delivery
of this First Supplemental Indenture, to effect the modifications of the
Original Indenture provided for in this First Supplemental Indenture, and to
make the Original Indenture, as further supplemented and amended by this First
Supplemental Indenture, a valid agreement of the Company, in accordance with
its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities by the Holders, the Company, the Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
the respective Holders from time to time of the Securities as follows:
ARTICLE I
MODIFICATION OF THE ORIGINAL INDENTURE
SECTION 1.1 AMENDMENT OF ARTICLE I OF THE ORIGINAL INDENTURE.
Section 1.1 of the Original Indenture is amended by changing the definition of
"Subsidiary Guarantor" to read as follows:
"'Subsidiary Guarantor' means (i) Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition Company), a
Delaware corporation, (ii) Cliffs Drilling Merger Company, a Delaware
corporation, (iii) Cliffs Drilling International, Inc., a Delaware
corporation, (iv) Cliffs Oil and Gas Company, a Delaware corporation,
(v) DRL, Inc., a Delaware corporation, (vi) Cliffs Drilling Trinidad
Ltd., a company organized under the laws of Trinidad and Tobago, (vii)
West Indies Drilling Joint Venture, a joint venture partnership
organized under the laws of Trinidad and Tobago, and (viii) each of
the Company's other Restricted Subsidiaries, if any, executing a
supplemental indenture in compliance with the provisions of Section
10.13(a) hereof and (ix) any Person that becomes a successor guarantor
of the Securities in compliance with the provisions of Section 13.2
hereof."
ARTICLE II
ADDITIONAL SUBSIDIARY GUARANTOR
SECTION 2.1 ADDITION OF SUBSIDIARY GUARANTORS. Cliffs Drilling
Trinidad Ltd., a company organized under the laws of Trinidad and Tobago and a
wholly-owned subsidiary of the Company, and West Indies Drilling Joint Venture,
a joint venture partnership organized under the laws of Trinidad and Tobago, by
execution of this First Supplemental Indenture each hereby agree to be bound by
the terms of the Indenture as a Subsidiary Guarantor.
- 2 -
<PAGE> 4
SECTION 2.2 SUBSIDIARY GUARANTEE OF THE SECURITIES. Exhibit A,
attached hereto and incorporated herein by reference, sets forth the form of
Subsidiary Guarantee from the Original Indenture to which Cliffs Drilling
Trinidad Ltd. and West Indies Drilling Joint Venture agree to be bound by
execution and delivery of this First Supplemental Indenture.
ARTICLE III
PARTICULAR REPRESENTATIONS
AND COVENANTS OF THE COMPANY
SECTION 3.1 AUTHORITY OF THE COMPANY. The Company is duly
authorized by a resolution of the Board of Directors to execute and deliver
this First Supplemental Indenture, and all corporate action on its part
required for the execution and delivery of this First Supplemental Indenture
has been duly and effectively taken.
SECTION 3.2 AUTHORITY OF THE SUBSIDIARY GUARANTORS. Each of the
Subsidiary Guarantors is duly authorized by a resolution of its respective
Board of Directors to execute and deliver this First Supplemental Indenture,
and all corporate action on the part of each required for the execution and
delivery of this First Supplemental Indenture has been duly and effectively
taken.
SECTION 3.3 TRUTH OF RECITALS AND STATEMENTS. The Company
warrants that the recitals of fact and statements contained in this First
Supplemental Indenture are true and correct, and that the recitals of fact and
statements contained in all certificates and other documents furnished
hereunder will be true and correct.
ARTICLE IV
CONCERNING THE TRUSTEE
SECTION 4.1 ACCEPTANCE OF TRUSTS. The Trustee accepts the trusts
hereunder and agrees to perform the same, but only upon the terms and
conditions set forth in the Original Indenture and in this First Supplemental
Indenture, to all of which the Company, Subsidiary Guarantors and the
respective Holders of Securities at any time hereafter outstanding agree by
their acceptance thereof.
SECTION 4.2 RESPONSIBILITY OF TRUSTEE FOR RECITALS, ETC. The
recitals and statements contained in this First Supplemental Indenture shall be
taken as the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture, except that the Trustee is duly authorized to execute and deliver
this First Supplemental Indenture.
- 3 -
<PAGE> 5
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1 RELATION TO THE INDENTURE. The provisions of this
First Supplemental Indenture shall become effective immediately upon the
execution and delivery hereof. This First Supplemental Indenture and all the
terms and provisions herein contained shall form a part of the Indenture as
fully and with the same effect as if all such terms and provisions had been set
forth in the Original Indenture. The Original Indenture is hereby ratified and
confirmed and shall remain and continue in full force and effect in accordance
with the terms and provisions thereof, as supplemented and amended by this
First Supplemental Indenture; and the Original Indenture and this First
Supplemental Indenture shall be read, taken and construed together as one
instrument.
SECTION 5.2 MEANING OF TERMS. Any capitalized term used in this
First Supplemental Indenture and not defined herein that is defined in the
Original Indenture shall have the meaning specified in the Original Indenture,
unless the context shall otherwise require.
SECTION 5.3 COUNTERPARTS OF FIRST SUPPLEMENTAL INDENTURE. This
First Supplemental Indenture may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
SECTION 5.4 GOVERNING LAW. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have cause this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
Company: CLIFFS DRILLING COMPANY
By: /s/ Edward A. Guthrie
---------------------------------
Edward A. Guthrie
Vice President - Finance
- 4 -
<PAGE> 6
Subsidiary Guarantors: CLIFFS DRILLING MERGER COMPANY
CLIFFS DRILLING INTERNATIONAL, INC.
CLIFFS OIL AND GAS COMPANY
SOUTHWESTERN OFFSHORE CORPORATION
(f/k/a Cliffs Drilling Asset Acquisition
Company)
By: /s/ Edward A. Guthrie
------------------------------------
Edward A. Guthrie
Vice President - Finance
DRL, INC.
By: /s/ Edward A. Guthrie
------------------------------------
Edward A. Guthrie
Vice President
CLIFFS DRILLING TRINIDAD LTD.
By: /s/ Edward A. Guthrie
------------------------------------
Edward A. Guthrie, Director
WEST INDIES DRILLING JOINT VENTURE
By: CLIFFS DRILLING TRINIDAD LTD.,
Partner and Firm Manager
By: /s/ Edward A. Guthrie
------------------------------------
Edward A. Guthrie, Director
- 5 -
<PAGE> 7
Trustee: STATE STREET BANK AND TRUST COMPANY
By: /s/ Susan C. Merker
------------------------------------
Susan C. Merker
Assistant Vice President
- 6 -
<PAGE> 8
EXHIBIT A
FORM OF SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Series ____ Security upon which
this notation is endorsed and each being hereinafter referred to as a
"Subsidiary Guarantor," which term includes any additional or successor
Subsidiary Guarantor under the Indenture) have, jointly and severally,
unconditionally guaranteed (a) the due and punctual payment of the principal
(and premium, if any) of and interest on the Securities, whether at maturity,
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms set forth in the Indenture, and (d) in case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Subsidiary Guarantor that
makes a payment or distribution under a Subsidiary Guarantee shall be entitled
to a contribution from each other Subsidiary Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor.
No stockholder, officer, director, employee, incorporator or Affiliate
as such, past, present or future, of any Subsidiary Guarantor shall have any
personal liability under its Subsidiary Guarantee by reason of his or its
status as such stockholder, officer, director, employee, incorporator or
Affiliate, or any liability for any obligations of any Subsidiary Guarantor
under the Securities or the Indenture or for any claim based on, in respect of,
or by reason of such obligations or their creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee
upon the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are
defined in the Indenture referred to in this Series ____ Security upon which
this notation of Subsidiary Guarantees is endorsed shall have the meanings
assigned to them in such Indenture.
<PAGE> 9
The Subsidiary Guarantees shall be binding upon the Subsidiary
Guarantors and shall inure to the benefit of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee respecting the Series _____ Security upon which the foregoing
Subsidiary Guarantees are noted, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof and in the
Indenture.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Series ____ Security
upon which the foregoing Subsidiary Guarantees are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized signatories.
<PAGE> 1
EXHIBIT 4.5
--------------------------------------------------
10.25% SENIOR NOTES DUE 2003, SERIES C
REGISTRATION RIGHTS AGREEMENT
dated July 31, 1997
by and among
CLIFFS DRILLING COMPANY,
SOUTHWESTERN OFFSHORE CORPORATION
CLIFFS DRILLING MERGER COMPANY,
CLIFFS DRILLING INTERNATIONAL, INC.
CLIFFS OIL AND GAS COMPANY and
DRL, INC.
and
JEFFERIES & COMPANY, INC.
and
ING BARING (U.S.) SECURITIES, INC.
--------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
-1-
<PAGE> 2
This Registration Rights Agreement is made and entered into this 31st
day of July, 1997, by and among Cliffs Drilling Company, Inc., a Delaware
corporation (the "Company"), Southwestern Offshore Corporation, a Delaware
corporation (formerly known as Cliffs Drilling Asset Acquisition Company,
Inc.), Cliffs Drilling Merger Company, a Delaware corporation, Cliffs Drilling
International, Inc., a Delaware corporation, Cliffs Oil and Gas Company, a
Delaware corporation and DRL, Inc. a Delaware corporation (the "Guarantors"
and, together with the Company, the "Issuers"), Jefferies & Company, Inc.
("Jefferies") and ING Baring (U.S.) Securities, Inc. ("ING" and, together with
Jefferies, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated July
31, 1997, among the Company, the Guarantors and the Initial Purchasers (the
"Purchase Agreement"). In order to induce the Initial Purchasers to enter into
the Purchase Agreement, the Issuers have agreed to provide the registration
rights provided for in this Agreement to the Initial Purchasers and their
respective direct and indirect transferees. The execution and delivery of this
Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: As defined in Section 4(a) hereof.
Advice: As defined in the last paragraph of Section 5 hereof.
Affiliate: With respect to any specified person, "Affiliate" shall
mean any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person. For the
purposes of this definition, "control," when used with respect to any person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the
terms hereof.
Business Day: Any day except a Saturday, a Sunday or a day on
which banking institutions in New York, New York generally are required or
authorized by law or other government action to be closed.
Company: As defined in the preamble hereof.
Consummate or consummate: When used to qualify the term "Exchange
Offer" shall mean validly and lawfully to issue and deliver the Exchange Notes
pursuant to the Exchange Offer
REGISTRATION RIGHTS AGREEMENT
-2-
<PAGE> 3
for all Notes validly tendered and not validly withdrawn pursuant thereto in
accordance with the terms of this Agreement.
Consummation Date: The date that is 30 Business Days immediately
following the date that the Exchange Registration Statement shall have been
declared effective by the SEC.
Effectiveness Period: As defined in Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC pursuant thereto.
Exchange Date: As defined in Section 2(d) hereof.
Exchange Notes: The 10.25% Senior Notes due 2003, Series D, of the
Company, guaranteed on a senior unsecured basis by each of the Guarantors, that
are identical to the Notes in all material respects, except that the provisions
regarding restrictions on transfer shall be modified, as appropriate, and the
issuance thereof pursuant to the Exchange Offer shall have been registered
pursuant to an effective Registration Statement in compliance with the
Securities Act.
Exchange Offer: An offer to issue, in exchange for any and all of
the Notes, a like aggregate principal amount of Exchange Notes, which offer
shall be made by the Company pursuant to Section 2 hereof.
Exchange Registration Statement: As defined in Section 2(a)
hereof.
Guarantors: As defined in the preamble hereof.
Indemnified Person: As defined in Section 7(a) hereof.
Indenture: The Indenture, dated as of August 7, 1997, among the
Issuers and State Street Bank and Trust Company, as trustee thereunder,
pursuant to which the Notes are issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereof.
Issue Date: As defined in Section 2(a).
Issuers: As defined in the preamble hereof.
Notes: The 10.25% Senior Notes due 2003, Series C, of the Company,
guaranteed on a senior unsecured basis by each of the Guarantors, issued
pursuant to the Indenture.
Participating Broker-Dealer: As defined in Section 2(e) hereof.
Private Exchange: As defined in Section 2(c) hereof.
REGISTRATION RIGHTS AGREEMENT
-3-
<PAGE> 4
Private Exchange Notes: As defined in Section 2(c) hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Notes, Exchange Notes or
Private Exchange Notes covered by such Registration Statement, and all other
amendments and supplements to any such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such prospectus.
Registration Default: As defined in Section 4(a) hereof.
Registration Statement: Any registration statement of the Company
and the Guarantors that covers any of the Notes, Exchange Notes or Private
Exchange Notes pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
REGISTRATION RIGHTS AGREEMENT
-4-
<PAGE> 5
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 3 hereof.
Shelf Registration Statement: As defined in Section 3 hereof.
Special Counsel: Vinson & Elkins L.L.P., special counsel to the
holders of Transfer Restricted Securities, or such other counsel as shall be
agreed upon by the Issuers and holders of a majority in aggregate principal
amount of Transfer Restricted Securities, the expenses of which holders of
Transfer Restricted Securities will be reimbursed by the Issuers pursuant to
Section 6.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Notes, upon original issuance
thereof and at all times subsequent thereto, each Exchange Note as to which
Section 3(a)(ii) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance
thereof and at all times subsequent thereto, until in the case of any such
Note, Exchange Note or Private Exchange Note, as the case may be, the earliest
to occur of (i) the date on which any such Note has been exchanged by a person
other than a Participating Broker-Dealer for an Exchange Note (other than with
respect to an Exchange Note as to which Section 3(a)(ii) hereof applies)
pursuant to the Exchange Offer, (ii) with respect to Exchange Notes received by
Participating Broker-Dealers in the Exchange Offer, the earlier of (x) the date
on which such Exchange Note has been sold by such Participating Broker-Dealer
by means of the Prospectus contained in the Exchange Registration Statement and
(y) the date on which the Exchange Registration Statement has been effective
under the Securities Act for a period of 180 days after the Consummation Date,
(iii) a Shelf Registration Statement covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the SEC and such Note,
Exchange Note or Private Exchange Note, as the case may be, has been disposed
of in accordance with such effective Shelf Registration Statement, (iv) the
date on which such Note, Exchange Note or Private Exchange Note, as the case
may be, is distributed to the public pursuant to Rule 144 (or any similar
provisions then in effect) or is saleable pursuant to Rule 144(k) promulgated
by the SEC pursuant to the Securities Act or (v) the date on which such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture or any other indenture under which
such Exchange Note or Private Exchange Note was issued.
Trustee: The trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A registration
in connection with which securities are sold to an underwriter for reoffering
to the public pursuant to an effective Registration Statement.
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2. Exchange Offer
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, the Issuers shall (A)
prepare and, on or prior to 60 days after the date of original issuance of the
Notes (the "Issue Date"), file with the SEC a Registration Statement under the
Securities Act with respect to an offer by the Company to the holders of the
Notes to issue and deliver to such holders, in exchange for Notes, a like
principal amount of Exchange Notes, (B) use their best efforts to cause the
Registration Statement relating to the Exchange Offer to be declared effective
by the SEC under the Securities Act on or prior to 120 days after the Issue
Date, and (C) commence the Exchange Offer and use their best efforts to issue,
on or prior to the Consummation Date, the Exchange Notes. The offer and sale of
the Exchange Notes pursuant to the Exchange Offer shall be registered pursuant
to the Securities Act on the appropriate form (the "Exchange Registration
Statement") and duly registered or qualified under all applicable state
securities or Blue Sky laws and will comply with all applicable tender offer
rules and regulations under the Exchange Act and state securities or Blue Sky
laws. The Exchange Offer shall not be subject to any condition, other than that
the Exchange Offer does not violate any applicable law or interpretation of the
staff of the SEC. Upon consummation of the Exchange Offer in accordance with
this Section 2, the Issuers shall have no further registration obligations
other than with respect to (i) Private Exchange Notes, (ii) Exchange Notes held
by Participating Broker-Dealers and (iii) Notes or Exchange Notes as to which
Section 3(a)(ii) hereof applies. No securities shall be included in the
Exchange Registration Statement other than the Exchange Notes.
(b) The Issuers may require each holder of Notes as a condition to
its participation in the Exchange Offer to represent to the Issuers and their
counsel in writing (which may be contained in the applicable letter of
transmittal) that at the time of the consummation of the Exchange Offer (i) any
Exchange Notes received by such holder will be acquired in the ordinary course
of its business, (ii) such holder is not participating in, and it has no
arrangement with any person to participate in, the distribution (within the
meaning of the Securities Act) of the Exchange Notes and (iii) such holder is
neither an Affiliate of an Issuer nor a broker-dealer tendering Notes acquired
directly from the Company for its own account.
(c) If, prior to consummation of the Exchange Offer, any of the
Initial Purchasers holds any Notes acquired by it and having, or which are
reasonably likely to be determined to have, the status of an unsold allotment
in the initial distribution, or any other holder of Notes is not entitled to
participate in the Exchange Offer, the Company upon the request of an Initial
Purchaser or any such holder shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to such Initial
Purchaser and any such holder, in exchange (the "Private Exchange") for such
Notes held by such Initial Purchaser and any such holder, a like principal
amount of debt securities of the Company, guaranteed by each of the Guarantors
on a senior unsecured basis, that are identical in all material respects to the
Exchange Notes except as to restrictions on transferability under applicable
securities laws (the "Private Exchange Notes") (and which are issued pursuant
to the same indenture as the Exchange Notes); provided, however, that the
Issuers shall not be required to effect a Private Exchange if in the written
opinion of counsel for the Issuers (a copy of which is delivered to the Initial
Purchasers and any holder of Notes whose request is the subject of such
opinion) such Private Exchange cannot be effected without registration under
the Securities Act. The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
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(d) Unless the Exchange Offer would not be permitted by any
applicable law or interpretation of the staff of the SEC, the Company shall
mail the Exchange Offer Prospectus and appropriate accompanying documents,
including appropriate letters of transmittal, to each holder of Notes
providing, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) the date of acceptance for exchange (the "Exchange Date"),
which date shall in no event be later than the Consummation Date
(unless otherwise required by applicable law);
(iii) that holders of Notes electing to have a Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Note, together with the enclosed letters of transmittal, to the
institution and at the address (located in the continental United
States) specified in the notice prior to the close of business on the
Exchange Date; and
(iv) that holders of Notes that do not tender all such securities
pursuant to the Exchange Offer may no longer have any registration
rights hereunder with respect to Notes not tendered.
As soon as practicable after the Exchange Date, the Company shall:
(i) accept for exchange all Notes or portions thereof validly
tendered and not validly withdrawn pursuant to the Exchange Offer or
the Private Exchange; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by
the Company, and issue, cause the Trustee under the Indenture (or the
indenture pursuant to which the Exchange Notes are issued) to
authenticate, and mail to each holder of Notes, Exchange Notes equal
in principal amount to the principal amount of the Notes or portions
thereof surrendered by such holder.
(e) The Issuers and each Initial Purchaser acknowledge that the
staff of the SEC has taken the position that any broker-dealer that owns
Exchange Notes that were received by such broker-dealer for its own account in
the Exchange Offer (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
The Issuers and each Initial Purchaser also acknowledge that it is
the SEC staff's position that if the Prospectus contained in the Exchange
Registration Statement includes a plan of distribution containing a statement
to the above effect and the means by which Participating Broker-Dealers may
resell the Exchange Notes, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act
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in connection with resales of Exchange Notes for their own accounts, so long as
the Prospectus otherwise meets the requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer, the Issuers agree (x) to use their best efforts to keep the
Exchange Registration Statement continuously effective for a period of up to
180 days or such earlier date as each Participating Broker-Dealer shall have
notified the Company in writing that such Participating Broker-Dealer has
resold all Exchange Notes acquired in the Exchange Offer, (y) to comply with
the provisions of Section 5 of this Agreement, as they relate to the Exchange
Offer and the Exchange Registration Statement, and (z) to deliver to such
Participating Broker-Dealer a "cold comfort" letter of the independent public
accountants of the Issuers and a legal opinion as to matters reasonably
requested by such Participating Broker-Dealer relating to the Exchange
Registration Statement and the related Prospectus and any amendments or
supplements thereto.
(f) The Initial Purchasers shall have no liability to any
Participating Broker-Dealer with respect to any request made pursuant to
Section 2(e).
(g) Accrued but unpaid interest on any Note that is exchanged for
an Exchange Note or a Private Exchange Note pursuant to this Agreement shall be
paid on or before the first interest payment date on the Exchange Notes and the
Private Exchange Notes, as the case may be.
(h) The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture, except in any case where an Exchange Note constitutes a Transfer
Restricted Security. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes nor the Notes will have the right to vote or consent as
a separate class on any matter.
3. Shelf Registration
(a) If (i) the Company is not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by any applicable law or applicable interpretation of
the staff of the SEC or (ii) any holder of a Note notifies the Company on or
prior to the Exchange Date that (A) due to a change in law or policy it is not
entitled to participate in the Exchange Offer, (B) due to a change in law or
policy it may not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Registration Statement is not appropriate or
available for such resales by such holder or (C) it is a broker-dealer that
owns Notes (including any Initial Purchaser that holds Notes as part of an
unsold allotment from the original offering of the Notes) acquired directly
from an Issuer or an Affiliate of an Issuer or (iii) any holder of Private
Exchange Notes so requests within 120 days after the consummation of the
Private Exchange (each such event referred to in clauses (i) through (iii), a
"Shelf Filing Event"), the Issuers shall cause to be filed with the SEC
pursuant to Rule 415 a shelf registration statement (the "Shelf Registration
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 9
Statement") on or prior to the later of (x) 90 days after the Issue Date and
(y) 30 days after the occurrence of such Shelf Filing Event, relating to all
Transfer Restricted Securities (the "Shelf Registration") the holders of which
have provided the information required pursuant to Section 3(b) hereof, and
shall use their commercially reasonable best efforts to have the Shelf
Registration Statement declared effective by the SEC on or prior to 90 days
after the occurrence of such Shelf Filing Event, provided that if the Company
has not consummated the Exchange Offer within 180 days of the Issue Date, then
the Issuers shall cause the Shelf Registration Statement to be filed with the
SEC on or prior to the 181st day after the Issue Date and shall use their best
efforts to have the Shelf Registration Statement declared effective by the SEC
within 60 days of the date of filing thereof. In such circumstances, the
Issuers shall use their best efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act, until (A) the second
anniversary of the Issue Date (subject to extension pursuant to the last
paragraph of Section 5 hereof) or (B) if sooner, the date immediately following
the date that all Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant thereto (the "Effectiveness
Period"); provided, however, at the Effectiveness Period shall be extended to
the extent required to permit dealers to comply with the applicable prospectus
delivery requirements of Rule 174 and as otherwise provided herein.
(b) No holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Shelf Registration Statement pursuant
to this Agreement unless and until such holder furnishes to the Company in
writing, within 30 days after receipt of a request therefor, such information
as the Company may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary prospectus included
therein. No holder of Transfer Restricted Securities shall be entitled to
Additional Interest pursuant to Section 4 hereof unless and until such holder
shall have provided all such reasonably requested information. Each holder of
Transfer Restricted Securities as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such holder not materially misleading.
4. Additional Interest
(a) The parties hereto agree that the holders of Transfer
Restricted Securities will suffer damages if the Issuers fail to fulfill their
obligations pursuant to Section 2 or Section 3, as applicable, and that it
would not be feasible to ascertain the extent of such damages. Accordingly, in
the event that (i) the applicable Registration Statement is not filed with the
SEC on or prior to the date specified herein for such filing, (ii) the
applicable Registration Statement has not been declared effective by the SEC on
or prior to the date specified herein for such effectiveness after such
obligation arises, (iii) if the Exchange Offer is required to be Consummated
hereunder, the Company has not exchanged Exchange Notes for all Notes validly
tendered and not validly withdrawn in accordance with the terms of the Exchange
Offer by the Consummation Date or (iv) the applicable Registration Statement is
filed and declared effective but shall thereafter cease to be effective without
being succeeded immediately by any additional Registration Statement covering
the Notes, the Exchange Notes or the Private Exchange Notes, as the case may
be, which has been filed and declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"),
REGISTRATION RIGHTS AGREEMENT
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then the interest rate on Transfer Restricted Securities will increase
("Additional Interest"), with respect to the first 90-day period immediately
following the occurrence of such Registration Default, by 0.50% per annum and
will increase by an additional 0.50% per annum with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of 2% per annum with respect to all Registration Defaults. Following the
cure of a Registration Default, the accrual of Additional Interest with respect
to such Registration Default will cease and upon the cure of all Registration
Defaults the interest rate will revert to the original rate.
(b) The Company shall notify the Trustee and paying agent under
the Indenture (or the trustee and paying agent under such other indenture under
which the Transfer Restricted Securities are issued) immediately upon the
happening of each and every Registration Default. The Company shall pay the
Additional Interest due on the Transfer Restricted Securities by depositing
with the paying agent (which shall not be the Company for these purposes) for
the Transfer Restricted Securities, in trust, for the benefit of the holders
thereof, prior to 11:00 A.M. on the next interest payment date specified by the
Indenture (or such other indenture), sums sufficient to pay the Additional
Interest then due. The Additional Interest due shall be payable on each
interest payment date specified by the Indenture (or such other indenture) to
the record holder entitled to receive the interest payment to be made on such
date. Each obligation to pay Additional Interest shall be deemed to accrue from
and including the date of the applicable Registration Default.
(c) The parties hereto agree that the Additional Interest provided
for in this Section 4 constitutes a reasonable estimate of the damages that
will be suffered by holders of Transfer Restricted Securities by reason of the
happening of any Registration Default.
5. Registration Procedures
In connection with the Issuers' registration obligations hereunder,
the Issuers shall effect such registrations on the appropriate form available
for the sale of the Notes, the Exchange Notes or Private Exchange Notes, as
applicable, to (i) in the case of the Exchange Offer, permit the exchange of
Exchange Notes for Notes in the Exchange Offer and, if applicable, resales of
Exchange Notes by Participating Broker-Dealers and (ii) in the case of a Shelf
Registration, permit the sale of the applicable Transfer Restricted Securities
in accordance with the method or methods of disposition thereof specified by
the holders of such Transfer Restricted Securities, and pursuant thereto the
Issuers shall as expeditiously as practicable:
(a) In the case of a Shelf Registration, a reasonable period of
time prior to the initial filing of a Shelf Registration Statement or
Prospectus and a reasonable period of time prior to the filing of any
amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference),
furnish to the holders of the Transfer Restricted Securities included
in such Shelf Registration Statement, their Special Counsel and the
managing underwriters, if any, copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review of such
holders, their Special Counsel and such underwriters, if any, and
cause the officers and directors of the Issuers, counsel to the
Issuers and independent certified public accountants to the Issuers to
respond to such reasonable
REGISTRATION RIGHTS AGREEMENT
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inquiries as shall be necessary, in the opinion of respective counsel
to such holders and such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act; provided,
however, that the foregoing inspection and information gathering shall
be coordinated on behalf of the Initial Purchasers by Jefferies, and
on behalf of any other persons by one counsel designated by and on
behalf of such other persons; and provided, further, that the Issuers
shall not be deemed to have kept a Shelf Registration Statement
effective during the applicable period if any of them voluntarily
takes or fails to take any reasonable action that results in holders
of the Transfer Restricted Securities covered thereby not being able
to sell such Transfer Restricted Securities pursuant to Federal
securities laws during that period (and the time period during which
such Shelf Registration Statement is required to remain effective
hereunder shall be extended by the number of days during which such
holders of Transfer Restricted Securities are therefore not able to
sell such Transfer Restricted Securities). The Issuers shall not file
any such Shelf Registration Statement or related Prospectus or any
amendments or supplements thereto to which the holders of a majority
in aggregate principal amount of the Transfer Restricted Securities
included in such Shelf Registration Statement shall reasonably object
on a timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective
for the applicable time period required hereunder; cause the related
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424; and comply
with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or in such Prospectus as so
supplemented;
(c) Notify the holders of Transfer Restricted Securities to be
sold or, in the case of an Exchange Offer, tendered for, their Special
Counsel and the managing underwriters, if any, promptly, and (if
requested by any such person), confirm such notice in writing, (i)(A)
when a Prospectus or any Prospectus supplement or post-effective
amendment is proposed to be filed, and (B) with respect to a
Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use of a
Prospectus or the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Notes,
Exchange Notes or Private Exchange Notes for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose,
and (v) of the happening of any event or information becoming known
that makes any statement made in a Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires
the making of any changes in such Registration Statement, Prospectus
or doc-
REGISTRATION RIGHTS AGREEMENT
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uments so that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that,
in the case of a Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(d) Use their best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of
a Prospectus or the effectiveness of a Registration Statement or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Notes, Exchange Notes or Private Exchange
Notes for sale in any jurisdiction, at the earliest practicable
moment;
(e) If a Shelf Registration Statement is filed pursuant to Section
3 hereof and if requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold pursuant to such Shelf Registration
Statement, (i) as soon as practicable incorporate in a Prospectus
supplement or post-effective amendment such information as the
managing underwriters, if any, and such holders reasonably believe
should be included therein, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the
Securities Act as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the
Issuers shall not be required to take any action pursuant to this
Section 5(e) that would, in the opinion of counsel for the Issuers,
violate applicable law;
(f) Upon written request to the Company, furnish to each holder of
Notes, Exchange Notes or Private Exchange Notes to be exchanged or
sold pursuant to a Registration Statement, their Special Counsel and
each managing underwriter, if any, without charge, at least one
conformed copy of such Registration Statement and each amendment
thereto, including financial statements and schedules and, to the
extent requested, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits (including those
previously furnished or incorporated by reference) as soon as
practicable after the filing of such documents with the SEC;
(g) Deliver to each holder of Notes, Exchange Notes or Private
Exchange Notes to be exchanged or sold pursuant to a Registration
Statement, their Special Counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus (including each form
of prospectus) and each amendment or supplement thereto as such
persons reasonably request; and the Issuers hereby consent to the use
of such Prospectus and each amendment or supplement thereto by each of
the selling holders of Transfer Restricted Securities and the
underwriters, if any, in connection with the offering and sale of the
Transfer Restricted Securities covered by such Prospectus and any
amendment or supplement thereto;
(h) Prior to any public offering of Notes, Exchange Notes or
Private Exchange Notes, use their best efforts to register or qualify
or cooperate with the holders of Notes, Exchange
REGISTRATION RIGHTS AGREEMENT
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Notes or Private Exchange Notes to be sold or tendered for, the
underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration
or qualification) of such Notes, Exchange Notes or Private Exchange
Notes for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any such holder or
underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept
effective hereunder and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Notes, Exchange Notes or Private Exchange Notes covered by the
applicable Registration Statement; provided, however, that the Issuers
shall not be required to (i) qualify generally to do business in any
jurisdiction where they are not then so qualified or (ii) take any
action which would subject them to general service of process or to
taxation in any jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the holders thereof and
the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold, which certificates shall not bear
any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company and to enable such Transfer
Restricted Securities to be in such authorized denominations and
registered in such names as the managing underwriters, if any, or such
holders may request at least two Business Days prior to any sale of
Transfer Restricted Securities;
(j) Upon the occurrence of any event contemplated by Section
5(c)(v), as promptly as practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to
each Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Prior to the effective date of the Exchange Registration
Statement, to provide a CUSIP number for the Exchange Notes (and
Private Exchange Notes if applicable);
(l) If a Shelf Registration Statement is filed pursuant to Section
3 hereof, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other reasonable actions in connection
therewith (including those reasonably requested by the managing
underwriters, if any, or the holders of a majority in aggregate
principal amount of the Transfer Restricted Securities being sold) in
order to expedite or facilitate the disposition of such Transfer
Restricted Securities, and, whether or not an underwriting agreement
is entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the
holders of such Transfer Restricted Securities and the underwriters,
if any, with respect
REGISTRATION RIGHTS AGREEMENT
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to the business of the Company and its subsidiaries (including with
respect to businesses or assets acquired or to be acquired by any of
them), and the Shelf Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference
therein, in each case with respect to such matters as are customarily
addressed in representations and warranties made by issuers to
underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Issuers and
updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters, if any, and Special Counsel to the holders of the
Transfer Restricted Securities being sold), addressed to each selling
holder of Transfer Restricted Securities and each of the underwriters,
if any, covering the matters customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably
requested by such Special Counsel and underwriters; (iii) use their
best efforts to obtain customary "cold comfort" letters and updates
thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data is, or is required to be, included in the Shelf Registration
Statement), addressed (where reasonably possible) to each selling
holder of Transfer Restricted Securities and each of the underwriters,
if any, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection
with underwritten offerings; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and
procedures no less favorable to the selling holders and the
underwriters, if any, than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to holders of a
majority in aggregate principal amount of Transfer Restricted
Securities covered by such Shelf Registration Statement and the
managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the holders of a
majority in aggregate principal amount of the Transfer Restricted
Securities being sold, their Special Counsel and the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and
to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuers;
(m) In the case of a Shelf Registration, make available for
inspection by a representative of the holders of Transfer Restricted
Securities being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, and any attorney,
consultant or accountant retained by such selling holders or
underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries
(including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the
Company), and cause the officers, directors, agents and employees of
the Company and its subsidiaries (including with respect to businesses
and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in
each case reasonably requested by any such representative,
underwriter, attorney, consultant or accountant in connection with
such Shelf Registration; provided,however, that such persons shall
first agree in writing with the Company that any information
REGISTRATION RIGHTS AGREEMENT
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that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information
shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to Federal securities laws in
connection with the filing of the Shelf Registration Statement or the
use of any Prospectus), (iii) such information becomes generally
available to the public other than as a result of a disclosure or
failure to safeguard such information by such person or (iv) such
information becomes available to such person from a source other than
the Company and its subsidiaries and such source is not bound by a
confidentiality agreement; and provided, further, that the foregoing
inspection and information gathering shall be coordinated on behalf of
the Initial Purchasers by Jefferies, and on behalf of any other
persons, by one counsel designated by and on behalf of such other
persons;
(n) Provide an indenture trustee for the Notes and/or the Exchange
Notes and Private Exchange Notes, as the case may be, and cause an
indenture to be qualified under the TIA not later than the effective
date of the first Registration Statement relating to the Notes and/or
the Exchange Notes and Private Exchange Notes, as the case may be; and
if such indenture shall be the Indenture, in connection therewith,
cooperate with the Trustee and the holders of the Notes and/or the
Exchange Notes and Private Exchange Notes, to effect such changes to
the Indenture as may be required for the Indenture to be (or to
remain) so qualified in accordance with the terms of the TIA; and
execute, and use their best efforts to cause the Trustee to execute,
all customary documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable the Indenture to be (or to remain) so qualified in a timely
manner;
(o) Comply with all applicable rules and regulations of the SEC
and make generally available to their security holders earning
statements satisfying the provisions of Section ll(a) of the
Securities Act and Rule 158, no later than 45 days after the end of
any 12-month period (or 90 days after the end of any 12-month period
if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter after the
effective date of a Registration Statement, which statement shall
cover said period, consistent with the requirements of Rule 158; and
(p) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities
Dealers, Inc.
The Issuers may require a holder of Transfer Restricted Securities
to be included in a Registration Statement to furnish to the Issuers such
information as is required by law to be disclosed by such holder in such
Registration Statement, and the Issuers may exclude from such
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 16
Registration Statement the Transfer Restricted Securities of any holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
If any such Registration Statement refers to any holder by name or
otherwise as the holder of any securities of an Issuer, then such holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such holder, to the effect that the
holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of the Issuers'
securities covered thereby and that such holding does not imply that such
holder will assist in meeting any future financial requirements of the Issuers,
or (ii) in the event that such reference to such holder by name or otherwise is
not required by the Securities Act, the deletion of the reference to such
holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.
In the case of a Shelf Registration pursuant to Section 3 hereof,
each holder of Transfer Restricted Securities agrees by acquisition of such
Transfer Restricted Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, such holder will forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 5(j) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus. If the Company shall
give any such notice, the Effectiveness Period shall be extended by the number
of days during such period from and including the date of the giving of such
notice to and including the date when each holder of Transfer Restricted
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(j)
hereof or (y) the Advice, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
any Registration Statement is filed or becomes effective and whether or not any
Notes, Exchange Notes or Private Exchange Notes are issued or sold pursuant to
any Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses (A) with respect to
filings required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
Prospectuses), (iii) fees and disbursements of counsel for the Issuers and the
Special Counsel, (iv) reasonable fees and disbursements of all independent
certified public accountants referred to in Section 2(e) and Section 5(1)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v) if
required, the reasonable fees and
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 17
expenses of any "qualified independent underwriter" and its counsel, and (vi)
fees and expenses of all other persons retained by the Issuers. In addition,
the Issuers shall pay their internal expenses (including, without limitation,
all salaries and expenses of their respective officers and employees performing
legal or accounting duties), the expense of any annual audit, and the fees and
expenses incurred in connection with the listing of the Notes, Exchange Notes
or Private Exchange Notes to be registered on any securities exchange.
Notwithstanding the foregoing or anything in this Agreement to the contrary,
each holder of Transfer Restricted Securities shall pay all underwriting
discounts and commissions of any underwriters or dealers with respect to any
Notes, Exchange Notes or Private Exchange Notes sold by it.
7. Indemnification
(a) The Issuers agree, jointly and severally, to indemnify and
hold harmless (i) each of the Initial Purchasers, each holder of Notes,
Exchange Notes and Private Exchange Notes and each Participating Broker-Dealer,
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any of the foregoing (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person"), and (iii) the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchasers, each holder of Notes,
Exchange Notes and Private Exchange Notes, each Participating Broker-Dealer and
any controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Person"), from and against any
and all losses, claims, damages, liabilities and judgments arising out of or
relating to any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary prospectus
or in any amendment or supplement thereto, or arising out of or relating to any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or preliminary prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Indemnified Person furnished in writing to the
Issuers by or on behalf of such Indemnified Person expressly for use therein;
provided that the indemnity agreement contained in this Section 7(a) with
respect to any preliminary prospectus or supplemental preliminary prospectus
shall not inure to the benefit of any Indemnified Person from whom the person
asserting any such loss, claim, damage or liability purchased the securities
which is the subject thereof, if the Prospectus corrected any such alleged
untrue statement or omission and if such Indemnified Person failed to deliver
or send a copy of the Prospectus, excluding any documents incorporated by
reference, to such person at or prior to the written confirmation of the sale
of securities to such person, provided that the Issuers have delivered the
Prospectus to the Initial Purchasers in requisite quantities on a timely basis
to permit such delivery or sending
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or
preliminary prospectus or any amendment or supplement thereto and with respect
to which indemnity may be sought against the Issuers hereunder, such
Indemnified Person shall promptly notify the Issuers in writing and the Company
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 18
Person and payment of all fees and expenses. Any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Issuers, (ii) the
Company shall have failed to assume the defense and employ counsel or pay all
such fees and expenses or (iii) the named parties to any such action (including
any impleaded parties) include both such Indemnified Person and an Issuer and
such Indemnified Person shall have been advised by its counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to any such Issuer (in which case the Company
shall not have the right to direct the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Issuers shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Persons, which firm shall be designated in writing by such
Indemnified Persons, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred). The Issuers shall not be liable for any
settlement of any such action effected without their written consent but if
settled with the written consent of the Issuers, the Issuers agree, jointly and
severally, to indemnify and hold harmless each Indemnified Person from and
against any loss or liability by reason of such settlement. No Issuer shall,
without the prior written consent of each Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to which
a holder of Transfer Restricted Securities offers or sells Transfer Restricted
Securities, such holder agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, their respective directors and officers and any
person controlling an Issuer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Issuers to each Indemnified Person but only with respect to
information relating to such holder furnished in writing by or on behalf of
such holder expressly for use in such Registration Statement. In any such case
in which any action shall be brought against an Issuer, any director or officer
of an Issuer or any person controlling an Issuer based on such Registration
Statement and in respect of which indemnity may be sought against a holder of
Transfer Restricted Securities, such holder shall have the rights and duties
given to the Issuers (except that if an Issuer shall have assumed the defense
thereof, such holder shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such holder), and the
Issuers, their respective directors and officers and any person controlling an
Issuer shall have the rights and duties given to the Indemnified Persons by
Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 19
received by each indemnifying party on the one hand and the indemnified party
on the other hand from the offering of the Notes, the Exchange Notes or the
Private Exchange Notes, as the case may be (it being expressly understood and
agreed that the relative benefits received by the Issuers from the offering of
the Notes, Exchange Notes or Private Exchange Notes, as the case may be, shall
be the amount of the net proceeds received by the Company from the sale of the
Notes to the Initial Purchasers), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnifying party on the one hand
and the indemnified party on the other hand in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of each indemnifying party on the one hand and the indemnified party on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by an indemnifying party
or such indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
The Issuers and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Indemnified Persons were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the net profits received by it in connection with the sale of
the Notes, Exchange Notes or Private Exchange Notes contemplated by this
Agreement exceeds the amount of any damages which such Indemnified Person has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section ll(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Indemnified Person's obligations to
contribute pursuant to this Section 7(d) are several in proportion to the
respective amount of Notes, Exchange Notes or Private Exchange Notes included
in any such Registration Statement by each Indemnified Person and not joint.
8. Rules 144 and 144A
Each of the Issuers shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but
in the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Securities, make available other
information as required by, and so long as necessary to permit, sales of its
Transfer Restricted Securities pursuant to Rule 144A. Notwithstanding the
foregoing, nothing in this Section 8 shall be deemed to require an Issuer to
register any of its securities pursuant to the Exchange Act.
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 20
9. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by an Issuer or by a holder
of Notes, Exchange Notes or Private Exchange Notes of any of its obligations
under this Agreement, each holder of Notes, Exchange Notes or Private Exchange
Notes and each Issuer, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Subject to Section 4 hereof,
the Issuers and each holder of Notes, Exchange Notes and Private Exchange Notes
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach of any of the provisions of this Agreement and
each hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not enter into
any agreement with respect to their securities that is inconsistent with the
rights granted to the holders of Notes, Exchange Notes and Private Exchange
Notes and Indemnified Persons in this Agreement or otherwise conflicts with the
provisions hereof. Without the written consent of the holders of a majority in
aggregate principal amount of the outstanding Transfer Restricted Securities,
the Issuers shall not grant to any person any rights which conflict with or are
inconsistent with the provisions of this Agreement.
(c) No Piggyback on Registrations. The Issuers shall not grant to
any of their security holders (other than the holders of Transfer Restricted
Securities in such capacity) the right to include any of their securities in
any Registration Statement other than Transfer Restricted Securities.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the holders
of not less than a majority of the then outstanding aggregate principal amount
of Transfer Restricted Securities; provided, however, that, for the purposes of
this Agreement,
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 21
Transfer Restricted Securities that are owned, directly or indirectly, by the
Issuers or any of their Affiliates are not deemed outstanding. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of holders of
Transfer Restricted Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Transfer Restricted Securities may be given by
holders of a majority in aggregate principal amount of the Transfer Restricted
Securities being sold by such holders pursuant to such Registration Statement;
and provided, further, that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence. Notwithstanding the foregoing, no amendment,
modification, supplement, waiver or consent with respect to Section 7 shall be
made or given otherwise than with the prior written consent of each Indemnified
Person affected thereby.
(e) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(i) if to the Issuers, as provided in the Purchase Agreement,
(ii) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered holder
of Notes, Exchange Notes or Private Exchange Notes, to the address of
such holder as it appears in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each holder of Notes, Exchange
Notes and Private Exchange Notes. The Issuers may not assign any of their
rights or obligations hereunder without the prior written consent of each
holder of Transfer Restricted Securities and each Indemnified Person.
Notwithstanding the foregoing, no successor or assignee of an Issuer shall have
any of the rights granted under this Agreement until such person shall
acknowledge its rights and obligations hereunder by a signed written statement
of such person's acceptance of such rights and obligations.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 22
(h) Governing Law; Submission to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF ANY COMPETENT NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
All references made in this Agreement to "Section" and "paragraph" refer to
such Section or paragraph of this Agreement, unless expressly stated otherwise.
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 23
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
CLIFFS DRILLING COMPANY
CLIFFS DRILLING MERGER COMPANY,
CLIFFS DRILLING INTERNATIONAL, INC.
CLIFFS OIL AND GAS COMPANY and
DRL, INC.
By: /s/ Douglas E. Swanson
----------------------------------
Name: Douglas E. Swanson
Title: President
SOUTHWESTERN OFFSHORE CORPORATION
By: /s/ Edward A. Guthrie
----------------------------------
Name: Edward A. Guthrie
Title: Vice President--Finance
and Secretary
JEFFERIES & COMPANY, INC.
By: /s/ Shauvik Kundagrami
--------------------------------
Name: Shauvik Kundagrami
---------------------------
Title: Sr. Vice President
--------------------------
ING BARING (U.S.) SECURITIES, INC.
By: /s/ John R. Seal
--------------------------------
Name: John R. Seal
---------------------------
Title: Vice President
--------------------------
REGISTRATION RIGHTS AGREEMENT
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<PAGE> 1
EXHIBIT 5.1
September 23, 1997
Board of Directors
Cliffs Drilling Company
1200 Smith Street, Suite 300
Houston, Texas 77002
Re: 10.25% Senior Notes due 2003, Series D
Gentlemen:
Reference is made to (i) the proposed issuance under the Securities Act of
1933, as amended (the "Securities Act") by Cliffs Drilling Company, a Delaware
corporation (the "Company"), of up to $50,000,000 aggregate principal amount of
its 10.25% Senior Notes due 2003, Series D and the guarantee of such notes by
certain subsidiaries of the Company (the "Debt Securities") in exchange for its
outstanding 10.25% Senior Notes due 2003, Series C (the "Old Notes") and (ii)
the Company's Registration Statement on Form S-4 (the "Registration Statement")
with respect to such Debt Securities to be filed with the Securities and
Exchange Commission under the Securities Act. The Debt Securities are to be
issued in accordance with resolutions of the Company's Board of Directors duly
adopted on July 30, 1997 and under and pursuant to the provisions of the
Indenture dated as of August 7, 1997 between the Company, certain of its
subsidiaries and State Street Bank and Trust Company, as trustee (the "Trustee")
(such Indenture as amended and supplemented to date, being hereinafter called
the "Indenture").
We have examined the Indenture, the global note and the certificated notes
issued under the Indenture relating to the Old Notes, the First Supplemental
Indenture dated as of August 29, 1997, and such statutes, corporate records and
documents, certificates of corporate and public officials and such other
instruments and documents as we have deemed necessary or appropriate for the
purposes of the opinions expressed herein.
Based upon the foregoing and subject to the qualifications, limitations,
assumptions and other statements set forth herein, we are of the opinion that:
(1) the Company is a validly existing corporation under the laws of
the State of Delaware; and
(2) the Debt Securities when issued in exchange for the Old Notes will
be validly issued and will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms
(subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect and subject to general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law).
The opinion expressed in paragraph (2) assumes that with respect to Debt
Securities issued under the Indenture (i) the Trustee is qualified to act as
Trustee under the Indenture, (ii) the Trustee has duly executed and delivered
the Indenture, (iii) the Indenture has been duly authorized and validly executed
and delivered by the Company to the Trustee, (iv) the Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended, and (v) such Debt
Securities have been duly executed, authenticated, issued and delivered in
accordance with the provisions of the Indenture upon exchange for the Old Notes
as provided for therein.
Except as otherwise stated below, the opinions expressed herein are based
upon, and limited to, the laws of the State of Texas and the United States and
the Delaware General Corporation Law, and to case decisions reported as of this
date under such laws, and to facts known to us on this date, and we do not
undertake to provide any opinion as to any matter or to advise any person with
respect to any events or changes occurring
<PAGE> 2
Board of Directors
Cliffs Drilling Company
September 23, 1997
subsequent to the date of this letter. We note that the Debt Securities each
provide that they will be governed by the laws of the State of New York. For
purposes of this opinion, we have assumed that the laws of the State of New York
are identical to the laws of the State of Texas. Accordingly, the opinions
expressed herein are given as if the laws of the State of Texas govern such
agreements without regard to provisions otherwise.
The opinions expressed in this letter are provided as legal opinions only
and not as any guaranties or warranties of the matters discussed herein, and
such opinions are strictly limited to the matters stated herein, and no other
opinions may be implied. This opinion letter is intended solely for your
benefit. Without our prior written consent, the opinions expressed herein may
not be published or relied upon by you other than in connection with the
Registration Statement or the transactions contemplated therein, or published or
relied upon by any other person in connection with any matter or in any manner
whatsoever.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Experts" in the Prospectus constituting part of the Registration Statement.
Very truly yours,
/s/ GRIGGS & HARRISON, P.C.
Page 2
<PAGE> 1
EXHIBIT 12.1
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Pre-Tax Income... $3,018 $4,311 $6,846 $7,852 $21,418 $ 8,746 $31,671
Interest...................... 2,643 1,356 826 199 9,932 1,747 8,076
Less Capitalized Interest..... (1,278) -- -- -- (730) (219) (407)
Net Amortization of Debt Issue
Costs....................... -- -- -- -- 462 80 373
Interest Portion of Rental
Expense..................... 58 66 58 56 86 41 60
------ ------ ------ ------ ------- ------- -------
Earnings............ $4,441 $5,733 $7,730 $8,107 $31,168 $10,395 $39,773
Interest...................... $2,643 $1,356 $ 826 $ 199 $ 9,932 $ 1,747 $ 8,076
Net Amortization of Debt Issue
Costs....................... -- -- -- -- 462 80 373
Interest Portion of Rental
Expense..................... 58 66 58 56 86 41 60
------ ------ ------ ------ ------- ------- -------
Fixed Charges............ $2,701 $1,422 $ 884 $ 255 $10,480 $ 1,868 $ 8,509
------ ------ ------ ------ ------- ------- -------
Ratio of Earnings to Fixed
Charges..................... 1.6x 4.0x 8.7x 31.8x 3.0x 5.6x 4.7x
====== ====== ====== ====== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Information" in the Registration Statement
(Form S-4) and related Prospectus of Cliffs Drilling Company for the
registration of the Company's $50 million Senior Notes due 2003, Series D, and
to the incorporation by reference therein of our report dated February 21, 1997,
with respect to the consolidated financial statements and schedule of Cliffs
Drilling Company included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Houston, Texas
September 23, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 16,
1996 included in Southwestern Offshore Corporation's Consolidated Financial
Statements for the year ended December 31, 1995 and to all references to our
Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
September 23, 1997
<PAGE> 1
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
----------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(Name, address and telephone number of agent for service)
---------------------
CLIFFS DRILLING COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 76-0248934
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 SMITH STREET
SUITE 300
HOUSTON, TX 77002
(Address of principal executive offices)(Zip Code)
10.25% SENIOR NOTES DUE 2003
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission
as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility
and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on file
with the Securities and Exchange Commission as Exhibit 4 to the
Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Eastern Edison Company
(File No. 33-37823) and is incorporated herein by reference
thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Hartford and the
State of Connecticut, on the 22nd day of September, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
-------------------------------
NAME: ELIZABETH C. HAMMER
TITLE: VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by CLIFFS
DRILLING COMPANY of its 10.25% SENIOR NOTES DUE 2003, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Elizabeth C. Hammer
-----------------------------
NAME: ELIZABETH C. HAMMER
TITLE: VICE PRESIDENT
DATED: SEPTEMBER 22, 1997
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business March 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
Dollars
<S> <C> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ......................... 1,665,142
Interest-bearing balances .................................................. 8,193,292
Securities .......................................................................... 10,238,113
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ........................................ 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income ................ 4,936,454
Allowance for loan and lease losses ..................... 70,307
Allocated transfer risk reserve ......................... 0
Loans and leases, net of unearned income and allowances .................... 4,866,147
Assets held in trading accounts ..................................................... 957,478
Premises and fixed assets ........................................................... 380,117
Other real estate owned ............................................................. 884
Investments in unconsolidated subsidiaries .......................................... 25,835
Customers' liability to this bank on acceptances outstanding ........................ 45,548
Intangible assets ................................................................... 158,080
Other assets ........................................................................ 1,066,957
----------
Total assets ........................................................................ 33,450,737
==========
LIABILITIES
Deposits:
In domestic offices ........................................................ 8,270,845
Noninterest-bearing ............................ 6,318,360
Interest-bearing ............................... 1,952,485
In foreign offices and Edge subsidiary ..................................... 12,760,086
Noninterest-bearing ............................ 53,052
Interest-bearing ............................... 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ........................................ 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities .................... 926,821
Other borrowed money ................................................................ 671,164
Subordinated notes and debentures ................................................... 0
Bank's liability on acceptances executed and outstanding ............................ 46,137
Other liabilities ................................................................... 745,529
Total liabilities ................................................................... 31,637,223
==========
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................................... 0
Common stock ........................................................................ 29,931
Surplus ............................................................................. 360,717
Undivided profits and capital reserves/Net unrealized holding gains (losses)......... 1,426,881
Cumulative foreign currency translation adjustments ................................. (4,015)
Total equity capital ................................................................ 1,813,514
----------
Total liabilities and equity capital ................................................ 33,450,737
==========
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
<PAGE> 1
EXHIBIT 99.1
CLIFFS DRILLING COMPANY
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING 10.25% SENIOR NOTES DUE 2003, SERIES C
IN EXCHANGE FOR
10.25% SENIOR NOTES DUE 2003, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON OCTOBER , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE")
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE
DELIVER TO THE EXCHANGE AGENT:
STATE STREET BANK AND TRUST COMPANY
By Mail:
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0078
By Hand/Overnight Courier:
State Street Bank and Trust Company
Corporate Trust Department
Fourth Floor
Two International Place
Boston, Massachusetts 02110
By Facsimile:
(617) 664-5232
Confirm by Telephone:
(617) 664-5314
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated September , 1997 (the "Prospectus") of Cliffs Drilling Company, a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together describe the Company's offer (the
"Exchange Offer") to exchange its 10.25% Senior Notes due 2003, Series D (the
"Exchange Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus is a part, for a like principal amount of its issued and
outstanding 10.25% Senior Notes due 2003, Series C (the "Old Notes").
Capitalized terms used but not defined herein have the respective meaning given
to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is extended. The Company
shall notify the holders of the Old Notes of any extension by oral or written
notice and will mail to the record holders of Old Notes an announcement thereof,
each prior to 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date.
This Letter of Transmittal is to be used by a holder of Old Notes either if
original Old Notes, if available, are to be forwarded herewith or if delivery of
Old Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering" and "Book-Entry
Transfer." Holders of Old Notes whose Old Notes are not immediately available,
or who are unable to deliver their Old Notes and all other documents required by
this Letter of Transmittal to the Exchange Agent on or prior to the Expiration
Date, or who are unable to complete the procedure for book-entry transfer on a
timely basis, must tender their Old Notes according to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The term "holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If the
space below is inadequate, list the registered numbers and principal amounts on
a separate signed schedule and affix the list to this Letter of Transmittal.
<PAGE> 2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- -----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) EXACTLY AS NAME(S)
APPEAR(S) ON OLD NOTES
(PLEASE FILL IN, IF BLANK) OLD NOTE(S) TENDERED
- -----------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL
REGISTERED AMOUNT REPRESENTED BY AMOUNT
NUMBER(S)* NOTE(S) TENDERED**
<S> <C> <C> <C>
=======================================================================================================================
=======================================================================================================================
=======================================================================================================================
* Need not be completed by book-entry holders.
** Unless otherwise indicated, any tendering holder of Old Notes will be deemed to have tendered the entire aggregate
principal amount represented by such Old Notes. All tenders must be in integral multiples of $1,000.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE
INSTITUTIONS ONLY):
Name of Tendering Institution:..................................................
Account Number:.................................................................
Transaction Code Number:........................................................
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered holder(s) of Old Notes:...................................
Date of Execution of Notice of Guaranteed Delivery:.............................
Window Ticket Number (if available):............................................
Name of Eligible Institution that Guaranteed Delivery:..........................
Account Number (if delivered by book-entry transfer):...........................
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name:...........................................................................
Address:........................................................................
<PAGE> 3
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned hereby exchanges, assigns and transfers to the
Company all right, title and interest in and to the Old Notes tendered for
exchange hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent, the agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company in
connection with the Exchange Offer) with respect to the tendered Old Notes with
full power of substitution to (i) deliver such Old Notes, or transfer ownership
of such Old Notes on the account books maintained by the Book-Entry Transfer
Facility, to the Company and deliver all accompanying evidences of transfer and
authenticity, and (ii) present such Old Notes for transfer on the books of the
Company and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer. The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the Exchange Notes issuable upon the exchange of
such tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the "SEC"),
including Exxon Capital Holdings Corporation, SEC No-Action Letter (available
April 13, 1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (available June
5, 1991) (the "Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC
No-Action Letter (available June 5, 1991), that the Exchange Notes issued in
exchange for the Old Notes pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by holders thereof (other than (i) a
broker-dealer who purchased Old Notes exchanged for such Exchange Notes directly
from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holders' business and such holders are not
participating in, and have no arrangement with any person to participate in, the
distribution of such Exchange Notes. The undersigned specifically represent(s)
to the Company that (i) any Exchange Notes acquired in exchange for Old Notes
tendered hereby are being acquired in the ordinary course of business of the
person receiving such Exchange Notes, whether or not the undersigned, (ii) the
undersigned is not participating in, and has no arrangement with any person to
participate in, the distribution of Exchange Notes, and (iii) neither the
undersigned nor any such other person is an "affiliate" (as defined in Rule 405
under the Securities Act) of the Company or a broker-dealer tendering Old Notes
acquired directly from the Company for its own account.
If the undersigned or the person receiving the Exchange Notes is a
broker-dealer that is receiving Exchange Notes for its own account pursuant to
the Exchange Offer, the undersigned acknowledges that it or such other person
will deliver a prospectus in connection with any resale of such Exchange Notes.
The undersigned acknowledges that if the undersigned is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes (i) the
undersigned cannot rely on the position of the staff of the SEC in the Morgan
Stanley Letter and similar SEC no-action letters, and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes, in which case the registration statement must
contain the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the SEC, and (ii) a broker-dealer that
delivers such a prospectus to purchasers in connection with such resales will be
subject to certain of the civil liability provisions under the Securities Act
and will be bound by the provisions of the Registration Rights Agreement
(including certain indemnification rights and obligations).
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Old Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Old
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer--Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the Exchange Notes issued in exchange for the Old Notes accepted for
exchange and return any Old Notes not tendered or not exchanged, in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail or deliver the Exchange Notes issued in
exchange for the Old Notes accepted for exchange and any Old Notes not tendered
or not exchanged (and accompanying documents, as appropriate) to the undersigned
at the address shown below the undersigned's signature(s). In the event that
both "Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the Exchange Notes issued in exchange for the Old Notes
accepted for exchange in the name(s) of, and return any Old Notes not tendered
or not exchanged to, the person(s) so indicated. The undersigned recognizes that
the Company has no obligation pursuant to the "Special Issuance Instructions"
and "Special Delivery Instructions" to transfer any Old Notes from the name of
the registered holder(s) thereof if the Company does not accept for exchange any
of the Old Notes so tendered for exchange.
<PAGE> 4
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old Notes in a principal amount not tendered,
or Exchange Notes issued in exchange for Old Notes accepted for exchange, are
to be issued in the name of someone other than the undersigned, or (ii) if Old
Notes tendered by book-entry transfer which are not exchanged are to be
returned by credit to an account maintained at the Book-Entry Transfer
Facility. Issue Exchange Notes and/or Old Notes to:
Name:
..............................................................................
(Please Type or Print)
..............................................................................
Address:......................................................................
..............................................................................
(include Zip Code)
..............................................................................
(Tax Identification or Social Security No.)
(Complete Substitute Form W-9)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Old Notes in the principal amount not tendered, or
Exchange Notes issued in exchange for Old Notes accepted for exchange, are to
be mailed or delivered to someone other than the undersigned, or to the
undersigned at an address other than that shown below the undersigned's
signature.
Mail or deliver Exchange Notes and/or Old Notes to:
Name:
..............................................................................
(Please Type or Print)
..............................................................................
Address:......................................................................
..............................................................................
(include Zip Code)
..............................................................................
(Tax Identification or Social Security No.)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
Book-Entry Transfer Facility Account Number:
<PAGE> 5
------------------------------------------------------------
IMPORTANT
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 on Reverse Side)
X...........................................................
X...........................................................
(Signature(s) of Registered Holders of Old Notes)
Dated:......................................., 1997
(The above lines must be signed by the registered holder(s)
of Old Notes as name(s) appear(s) on the Old Notes or on a
security position listing, or by person(s) authorized to
become registered holder(s) by a properly completed bond
power from the registered holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Old Notes to
which this Letter of Transmittal relate are held of record
by two or more joint holders, then all such holders must
sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity, then such
person must (i) set forth his or her full title below and
(ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to
act. See Instruction 5 regarding the completion of this
Letter of Transmittal, printed below.)
Name(s):....................................................
(Please Type or Print)
Capacity:...................................................
Address:....................................................
............................................................
(Include Zip Code)
Area Code and Telephone Number:.............................
------------------------------------------------------------
------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible
Institution.
Signature(s) Guaranteed by an Eligible Institution:.........
(Authorized Signature)
............................................................
(Title)
............................................................
(Name of Firm)
............................................................
(Address, Include Zip Code)
............................................................
(Area Code and Telephone Number)
Dated:................................................, 1997
------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE
OFFER
1. Delivery of this Letter of Transmittal and Old Notes or Book-Entry
Confirmations. All physically delivered Old Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Old Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Old Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Old Notes should be sent to the Company.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes and whose Old Notes are not immediately available or who cannot deliver
their Old Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date or who cannot complete
the procedure for book-entry transfer on a timely basis, must tender their Old
Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through a firm which is a member of a registered national securities exchange or
of the National Association of Securities Dealers Inc., a commercial bank or a
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution"); (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder of the Old Notes, the registration number(s) of such Old Notes and the
total principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five business days after the
Expiration Date, this Letter of Transmittal (or facsimile hereof) together with
the Old Notes in proper form for transfer (or a Book-Entry Confirmation) and any
other documents required hereby, must be deposited by the Eligible Institution
with the Exchange Agent; and (iii) the certificates for all physically tendered
shares of Old Notes, in proper form for transfer (or Book-Entry Confirmation, as
the case may be) and all other documents required hereby are received by the
Exchange Agent within five business days after the Expiration Date.
Any holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial holder of Old Notes who is not the
registered holder and who wishes to tender should arrange with the registered
holder to execute and deliver this Letter of Transmittal on his behalf or must,
prior to completing and executing this Letter of Transmittal and delivering his
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed bond power from the
registered holder.
4. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering holder should fill in the principal amount tendered
in the third column of the box entitled "Description of Old Notes Tendered"
above. The entire principal amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Old Notes is not tendered, then Old Notes for the
principal amount of Old Notes not tendered and Exchange Notes issued in exchange
for any Old Notes accepted will be sent to the holder at his or her registered
address, unless a different address is provided in the appropriate box on this
Letter of Transmittal, promptly after the Old Notes are accepted for exchange.
5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever. If this Letter
of Transmittal (or facsimile hereof) is signed by a participant in the
Book-Entry Transfer Facility, the signature must correspond with the name as it
appears on the security position listing as the holder of the Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes listed and tendered hereby and the
Exchange Notes issued in exchange therefor are to be issued (or any untendered
principal amount of Old Notes is to be reissued) to the registered holder, the
said holder need not and should not endorse any
<PAGE> 7
tendered Old Notes, nor provide a separate bond power. In any other case, such
holder must either properly endorse the Old Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal, with the
signatures on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered holder or holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers, in each case
signed as the name of the registered holder or holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal (or
facsimile hereof) is signed by the registered holder(s) of the Old Notes
tendered herein (or by a participant in the Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of the tendered Old
Notes) and the Exchange Notes are to be issued directly to such registered
holder(s) (or, if signed by a participant in the Book-Entry Transfer Facility,
deposited to such participant's account at such Book-Entry Transfer Facility)
and neither the box entitled "Special Delivery Instructions" nor the box
entitled "Special Registration Instructions" has been completed, or (ii) such
Old Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on this Letter of Transmittal (or facsimile hereof) must
be guaranteed by an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address (or account at
the Book-Entry Transfer Facility) to which Exchange Notes or substitute Old
Notes for principal amounts not tendered or not accepted for exchange are to be
issued or sent, if different from the name and address of the person signing
this Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered hereby, or if tendered Old Notes are registered in the name of any
person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with this Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law requires that a holder
of any Old Notes which are accepted for exchange must provide the Company (as
payor) with its correct taxpayer identification number ("TIN"), which, in the
case of a holder who is an individual is his or her social security number. If
the Company is not provided with the correct TIN, the holder may be subject to a
$50 penalty imposed by Internal Revenue Service. In addition, payments that are
made to such holder may be subject to backup withholding. If backup withholding
applies, the Exchange Agent is required to withhold 31% of any payment to the
holder. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an over-payment of taxes, a refund may be
obtained. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligations regarding backup
withholding.
<PAGE> 8
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any conditions
of the Exchange Offer or defects or irregularities in tenders as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with regard to tenders of Old Notes nor shall any of them incur
any liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to waive,
in whole or part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Old Notes on transmittal of this Letter of Transmittal will
be accepted.
12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
14. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE OLD NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL
HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO THE
EXPIRATION TIME.
<PAGE> 9
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYER'S NAME: CLIFFS DRILLING COMPANY
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Social Security Number
OR Employer Identification
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN Number
IN THE BOX AT RIGHT AND CERTIFY
FORM W-9 BY SIGNING AND DATING BELOW. ---------------------------------------
-------------------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of perjury, I
certify that:
DEPARTMENT OF THE TREASURY (1) The number shown on this form is my correct
INTERNAL REVENUE SERVICE Taxpayer Identification Number (or I am waiting for
a number to be issued to me) and
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding either because
I have not been notified by the Internal Revenue PART 3 --
Service ("IRS") that I am subject to backup
withholding as a result of failure to report all Awaiting TIN [ ]
interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding. Please complete the
Taxpayer Identification
Number below.
-------------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) in Part 2 above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another
notification from the IRS stating that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE __________________________________ DATE ___________________________, 1997
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b)I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
---------------------------------
--------------------------------, 1997
Signature Date
CERTIFICATE FOR FOREIGN RECORD HOLDERS
Under penalties of perjury, I certify that I am not a United States citizen or
resident (or I am signing for a foreign corporation, partnership, estate or
trust).
---------------------------------
---------------------------------, 1997
Signature Date
<PAGE> 10
CLIFFS DRILLING COMPANY
LETTER TO REGISTERED HOLDERS AND
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING 10.25% SENIOR NOTES DUE 2003, SERIES C
IN EXCHANGE FOR
10.25% SENIOR NOTES DUE 2003, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON OCTOBER , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Cliffs Drilling Company, a Delaware corporation (the "Company"), to exchange
its 10.25% Senior Notes due 2003, Series D (the "Exchange Notes"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of its issued and outstanding 10.25% Senior
Notes due 2003, Series C (the "Old Notes") upon the terms and subject to the
conditions set forth in the Company's Prospectus, dated September , 1997, and
the related Letter of Transmittal (which together constitute the "Exchange
Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated September , 1997;
2. Letter of Transmittal (together with accompanying Substitute Form
W-9 Guidelines);
3. Notice of Guaranteed Delivery;
4. Letter which may be sent to your clients for whose account you hold
Old Notes in your name or in the name of your nominee; and
5. Letter which may be sent from your clients to you with such
client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the Exchange Notes acquired in exchange for
Old Notes pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
the holder, (ii) the holder is not participating in, and has no arrangement with
any person to participate in, the distribution of Exchange Notes within the
meaning of the Securities Act, and (iii) neither the holder nor any such other
person is an "affiliate" (within the meaning of Rule 405 under the Securities
Act) of the Company or a broker-dealer tendering Old Notes acquired directly
from the Company. If the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Old Notes, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY
<PAGE> 11
CLIFFS DRILLING COMPANY
LETTER TO CLIENTS
FOR
TENDER OF ALL OUTSTANDING 10.25% SENIOR NOTES DUE 2003, SERIES C
IN EXCHANGE FOR
10.25% SENIOR NOTES DUE 2003, SERIES D
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON OCTOBER , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated September , 1997, of Cliffs
Drilling Company, a Delaware corporation (the "Company") and a related Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange its 10.25% Senior Notes due 2003, Series D (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act") for a like principal amount of its issued and outstanding
10.25% Senior Notes due 2003, Series C (the "Old Notes"), upon the terms and
subject to the conditions set forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
We are the holder of record of Old Notes held by us for your own account. A
tender of such Old Notes can be made only by us as the record holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations and warranties contained in the Letter of Transmittal.
Very truly yours,
<PAGE> 12
PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE
TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION
DATE.
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK
ENTRY TRANSFER PARTICIPANT
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
September , 1997 (the "Prospectus") of Cliffs Drilling Company, a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its 10.25% Senior Notes due 2003, Series D (the
"Exchange Notes"), for all of its outstanding 10.25% Senior Notes due 2003,
Series C (the "Old Notes"). Capitalized terms used but not defined herein have
the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (FILL IN AMOUNT):
$________________________ of the 10.25% Senior Notes due 2003, Series C.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] To TENDER the following Old Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED) (IF
ANY): $________________________.
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
Exchange Notes acquired in exchange for Old Notes pursuant to the Exchange Offer
are being acquired in the ordinary course of business of the person receiving
such Exchange Notes, whether or not undersigned, (ii) the undersigned is not
participating in, and has no arrangement with any person to participate in, the
"distribution" (within the meaning of the Securities Act) of Exchange Notes, and
(iii) neither the undersigned nor any such other person is an "affiliate"
(within the meaning of Rule 405 under the Securities Act) of the Company or a
broker-dealer tendering Old Notes acquired directly from the Company. If the
undersigned is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Old Notes, it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Notes.
SIGN HERE
Name of beneficial owner(s):_________________________________________________
Signature(s):________________________________________________________________
Name(s) (please print):______________________________________________________
Address:_____________________________________________________________________
Telephone Number:____________________________________________________________
Taxpayer Identification or Social Security Number:___________________________
Date:________________________________________________________________________
2
<PAGE> 13
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING 10.25% SENIOR NOTES DUE 2003, SERIES C
IN EXCHANGE FOR
10.25% SENIOR NOTES DUE 2003, SERIES D
This form, or one substantially equivalent hereto, must be used by a holder
to accept the Exchange Offer of Cliffs Drilling Company, a Delaware corporation
(the "Company"), and to tender 10.25% Senior Notes due 2003, Series C (the "Old
Notes") to the Exchange Agent pursuant to the guaranteed delivery procedures
described in "The Exchange Offer -- Guaranteed Delivery Procedures" of the
Company's Prospectus, dated September , 1997 (the "Prospectus") and in
Instruction 2 to the related Letter of Transmittal. Any holder who wishes to
tender Old Notes pursuant to such guaranteed delivery procedures must ensure
that the Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date (as defined below) of the Exchange Offer. Capitalized terms used
but not defined herein have the meanings ascribed to them in the Prospectus or
the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON OCTOBER
, 1997. UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
STATE STREET BANK AND TRUST COMPANY
By Mail:
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0078
By Hand/Overnight Courier:
State Street Bank and Trust Company
Corporate Trust Department
Fourth Floor
Two International Place
Boston, Massachusetts 02110
By Facsimile:
(617) 664-5232
Confirm by Telephone:
(617) 664-5314
---------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE BOX ON
THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 14
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
AGGREGATE
CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD NOTES OR PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
------------------------------------------------ ------------------ -------------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Names of Record Holders: Signatures:
- ------------------------------- -------------------------------------------------
Addresses: -------------------------------------------------
- -------------------------------------------------
- ------------------------------------------------- Dated:
------------------------------------------ , 1997
Area Code and Telephone Numbers:
-----------------
- -------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as their name(s) appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 15
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Old Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility described in
the Prospectus under the caption "The Exchange Offer -- Book-Entry Transfer" and
in the Letter of Transmittal) and any other required documents, all by 5:00
p.m., New York City time, within five business days following the Expiration
Date.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------ -----------------------------------------------------
Address: ------------------------------------------- (AUTHORIZED SIGNATURE)
(INCLUDE ZIP CODE) Name: ---------------------------------------------
Area Code and Tel. Number: Title:
-----------------------------------------------
- ----------------------------------------------------- (PLEASE TYPE OR PRINT)
Date: --------------------------------------- , 1997
</TABLE>
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE
MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
<PAGE> 16
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Old Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Old Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
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