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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 1998
Registration No. 333-53717
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
ON
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NATIONAL-OILWELL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0475815
(STATE OR OTHER JURISDICTION OF (I.R.S. Employer
INCORPORATION OR ORGANIZATION) Identification Number)
5555 San Felipe
Houston, Texas 77056
(713) 960-5100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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RICHARD L. LIONBERGER, ESQUIRE
Vice President and General Counsel
5555 San Felipe
Houston, Texas 77056
(713) 960-5100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
DAVID R. KING, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103-6993
(215) 963-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date 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: [ ]
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 for the
same offering: [ ]
CALCULATION OF REGISTRATION FEE
============================================================================================================================
PROPOSED PROPOSED
TITLE OF CLASS OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER NOTE (1) OFFERING PRICE (1) REGISTRATION FEE
- - - ----------------------------------------------------------------------------------------------------------------------------
6 7/8% Senior Notes due 2005, Series B $150,000,000 100% $150,000,000 $44,250(2)
- - - ----------------------------------------------------------------------------------------------------------------------------
(1) Calculated in accordance with Rule 457(f)(2).
(2) The Registrant paid a filing fee of $57,401.10 with respect to the Common
Stock registered on the original Registration Statement on Form S-3 filed on
May 27, 1998.
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This registration statement shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
PROSPECTUS
SUBJECT TO COMPLETION DATED AUGUST 21, 1998
OFFER TO EXCHANGE ALL OUTSTANDING
6 7/8% SENIOR NOTES DUE 2005
($150,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 6 7/8% SENIOR NOTES DUE 2005, SERIES B
of
NATIONAL-OILWELL, INC.
The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New
York City time on _________, 1998 (as such date may be extended, the "Expiration
Date").
National-Oilwell Inc. ("National-Oilwell" or the "Company") hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal"), to exchange $1,000 principal amount of its 6 7/8% Senior Notes
due July 1, 2005, Series B (the "Exchange Notes"), for each $1,000 principal
amount of its outstanding 6 7/8% Senior Notes due July 1, 2005 (the "Old Notes"
and together with the Exchange Notes, the "Notes") of which an aggregate
principal amount of $150,000,000 is outstanding. See "The Exchange Offer."
The Company will accept for exchange pursuant to the Exchange Offer any
and all Old Notes that are validly tendered prior to 5:00 p.m., New York City
time, on the Expiration Date. Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange
Offer is not conditioned upon any amount of the Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain customary
conditions, which may be waived by the Company, and to the terms and provisions
of the Registration Rights Agreement (as defined below). See "The Exchange
Offer."
The Old Notes were issued in a transaction (the "Offering") pursuant to
which the Company issued an aggregate of $150,000,000 principal amount of the
Old Notes. The Old Notes were sold by the Company to Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc. and
Morgan Stanley & Co. Incorporated (the "Initial Purchasers") on June 26, 1998
(the "Closing Date") pursuant to a Purchase Agreement, dated June 23, 1998 (the
"Purchase Agreement") among the Company and the Initial Purchasers. The Initial
Purchasers subsequently resold the Old Notes in reliance on Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). The Company and the
Initial Purchasers also entered into the Registration Rights Agreement dated as
of June 26, 1998 (the "Registration Rights Agreement"), pursuant to which the
Company granted certain registration rights for the benefit of the holders of
the Old Notes. The Exchange Offer is intended to satisfy certain of the
Company's obligations under the Registration Rights Agreement with respect to
the Old Notes. See "The Exchange Offer -- Purpose and Effect."
The Old Notes were, and the Exchange Notes will be, issued under the
Indenture, dated as of June 26, 1998 (the "Indenture"), between the Company and
The Bank of New York, as trustee (in such capacity, the "Trustee"). The Bank of
New York is acting as Exchange Agent in connection with the Exchange Offer (in
such capacity, the "Exchange Agent").
The form and terms of the Exchange Notes will be identical in all
material respects to the form and terms of the Old Notes, except that (i) the
Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof, (ii) holders of Exchange
Notes will not be entitled to the additional interest payable in certain events
under the terms of the Registration Rights, Agreement in respect of any Old
Notes (the "Additional Interest") and (iii) holders of Exchange Notes will not
be, and upon the consummation of the Exchange Offer, holders of Old Notes will
no longer be, entitled to certain other rights under the Registration Rights
Agreement intended for the holders of unregistered securities; provided,
however, that (i) if, because of any changes in law, rules or regulations of the
Securities and Exchange Commission (the "Commission") or applicable
interpretations thereof by the staff of the Commission, the Company is not
permitted to effect the Exchange Offer, (ii) if for any other reason this
Registration Statement is not declared effective by November 23, 1998 or the
Exchange Offer is not consummated by December 23, 1998, (iii) if a holder is
advised by counsel that it is not permitted by Federal securities laws or
Commission policy to participate in the Exchange Offer or does not receive
Exchange Notes that are fully tradeable pursuant to the Exchange Offer without
restriction or limitation as to holding period or volume or (iv) upon the
request of the Initial Purchasers acquiring a majority of the initial aggregate
principal amount of the Old Notes (but only with respect to any Old Notes which
the Initial Purchasers acquired directly from the Company), the Company is
required to file a shelf registration statement pursuant to Rule 415 under the
Securities Act generally for the benefit of such holder of Old Notes (the "Shelf
Registration Statement"), and such holders will be entitled to receive
Additional Interest following the occurrence of certain defined events of
default in connection with the filing of such Shelf Registration Statement. The
Exchange Offer shall be deemed consummated upon the occurrence of written or
oral notice by the Company to the Exchange Agent that it has accepted validly
tendered Old Notes for exchange and the delivery by the Company to the Trustee
of Exchange Notes in the same aggregate principal amount as the aggregate
principal amount of Old Notes that were validly tendered by holders thereof
pursuant to the Exchange Offer. See "The Exchange Offer -- Termination of
Certain Rights" and "-- Procedures for Tendering Old Notes" and "Description of
Exchange Notes."
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SEE "RISK FACTORS" BEGINNING ON PAGE 11 A
DISCUSSION OF CERTAIN RISKS THAT HOLDERS SHOULD
CONSIDER IN EVALUATING THE EXCHANGE OFFER.
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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.
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The date of this Prospectus is ________, 1998
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The Exchange Notes will bear interest at a rate equal to 6 7/8% per
annum from and including their date of issuance. Interest on the Exchange Notes
is payable semiannually on January 1 and July 1 of each year (each, an "Interest
Payment Date") beginning January 1, 1999. Holders whose Old Notes are accepted
for exchange will have the right to receive interest accrued thereon from the
date of their original issuance to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes. Interest on the Old Notes accepted for exchange will
cease to accrue on the day prior to the issuance of the Exchange Notes. The
Exchange Notes will mature on July 1, 2005. See "Description of Exchange
Notes -- General."
The Exchange Notes may be redeemed, in whole or in part, at the option
of the Company at any time prior to maturity upon payment of the principal
amount thereof, together with unpaid interest accrued to the redemption date and
a "Make-Whole Premium" as defined herein. See "Description of the Exchange
Notes -- Redemption."
Based on interpretation of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any purchaser of Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing the Exchange
Notes, or any broker-dealer who purchased the Notes from the Company to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
(i) will not be able to rely on the interpretation by the staff of the
Commission set forth in the above referenced no-action letters, (ii) will not be
able to tender the Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Notes, unless such sale or transfer
is made pursuant to an exemption from such requirements. The Company does not
intend to seek its own no-action letter, and there is no assurance that the
staff of the Commission would make a similar determination with respect to the
Exchange Notes as it has in such no action letter to third parties.
Each holder of the Notes who wishes to exchange the Notes for the
Exchange Notes in the Exchange Offer will be required to make certain
representations, including that (i) it is neither an affiliate of Company nor a
broker-dealer tendering Notes acquired directly from the Company for its own
account, (ii) any Exchange Notes to be received by it shall be acquired in the
ordinary course of its business and (iii) at the time of commencement of the
Exchange Offer, it has no arrangement or understanding 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 Initial Purchaser or other broker-dealer which makes a market in the
Old Notes and exchanges Old Notes in the Exchange Offer for Exchange Notes (a
"Participating Broker-Dealer") must deliver a prospectus meeting the
requirements of the Securities Act. The staff of the Commission has taken the
position 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 the Old Notes) with this prospectus.
Under the Registration Rights Agreement, the Company is required to allow
Participating Broker-Dealers to use this prospectus in connection with the
resale of Exchange Notes received in exchange for Old Notes acquired by such
Participating Broker-Dealers for their own account as a result of market-making
or other trading activities.
The Company will not receive any proceeds from the Exchange Offer, but,
pursuant to the Registration Rights Agreement, the Company will bear certain
registration expenses. No underwriter is being utilized in connection with the
Exchange Offer.
The Old Notes were issued originally in global form (the "Global Old
Note"). The Global Old Note was deposited with, or on behalf of, The Depository
Trust Company ("DTC"), as the initial depository with respect to the Old Notes
(in such capacity, the "Depositary"). As of August 20, 1998, Cede & Co., nominee
for DTC, was the sole registered holder of the Old Notes. Beneficial interests
in the Global Old Note are shown on, and transfers thereof are effected only
through, records maintained by the Depositary and its participants. The use of
the Global Old Note to represent certain of the Old Notes permits the
Depositary's participants, and anyone holding a beneficial interest in an Old
Note registered in the name of such a participant, to transfer interests in the
Old Notes electronically in accordance with the Depositary's established
procedures without the need to transfer a physical certificate. Except as
provided below, the Exchange Notes will also be issued initially as a note in
global form (the "Global Exchange Note," and together with the Global Old Note,
the "Global Notes") and deposited with, or on behalf of, the Depositary.
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TABLE OF CONTENTS
PAGE
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Disclosure Regarding Forward-Looking Statements...................................................................1
Available Information.............................................................................................2
Incorporation of Certain Documents by Reference...................................................................2
Prospectus Summary................................................................................................3
Risk Factors.....................................................................................................11
The Exchange Offer...............................................................................................14
Capitalization...................................................................................................22
National-Oilwell, Inc. And Subsidiaries Selected Consolidated Financial Data.....................................23
Business.........................................................................................................25
Management.......................................................................................................30
Description of Exchange Notes....................................................................................33
Certain United States Federal Income Tax Consequences to Holders of Exchange Notes ..............................41
Plan of Distribution.............................................................................................43
Legal Matters....................................................................................................44
Experts..........................................................................................................44
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains or has incorporated by reference, statements
that are not historical facts or statements of current condition and are
forward-looking statements. Such statement may be identified by, among other
things, the use of forward-looking terminology such as "believes," "expects,"
"forecasts," "estimates," "plans," "continues," "may," "will," "should,"
"anticipates," or "intends," or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy or intentions. Such
statements address, among other things, statements under "Prospectus Summary"
and "Risk Factors" as well as in the Prospectus generally. Although
National-Oilwell 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 National-Oilwell's expectations are
disclosed under "Risk Factors" and in this Prospectus generally, as well as in
the documents incorporated by reference herein. Given these uncertainties,
current or prospective investors are cautioned not to place undue reliance on
any such forward-looking statements. The Company disclaims any obligation or
intent to update any such factors or forward-looking statement to reflect future
events or developments.
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AVAILABLE INFORMATION
The Company is subject to the information requirement 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 with the Commission can be inspect at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the regional offices of the Commission at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, New York, New York 10048. Copies
of such material may be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Company's Common Stock is listed on the New
York Stock Exchange and reports, proxy statements and other information
regarding the Company can be inspected at the offices of the New York Stock
Exchange, 22 Broad Street, New York, New York 10006. The Commission maintains a
web site that contains all information filed electronically. The address of the
Commission's web site is http://www.SEC.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are incorporated by reference herein:
(i) Annual Report on Form 10-K for the year ended December 31,
1997;
(ii) Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998; and
(iii) Current Report on Form 8-K filed on June 17, 1998, as amended
by a Form 8-K/A filed on August 17, 1998.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to consummation of the Exchange Offer shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
THE COMPANY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM
A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST
OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT
THIS PROSPECTUS INCORPORATES. WRITTEN OR ORAL REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO THE COMPANY TO THE ATTENTION OF M. GAY MATHER, MANAGER, INVESTOR
RELATIONS, NATIONAL-OILWELL, INC., 5555 SAN FELIPE, HOUSTON, TEXAS 77056
(TELEPHONE (713) 960-5422). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY _______________, 1998.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
or incorporated by reference in this Prospectus. Prospective investors should
also review carefully the information set forth under "Risk Factors."
Unless the context otherwise requires, (i) all references to
"National-Oilwell" or the "Company" are to National-Oilwell, Inc. and its
subsidiaries, and (ii) all references to activities of, and financial
information with respect to, National-Oilwell are presented on a combined basis,
including with respect to periods prior to the consummation of the September 25,
1997 business combination (the "Dreco Combination") with Dreco Energy Services
Ltd. ("Dreco").
THE COMPANY
National-Oilwell is a worldwide leader in the design, manufacture and
sale of machinery, equipment and downhole products used in oil and gas drilling
and production, as well as in the distribution to the oil and gas industry of
maintenance, repair and operating products. The Company manufactures and
assembles drilling machinery, including drawworks, mud pumps and power swivels
(also known as "top drives"), which are the major mechanical components of
drilling rigs, as well as masts, derricks, substructures and cranes. Many of
these components are designed specifically for applications in offshore,
extended reach and deep land drilling. The Company estimates that approximately
65% of the mobile offshore rig fleet and the majority of the world's larger land
rigs (2,000 horsepower and greater) manufactured in the last twenty years
utilize drawworks, mud pumps and other drilling machinery components
manufactured by the Company.
As a result of the Dreco Combination, National-Oilwell expanded its
machinery and equipment capabilities and added a business segment that designs
and manufactures drilling motors and specialized drilling tools for rent and for
sale. Drilling motors are essential components of systems for horizontal,
directional, extended reach and performance drilling. Drilling tools include
drilling jars, shock tools and other specialized products.
The Company also provides distribution services through its network of
approximately 120 distribution service centers located near major drilling and
production activity worldwide, but principally in the United States and Canada.
These distribution service centers stock and sell a variety of expendable items
for oilfield applications and spare parts for National-Oilwell equipment. As oil
and gas companies and drilling contractors have refocused on their core
competencies and emphasized efficiency initiatives to reduce costs and capital
requirements, the Company's distribution services have expanded to offer
outsourcing and alliance arrangements that include comprehensive procurement,
inventory management and logistics support.
Over the last fifteen years, much of the demand for capital equipment
has been satisfied from the large surplus of equipment built during the late
seventies and early eighties. The Company believes that the surplus has been
reduced substantially over this period, especially for higher capacity equipment
for which National-Oilwell is a leading supplier. National-Oilwell's backlog for
capital equipment has grown to $260 million at June 30, 1998, up from $141
million at June 30, 1997. The level of backlog can be affected by volatility in
the price of oil and gas and other factors. See "Risk Factors." The Company
expects to ship a majority of the June 30, 1998 backlog by the end of 1998.
National-Oilwell believes that reasonably anticipated demand for the
Company's capital equipment in 1998 and 1999 can be met without significant
incremental capital expenditures by the Company's continuing focus on process
improvement and through the combined capabilities available after the Dreco
Combination.
National-Oilwell is incorporated in Delaware, with its principal
executive offices located at 5555 San Felipe, Houston, Texas 77056, and its
telephone number is (713) 960-5100.
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RECENT DEVELOPMENTS
On July 21, 1998, National-Oilwell completed the purchase of all the
outstanding capital stock of Roberds-Johnson Industries, Inc. ("RJI") for 1.35
million shares of National-Oilwell common stock. The transaction will be
recorded in accordance with the pooling-of-interests method of accounting. RJI
manufactures a broad range of equipment used on deep water drilling rigs,
including modular packages for production facilities, small platform drilling
packages, mud tank and engine packages and other fabricated equipment. In
addition, RJI has designed and built various models of highly automated land
rigs. RJI also provides a full rig-up facility with employees experienced in the
engineering and construction of conventional land drilling rigs.
BUSINESS STRATEGY
National-Oilwell's current business strategy is to enhance its market
positions and operating performance by:
Leveraging Its Installed Base of Higher Capacity Drilling Machinery and
Equipment. National-Oilwell believes its market position presents substantial
opportunities to capture a significant portion of expenditures for the
construction of new, higher capacity drilling rigs and equipment as well as the
upgrade and refurbishment of existing drilling rigs and equipment. The Company
believes the advanced age of the existing fleet of drilling rigs, coupled with
increasing drilling activity involving greater depths and extended reach, will
generate the demand for new equipment, especially in the higher capacity end of
the market. National-Oilwell's larger drawworks, mud pumps and power swivels
provide, in many cases, the largest capacities currently available in the
industry.
Expanding Its Downhole Products Business. National-Oilwell believes
that the strengthened marketing and distribution capabilities resulting from the
Dreco Combination provide an opportunity for growth in the rental and sale of
high-performance drilling motors and downhole tools, especially for use in
directional, horizontal, extended reach and other value-added drilling
applications.
Building on Distribution Strengths and Alliance/Outsourcing Trends. As
a result of efficiency initiatives, oil and gas companies and drilling
contractors are frequently seeking alliances with suppliers, manufacturers and
service providers, or outsourcing their procurement, inventory management and
logistics requirements for equipment and supplies in order to achieve cost and
capital improvements. National-Oilwell believes that it is well-positioned to
provide these services as a result of its (i) large and geographically diverse
network of distribution service centers in major oil and gas producing areas in
the United States and Canada, (ii) purchasing leverage due to the volume of
products sold, (iii) breadth of available product lines and (iv) integrated
information and process systems that enhance procurement, inventory management
and logistics activities. In addition, the strategic integration of
National-Oilwell's distribution expertise, extensive distribution network and
growing base of customer alliances may provide an increased opportunity for
cost-effective marketing of National-Oilwell's manufactured parts and equipment.
Continuing to Make Acquisitions that Enhance Its Product Line.
National-Oilwell believes that the oilfield service and equipment industry will
continue to experience consolidation as businesses seek to align themselves with
other market participants in order to gain access to broader markets and become
affiliated with integrated product offerings, and National-Oilwell plans to
participate in this trend. During 1997, the Company made three acquisitions,
including the Dreco Combination, which have enabled the Company to provide a
more complete rig package to its customers. To date in 1998, the Company has
completed the acquisitions of Speciality Tools Ltd., a company that designs and
engineers downhole tools for thru-tubing applications, Versatech International
Ltd., a company engaged in the manufacture of coiled tubing tools and equipment,
Phoenix Energy Products Holdings, Inc. ("Phoenix"), a company that manufactures
and sells several lines of products that are complementary to those of
National-Oilwell, including fluid end expendable products, solid control
equipment and pipe handling tools, and RJI.
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ISSUANCE OF THE OLD NOTES
The Old Notes were sold to the Initial Purchasers on June 26, 1998
pursuant to the Purchase Agreement. The Initial Purchasers subsequently resold
the Old Notes in reliance on Rule 144A under the Securities Act and other
available exemptions under the Securities Act. In connection with such sale, the
Company and the Initial Purchasers also entered into the Registration Rights
Agreement pursuant to which the Company granted certain registration rights for
the benefit of the holders of the Old Notes. The Exchange Offer is intended to
satisfy certain obligations of the Company under the Registration Rights
Agreement with respect to the Old Notes. See "The Exchange Offer -- Purpose and
Effect." Capitalized terms used but not defined in this Prospectus Summary are
defined elsewhere in the Prospectus.
THE EXCHANGE OFFER
The Exchange Offer........................ The Company is offering upon the terms and subject to the conditions set
forth herein to exchange $1,000 principal amount of Exchange Notes for each
$1,000 principal amount of the outstanding Old Notes. As of the date of this
Prospectus, $150 million in aggregate principal amount of the Old Notes is
outstanding. As of the date of this Prospectus, there is one registered holder
of the Old Notes, Cede & Co., nominee for DTC, which holds the Old Notes for
its participants. See "The Exchange Offer -- Terms of the Exchange Offer." The
terms of the Exchange Notes are identical in all material respects (including
principal amount, interest rate and maturity) to the terms of the Old Notes for
which they may be exchanged, except as described under "Prospectus
Summary -- Termination of Certain Rights." See "The Exchange Offer."
Expiration Date........................... 5:00 p.m., New York City time, on _______________, 1998 as the same may be
extended. See "The Exchange Offer -- Expiration Date; Extensions; Amendments."
Conditions of the Exchange Offer.......... 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 customary conditions, including that (i) the Exchange Offer, or
the making of an exchange by a holder, does not violate applicable law or
any applicable interpretation of the staff of the Commission and (ii) no
action or proceeding is instituted or threatened that would be reasonably
likely to materially impair the ability of the Company to proceed with the
Exchange Offer. The Company expects that the foregoing conditions will be
satisfied. All such conditions may be waived by the Company. See "The
Exchange Offer -- Conditions of the Exchange Offer."
Termination of Certain Rights............. Pursuant to the Registration Rights Agreement and the Old Notes, holders of
Old Notes have rights to receive Additional Interest upon certain events,
which Additional Interest may not exceed .25% per annum, and have certain
rights intended for the holders of unregistered securities. Holders of
Exchange Notes will not be and, upon consummation of the Exchange Offer,
holders of Old Notes will no longer be, entitled to (i) the right to
receive the Additional Interest or (ii) certain other rights under the
Registration Rights Agreement intended for holders of unregistered
securities. The Exchange Offer shall be deemed consummated upon the
occurrence of written or oral notice by the Company to the Exchange Agent
that it has accepted validly tendered Old Notes for exchange and the
delivery by the Company to the Trustee of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of
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Old Notes that were tendered by holders thereof pursuant to the Exchange Offer.
See "The Exchange Offer -- Termination of Certain Rights" and "Procedures for
Tendering Old Notes."
Shelf Registration....................... Under the Registration Rights Agreement, the Company will be required to file
a Shelf Registration Statement pursuant to Rule 415 under the Securities
Act covering Old Notes (the "Shelf Registration") if (i) because of any
changes in law, Commission rules or regulations or applicable interpretations
thereof by the staff of the Commission, the Company is not permitted to
effect the Exchange Offer, (ii) if for any other reason the Registration
Statement of which this Prospectus is a part is not declared effective by
November 23, 1998 or the Exchange Offer is not consummated by December 23,
1998, (iii) if a holder is advised by counsel that it is not permitted by
Federal securities laws or Commission policy to participate in the Exchange
Offer or does not receive Exchange Notes that are fully tradeable pursuant
to the Exchange Offer without restriction or limitation as to holding
period or volume or (iv) upon the request of the Initial Purchasers
acquiring a majority of the initial aggregate principal amount of the Old
Notes (but only with respect to any Old Notes which the Initial Purchasers
acquired directly from the Company). The Company will be required to use
its reasonable best efforts to cause any Shelf Registration to be declared
effective under the Securities Act as promptly as practicable but no later
than January 22, 1999 and, subject to certain exceptions, to keep the Shelf
Registration continuously effective under the Securities Act until the
earlier of (i) June 25, 2001 or (ii) such period ending when all Old Notes
covered by the Shelf Registration (a) have been sold in the manner set
forth and as contemplated in the Shelf Registration, (b) cease to be
outstanding or (c) become freely tradeable without restriction or
limitation as to holding period or volume.
Accrued Interest on the Old Notes......... The Exchange Notes will bear interest at a rate equal to 6 7/8% per annum
from and including their date of issuance. Holders whose Old Notes are
accepted for exchange will have the right to receive interest accrued
thereon from the date of their original issuance to, but not including, the
date of issuance of the Exchange Notes, such interest to be payable with
the first interest payment on the Exchange Notes. Interest on the Old Notes
accepted for exchange, which accrued at the rate of 6 7/8% per annum, will
cease to accrue interest on, the day prior to the issuance of the Exchange
Notes.
Additional Interest....................... Pursuant to the Registration Rights Agreement, if (i) the Registration
Statement of which this Prospectus is a part has not been declared
effective on or prior to November 23, 1998, (ii) the Exchange Offer is not
consummated on or prior to December 23, 1998, (iii) a required Shelf
Registration Statement is not declared effective on or prior to the 210th
calendar day following the Closing Date or (iv) the Registration Statement
of which this Prospectus is a part or any required Shelf Registration
Statement is filed and declared effective but shall thereafter be either
withdrawn by the Company or become subject to an effective stop order
suspending the effectiveness of such registration statement, except as
specifically permitted by the Registration Rights Agreement, without being
succeeded immediately by an additional registration statement filed and
declared effective (each such event referred to in clauses (i) through (iv)
above, a "Registration Default"), the interest rate borne by the Old
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Notes shall be increased by .25% per annum following such Registration
Default; provided that the aggregate amount of any such increase in the
interest rate on the Notes shall in no event exceed .25% per annum; and
provided, further, that if this Registration Statement is not declared
effective on or prior to November 23, 1998 and the Company shall
request holders of Old Notes to provide information for inclusion in the
Shelf Registration Statement, then Old Notes owned by holders who do
not deliver such information to the Company or who do not provide
comments on the Shelf Registration Statement when required pursuant to
the Registration Rights Agreement will not be entitled to any such
increase in the interest rate for any day after December 23, 1998.
Following the cure of all Registration Defaults, the accrual of such
Additional Interest will cease and the interest rate will revert to the
original rate.
Procedures for Tendering
Old Notes................................. Unless a tender of Old Notes is effected pursuant to the procedures for book-entry
transfer as provided herein, each holder desiring to accept the Exchange
Offer must complete, sign and date the Letter of Transmittal, or a
facsimile thereof, have the signature thereon guaranteed if required by the
Letter of Transmittal, and mail or otherwise deliver the Letter of
Transmittal, or such facsimile, together with the Old Notes or a Notice of
Guaranteed Delivery and any other required documents (such as evidence of
authority to act, if the Letter of Transmittal is signed by someone acting
in a fiduciary or representative capacity), to the Exchange Agent at the
address set forth on the back cover page of this Prospectus prior to 5:00
p.m., New York City time, on the Expiration Date. Any beneficial owner of
the Old Notes whose Old Notes are registered in the name of a nominee, such
as a broker, dealer, commercial bank or trust company and who wishes to
tender Old Notes in the Exchange Offer, should instruct such entity or
person to promptly tender on such beneficial owner's behalf. See "The
Exchange Offer -- Procedures for Tendering Old Notes."
Guaranteed Delivery Procedures............ Holders whose certificates for Old Notes are not immediately available or who
cannot deliver their certificates and all other required documents to the
Exchange Agent (as defined below) on or prior to the Expiration Date, or
who cannot complete the procedure for book-entry on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set
forth in the Letter of Transmittal.
Acceptance of Old Notes and Delivery
of Exchange Notes......................... Upon satisfaction or waiver of all conditions of the Exchange Offer, the Company
will accept any and all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration
Date. The Exchange Notes issued pursuant to the Exchange Offer will be
delivered promptly after acceptance of the Old Notes. See "The Exchange
Offer -- Acceptance of Old Notes for Exchange; Delivery of Exchange Notes."
Withdrawal Rights......................... Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. See "The Exchange Offer -- Withdrawal
Rights."
The Exchange Agent........................ The Bank of New York is the exchange agent (in such capacity, the "Exchange Agent").
The address and telephone number of the Exchange
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Agent are set forth in "The Exchange Offer -- The Exchange Agent; Assistance."
Fees and Expenses......................... All expenses incident to the Company's consummation of the Exchange Offer and
compliance with the Registration Rights Agreement will be borne by the
Company. The Company is also required to pay certain transfer taxes
applicable to the Exchange Offer. See "The Exchange Offer -- Fees and Expenses."
Resales of the Exchange
Notes..................................... Based on interpretation of the Securities Act by the staff of the Commission set
forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by holders thereof without further
compliance with the registration and prospectus delivery provisions of the
Securities Act. However, any purchaser of Notes who is an "affiliate" of
the Company or who intends to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes, or any broker-dealer who
purchased the Notes from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (i) will not be able to
rely on the interpretation by the staff of the Commission set forth in the
above referenced no-action letters, (ii) will not be able to tender the
Notes in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
any sale or transfer of the Notes, unless such sale or transfer is made
pursuant to an exemption from such requirements. The Company does not
intend to seek its own no-action letter, and there is no assurance that the
staff of the Commission would make a similar determination with respect to
the Exchange Notes as it has in such no action letter to third parties.
Each holder of the Notes who wishes to exchange the Notes for the Exchange
Notes in the Exchange Offer will be required to make certain representations,
including that (i) it is neither an affiliate of Company nor a broker-dealer
tendering Notes acquired directly from the Company for its own account,
(ii) any Exchange Notes to be received by it shall be acquired in the
ordinary course of its business, and (iii) at the time of commencement of
the Exchange Offer, it has no arrangement or understanding 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 Participating Broker-Dealer must deliver a prospectus
meeting the requirements of the Securities Act. The staff of the Commission
has taken the position 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 the Notes)
with the prospectus contained in the Exchange Offer Registration Statement.
Under the Registration Rights Agreement, the Company is required to allow
Participating Broker-Dealers to use the prospectus contained in the
Exchange Offer Registration Statement in connection with the resale of
Exchange Notes received in exchange for Notes acquired by such
Participating Broker-Dealers for their own account as a result of
market-making or other trading activities.
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DESCRIPTION OF EXCHANGE NOTES
The form and terms of the Exchange Notes will be identical in all
material respects to the form and terms of the Old Notes, except that (i) the
Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof, (ii) holders of the
Exchange Notes will not be entitled to Additional Interest and (iii) holders of
the Exchange Notes will not be, and upon consummation of the Exchange Offer,
holders of the Old Notes will no longer be, entitled to certain other rights
under the Registration Rights Agreement intended for the holders of unregistered
securities, except in certain limited circumstances. See "Exchange
Offer -- Termination of Certain Rights." The Exchange Offer shall be deemed
consummated upon the occurrence of the delivery by the Company to the Trustee in
its capacity as Registrar under the Indenture of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of Old Notes that
were tendered by holders thereof pursuant to the Exchange Offer. See "The
Exchange Offer -- Termination of Certain Rights," " -- Procedures for Tendering
Old Notes," and "Description of Exchange Notes."
Securities Offered........................ $150,000,000 aggregate principal amount of 6 7/8% Senior Notes due 2005, Series B.
Maturity Date............................. July 1, 2005.
Interest Payments Dates................... January 1 and July 1, of each year, commencing January 1, 1999.
Ranking................................... The Notes are unsecured senior obligations of the Company and rank pari passu in
right of payment with all other existing and future unsecured and
unsubordinated indebtedness of the Company and senior in right of payment
to all future subordinated indebtedness of the Company. The Notes are
effectively subordinated, however, to (i) all future secured obligations of
the Company to the extent of the assets securing such obligations and (ii)
all current and future borrowings and trade obligations of the subsidiaries
of the Company. The Indenture under which the Notes are issued permits the
Company and its subsidiaries to incur additional indebtedness, including
additional secured indebtedness, subject to certain conditions. See
"Description of the Exchange Notes -- General."
Redemption................................ The Notes may be redeemed, in whole or in part, at the option of the Company
at any time prior to maturity upon payment of the principal amount thereof,
together with unpaid interest accrued to the redemption date and a "Make-Whole
Premium," as defined herein. See "Description of the Exchange Notes -- Redemption."
Certain Covenants......................... The Indenture contains certain covenants that, among other things, limit the
ability of the Company and its subsidiaries to (i) create certain liens, (ii)
engage in sale and leaseback transactions or (iii) engage in certain mergers,
consolidations or asset sales. See "Description of the Exchange Notes."
Absence of a Public Market for
the Exchange Notes........................ There is no existing market for the Notes and there can be no assurance as to
the liquidity of any markets that may develop for the Notes, the ability of
holders of the Notes to sell their Notes or the price at which holders would be
able to sell their Notes. Future trading prices of the Notes will depend on may
factors, including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. The Company has been
advised by the Initial Purchasers that, subject to applicable laws and
regulations, such firms currently intend to make a market in the Notes, although
they are not obligated to do so and may discontinue any market-making activities
with respect to the Notes at any time without notice. The Company does not
intend to apply for
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listing of the Notes on any securities exchange or for quotation through the
Nasdaq National Market or any other quotation system. See "Risk Factors -- Absence
of Public Market for the Notes" and "Plan of Distribution."
For more detailed information regarding the terms of the Notes, see
"Description of Exchange Notes."
RISK FACTORS
See "Risk Factors" beginning on page 11 of this Prospectus for a
discussion of certain factors which should be considered by prospective
investors in evaluating the Exchange Offer.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
holders of Notes should consider carefully the following risk factors affecting
the business of the Company.
DEPENDENCE ON OIL AND GAS INDUSTRY
National-Oilwell's businesses are substantially dependent upon the
condition of the oil and gas industry and the industry's willingness to explore
for and produce oil and gas. The degree of such willingness is generally
dependent upon the prevailing view of future product prices, which are
influenced by numerous factors affecting the supply and demand for oil and gas,
including the level of drilling activity, worldwide economic activity, interest
rates and the cost of capital, the development of alternate energy sources,
environmental regulation, tax policies, political requirements of national
governments, coordination by the Organization of Petroleum Exporting Countries
("OPEC") and the cost of producing oil and gas. Any significant reduction in
demand for drilling services, in cash flows of drilling contractors or in rig
utilization rates below current levels would result in a drop in demand for
products manufactured and sold by National-Oilwell.
VOLATILITY OF OIL AND GAS PRICES
Oil and gas prices and activity have been characterized by significant
volatility over the last approximately twenty years. Since 1986, spot oil prices
(West Texas Intermediate) have ranged from a low of approximately $11 per barrel
in 1986 to a high of approximately $40 per barrel in 1991. Oil prices have
generally been under downward pressure to date in 1998, with spot prices
generally within a range of $12-$16 per barrel. Spot gas prices (Henry Hub) have
ranged from lows below $1.00 per mcf of gas in 1992 to highs above $3.00 per mcf
in 1996 and 1997. There has also been downward pressure on gas prices to date in
1998, and prices have generally been within a range of $1.80 to $2.20 per mcf.
These price changes have caused numerous shifts in the strategies and
expenditure levels of oil and gas companies and drilling contractors,
particularly with respect to decisions to purchase major capital equipment of
the type manufactured by National-Oilwell. Moreover, uncertainty with respect to
the stability and direction of future prices has often led to deferral of such
expenditures. Recent expectations of lower oil prices generally have the effect
of slowing production and new drilling, particularly in areas where the per
barrel cost of production is high. This slowdown has a more immediate effect on
parts of National-Oilwell's distribution business but can also affect the
downhole products and products and technology segments if lower prices are
expected to continue for extended periods. No assurance can be given as to the
future price levels of oil and gas or the volatility thereof, or that the future
price of oil and gas will be sufficient to support current levels of exploration
and production.
HIGHLY COMPETITIVE INDUSTRY
The oilfield products and services industry is highly competitive. The
revenues and earnings of National-Oilwell can each be affected by competitive
actions such as price changes, introduction of new technologies and products or
improved availability and delivery. National-Oilwell competes with a large
number of companies, some of which may offer certain more technologically
advanced products, possess greater financial resources and have more extensive
and diversified operations.
POTENTIAL PRODUCT LIABILITY AND WARRANTY CLAIMS
Certain products of National-Oilwell and its predecessors are used in
potentially hazardous drilling, completion and production applications that can
cause personal injury or loss of life, damage to property, equipment or the
environment and suspension of operations. National-Oilwell maintains insurance
coverage in such amounts and against such risks as it believes to be in
accordance with normal industry practice. Such insurance does not, however,
provide coverage for all liabilities (including liabilities for certain events
involving pollution), and there can be no assurance that such insurance will be
adequate to cover all losses or liabilities that may be incurred by
National-Oilwell in its operations. Moreover, no assurance can be given that
National-Oilwell will, in the future, be able to maintain insurance
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at levels it deems adequate and at rates it considers reasonable or that
particular types of coverage will be available. Litigation arising from a
catastrophic occurrence at a location where equipment and services of
National-Oilwell or its predecessors have been used may, in the future, result
in National-Oilwell being named as a defendant in product liability or other
lawsuits asserting potentially large claims. National-Oilwell is a party to
various legal and administrative proceedings which have arisen from its
businesses. No assurance can be given with respect to the outcome of these or
any other pending legal and administrative proceedings and the effects such
outcomes may have on National-Oilwell.
IMPACT OF POLITICAL DEVELOPMENTS AND GOVERNMENTAL REGULATIONS
Many aspects of National-Oilwell's operations are affected by political
developments, including restrictions on the ability to do business in various
foreign jurisdictions, and are subject to both domestic and foreign governmental
regulation, including those relating to oilfield operations, worker safety and
the protection of the environment. In addition, National-Oilwell depends on the
demand for its services from the oil and gas industry and, therefore, is
affected by any changes in taxation, price controls or other laws and
regulations that affect the oil and gas industry generally. The adoption of laws
and regulations curtailing exploration for or production of oil and gas for
economic or other policy reasons could adversely affect National-Oilwell's
operations. National-Oilwell cannot determine the extent to which its future
operations and earnings may be affected by political developments, new
legislation, new regulations or changes in existing regulations.
IMPACT OF ENVIRONMENTAL REGULATIONS
The operations of National-Oilwell and its customers are affected by
numerous foreign, federal, state, provincial and local environmental laws and
regulations. The technical requirements of these laws and regulations are
becoming increasingly expensive, complex and stringent. These laws may impose
penalties or sanctions for damages to natural resources or threats to public
health and safety. Such laws and regulations may also expose National-Oilwell to
liability for the conduct of or conditions caused by others, or for acts of
National-Oilwell or its predecessors that were in compliance with all applicable
laws at the time such acts were performed. Sanctions for noncompliance may
include revocation of permits, corrective action orders, administrative or civil
penalties and criminal prosecution. Certain environmental laws provide for joint
and several liability for remediation of spills and releases of hazardous
substances. In addition, National-Oilwell may be subject to claims alleging
personal injury or property damage as a result of alleged exposure to hazardous
substances, as well as damage to natural resources.
RISK OF CERTAIN FOREIGN MARKETS
Certain of National-Oilwell's revenues result from the sale of products
to customers for ultimate destinations in the Middle East, Africa, Southeast
Asia and other international markets and are subject to risks of instability of
foreign economies and governments. Furthermore, National-Oilwell's sales can be
affected by laws and regulations limiting exports to particular countries. In
certain cases, export laws and regulations of one jurisdiction may contradict
those of another.
National-Oilwell attempts to limit its exposure to foreign currency
fluctuations by limiting the amount of sales denominated in currencies other
than United States dollars, Canadian dollars and British pounds.
National-Oilwell has not engaged in and does not currently intend to engage in
any significant hedging or currency trading transactions designed to compensate
for adverse currency fluctuations among those or any other foreign currencies.
INTEGRATION OF ACQUISITIONS AND MANAGEMENT OF GROWTH
National-Oilwell completed four acquisitions in 1997 and has completed
four acquisitions to date in 1998. In addition, the Company expects to evaluate
and, where feasible, make additional strategic acquisitions in the future. There
can be no assurance that suitable acquisition candidates will be available, that
acquisitions can be completed on reasonable terms, that the Company will
successfully integrate the operations of any acquired entities or that the
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Company will have access to adequate funds to effect any desired acquisitions.
In addition, the process of combining the organizations could cause the
interruption of, or a loss of momentum in, the activities of some or all of the
companies' businesses, which could have an adverse effect on their combined
operations. The Dreco Combination and recent growth in revenues and backlog have
placed significant demands on the Company and its management to improve the
combined entity's operational, financial and management information systems, to
develop further the management skills of the Company's managers and supervisors,
and to continue to train, motivate and effectively manage the Company's
employees. The failure of the Company to manage its growth effectively could
have a material adverse effect on the Company.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
There is no existing market for the Notes and there can be no assurance
as to the liquidity of any markets that may develop for the Notes, the ability
of holders of the Notes to sell their Notes or the price at which holders would
be able to sell their Notes. Future trading prices of the Notes will depend on
many factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. The Company
has been advised by the Initial Purchasers that, subject to applicable laws and
regulations, such firms currently intend to make a market in the Notes, although
they are not obligated to do so and may discontinue any market-making activities
with respect to the Notes at any time without notice.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company to the Initial Purchasers on
June 26, 1998, pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Old Notes in reliance on Rule 144A under the Securities
Act. The Company and the Initial Purchasers also entered into the Registration
Rights Agreement pursuant to which the Company agreed with respect to the Old
Notes to (i) cause a Registration Statement to be filed with the Commission
under the Securities Act concerning the Exchange Offer, (ii) use its reasonable
best efforts (a) to cause such Registration Statement to be declared effective
by the Commission by November 23, 1998 and (b) to cause the Exchange Offer to be
consummated by December 23, 1998. This Exchange Offer is intended to satisfy the
Company's exchange offer obligations under the Registration Rights Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the accompanying Letter of Transmittal, to exchange
$1,000 in principal amount of the Exchange Notes for each $1,000 in principal
amount of the outstanding Old 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 Expiration Date. Tenders of the Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. 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
customary conditions which may be waived by the Company, and to the terms and
provisions of the Registration Rights Agreement. See "-- Conditions of the
Exchange Offer."
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, Holders may tender less than the aggregate principal amount
represented by the Old Notes held by them, provided that they appropriately
indicate this fact on the Letter of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-entry transfer).
As of August 20, 1998, $150,000,000 aggregate principal amount of the
Old Notes was outstanding and there was one registered holder of the Old Notes,
Cede & Co., nominee for DTC, which held the Old Notes for its participants. Only
a holder of the Old Notes (or such holder's legal representative or
attorney-in-fact) may participate in the Exchange Offer. There will be no fixed
record date for determining holders of the Old Notes entitled to participate in
the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering of Old
Notes and for the purposes of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, 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.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be ____________, 1998 at 5:00 p.m., New York
City time, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the Expiration Date shall be the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the
Exchange Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 10:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
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The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer or (iii) if any of
the conditions set forth below under "Conditions of the Exchange Offer" shall
not have been satisfied, to terminate the Exchange Offer, by giving oral or
written notice of such delay, extension, or termination to the Exchange Agent.
The Company reserves the right, in its sole discretion, to amend the terms of
the Exchange Offer in any manner. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendments by means of a prospectus supplement that will
be distributed to the registered holders of the Old Notes.
CONDITIONS OF THE EXCHANGE OFFER
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 customary conditions, including without limitation that (i) the
Exchange Offer, or the making of an exchange by a holder, does not violate
applicable law or any applicable interpretation of the staff of the Commission
and (ii) no action or proceeding is instituted or threatened that would be
reasonably likely to materially impair the ability of the Company to proceed
with the Exchange Offer.
The Company expects that the foregoing conditions will be satisfied.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company in whole or in part at any time and from time to time in
its sole discretion. The failure by the Company at any time to exercise any of
the foregoing rights shall not be deemed a waiver of such rights and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding upon all parties.
TERMINATION OF CERTAIN RIGHTS
Pursuant to the Registration Rights Agreement and the Old Notes,
holders of Old Notes have rights to receive Additional Interest and have certain
rights intended for the holders of unregistered securities. Holders of Exchange
Notes will not be and, upon consummation of the Exchange Offer, holders of Old
Notes will no longer be, entitled to (i) the right to receive Additional
Interest or (ii) certain other rights under the Registration Rights Agreement
intended for holders of unregistered securities. The Exchange Offer shall be
deemed consummated upon the occurrence of the delivery by the Company to the
Registrar of Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Old Notes that were tendered by holders thereof
pursuant to the Exchange Offer.
SHELF REGISTRATION
The Company will be required to file the Shelf Registration Statement
pursuant to Rule 415 under the Securities Act covering the Old Notes if (i)
because of any changes in law, Commission rules or regulations or applicable
interpretations thereof by the staff of the Commission, the Company is not
permitted to effect the Exchange Offer, (ii) if for any other reason the
Registration Statement of which this Prospectus is a part is not declared
effective by November 23, 1998 or the Exchange Offer is not consummated by
December 23, 1998, (iii) if a holder is advised by counsel that it is not
permitted by Federal securities laws or Commission policy to participate in the
Exchange Offer or does not receive Exchange Notes that are fully tradeable
pursuant to the Exchange Offer without restriction or limitation as to holding
period or volume or (iv) upon the request of the Initial Purchasers acquiring a
majority of the initial aggregate principal amount of the Old Notes (but only
with respect to any Old Notes which the Initial Purchasers acquired directly
from the Company).
ACCRUED INTEREST ON THE OLD NOTES
The Exchange Notes will bear interest at a rate equal to 6 7/8% per
annum from and including their date of issuance. Holders whose Old Notes are
accepted for exchange will have the right to receive interest accrued thereon
from the date of their original issuance to, but not including, the date of
issuance of the Exchange Notes, such interest to be payable with the first
interest payment on the Exchange Notes. Interest on the Old Notes accepted for
exchange,
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which interest accrued at the rate of 6 7/8% per annum, will cease to accrue on
the day prior to the issuance of the Exchange Notes.
ADDITIONAL INTEREST
Pursuant to the Registration Rights Agreement, if (a) the Registration
Statement of which this Prospectus is a part has not been declared effective on
or prior to November 23, 1998, (b) the Exchange Offer is not consummated on or
prior to December 23, 1998, (c) a required Shelf Registration Statement is not
declared effective on or prior to the 210th calendar day following the Closing
Date or (d) this Registration Statement or any required Shelf Registration
Statement is filed and declared effective but shall thereafter be either
withdrawn by the Company or become subject to an effective stop order suspending
the effectiveness of such registration statement, except as specifically
permitted by the Registration Rights Agreement, without being succeeded
immediately by an additional registration statement filed and declared effective
(each such event referred to in clauses (a) through (d) above, a "Registration
Default"), the interest rate borne by the Old Notes shall be increased by .25%
per annum following such Registration Default; provided that the aggregate
amount of any such increase in the interest rate on the Notes shall in no event
exceed .25% per annum; and provided, further, that if this Registration
Statement is not declared effective on or prior to November 23, 1998 and the
Company shall request holders of Old Notes to provide information for inclusion
in the Shelf Registration Statement, then Old Notes owned by holders who do not
deliver such information to the Company or who do not provide comments on the
Shelf Registration Statement when required pursuant to the Registration Rights
Agreement will not be entitled to any such increase in the interest rate for any
day after December 23, 1998. Following the cure of all Registration Defaults,
the accrual of such additional interest will cease and the interest rate will
revert to the original rate.
PROCEDURES FOR TENDERING OLD NOTES
The tender of a holder's Old Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit such Old Notes,
together with a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to the
Exchange Agent at the address set forth on the back cover page of this
Prospectus prior to 5:00 p.m., New York City time, on the Expiration Date. THE
METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS BY
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. 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 TIMELY DELIVERY.
Any financial institution that is a participant in DTC's book-entry
transfer system may make bookentry delivery of the Old Notes by causing DTC to
transfer such Old Notes into the Exchange Agent's account in accordance with
DTC's procedures for such transfer. In connection with a book-entry transfer,
DTC participants may, in lieu of physically completing and signing the Letter of
Transmittal and delivering it to the Depositary, electronically transmit their
acceptance through Automated Tender Offer Program ("ATOP"), and DTC will then
edit and verify the acceptance and send an Agent's Message to the Exchange
Agent. Delivery of tendered Notes must be made to the Depositary pursuant to the
book-entry delivery procedures set forth below or the tendering DTC participant
must comply with the guaranteed delivery procedures set forth below.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the book-entry
confirmation, which states that DTC has received an express acknowledgment from
each participant in DTC tendering the Old Notes and that such participants have
received the Exchange Offer and agree to be bound by the terms of the Exchange
Offer and the Company may enforce such agreement against such participants.
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Each signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Old Notes surrendered for
exchange pursuant hereto are tendered (i) by a registered holder of the Old
Notes who has not completed either the box entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions" in the Letter
of Transmittal or (ii) by an Eligible Institution (as defined below). In the
event that a signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, is required to be guaranteed, such guarantee must be by a firm
which is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or otherwise be an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (collectively, "Eligible Institutions"). If the Letter of
Transmittal is signed by a person other than the registered holder of the Old
Notes, the Old Notes surrendered for exchange must either (i) be endorsed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution, or (ii) be accompanied by a bond power, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are registered on the books
of the Registrar.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company, or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such period of time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Old Notes for exchange but shall not incur any
liability for failure to give such notification. Tenders of the Old Notes will
not be deemed to have been made until such irregularities have been cured or
waived.
If any Letter of Transmittal, endorsement, bond power, power of
attorney or any other document required by the Letter of Transmittal 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, unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
Any beneficial owner of the Old Notes whose Old Notes are registered in
the name of a nominee, such as a broker, dealer, commercial bank or trust
company and who wishes to tender Old Notes in the Exchange Offer should contact
such registered holder promptly and instruct such registered holder to tender on
such beneficial owner's behalf. If such beneficial owner wishes to tender
directly, such beneficial owner must, prior to completing and executing the
Letter of Transmittal and tendering Old Notes, make appropriate arrangements to
register ownership of the Old Notes in such beneficial owner's name. Beneficial
owners should be aware that the transfer of registered ownership may take
considerable time.
By tendering, each registered holder will represent to the Company
that, among other things (i) the Exchange Notes to be acquired in connection
with the Exchange Offer by the Holder and each beneficial owner of the Old Notes
are being acquired by the holder and each beneficial owner in the ordinary
course of business of the holder and each beneficial owner, (ii) the holder and
each beneficial owner are not participating, do not intend to participate, and
have no arrangement or understanding with any person to participate, in the
distribution (within the meaning of the Securities Act) of the Exchange Notes,
(iii) the holder and each beneficial owner acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely on the position of the
staff of the Commission set forth in no-action
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letters that are discussed herein under "-- Resales of the Exchange Notes," (iv)
that if the holder is a broker-dealer that acquired Old Notes as a result of
market-making or other trading activities, it will deliver a prospectus in
connection with any resale of Exchange Notes acquired in the Exchange Offer,
(v) the holder and each beneficial owner understand that a secondary, resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 of Regulation S-K of the Commission, and (vi) neither the
Holder nor any Beneficial Owner is an "affiliate," as defined under Rule 405 of
the Securities Act, of the Company except as otherwise disclosed to the Company
in writing. In connection with a book-entry transfer, each participant will
confirm that it makes the representations and warranties contained in the Letter
of Transmittal.
GUARANTEED DELIVERY PROCEDURES
Holders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in the Letter of
Transmittal. Pursuant to such procedures, if the Holder desires to tender Old
Notes other than by book-entry transfer, (i) such tender must be made through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Old Notes, the certificate number or numbers of any Old Notes which
will not be tendered by book-entry transfer, and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five business days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old Notes, in
proper form for transfer, and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, and all other documents required by this Letter, are
received by the Exchange Agent within five business days after the date of
execution of the Notice of Guaranteed Delivery. In the case of a book-entry
transfer, pursuant to the guaranteed delivery procedures set forth in the Letter
of Transmittal (i) the tender must be made through an Eligible Institution, (ii)
prior to the Expiration Date, the Exchange Agent must receive confirmation from
the Depositary of receipt by the Depositary of a Notice of Guaranteed Delivery
via ATOP, by which the tendering Holder will expressly acknowledge the receipt
of, and agree to be bound by, the Notice of Guaranteed Delivery including a
guarantee that book-entry confirmation will be received by the Exchange Agent
within five business days after the date of transmittal of the Notice of
Guaranteed Delivery, and (iii) book-entry confirmation must be received by the
Exchange Agent within five business days after the date of the transmittal of
the Notice of Guaranteed Delivery via ATOP. Any Holder 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 and Letter of
Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time,
on the Expiration Date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all the conditions to the Exchange
Offer, the Company will accept any and all Old Notes that are properly tendered
in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration
Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered
promptly after acceptance of the Old Notes. For purposes of the Exchange Offer,
the Company shall be deemed to have accepted validly tendered Old Notes, when,
as, and if the Company has given oral or written notice thereof to the Exchange
Agent.
In all cases, issuances of Exchange Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of such Old Notes, a properly completed and
duly executed Letter of Transmittal and all other required documents (or of
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC); provided, however, that the Company reserves the
absolute right to waive any defects or irregularities in the tender or
conditions of the Exchange Offer. If any tendered Old Notes are not accepted for
any reason, such unaccepted Old Notes will be returned without expense to the
tendering Holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
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WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn by delivery of a written
notice to the Exchange Agent at its address set forth on the back cover page of
this Prospectus, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. 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 the certificate number or
numbers and principal amount of such Old Notes, as applicable), (iii) be signed
by the holder 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 a bond power in the name of the
person withdrawing the tender, in satisfactory form as determined by the Company
in its sole discretion, duly executed by the registered holder, with the
signature thereon Guaranteed by an Eligible Institution together with the other
documents required upon transfer by the Indenture, and (iv) specify the name in
which such Old Notes are to be re-registered, if different from the depositor,
pursuant to such documents of transfer. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, in its sole discretion. The Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are withdrawn will be returned to the holder thereof without cost to such holder
as soon as practicable after withdrawal. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "-- Procedures for
Tendering Old Notes" at any time on or prior to the Expiration Date.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and,
except as described under "-- Shelf Registration," holders of Old Notes who do
not tender their Old Notes will not have any further registration rights under
the Registration Rights Agreement or otherwise. Accordingly, any holder of Old
Notes that does not exchange that holder's Old Notes for Exchange Notes will
continue to hold the untendered Old Notes and will be entitled to all the rights
and subject to the limitations applicable thereto under the Indenture, except to
the extent such rights or limitations, by their terms, terminate or cease to
have further effectiveness as a result of the Exchange Offer.
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company or any subsidiary thereof, (ii) pursuant
to an effective registration statement under the Securities Act, (iii) for so
long as the Old Notes are eligible for resale pursuant to Rule 144A under the
Securities Act, to a person it reasonably believes is "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act (a "QIB") that
purchases for its own account or for the account of a QIB to whom notice is
given that the transfer is being made in reliance on 144A, (iv) pursuant to
offers and sales to non-U.S. persons in an "offshore transaction" within the
meaning of Regulation S under the Securities Act, (v) to an institutional
"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 relating to the restrictions on
transfer of the Old Notes evidenced thereby (the form of which letter can be
obtained from the Trustee) or (vi) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of its property
or the property of such investor account or accounts be at all times within its
or their control and in compliance with any applicable state securities laws.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for the untendered Old Notes could be adversely
affected.
THE EXCHANGE AGENT; ASSISTANCE
The Bank of New York is the Exchange Agent. All tendered Old Notes,
executed Letters of Transmittal and other related documents should be directed
to the Exchange Agent. Requests for assistance and requests for additional
copies of the Prospectus, the Letter of Transmittal and other related documents
should be addressed to the Exchange Agent as follows:
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By Hand or Overnight Delivery: By Facsimile: By Registered or Certified Mail:
(for Eligible Institutions only)
The Bank of New York The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street
Corporate Trust Services Window New York, New York 10286
Ground Level To Confirm by telephone Attn: Reorganization Section
Attn: Reorganization Section or for Information Call:
(212) 815-6333
FEES AND EXPENSES
All fees and expenses incident to the performance of or compliance with
the Registration Rights Agreement by the Company will be borne by the Company,
including, without limitation: (i) all Commission, stock exchange or National
Association of Securities Dealers, Inc. (the "NASD") registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of one firm of legal counsel for
any underwriters or Holders in connection with blue sky qualification of any of
the Exchange Notes and any filings with the NASD), (iii) all expenses of any
persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto relating to the performance of and compliance with the
Registration Rights Agreement, (iv) all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, (vi) the fees and expenses of the Trustee, and any escrow agent or
custodian and (vii) any fees and expenses of any special experts retained by the
Company in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Old Notes by a holder.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, 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 is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Old Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss will be recognized by the Company for
accounting purposes. The expenses of the Exchange Offer will be amortized over
the term of the Exchange Notes.
RESALES OF THE EXCHANGE NOTES
Based on interpretation of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof
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without further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any purchaser of Notes who is an
"affiliate" of the Company or who intends to participate in the Exchange Offer
for the purpose of distributing the Exchange Notes, or any broker-dealer who
purchased the Notes from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (i) will not be able to rely
on the interpretation by the staff of the Commission set forth in the above
referenced no-action letters, (ii) will not be able to tender the Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements. The Company does not intend to seek its own
no-action letter, and there is no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Notes as it has
in such no action letter to third parties.
Each holder of the Old Notes who wishes to exchange the Old Notes for
the Exchange Notes in the Exchange Offer will be required to make certain
representations, including that (i) it is neither an affiliate of Company nor a
broker-dealer tendering Notes acquired directly from the Company for its own
account, (ii) any Exchange Notes to be received by it shall be acquired in the
ordinary course of its business, and (iii) at the time of commencement of the
Exchange Offer, it has no arrangement or understanding 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 Participating Broker-Dealer must deliver a prospectus meeting the
requirements of the Securities Act. The staff of the Commission has taken the
position 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 the Notes) with this prospectus.
Under the Registration Rights Agreement, the Company is required to allow
Participating Broker-Dealers to use this prospectus in connection with the
resale of Exchange Notes received in exchange for Notes acquired by such
Participating Broker-Dealers for their own account as a result of market-making
or other trading activities. See "Plan of Distribution."
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of
June 30, 1998. This table should be read in conjunction with the consolidated
financial statements of the Company, which are incorporated by reference into
this Prospectus. See "National-Oilwell, Inc. and Subsidiaries Selected
Consolidated Financial Data."
ACTUAL
-------
Cash and cash equivalents $ 27.0
=======
Long-term debt, including current portion
Senior Credit Facility......................... $ 65.3
Notes.......................................... 150.0
Total debt.............................. 215.3
Stockholders' equity............................. 320.1
-------
Total capitalization.................... $ 535.4
=======
The Exchange Offer would not have any effect on the Company's
capitalization.
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NATIONAL-OILWELL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
As a result of the differing year ends of National-Oilwell and Dreco
prior to the Dreco Combination, the balance sheet and results of operations for
dissimilar year ends have been combined pursuant to pooling-of-interests
accounting. National-Oilwell's results of operations for the year ended December
31, 1997 include Dreco's results of operations for the six months ended May 31,
1997 and the six months ended December 31, 1997. Data for the year ended
December 31, 1996 includes the operations of National-Oilwell for the twelve
months ended and as of December 31, 1996 combined pursuant to
pooling-of-interests accounting with the operations of Dreco for the twelve
months ended and as of November 30, 1996. Data for the three years ended August
31, 1995 reflect the operations of Dreco only, as the operations of
National-Oilwell were acquired from a predecessor as of January 1, 1996 and, in
accordance with generally accepted accounting principles, cannot be combined.
Data for the six months ended June 30, 1997 includes the operations of
National-Oilwell for the six months ended and as of June 30, 1997 combined
pursuant to pooling-of-interests accounting with the operations of Dreco for the
six months ended and as of May 31, 1997. The unaudited consolidated financial
statements of National-Oilwell include, in the opinion of National-Oilwell's
management, all adjustments, consisting of normal recurring accruals, necessary
to present fairly the results of such periods. The data set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated by reference herein from the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and
from the Company's Quarterly Report on Form 10-Q for the three months ended June
30, 1998.
Except for data as of June 30, 1998 and for the six months then ended, the
following data does not reflect the acquisition of Phoenix, which was completed
on June 2, 1998 and was accounted for under the purchase method of accounting.
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31, YEAR ENDED AUGUST 31,(1)
-------- ------------ ------------------------
1998 1997(2) 1997(2) 1996(3) 1995 1994 1993
---- ------ ------ ------ ---- ---- ----
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT RATIOS)
OPERATING DATA:
Revenues......................... $596,695 $440,760 $1,005,572 $761,816 $86,875 $ 79,663 $93,981
Operating income (loss) before
special items(4)............... 75,179 34,638 97,899 44,110 10,059 (9,253) 3,133
Operating income (loss)(4)....... 75,179 34,638 87,239 27,499 10,059 (9,253) 3,133
Income (loss) before taxes and
extraordinary loss(5).......... 71,643 32,260 82,482 16,718 12,196 (6,709) 6,061
Income (loss) before
extraordinary loss(5).......... 44,948 20,764 51,281 10,147 7,789 (6,682) 7,386
Net income (loss)................ 44,948 20,764 50,658 6,147 7,789 (6,682) 7,386
OTHER DATA:
Depreciation and amortization.... 8,780 6,509 14,744 8,775 4,558 4,926 4,481
Capital expenditures............. 9,368 12,216 32,605 15,166 6,435 5,932 6,167
EBITDA before special
items(6)....................... 83,959 41,147 112,643 52,885 14,617 (4,327) 7,614
Ratio of earnings to fixed
charges(7)..................... 22.7x 12.1x 14.8x 2.4x 96.3x -- (7) 11.9x
Ratio of EBITDA to interest
expense........................ 28.1x 16.2x 21.4x 4.8x 228.4x -- (6) 15.0x
BALANCE SHEET DATA:
Working capital.................. 315,427 229,501 252,137 168,897 32,992 18,292 27,725
Total assets............ 807,154 468,763 567,511 352,518 72,355 69,323 74,047
Long-term debt, less current
maturities..................... 214,002 69,268 61,565 39,136 1,987 1,440 2,857
Owners' equity................... 320,125 239,586 277,688 169,016 48,957 38,690 46,626
- - - ----------
(1) Data for the three years ended August 31, 1995 reflect the operations
of Dreco only, as the operations of National-Oilwell were acquired from
a predecessor as of January 1, 1996 and, in accordance with generally
accepted accounting principles, cannot be combined.
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(2) In order to conform Dreco's fiscal year end to match National-Oilwell's
year end, the results of operations for the month of June 1997 have
been included directly in stockholders' equity. Dreco's revenues and
net income were $13.4 million and $0.9 million for the month.
(3) In order to conform Dreco's August 31 fiscal year end to a period
within 93 days of National-Oilwell's December 31 year end, the results
of operations for the period from September 1, 1995 through November
30, 1995 have been included directly in stockholders' equity.
Dreco's revenues and net income were $33.4 million and $3.2 million for
such period.
(4) In September 1997, National-Oilwell recorded a $10,660,000 charge
related to merger expenses incurred in connection with the Dreco
Combination. In October 1996, National-Oilwell recorded $16,611,000 in
charges related to the cancellation of management agreements and
expenses related to special incentive plans that terminated upon the
occurrence of its initial public offering of Common Stock.
(5) National-Oilwell recorded extraordinary losses of $623,000 net of
income tax benefit of $376,000 in September 1997, and of $4,000,000 net
of income tax benefit of $2,400,000 in October 1996, due to the
write-off of deferred debt costs.
(6) EBITDA before special items means earnings before special items,
interest expense, income taxes, depreciation and amortization. EBITDA
is not intended to represent cash flows for the period and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. EBITDA is presented as supplemental disclosure and the
Company believes it is frequently used to analyze companies and as a
measure of a company's ability to service its debt.
(7) The ratio of earnings to fixed charges is calculated by dividing (i)
income (loss) before income taxes and extraordinary loss plus fixed
charges by (ii) fixed charges. Fixed charges consist of interest
incurred (expensed or capitalized), amortization of deferred financing
costs and the portion of rental expense which is deemed representative
of interest. If the special charges in 1997 and 1996 were also added to
earnings, the ratio of earnings to fixed charges would have been 16.6x
and 3.8x, respectively. Additional income before income taxes necessary
to attain a ratio of 1.0x for 1994 would have been $6.7 million.
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BUSINESS
GENERAL
National-Oilwell is a worldwide leader in the design, manufacture and
sale of machinery, equipment and downhole products used in oil and gas drilling
and production, as well as in the distribution to the oil and gas industry of
maintenance, repair and operating products. The Company manufactures and
assembles drilling machinery, including drawworks, mud pumps and power swivels
(also known as "top drives"), which are the major mechanical components of
drilling rigs, as well as masts, derricks, substructures and cranes. Many of
these components are designed specifically for applications in offshore,
extended reach and deep land drilling. The Company estimates that approximately
65% of the mobile offshore rig fleet and the majority of the world's larger land
rigs (2,000 horsepower and greater) manufactured in the last twenty years
utilize drawworks, mud pumps and other drilling machinery components
manufactured by National-Oilwell.
As a result of the Dreco Combination, National-Oilwell expanded its
machinery and equipment capabilities and also added a business segment that
designs and manufactures drilling motors and specialized drilling tools for rent
and for sale. Drilling motors are essential components of systems for
horizontal, directional, extended reach and performance drilling. Drilling tools
include drilling jars, shock tools and other specialized products.
The Company also provides distribution services through its network of
approximately 120 distribution service centers located near major drilling and
production activity worldwide, but principally in the United States and Canada.
These distribution service centers stock and sell a variety of expendable items
for oilfield applications and spare parts for National-Oilwell equipment. As oil
and gas companies and drilling contractors have refocused on their core
competencies and emphasized efficiency initiatives to reduce costs and capital
requirements, the Company's distribution services have expanded to offer
outsourcing and alliance arrangements that include comprehensive procurement,
inventory management and logistics support.
The relative revenues, before eliminations, and operating income
contribution of the three segments is summarized as follows (in thousands):
PRODUCTS AND DOWNHOLE DISTRIBUTION
TECHNOLOGY PRODUCTS SERVICES
---------- -------- --------
SIX MONTHS ENDED JUNE 30, 1998
Total revenues............................... $308,164 $35,523 $289,433
Operating income............................. 57,433 11,783 9,070
YEAR ENDED DECEMBER 31, 1997
Total revenues............................... $371,841 $69,012 $630,899
Operating income............................. 53,453 25,551 27,581
CURRENT INDUSTRY ENVIRONMENT
Drilling activity worldwide increased significantly from early 1996
through the end of 1997, with demand for oil and gas rising and inventories
comparatively low. In addition, increased use of 3-D seismic, directional
drilling and other technologies lowered the cost of finding and developing
hydrocarbons. As a result of these industry conditions, drilling contractors
experienced improved utilization and profitability, and the resulting cash flows
enabled these contractors to replace and upgrade the aging drilling rig fleet.
During 1998, the prices of oil and gas have declined, and, as a result of lower
oil and gas prices, contracts for drilling services are generally being renewed
currently at lower day rates than experienced in late 1997.
Over the last fifteen years, much of the demand for capital equipment
has been satisfied from the large surplus of equipment built during the late
seventies and early eighties. The Company believes that the surplus has been
reduced
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substantially over this period, especially for higher capacity equipment for
which National-Oilwell is a leading supplier. The Company's orders for new
equipment have increased dramatically as shown below, but such orders can be
affected by volatility in the price of oil and gas and other factors. See "Risk
Factors."
[Chart Showing Capital Equipment Backlog and Revenues
In the Nine Quarters Ending June 30, 1998 ($Millions)]
DATA POINTS FOR BACKLOG AND REVENUE GRAPH
($MILLIONS)
JUN-96 SEP-96 DEC-96 MAR-97 JUN-97 SEP-97 DEC-97 MAR-98 JUN-98
Backlog............. 33.8 39.2 38.2 86.0 140.8 238.6 271.2 273.0 260.0
Revenue............. 41.4 36.0 34.5 32.4 39.5 55.1 62.1 67.4 85.1
National-Oilwell believes that reasonably anticipated demand for the
Company's capital equipment in 1998 and 1999 can be met without significant
incremental capital expenditures by the Company's continuing focus on process
improvement and through the combined capabilities available after the Dreco
Combination. Depending on the timing and nature of future orders, future
expansion may be required.
BUSINESS STRATEGY
National-Oilwell's current business strategy is to enhance its market
positions and operating performance by:
Leveraging Its Installed Base of Higher Capacity Drilling Machinery and
Equipment. National-Oilwell believes its market position presents substantial
opportunities to capture a significant portion of expenditures for the
construction of new, higher capacity drilling rigs and equipment as well as the
upgrade and refurbishment of existing drilling rigs and equipment. The Company
believes the advanced age of the existing fleet of drilling rigs, coupled with
increasing drilling activity involving greater depths and extended reach, will
generate demand for new equipment, especially in the higher capacity end of the
market. National-Oilwell's larger drawworks, mud pumps and power swivels
provide, in many cases, the largest capacities currently available in the
industry.
Expanding Its Downhole Products Business. National-Oilwell believes
that the strengthened marketing and distribution capabilities resulting from the
Dreco Combination provide an opportunity for growth in the rental and sale of
high-performance drilling motors and downhole tools, especially for use in
directional, horizontal, extended reach and other value-added drilling
applications.
Building on Distribution Strengths and Alliance/Outsourcing Trends. As
a result of efficiency initiatives, oil and gas companies and drilling
contractors are frequently seeking alliances with suppliers, manufacturers and
service providers, or outsourcing their procurement, inventory management and
logistics requirements for equipment and supplies in order to achieve cost and
capital improvements. National-Oilwell believes that it is well-positioned to
provide these services as a result of its (i) large and geographically diverse
network of distribution service centers in major oil and gas producing areas in
the United States and Canada, (ii) purchasing leverage due to the volume of
products sold, (iii) breadth of available product lines and (iv) integrated
information and process systems that enhance procurement, inventory management
and logistics activities. In addition, the strategic integration of
National-Oilwell's distribution expertise, extensive distribution network and
growing base of customer alliances may provide an increased opportunity for
cost-effective marketing of National-Oilwell's manufactured parts and equipment.
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Continuing to Make Acquisitions that Enhance Its Product Line.
National-Oilwell believes that the oilfield service and equipment industry will
continue to experience consolidation as businesses seek to align themselves with
other market participants in order to gain access to broader markets and become
affiliated with integrated product offerings, and National-Oilwell plans to
participate in this trend. During 1997, the Company made three acquisitions,
including the Dreco Combination, which have enabled the Company to provide a
more complete rig package to its customers. To date in 1998 the Company has
completed the acquisitions of Speciality Tools Ltd., a company that designs and
engineers downhole tools for thru-tubing applications, Versatech International
Ltd., a company engaged in the manufacture of coiled tubing tools and equipment,
Phoenix and RJI.
OPERATIONS
Products and Technology
National-Oilwell designs, manufactures and sells the major mechanical
components for both land and offshore drilling rigs, as well as complete land
drilling and well servicing rigs. The major mechanical components include
drawworks, mud pumps, power swivels, SCR houses, traveling equipment and rotary
tables. These are the major components involved in the primary functions of
drilling oil and gas wells, which consist of pumping fluids and hoisting,
supporting and rotating the drill string. Many of these components are designed
specifically for applications in offshore, extended reach and deep land
drilling. This equipment is installed on new rigs and used in the upgrade,
refurbishment and repair of existing rigs.
While offering a complete line of conventional rigs, National-Oilwell
has extensive experience in providing rig designs to satisfy requirements for
harsh or specialized environments. Such products include North Slope of Alaska
and Arctic drilling and well servicing rigs, highly mobile drilling and well
servicing rigs for jungle and desert use, modular well servicing rigs for
offshore platforms and modular drilling facilities for North Sea platforms.
Masts, derricks and substructures are made for use on land rigs and on fixed and
mobile offshore platforms and are suitable for drilling to maximum depths up to
more than 30,000 feet. Other products include pedestal cranes, reciprocating and
centrifugal pumps and fluid end expendables for all major manufacturers' pumps.
National-Oilwell's business includes the sale of replacement parts for its own
manufactured machinery and equipment.
Downhole Products
National-Oilwell designs and manufactures drilling motors and
specialized drilling tools for rent and sale. Rentals generally involve products
that are not economical for a customer to own or maintain because of the broad
range of equipment required for the diverse hole size and depths encountered in
drilling for oil and gas. Sales generally involve products that require
infrequent service, are disposable or are sold in countries where
National-Oilwell does not provide repair and maintenance services.
National-Oilwell's drilling motors are devices placed between the drill
string and the drill bit to cause the bit to rotate without necessarily rotating
the drill string. Drilling motors are essential components in systems for
horizontal, directional, extended reach and performance drilling.
National-Oilwell often rents its drilling motors, retaining control over the
servicing and maintenance function so as to preserve their operating
reliability. National-Oilwell is continuing to enhance and broaden the range of
its drilling motors by, among other things, widening the size range offered,
reducing the initial cost and ongoing repair and maintenance cost, and
developing alternative designs of motor bearing assembly sealing systems and
speed reduction systems.
National-Oilwell manufactures hydraulic-mechanical and mechanical
drilling jars and shock tools. Drilling jars are used to assist in releasing a
drill string that becomes stuck in a well bore. A shock tool is a downhole shock
absorber that is placed low in the drill string and is intended to extend bit
life, reduce drill string failures and reduce damage to the drilling rig.
National-Oilwell also manufactures and rents or sells fishing jars, bumper subs,
reamers, stabilizers and kelly and tubing safety valves.
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Distribution Services
National-Oilwell provides distribution services through its network of
approximately 120 distribution service centers located near major drilling and
production activity worldwide, but principally in the United States and Canada.
These distribution service centers stock and sell a variety of expendable items
for oilfield applications and spare parts for National-Oilwell equipment. As oil
and gas companies and drilling contractors have refocused on their core
competencies and emphasized efficiency initiatives to reduce costs and capital
requirements, National-Oilwell's distribution services have expanded to offer
outsourcing and alliance arrangements that include comprehensive procurement,
inventory management and logistics support. In addition, management believes
that National-Oilwell has a competitive advantage in the distribution services
business by distributing market-leading products manufactured by its Products
and Technology business.
The supplies and equipment stocked by National-Oilwell's distribution
service centers vary by location. Each distribution point generally offers a
large line of oilfield products including valves, fittings, flanges, spare parts
for oilfield equipment and miscellaneous expendable items. Most drilling
contractors and oil and gas companies typically buy such supplies and equipment
pursuant to non-exclusive contracts, which normally specify a discount from
National-Oilwell's list price for each product or product category.
National-Oilwell's tubular business is focused on the procurement,
inventory management and delivery of oil country tubular goods manufactured by
third parties. Tubular goods primarily consist of well casing and production
tubing used in the drilling, completion and production of oil and gas wells.
Well casing is used to line the walls of a well bore to provide structural
support. Production tubing provides the conduit through which the oil or gas
will be brought to the surface upon completion of the well. Substantially all of
National-Oilwell's sales of tubular goods are made through National-Oilwell's
direct sales force and have historically been concentrated in North America.
Strategic alliances constitute a growing percentage of
National-Oilwell's business and differ from standard agreements for supplies and
equipment in that National-Oilwell becomes the customer's primary supplier of
those items. In certain cases, National-Oilwell has assumed responsibility for
procurement, inventory management and product delivery for the customer,
occasionally by working directly out of the customer's facilities.
MARKETING
Substantially all of National-Oilwell's drilling machinery, equipment
and spare parts sales, and a large portion of National-Oilwell's smaller pumps
and parts sales, are made through National-Oilwell's direct sales force and
through National-Oilwell's distribution service centers. Sales to foreign
state-owned oil companies are typically made in conjunction with agent or
representative arrangements. Distribution sales are made through the Company's
network of distribution service centers. National-Oilwell's downhole products
are rented in Canada and Venezuela and marketed worldwide through its own sales
force and through commission representatives. Customers for all of
National-Oilwell's products and services include drilling and other service
contractors, exploration and production companies, supply companies and
nationally owned or controlled drilling and production companies.
COMPETITION
The oilfield services and equipment industry is highly competitive, and
National-Oilwell's revenues and earnings can be affected by price changes,
introduction of new technologies and products and improved availability and
delivery. National-Oilwell competes in one or more of its segments with a large
number of companies. See "Risk Factors -- Highly Competitive Industry."
MANUFACTURING AND BACKLOG
National-Oilwell has numerous principal manufacturing facilities
located in the United States and Canada. National-Oilwell also outsources the
manufacture of parts or purchases components from qualified subcontractors. The
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Company's manufacturing operations require a variety of components, parts and
raw materials which National-Oilwell purchases from multiple commercial sources.
National-Oilwell has not experienced and does not expect any significant delays
in obtaining deliveries of essential components, parts or raw materials.
Sales of National-Oilwell's products are made on the basis of written
orders and oral commitments. The Company's backlog for equipment at June 30,
1998 was $260 million as compared to $141 million at June 30, 1997. The level of
backlog at any particular time is not necessarily indicative of the future
operating performance of the Company, and orders may be changed at any time. The
level of backlog can be affected by volatility in the price of oil and gas and
other factors. See "Risk Factors." A majority of the June 30, 1998 backlog is
expected to be shipped by the end of 1998. See "-- Current Industry
Environment."
DISTRIBUTION SUPPLIERS
National-Oilwell obtains products sold by its Distribution Services
business from a number of suppliers, including its own Products and Technology
segment. National-Oilwell does not believe that any one supplier of products is
material to National-Oilwell. For the year ended December 31, 1997,
National-Oilwell purchased approximately one third of its tubular requirements
pursuant to a distribution agreement with the U.S. Steel Group of USX
Corporation, and its remaining requirements from various suppliers. National-
Oilwell has not experienced and does not foresee experiencing a shortage in
products or tubular goods sold by the Company.
ENGINEERING
National-Oilwell maintains a staff of engineers and technicians to (i)
design and test new products, components and systems for use in drilling and
pumping applications, (ii) enhance the capabilities of existing products and
(iii) assist National-Oilwell's sales organization and customers with special
projects. National-Oilwell's product engineering efforts focus on developing
technology to improve the economics and safety of drilling and pumping
processes. National-Oilwell has recently developed a 1,000-ton capacity power
swivel to complement its lower capacity models, and has also introduced a 7,800
horsepower heave compensating drawworks and dual derrick systems to increase
customer efficiencies on deep water drilling rigs at extended depths and during
horizontal drilling.
PATENTS AND TRADEMARKS
National-Oilwell owns or has a license to use a number of patents
covering a variety of products. Although in the aggregate these patents are of
importance, National-Oilwell does not consider any single patent to be of a
critical or essential nature. In general, National-Oilwell depends on
technological capabilities, quality products and application of its expertise
rather than patented technology in the conduct of its business. The Company
enjoys significant product name-brand recognition, principally through its
NATIONAL-OILWELL(R), DRECO(R), ROSS HILL, TRUDRIL(R), VECTOR(R), GRIFFITH(R) and
MISSION-FLUID KING(R) trade names.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names, ages as of August 5, 1998 and position
with the Company of the directors and executive officers of National-Oilwell.
The Certificate of Incorporation of National-Oilwell currently classifies the
board of directors into three classes having staggered terms of three years
each. The periods shown for service as an employee of National-Oilwell include
service as an employee of its predecessor partnership and of Dreco.
DIRECTOR'S
TERM
NAME AGE POSITION WITH THE COMPANY EXPIRING
---- --- ------------------------- ----------
Joel V. Staff(1)...................... 54 Chairman of the Board, President and 1999
Chief Executive Officer
James J. Fasnacht..................... 43 Vice President and Group President, --
Distribution Services
W. Douglas Frame...................... 56 Vice President and Group President, Downhole --
Products
Jerry N. Gauche....................... 50 Vice President -- Organizational Effectiveness --
Steven W. Krablin..................... 48 Vice President and Chief Financial Officer --
Richard L. Lionberger................. 48 Vice President, General Counsel and Secretary --
Merrill A. Miller, Jr................. 48 Vice President and Group President, Products --
and Technology
Frederick W. Pheasey.................. 56 Executive Vice President and Director 2001
Howard I. Bull(2)(3).................. 58 Director 2001
James C. Comis III.................... 34 Director 2001
James T. Dresher(2)(3)................ 79 Director 2000
W. McComb Dunwoody(1)................. 53 Director 1999
William E. Macaulay(1)................ 52 Director 1999
Bruce M. Rothstein.................... 46 Director 2000
- - - ----------
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
Joel V. Staff has served as the President and Chief Executive Officer
of National-Oilwell since July 1993 and Chairman of the Board since January
1996. Prior to joining National-Oilwell, Mr. Staff served as a Senior Vice
President of Baker Hughes Incorporated, a worldwide diversified oil services
company, from October 1983 to May 1993. Mr. Staff also serves as a director of
Denali Incorporated, a provider of products and services for handling critical
fluids.
James J. Fasnacht has served as Vice President since November 1993, as
Group President, Distribution Services since April 1997, as General Manager of
Pumping Systems from November 1993 to April 1997, as Human Resources Manager
from 1991 to November 1993 and in various other capacities since joining
National-Oilwell in 1979.
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W. Douglas Frame has served as Vice President and Group President,
Downhole Products since September 1997. Prior thereto, Mr. Frame, who joined
Dreco in 1978, served in various capacities in both the drilling equipment and
downhole products groups.
Jerry N. Gauche has served as Vice President -- Organizational
Effectiveness since joining National-Oilwell in January 1994. Prior thereto, Mr.
Gauche was employed by BP Exploration, Inc., an oil and gas exploration and
production company, where he served as General Manager of Central Services from
January 1990 to September 1992 and Director of Public Affairs and Executive
Coordination from May 1988 to December 1989. From October 1992 to January 1994,
Mr. Gauche was self-employed managing his personal investments.
Steven W. Krablin has served as Vice President and Chief Financial
Officer since January 1996. Mr. Krablin served in various capacities including
Vice President -- Finance and Chief Financial Officer of Enterra Corporation, an
international oilfield service company, from November 1986 to January 1996.
Richard L. Lionberger has served as Vice President, General Counsel and
Secretary of the Company since June 1998. Prior thereto Mr. Lionberger was Vice
President, General Counsel and Secretary of Diamond Offshore Drilling, Inc., a
drilling contractor from February 1992 to June 1998.
Merrill A. Miller, Jr. has served as Vice President since July 1996, as
Group President, Products and Technology since April 1997, as General Manager of
Drilling Systems from July 1996 to April 1997 and as Vice President of
Marketing, Drilling Systems from February 1996 to July 1996. Prior thereto, Mr.
Miller was President of Anadarko Drilling Company, a drilling contractor, from
January 1995 to February 1996. From May 1980 to January 1995, Mr. Miller served
in various capacities including Vice President/U.S. Operations of Helmerich &
Payne International Drilling Co., a drilling contractor.
Frederick W. Pheasey has served as Executive Vice President and
director of National-Oilwell since September 1997. He was a co-founder of Dreco
and served in various executive capacities with Dreco and its predecessors from
1972 to September 1997, most recently as its Chairman.
Howard I. Bull has served as a Director of National-Oilwell since
January 1996. Mr. Bull was President, Chief Executive Officer and a director of
Dal-Tile International, Inc., a manufacturer and distributor of tile, from April
1994 until his retirement in June 1997. Prior thereto, Mr. Bull served at York
International Corporation, a worldwide manufacturer and distributor of air
conditioner and refrigeration equipment, as President of its Applied Systems
Division and Air Conditioning Business Group. Mr. Bull also serves as a director
of Marine Drilling Companies, Inc., an offshore drilling contractor. Mr. Bull
has an interest in one of the funds managed by Inverness/Phoenix LLC, a
principal stockholder of the Company.
James C. Comis III has served as a Director of National-Oilwell since
January 1996. He is a Managing Director of Inverness Management LLC. Through
Inverness Management LLC and its affiliates, Mr. Comis has been engaged in
sponsoring and investing in private equity transactions since 1990.
Additionally, Mr. Comis has served as Managing Director of Inverness/Phoenix LLC
since 1994. Inverness/Phoenix LLC is a principal stockholder of the Company.
James T. Dresher has served as a Director of National-Oilwell since
January 1996. Mr. Dresher was Chairman/Chief Executive Officer and principal
owner of Unidata, Inc., a Denver-based software company, from December 1991
until February 1998 and has been Chairman and owner of Glenangus, a residential
real estate development company, since 1972. Mr. Dresher serves as a director of
Ardent Software, Inc., a data management company. Mr. Dresher has an interest in
one of the funds managed by Inverness/Phoenix LLC, a principal stockholder of
the Company.
W. McComb Dunwoody has served as a Director of National-Oilwell and
Chairman of its Executive Committee since January 1996. He is a Managing
Director of Inverness Management LLC. Through Inverness Management LLC and its
affiliates, Mr. Dunwoody has been engaged in sponsoring and investing in private
equity transactions since 1981.
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Additionally, Mr. Dunwoody has served as President and Chief Executive Officer
of Inverness/Phoenix LLC since 1994 and has been Chief Executive Officer of The
Inverness Group Incorporated since 1981. Inverness/Phoenix LLC is a principal
stockholder of the Company.
William E. Macaulay has served as a Director of National-Oilwell since
January 1996. He has been the President and Chief Executive Officer of First
Reserve Corporation, a corporate manager of private investments focusing on the
energy and energy-related sectors, since 1983. First Reserve Corporation is a
principal stockholder of the Company. Mr. Macaulay serves as a director of EVI
Weatherford Inc., an oilfield service company, Maverick Tube Corporation, a
manufacturer of steel pipe and casing, TransMontaigne Oil Company, an oil
products distribution and refining company, Cal Dive International, Inc., a
provider of subsea services in the Gulf of Mexico, Domain Energy Corporation, an
oil and gas exploration company, and Entech Industries, Inc., a manufacturer of
high-end valves used principally in sub-sea gathering systems. Mr. Macaulay
formerly served as a director of Phoenix, which was acquired by the Company on
June 2, 1998.
Bruce M. Rothstein has served as a Director of National-Oilwell since
May 1996. Mr. Rothstein is a Managing Director of First Reserve Corporation,
which he joined in 1991. First Reserve Corporation is a principal stockholder of
the Company. Mr. Rothstein serves as a director of Anker Coal Group, Inc., a
producer and marketer of coal, and Entech Industries, Inc., a manufacturer of
high-end valves used principally in sub-sea gathering systems.
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DESCRIPTION OF EXCHANGE NOTES
The Old Notes were issued under the Indenture, in a transaction not
subject to the registration requirements of the Securities Act. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The
Notes are subject to all such terms, and Holders of the Notes are referred to
the Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Notes and the Indenture does not purport to
be complete and is subject, and is qualified in its entirety by reference, to
all of the provisions of the Notes and the Indenture, including the definitions
therein of certain terms used below. The Indenture provides for the issuance
thereunder of the Exchange Notes. If the Exchange Offer is completed but some
Old Notes are not exchanged for Exchange Notes, such Old Notes and the Exchange
Notes will constitute a single series for all purposes of the Indenture.
References in this summary to the Notes include the Old Notes and the Exchange
Notes unless the context otherwise requires. Copies of the forms of the
Indenture and the Registration Rights Agreement are available as set forth under
"Available Information."
GENERAL
The Notes are in the aggregate principal amount of $150,000,000 and
will mature on July 1, 2005. The Notes bear interest at the rate per annum of
6 7/8%, payable semiannually on January 1 and July 1 of each year, commencing
January 1, 1999, to the Person in whose name the Note (or any predecessor Note)
is registered at the close of business on the preceding December 15 or June 15,
as the case may be. The Notes are subject to redemption prior to maturity as
described under "-- Redemption."
The Notes are senior unsecured obligations of the Company and rank pari
passu in right of payment with all other unsecured and unsubordinated
indebtedness of the Company. The Indenture does not limit the Company's ability
to incur additional indebtedness.
The Company is a holding company, conducting essentially all of its
business through subsidiaries, and the Indenture does not restrict the
incurrence of debt by such subsidiaries. The Notes are effectively subordinated
to all obligations of such subsidiaries. Consequently, the rights of the Company
to receive assets of any subsidiary (and thus the ability of holders of Notes to
benefit indirectly from such assets) are subject to the prior claims of
creditors of that subsidiary.
REDEMPTION
The Notes are redeemable, at the option of the Company, at any time in
whole or from time to time in part, upon not less than 30 and not more than 60
days' notice as provided in the Indenture, on any date prior to maturity (the
"Redemption Date") at a price (the "Redemption Price") equal to 100% of the
principal amount thereof plus accrued interest 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) plus a Make-Whole Premium, if any. In no event will the Redemption Price
ever be less than 100% of the principal amount of the Notes plus accrued
interest to the Redemption Date.
The amount of the Make-Whole Premium with respect to any Note (or
portion thereof) to be redeemed will be equal to the excess, if any, of the sum
of the present values, calculated as of the Redemption Date, of: (i) each
interest payment that, but for such redemption, would have been payable on the
Note (or portion thereof) being redeemed on each Interest Payment Date occurring
after the Redemption Date (excluding any accrued interest for the period prior
to the Redemption Date); plus (ii) the principal amount that, but for such
redemption, would have been payable at the final maturity of the Note (or
portion thereof) being redeemed; over the principal amount of the Note (or
portion thereof) being redeemed.
The present values of interest and principal payments referred to above
will be determined in accordance with generally accepted principles of financial
analysis. Such present values will be calculated by discounting the amount
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of each payment of interest or principal from the date that each such payment
would have been payable, but for the redemption, to the Redemption Date at a
discount rate equal to the Treasury Yield (as defined below) plus 20 basis
points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company fails to make such appointment at least 45 days prior to the
Redemption Date, or if the institution so appointed is unwilling or unable to
make such calculation, such calculation will be made by Merrill Lynch & Co. or
if such firm is unwilling or unable to make such calculation, by an independent
investment banking institution of national standing appointed by the Trustee (in
any such case, an "Independent Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Notes, calculated to the nearest 1/12th
of a year (the "Remaining Term"). The Treasury Yield will be determined as of
the third business day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields as calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200% or above being rounded upward. If weekly average yields for United States
Treasury Notes are not available in the H.15 Statistical Release or otherwise,
then the Treasury Yield will be calculated by interpolation of comparable rates
selected by the Independent Investment Banker.
If less than all of the Notes are to be redeemed, the Trustee will
select the Notes to be redeemed by such method as the Trustee shall deem fair
and appropriate. The Trustee may select for redemption Notes and portions of
Notes in amounts equal to whole multiples of $1,000.
CERTAIN DEFINITIONS
The following definitions are applicable to the discussion of the
Indenture:
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on a consolidated balance sheet of the Company, less applicable
reserves and other properly deductible items and after deducting therefrom (a)
all current liabilities (other than liabilities that, by their terms, are
extendable or renewable at the option of the obligor to a date that is 12 months
or more after the date on which such current liabilities are determined) and (b)
all goodwill, trade names, trademarks, patents, copyrights, unamortized debt
discount and expense and other like intangibles, all in accordance with
generally accepted accounting principles consistently applied.
"Lien" means, with respect to any property or asset, any mortgage,
pledge, lien, encumbrance, charge or security interest of any kind in respect of
such property or asset, whether or not filed, recorded or otherwise perfected
under applicable law, but excluding agreements to refrain from granting Liens.
"Permitted Liens" means (a) certain purchase money Liens, (b) statutory
liens or landlords', carriers', warehouseman's, mechanics', suppliers',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate
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proceedings, (c) Liens existing on property at the time of acquisition by the
Company or a Restricted Subsidiary, (d) Liens on the property or on the
outstanding shares or indebtedness of any Person at the time it becomes a
Restricted Subsidiary, (e) Liens on property of a Person existing at the time
such Person is merged or consolidated with the Company or a Restricted
Subsidiary, (f) Liens in favor of governmental bodies to secure certain progress
or advance payments, (g) Liens existing on property owned by the Company or any
of its Subsidiaries on the date of the Indenture or provided for pursuant to
agreements existing on the date of the Indenture, (h) Liens created pursuant to
the creation of trusts or other arrangements funded solely with cash or
securities of the type customarily subject to such arrangements in customary
financial practice with respect to long-term or medium-term indebtedness for
borrowed money, the sole purpose of which is to make provision for the
retirement or defeasance, without prepayment of indebtedness or (i) any
extensions, renewals or replacements in whole or in part of a Lien enumerated in
clauses (a) through (h) above.
"Person" means (a) any form of business entity, association, grouping,
trust or other form now or hereafter permitted by the laws of any state of the
United States of America or any foreign government or utilized by businesses in
the conduct of their activities and (b) a natural person, as the context may
require.
"Principal Property" means any real property, manufacturing plant,
office building, warehouse or other physical facility, or any other like
depreciable asset of the Company or of any Restricted Subsidiary, whether owned
at the date of the Indenture or thereafter acquired that in the opinion of the
Board of Directors of the Company is of material importance to the total
business conducted by the Company and its Restricted Subsidiaries, as a whole;
provided, however, that any such property shall not be deemed a Principal
Property if such property does not have a fair value in excess of 5% of the
total assets included on a consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied.
"Restricted Subsidiary" means (a) any currently existing Subsidiary
whose principal assets and business are located in the United States or Canada
and (b) any Subsidiary that is designated by the Company to be a Restricted
Subsidiary.
"Sale and Leaseback Transaction" means the sale or transfer by the
Company or a Restricted Subsidiary of any Principal Property owned by it with
the intention of taking back a lease on such property.
"Secured Debt" means indebtedness for money borrowed by the Company or
a Restricted Subsidiary, and any other indebtedness of the Company or a
Restricted Subsidiary, on which interest is paid or payable (other than
indebtedness owed by a Restricted Subsidiary to the Company, by a Restricted
Subsidiary to another Restricted Subsidiary or by the Company to a Restricted
Subsidiary), that in any such case is secured by (a) any Lien on any Principal
Property of the Company or a Restricted Subsidiary or (b) a Lien on any shares
of stock or indebtedness of a Restricted Subsidiary that owns a Principal
Property. The amount of Secured Debt at any time outstanding shall be the amount
then owing thereon by the Company or a Restricted Subsidiary.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the Company, or the Company and one or more Subsidiaries, or any one or
more Subsidiaries, directly or indirectly own voting securities entitling any
one or more of the Company and its Subsidiaries to elect a majority of the
directors, either at all times, or so long as there is no default or contingency
which permits the holders of any other class or classes of securities to vote
for the election of one or more directors, (b) any partnership of which the
Company, or the Company and one or more of its Subsidiaries, or any one or more
Subsidiaries, is at the date of determination, a general or limited partner of
such partnership, but only if the Company and its Subsidiaries are entitled to
receive more than 50% of the assets of such partnership upon dissolution or more
than 50% of the profits of such partnership, or (c) any other Person (other than
a corporation or partnership) in which the Company, or the Company and one or
more Subsidiaries, or any one or more Subsidiaries, directly or indirectly, at
the date of determination thereof, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
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LIMITATION ON LIENS
The Indenture provides that the Company will not, nor will it permit
any Restricted Subsidiary to, create, incur, issue, assume or guarantee any
Secured Debt without making effective provision whereby the Notes and any other
indebtedness of or guaranteed by the Company or any such Restricted Subsidiary
then entitled thereto, subject to applicable priorities of payment, shall be
secured by such Lien equally and ratably with any and all other obligations and
indebtedness thereby secured, so long as any such other obligations and
indebtedness shall be so secured; provided, that if any such Lien securing such
Secured Debt ceases to exist, such equal and ratable security for the benefit of
the holders of Notes shall automatically cease to exist without any further
action; provided, further, that if such Secured Debt is expressly subordinated
to the Notes, the Lien securing such subordinated Secured Debt shall be
subordinate and junior to the Lien securing the Notes with the same relative
priority as such Secured Debt shall have with respect to the Notes. The
foregoing provisions do not apply to Secured Debt that is secured by Permitted
Liens.
Notwithstanding the foregoing restrictions, the Company and its
Restricted Subsidiaries may, without equally and ratably securing the Notes,
create, incur, issue, assume or guarantee Secured Debt not otherwise permitted
or excepted if the sum of (a) the amount of such Secured Debt plus (b) the
aggregate value of Sale and Leaseback Transactions (subject to certain
exceptions described below), does not exceed 10% of Consolidated Net Tangible
Assets (as shown in the quarterly consolidated balance sheet of the Company most
recently published prior to the date of such creation, incurrence, issuance,
assumption or guarantee).
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, nor will it permit
any Restricted Subsidiary to, engage in a Sale and Leaseback Transaction,
unless: (a) such Sale and Leaseback Transaction occurs within one year from the
date of completion of the acquisition of the Principal Property subject thereto
or the date of the completion of construction, development or substantial repair
or improvement, or commencement of full operations, on such Principal Property,
whichever is later, (b) the Sale and Leaseback Transaction involves a lease for
a period, including renewals, of not more than three years, (c) the Company or
such Restricted Subsidiary would be entitled to incur Secured Debt secured by a
Lien on the Principal Property subject thereto in a principal amount equal to or
exceeding the net sale proceeds from such Sale and Leaseback Transaction without
equally and ratably securing the Notes pursuant to the above covenant entitled
"Limitation on Liens," or (d) the Company or such Restricted Subsidiary, within
a one-year period after such Sale and Leaseback Transaction, applies or causes
to be applied an amount not less than the net sale proceeds from such Sale and
Leaseback Transaction to (i) the redemption of Notes or the prepayment,
repayment, reduction or retirement of any indebtedness of the Company or any of
its Subsidiaries that ranks pari passu with the Notes or (ii) the expenditure or
expenditures for Principal Property used or to be used in the ordinary course of
business of the Company or any Restricted Subsidiary.
Notwithstanding the foregoing, under the Indenture, the Company may,
and may permit each of its Restricted Subsidiaries to, effect any Sale and
Leaseback Transaction that is not excepted by clauses (a) through (d)
(inclusive) of the above paragraph, provided that, after giving effect thereto
and the application of proceeds, if any, received by the Company or any
Restricted Subsidiary as a result thereof, the net sale proceeds from such Sale
and Leaseback Transaction, together with the aggregate principal amount of all
Secured Debt then outstanding (other than the Notes) secured by Liens upon
Principal Property that are not Permitted Liens would not exceed 10% of the
Consolidated Net Tangible Assets (as shown in the quarterly consolidated balance
sheet of the Company most recently published prior to the date such Sale and
Leaseback Transaction is effected).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may (a) consolidate with or
merge into, or (b) sell, convey, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to, any Person, provided that
(i) in the case of any such consolidation or merger, the Company is the
continuing entity or, if the Company is not the continuing entity, the
continuing entity is a Person organized and validly existing under the laws of
the United States, any political
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subdivision thereof or any State thereof and assumes by supplemental indenture
all of the Company's obligations on the Notes and under the Indenture, and (ii)
after giving effect to the transaction no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
exist. Upon a disposition of assets described in clause (b) of the preceding
sentence, the Company will be released from any further liability under the
Notes and the Indenture.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the
Indenture with respect to the Notes: (a) failure to pay principal of or any
premium on the Notes when due; (b) failure to pay any interest on the Notes when
due, and the continuance of such default for 30 days; (c) failure to perform or
observe any other covenant of the Company in the Notes or Indenture, and the
continuance of such default for 60 days after written notice has been given by
the Trustee, or the Holders of at least 25% in principal amount of the Notes, as
provided in the Indenture; (d) indebtedness of the Company or any Subsidiary is
not paid when due within the applicable grace period, if any, or is accelerated
by the holders thereof and, in either case, the principal amount of such unpaid
or accelerated indebtedness exceeds $20 million; and (e) certain events in
bankruptcy, insolvency or reorganization of the Company.
If an Event of Default (other than an Event of Default described in
clause (e) above) shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes by notice to
the Company as provided in the Indenture may declare the principal amount of all
Notes to be due and payable immediately. If an Event of Default described in
clause (e) above shall occur, the principal amount of all the Notes will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the Notes, by written
notice to the Trustee, may rescind and annul such acceleration and its
consequences if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. For
information as to waiver of defaults, see "Modification and Waiver."
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 is under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes, unless
such Holders of the Notes shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the Notes has 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.
No Holder of any Note has any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (a) such Holder has previously given to
the Trustee written notice of a continuing Event of Default, (b) the Holders of
at least 25% in aggregate principal amount of the Notes have made written
request, and such Holder or Holders have offered reasonable indemnity, to the
Trustee to institute such proceeding in respect to such Event of Default as
trustee and (c) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount of the
Notes a direction inconsistent with such request, within 60 days after such
notice, request and offer. However, such limitations do not apply to any
proceeding which is instituted by a Holder of a Note for the enforcement of
payment of the principal of, any premium or interest on such Note on or after
the applicable due date specified in such Note.
The Company is required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Notes; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Note affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any such Note, (b) reduce the principal amount of,
or any interest on, any such Note, (c) reduce the amount of principal of any
such Note payable upon acceleration of the Stated Maturity thereof, (d) change
the place or currency of payment of principal of, or interest on, any such Note,
(e) impair the right to institute suit for the enforcement of any payment on or
with respect to any such Note, (f) reduce the percentage in principal amount of
such Note, the consent of whose Holders is required for modification or
amendment of the Indenture, (g) reduce the percentage in principal amount of
such Note necessary for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults, (h) modify such provisions with
respect to modification and waiver, (i) waive, reduce or modify a Make-Whole
Premium with respect to any Note called for redemption or (j) make changes to
the amendment and waiver provisions or to the provisions relating to waivers of
past defaults or institution of proceedings for payment of principal, any
premium or interest.
The Holders of a majority in principal amount of the Notes may waive
compliance by the Company with certain restrictive provisions of the Indenture
or waive any past default under the Indenture, except a continuing default in
the payment of principal of, any premium or interest on such Notes and covenants
and provisions of the Indenture that under the proviso in the preceding
paragraph cannot be amended without the consent of the Holder of each Note
affected thereby.
Except in certain limited circumstances, the Company is entitled to set
any day as a record date for the purpose of determining the Holders of Notes
entitled to give or take any direction, notice, consent, waiver or other action
under the Indenture, in the manner and subject to the limitations provided in
the Indenture. In certain limited circumstances, the Trustee also is entitled to
set a record date for action by Holders of Notes. If a record date is set for
any action to be taken by Holders of the Notes, such action may be taken only by
persons who are Holders of the Notes on the record date. To be effective, such
action must be taken by Holders of the requisite principal amount of the Notes
within a specified period following the record date. For any particular record
date, this period will be 180 days or such shorter period as may be specified by
the Company (or the Trustee, if it sets the record date), and may be shortened
or lengthened (but not beyond 180 days) from time to time.
SATISFACTION AND DISCHARGE; DEFEASANCE
Satisfaction and Discharge. The Indenture provides that the Company may
satisfy and discharge certain obligations to Holders of Notes which have not
already been delivered to the Trustee for cancellation and which have either
become due and payable or are by their terms due and payable within one year by
(a) depositing or causing to be deposited with the Trustee funds or U.S.
Government Obligations in an amount sufficient to pay the principal and any
premium and interest to the date of such deposit (in case of the Notes which
have become due and payable) or to the Stated Maturity, as the case may be, (b)
paying or causing to be paid all other sums payable under the Indenture with
respect to such Notes and (c) delivering to the Trustee an Officer's Certificate
relating to such satisfaction and discharge.
Defeasance and Discharge. The Indenture provides that the Company will
be discharged from all its indebtedness and obligations with respect to the
Notes (except for certain obligations to exchange or register the transfer of
the Notes, to replace stolen, lost or mutilated outstanding Notes, to maintain
paying agencies and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the Holders of the Notes of money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of, any premium and interest on the Notes at
Stated Maturity in accordance with the terms of the Indenture and the Notes.
Such defeasance or discharge may occur only if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the
Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax law, in
either case to the effect that Holders of the Notes will not recognize gain or
loss
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for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur.
Defeasance of Certain Covenants. The Indenture provides that the
Company may omit to comply with certain restrictive covenants, including the
covenants described under "Limitation on Liens," "Limitation on Sale and
Leaseback Transactions" and "Consolidation, Merger and Sale of Assets," in which
event certain Events of Default, which are described above in clause (c) (with
respect to such respective covenants) under "Events of Default," will no longer
constitute Events of Default. The Company, in order to exercise such option to
defease such covenants, will be required to deposit, in trust for the benefit of
the Holders of the Notes, money or U.S. Government Obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of, any premium and interest on the Notes at Maturity in accordance
with the terms of the Indenture and the Notes. The Company will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel to
the effect that Holders of the Notes will not recognize gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit
and defeasance were not to occur.
If subsequent to the completion of a defeasance of certain covenants as
described in the immediately preceding paragraph, the Notes are declared due and
payable because of the occurrence of any remaining Event of Default, the amount
of money and U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on the Notes at Maturity but may not be sufficient
to pay amounts due on the Notes upon any acceleration resulting from such Event
of Default. In such case, the Company would remain liable for such payments.
CONCERNING THE TRUSTEE
The Bank of New York, the Trustee under the Indenture, makes loans to
the Company in the normal course of business and is a lender under the Company's
Senior Credit Facility.
BOOK-ENTRY DELIVERY AND FORM
The Exchange Notes initially are expected to be represented by one or
more permanent global certificates in definitive, fully registered form
(previously defined as the "Global Exchange Notes"). The Global Exchange Notes
will be deposited with, or on behalf of DTC and registered in the name of DTC or
a nominee of DTC. EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL
NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS, OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
A Global Note is exchangeable for definitive Notes in registered
certificated form if (i) the Depositary (A) notifies the Company that it is
unwilling or unable to continue as depository for the Global Note and the
Company thereupon fails to appoint a successor depository or (B) has ceased to
be a clearing agency registered under the Securities Exchange Act of 1934, as
amended, or (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause issuance of the Notes in certificated form. In addition,
beneficial interests in a Global Note may be exchanged for certificated Notes
upon request but only upon at least 20 days prior written notice given to the
Trustee by or on behalf of the Depositary in accordance with customary
procedures. In all cases, certificated Notes delivered in exchange for any
Global Note or beneficial interests therein will be registered in names, and
issued in any approved denominations, requested by or on behalf of the
Depositary (in accordance with its customary procedures) and will bear the
appropriate restrictive legend described under "Notice to Investors" unless the
Company determines otherwise in compliance with applicable law.
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Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes, and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
In addition, transfer of beneficial interests in the Global Notes are
subject to the applicable rules and procedures of the Depositary and its direct
or indirect participants, which may change from time to time. The Notes may be
presented for registration of transfer and exchange at the offices of the
Trustee.
DEPOSITARY PROCEDURES
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to the Depositary's system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
(collectively, "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through
the Participants or Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of the Depositary are recorded on the records of the Participants and
Indirect Participants.
The Depositary has also advised the Company that pursuant to procedures
established by it, (i) upon deposit of the Global Notes, the Depositary will
credit the accounts of Participants designated by the Initial Purchasers with
portions of the principal amount of Global Notes and (ii) ownership of such
interests in the Global Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to Participants) or by Participants and the Indirect Participants
(with respect to other owners of beneficial interests in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through the Depositary, if they are Participants in such system, or indirectly
through organizations that are Participants in such system. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons may be limited to that extent.
Because the Depositary can act only on behalf of Participants, which in turn act
on behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to persons
or entities that do not participate in the Depositary system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interest. For certain other restrictions on the
transferability of the Notes, see "-- Exchange of Book-Entry Notes for
Certificated Notes."
Payments in respect of the principal, premium, if any, and interest on
a Global Note registered in the name of the Depositary or its nominee will be
payable by the Trustee to the Depositary or its nominee in its capacity as the
registered Holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the Notes,
including the Global Notes, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee nor any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
of the Depositary's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
of the Depositary's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the Global Notes or
(ii) any other matter relating to the actions and practices of the Depositary or
any of its Participants or Indirect Participants.
The Depositary has advised the Company that its current practices, upon
receipt of any payment in respect of securities such as the Notes (including
principal and interest), is to credit the accounts of the relevant Participants
with
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the payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Notes as shown on the records of the Depositary. Payments by
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of the Depositary, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by the Depositary or its
Participants in identifying the beneficial owners of the Notes, and the Company
and the Trustee may conclusively rely on and will be protected in relying on
instructions from the Depositary or its nominee as the registered owner of the
Notes for all purposes.
Interests in the Global Notes will trade in the Depositary's Same-Day
Funds Settlement System, and secondary market trading activity in such interests
will, therefore, settle in immediately available funds, subject in all cases to
the rules and procedures of the Depositary and its Participants.
Transfers between Participants in the Depositary will be effective in
accordance with the Depositary's procedures, and will be settled in same-day
funds.
The Depositary has advised the Company that it will take any action
permitted to be taken by a Holder of Notes only at the direction of one or more
Participants to whose account the Depositary interests in the Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of the Notes as to which such Participant or Participants has or have given
direction. However, if there is an Event of Default under the Notes, the
Depositary reserves the right to exchange Global Notes for Notes in certificated
form, and to distribute such Notes to its Participants.
Although the Depositary has agreed to the foregoing procedures to
facilitate transfers of interests in the Global Notes among Participants in the
Depositary, it is under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. None of the
Company, the Initial Purchasers or the Trustee will have any responsibility for
the performance by the Depositary or its Participants or Indirect Participants
of their respective obligations under the rules and procedures governing its
operations.
Same Day Settlement and Payment. The Indenture requires that payments
in respect of the Notes represented by the Global Note (including principal,
premium, if any, and interest) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
certificated Notes, the Company will make all payments of principal, premium, if
any, and interest by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The Company expects
that secondary trading in the certificated Notes will also be settled in
immediately available funds.
The information in this section concerning the Depositary and its
book-entry system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
TO HOLDERS OF EXCHANGE NOTES
This summary of certain U.S. federal income tax considerations
addresses tax considerations applicable to a holder of Exchange Notes that is a
citizen or resident of the United States or a U.S. domestic corporation or
partnership or that otherwise will be subject to U.S. federal income taxation on
a net income basis in respect of the Exchange Notes (a "U.S. Holder"). The
summary deals only with U.S. Holders that will hold Exchange Notes as capital
assets but does not address tax considerations applicable to (i) U.S. Holders
that may be subject to special tax rules, such as U.S. tax-exempt entities,
banks, insurance companies, or dealers in securities or currencies, (ii) U.S.
Holders that will hold Exchange Notes as a position in a "straddle" for tax
purposes, and (iii) U.S. Holders that have a "functional currency" other than
the U.S. Dollar. In addition, the discussion does not address special rules that
could in certain
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circumstances apply to a U.S. Holder that owns directly or by attribution 10
percent or more of the total combined voting power of all classes of stock
entitled to vote of the Company.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), as in effect on the date of this Offering Memorandum, as well as
regulations promulgated thereunder and existing administrative interpretations
and court decisions.
PERSONS WHO WOULD BE CONSIDERED TO BE U.S. HOLDERS AND THAT ARE
CONSIDERING THE ACQUISITION OF EXCHANGE NOTES ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO
THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE
LAWS OF ANY OTHER JURISDICTION.
EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES
The exchange of Old Notes for Exchange Notes pursuant to the Exchange
Offer will not be a taxable event, and holders of Old Notes will not recognize
any gain or loss for federal income tax purposes. Holders of Old Notes who
acquire Exchange Notes pursuant to the Exchange Offer will have the same tax
basis in the Exchange Notes as they had in the Old Notes.
INCOME ON NOTES
The Exchange Notes will be treated as newly originated debt instruments
for federal income tax purposes and will not be issued with original issue
discount. Interest earned on the Exchange Notes will be taxed as ordinary income
and holders of the Exchange Notes will account for the interest income under the
proper method of accounting employed by such holder.
SALE, EXCHANGE OR MATURATION OF EXCHANGE NOTES
Upon the sale, exchange, retirement or other disposition of an Exchange
Note, including the receipt of the face amount of an Exchange Note at maturity,
a U.S. Holder generally will recognize gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement and the U.S.
Holder's adjusted tax basis in such Exchange Note. The adjusted tax basis of an
Exchange Note for a U.S. Holder that purchased an Old Note generally will equal
the issue price of the Old Note.
Except as discussed under "Market Discount" below, gain or loss
recognized by a U.S. Holder on the sale, exchange, retirement or other
disposition of an Exchange Note generally will be long-term capital gain or loss
if the U.S. Holder has held the Note for more than eighteen months at the time
of disposition. The ability of U.S. Holders to offset capital losses against
ordinary income is limited.
BACKUP WITHHOLDING
A U.S. Holder of an Exchange Note may be subject to backup withholding
at the rate of 31% with respect to interest paid on an Exchange Note and gross
proceeds upon sale or retirement of an Exchange Note unless such holder (a) is a
corporation or other exempt recipient and, when required, demonstrates this fact
or (b) provides, when required, a correct taxpayer identification number,
certifies under the penalty of perjury that the holder is not subject to backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Furthermore, a holder of an Exchange Note that does not
provide the holder's correct taxpayer identification number may be subject to
penalties imposed by the Internal Revenue Service (the "IRS"). Backup
withholding will be made when cash payments are made with respect to the
Exchange Note. Backup withholding is not an additional tax; any amounts so
withheld will be allowed as a refund or credit against the holder's federal
income tax liability provided that the required information is furnished to the
IRS.
42
46
TREATMENT OF SUBSEQUENT PURCHASERS OF NOTES
Premium. A U.S. Holder of an Exchange Note that purchases the Exchange
Note at a cost greater than its remaining redemption amount will be considered
to have purchased the Exchange Note at a premium, and may elect to amortize such
premium (as an offset to interest income), using a constant yield method, over
the remaining term of the Exchange Note. Such election, once made, generally
applies to all Exchange Notes held or subsequently acquired by the U.S. Holder
on or after the first taxable year to which the election applies and may not be
revoked without the permission of the IRS. A U.S. Holder that elects to amortize
such premium must reduce its tax basis in an Exchange Note by the amount of the
premium amortized during its holding period. With respect to a U.S. Holder that
does not elect to amortize the bond premium, the amount of bond premium will be
included in the holder's tax basis when the Exchange Note matures or is disposed
of by the U.S. Holder.
Market Discount. If a subsequent U.S. Holder of an Exchange Note
purchases the Exchange Note at a price that is lower than its adjusted issue
price, by .025% or more of its adjusted issue price multiplied by the number of
remaining whole years to maturity, the Exchange Note will be considered to bear
"market discount" (in an amount equal to the difference between such purchase
price and such adjusted issue price) in the hands of such subsequent U.S.
Holder. In such case, gain realized by the subsequent U.S. Holder on the sale or
retirement of the Exchange Note will be treated as ordinary interest income to
the extent of the market discount that accrued on the Exchange Note while held
by such subsequent U.S. Holder. In addition, the subsequent U.S. Holder could be
required to defer the deduction of a portion of the interest paid on any
indebtedness incurred or continued to purchase or carry the Exchange Note. Also
if a subsequent U.S. Holder makes a gift of an Exchange Note, accrued market
discount, if any will be recognized as if such Holder had sold such Exchange
Note for a price equal to its fair market value. In general terms, market
discount on an Exchange Note will be treated as accruing ratably over the term
of such Exchange Note, or, at the election of the U.S. Holder, under a constant
yield method.
Alternatively, a U.S. Holder may elect to include market discount in
income currently as it accrues (on either a ratable or constant yield basis), in
which case the rule regarding deferral of interest deductions will not apply.
Such election, once made, applies to all market discount bonds acquired by the
taxpayer on or after the first day of the first taxable year to which such
election applies and may not be revoked without the consent of the IRS.
PLAN OF DISTRIBUTION
Based on interpretation of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any purchaser of Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing the Exchange
Notes, or any broker-dealer who purchased the Notes from the Company to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
(i) will not be able to rely on the interpretation by the staff of the
Commission set forth in the above referenced no-action letters, (ii) will not be
able to tender the Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Notes, unless such sale or transfer
is made pursuant to an exemption from such requirements. The Company does not
intend to seek its own no-action letter, and there is no assurance that the
staff of the Commission would make a similar determination with respect to the
Exchange Notes as it has in such no action letter to third parties.
Each holder of the Notes who wishes to exchange the Notes for the
Exchange Notes in the Exchange Offer will be required to make certain
representations, including that (i) it is neither an affiliate of Company nor a
broker-dealer tendering Notes acquired directly from the Company for its own
account, (ii) any Exchange Notes to be received by it shall be acquired in the
ordinary course of its business, and (iii) at the time of commencement of the
Exchange Offer, it has no arrangement or understanding 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 Participating
43
47
Broker-Dealer must deliver a prospectus meeting the requirements of the
Securities Act. The staff of the Commission has taken the position 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 the Notes) with the prospectus contained in the
Exchange Offer Registration Statement. Under the Registration Rights Agreement,
the Company is required to allow Participating Broker-Dealers to use the
prospectus contained in the Exchange Offer Registration Statement in connection
with the resale of Exchange Notes received in exchange for Notes acquired by
such Participating Broker-Dealers for their own account as a result of
market-making or other trading activities.
The Company will not receive any proceeds from any sales of Exchange
Notes by broker-dealers. Any resales of Exchange Notes by broker-dealers may be
made directly to a purchaser 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 such
resales of Exchange Notes and any commissions or concessions received by such
persons may be deemed to be underwriting compensation under the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Exchange Offer must agree that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus a broker-dealer will not be
deemed to admit that it is an underwriter within the meaning of the Securities
Act. The Company has agreed to pay all expenses incident to the Exchange Offer
other than commissions or concessions of any brokers or dealers and will
indemnify Holders (including broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
By its acceptance of the Exchange Offer, any broker-dealer that
receives Exchange Notes pursuant to the Exchange Offer hereby agrees to notify
the Company prior to using the Prospectus in connection with the sale or
transfer of Exchange Notes, and acknowledges and agrees that, upon receipt of
notice from the Company of the happening of any event which makes any statement
in the Prospectus untrue in any material respect or which requires the making of
any changes in the Prospectus in order to make the statements therein not
misleading or which may impose upon the Company disclosure obligations that may
have a material adverse effect on the Company (which notice the Company agrees
to deliver promptly to such broker-dealer), such broker-dealer will suspend use
of the Prospectus until the Company has notified such broker-dealer that
delivery of the Prospectus may resume and has furnished copies of any amendment
or supplement to the Prospectus to such broker-dealer.
LEGAL MATTERS
Certain legal matters with respect to the Exchange Notes offered hereby
will be passed upon for the Company by Morgan, Lewis & Bockius LLP,
Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements of National-Oilwell at December
31, 1997 and for each of the two years then ended, appearing in
National-Oilwell's Annual Report on Form 10-K for the year ended December 31,
1997 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon, included therein, and incorporated by reference
elsewhere herein, which, for the year ended December 31, 1996, is based in part
on the report of Coopers & Lybrand, independent auditors. The financial
statements referred to above are included in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
The consolidated financial statements of National-Oilwell at August 31,
1995 and for the year then ended, appearing in National-Oilwell's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by Coopers &
Lybrand, independent auditors, as set forth in their report thereon and
incorporated by reference elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
44
48
================================================================================
All tendered Old Notes, executed Letters of Transmittal and other related
documents should be directed to the Exchange Agent. Requests for assistance and
requests for additional copies of the Prospectus, the Letter of Transmittal and
other related documents should be addressed to the Exchange Agent as follows:
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
Attn: Reorganization Section
By Facsimile:
(for Eligible Institutions only)
(212) 571-3080
To confirm by telephone or for
information call:
(212) 815-6333
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Reorganization Section,
(Originals of all documents submitted by facsimile should be sent promptly
by hand, overnight courier, or registered or certified mail)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED 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. NEITHER THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL NOR BOTH TOGETHER
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE LETTER OF TRANSMITTAL
OR BOTH TOGETHER NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
================================================================================
================================================================================
OFFER TO EXCHANGE
ALL OUTSTANDING
6 7/8% SENIOR NOTES DUE 2005, SERIES B
($150,000,000 PRINCIPAL AMOUNT)
FOR 6 7/8% SENIOR NOTES DUE 2005
OF
NATIONAL-OILWELL, INC.
----------------
PROSPECTUS
----------------
, 1998
================================================================================
45
49
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
authorizes, inter alia, a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that such person is or was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A Delaware corporation may
indemnify past or present officers and directors of such corporation or of
another corporation or other enterprise at the former corporation's request, in
an action by or in the right of the corporation to procure a judgment in its
favor under the same conditions, except that no indemnification is permitted
without judicial approval if such person is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify him against the
expenses (including attorney's fees) which he actually and reasonably incurred
in connection therewith. Section 145 further provides that any indemnification
shall be made by the corporation only as authorized in each specific case upon a
determination by the (i) stockholders, (ii) board of directors by a majority
vote or a quorum consisting of directors who were not parties to such action,
suit or proceeding or (iii) independent counsel if a quorum of disinterested
directors so directs. Section 145 provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 145 of the DGCL also empowers National-Oilwell to purchase and
maintain insurance on behalf of any person who is or was an officer or director
of National-Oilwell against liability asserted against or incurred by him in any
such capacity, whether or not National-Oilwell would have the power to indemnify
such officer or director against such liability under the provisions of Section
145. National-Oilwell maintains a directors' and officers' liability policy for
such purposes.
Article Sixth, Part II, Section 1 of National-Oilwell's Amended and
Restated Certificate of Incorporation and Article VI of National-Oilwell's
Bylaws each provide that directors, officers, employees and agents shall be
indemnified to the fullest extent permitted by Section 145 of the DGCL.
II - 1
50
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- - - ------- -----------
4.1 -- Indenture dated as of June 26, 1998 between the Company and The Bank of New York,
as trustee, including the form of Exchange Note
4.2 -- Registration Rights Agreement dated as of June 26, 1998 among the Company and
Merrill Lynch & Co., Chase Securities Inc. and Morgan Stanley & Co. Incorporated
5 -- Opinion of Morgan, Lewis & Bockius LLP regarding validity of Exchange Notes
12 -- Statement regarding computation of earnings to fixed charges ratio
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Coopers & Lybrand
23.3 -- Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24.1 -- Powers of Attorney (included on signature pages hereof)
25 -- Statement of Eligibility of Trustee
All schedules are omitted because they are not applicable or the
required information has been provided in the consolidated financial statements
or the notes thereto.
(c) Not applicable.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question
II - 2
51
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
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) or 11 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.
II - 3
52
SIGNATURES
Pursuant to the requirements on the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Houston,
state of Texas on August 21, 1998.
NATIONAL-OILWELL, INC.
By: /s/ Steven W. Krablin
---------------------------------
Steven W. Krablin
Vice President and Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven W. Krablin and Richard L.
Lionberger, or either of them, his true and lawful attorney-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all registration
statements filed by National-Oilwell, Inc., a Delaware corporation, in which the
undersigned holds offices, and any amendments to the registration statement, and
to file any and all of the same, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or their substitute or 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 has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ Joel V. Staff Chairman of the Board of Directors August 21, 1998
- - - ----------------------------------- (Principal Executive Officer)
Joel V. Staff
/s/ Steven W. Krablin Vice President and Chief Financial Officer August 21, 1998
- - - ----------------------------------- (Principal Financial Officer and Principal
Steven W. Krablin Accounting Officer)
/s/ Howard I. Bull Director August 21, 1998
- - - -----------------------------------
Howard I. Bull
/s/ James C. Comis III Director August 21, 1998
- - - -----------------------------------
James C. Comis III
II - 4
53
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ James T. Dresher Director August 21, 1998
- - - -----------------------------------
James T. Dresher
/s/ W. McComb Dunwoody Director August 21, 1998
- - - -----------------------------------
W. McComb Dunwoody
/s/ William E. Macaulay Director August 21, 1998
- - - -----------------------------------
William E. Macaulay
/s/ Frederick W. Pheasey Director August 21, 1998
- - - -----------------------------------
Frederick W. Pheasey
/s/ Bruce M. Rothstein Director August 21, 1998
- - - -----------------------------------
Bruce M. Rothstein
II - 5
54
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - - ------- -----------
4.1 -- Indenture dated as of June 26, 1998 between the Company and The Bank of New York,
as trustee, including the form of Exchange Note
4.2 -- Registration Rights Agreement dated as of June 26, 1998 among the Company and
Merrill Lynch & Co., Chase Securities Inc. and Morgan Stanley & Co. Incorporated
5 -- Opinion of Morgan, Lewis & Bockius LLP regarding validity of Exchange Notes
12 -- Statement regarding computation of earnings to fixed charges ratio
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Coopers & Lybrand
23.3 -- Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24.1 -- Powers of Attorney (included on signature pages hereof)
25 -- Statement of Eligibility of Trustee
1
EXHIBIT 4.1
================================================================================
NATIONAL - OILWELL, INC.
Issuer
6 7/8% SENIOR NOTES DUE 2005
INDENTURE
Dated as of June 26, 1998
THE BANK OF NEW YORK
Trustee
================================================================================
2
CROSS-REFERENCE TABLE(1)
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 7.10
(c)................................................................ N.A.
311 (a)................................................................ 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312 (a)................................................................ 2.5
(b)................................................................ 10.3
(c)................................................................ 10.3
313 (a)................................................................ 7 .6
(b)(2)............................................................. 7.6, 7.7
(c)................................................................ 7.6, 10.2
(d)................................................................ 7.6
314 (a)................................................................ 4.5
(a)(4)............................................................. 10.5
(c)(1)............................................................. N.A.
(c)(2)............................................................. N.A.
(c)(3)............................................................. N.A.
(e)................................................................ 10.5
(f)................................................................ N.A.
315 (a)................................................................ 3.5
(b)................................................................ N.A.
(c)................................................................ 7.1, 7.2
(d)................................................................ N.A.
(e)................................................................ 6.11
316 (a)(last sentence)................................................. N.A.
(a)(1)(A).......................................................... N.A.
(a)(1)(B).......................................................... N.A.
(a)(2)............................................................. N.A.
(b)................................................................ N.A.
(c)................................................................ N.A.
317 (a)(1)............................................................. 6.4
(a)(2)............................................................. N.A.
(b)................................................................ N.A.
318 (a)................................................................ N.A.
(b)................................................................ N.A.
(c)................................................................ 10.1
N.A. means not applicable.
- - - --------
(1) This Cross-Reference Table is not part of this Indenture.
2
3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions............................................................ 1
SECTION 1.2 Other Definitions...................................................... 10
SECTION 1.3 Incorporation by Reference of Trust Indenture Act...................... 10
SECTION 1.4 Rules of Construction.................................................. 10
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating........................................................ 11
SECTION 2.2 Execution and Authentication........................................... 12
SECTION 2.3 Registrar and Paying Agent............................................. 13
SECTION 2.4 Paying Agent to Hold Money in Trust.................................... 13
SECTION 2.5 Holder Lists........................................................... 14
SECTION 2.6 Transfer and Exchange.................................................. 14
SECTION 2.7 Replacement Notes...................................................... 29
SECTION 2.8 Outstanding Notes...................................................... 29
SECTION 2.9 Treasury Notes......................................................... 29
SECTION 2.10 Temporary Notes........................................................ 30
SECTION 2.11 Cancellation........................................................... 30
SECTION 2.12 Defaulted Interest..................................................... 30
SECTION 2.13 CUSIP Numbers.......................................................... 30
ARTICLE III
REDEMPTION
SECTION 3.1 Redemption at the Option of the Company................................ 31
SECTION 3.2 Notice to the Trustee.................................................. 31
SECTION 3.3 Selection of Notes To Be Redeemed...................................... 31
SECTION 3.4 Notice of Redemption................................................... 32
SECTION 3.5 Effect of Notice of Redemption......................................... 33
SECTION 3.6 Deposit of Redemption Price............................................ 33
SECTION 3.7 Notes Redeemed or Purchased in Part.................................... 33
SECTION 3.8 Purchase of Notes...................................................... 33
i
4
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes....................................................... 34
SECTION 4.2 Maintenance of Office or Agency........................................ 34
SECTION 4.3 Statement by Officers as to Default.................................... 35
SECTION 4.4 Corporate Existence.................................................... 35
SECTION 4.5 SEC Reports; Financial Statements...................................... 35
SECTION 4.6 Limitation on Liens.................................................... 36
SECTION 4.7 Limitation on Sale and Leaseback Transactions.......................... 36
ARTICLE V
SUCCESSORS
SECTION 5.1 Consolidation, Merger, or Sale of Assets............................... 37
SECTION 5.2 Successor Corporation Substituted...................................... 37
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default...................................................... 38
SECTION 6.2 Acceleration........................................................... 39
SECTION 6.3 Other Remedies......................................................... 39
SECTION 6.4 Waiver of Past Defaults................................................ 40
SECTION 6.5 Control by Majority.................................................... 40
SECTION 6.6 Limitation on Suits.................................................... 40
SECTION 6.7 Rights of Holders of Notes to Receive Payment and Institute
Proceedings............................................................ 41
SECTION 6.8 Collection Suit by Trustee............................................. 41
SECTION 6.9 Trustee May File Proofs of Claim....................................... 41
SECTION 6.10 Priorities............................................................. 42
SECTION 6.11 Undertaking for Costs.................................................. 42
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee...................................................... 43
SECTION 7.2 Rights of Trustee...................................................... 44
SECTION 7.3 Individual Rights of Trustee........................................... 45
ii
5
SECTION 7.4 Trustee's Disclaimer................................................... 45
SECTION 7.5 Notice of Defaults..................................................... 45
SECTION 7.6 Reports by Trustee to Holders of the Notes............................. 46
SECTION 7.7 Compensation and Indemnity............................................. 46
SECTION 7.8 Replacement of Trustee................................................. 47
SECTION 7.9 Successor Trustee by Merger, Etc....................................... 48
SECTION 7.10 Eligibility; Disqualification.......................................... 48
SECTION 7.11 Preferential Collection of Claims Against Company...................... 48
ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.1 Satisfaction and Discharge of Indenture................................ 49
SECTION 8.2 Application of Trust Money............................................. 50
SECTION 8.3 Option to Effect Legal Defeasance or Covenant Defeasance............... 50
SECTION 8.4 Defeasance and Discharge............................................... 50
SECTION 8.5 Covenant Defeasance.................................................... 51
SECTION 8.6 Conditions to Defeasance or Covenant Defeasance........................ 51
SECTION 8.7 Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.................................. 53
SECTION 8.8 Repayment to Company................................................... 53
SECTION 8.9 Reinstatement.......................................................... 54
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 Without Consent of Holders of Notes.................................... 54
SECTION 9.2 With Consent of Holders of Notes....................................... 55
SECTION 9.3 Compliance with Trust Indenture Act.................................... 56
SECTION 9.4 Revocation and Effect of Consents...................................... 56
SECTION 9.5 Notation on or Exchange of Notes....................................... 57
SECTION 9.6 Trustee to Sign Amendments, Etc........................................ 57
SECTION 9.7 Record Dates........................................................... 57
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Trust Indenture Act Controls........................................... 57
SECTION 10.2 Notices................................................................ 58
iii
6
SECTION 10.3 Communication by Holders of Notes with Other Holders of
Notes.................................................................. 59
SECTION 10.4 Certificate and Opinion as to Conditions Precedent..................... 59
SECTION 10.5 Statements Required in Certificate or Opinion.......................... 59
SECTION 10.6 Rules by Trustee and Agents............................................ 60
SECTION 10.7 No Personal Liability of Directors, Officers, Employees and
Stockholders........................................................... 60
SECTION 10.8 Governing Law.......................................................... 60
SECTION 10.9 No Adverse Interpretation of Other Agreements.......................... 60
SECTION 10.10 Successors............................................................. 60
SECTION 10.11 Severability........................................................... 60
SECTION 10.12 Counterpart Originals.................................................. 61
SECTION 10.13 Table of Contents, Headings, Etc....................................... 61
EXHIBIT A-1 (Face of Note)......................................................... A1-1
EXHIBIT A-2 (Face of Regulation S Temporary Global Note)........................... A2-1
EXHIBIT B Form of Certificate of Transfer........................................ B-1
EXHIBIT C Form of Certificate of Exchange........................................ C-1
EXHIBIT D Form of Certificate of Acquiring Institutional Accredited Investor .... D-1
EXHIBIT E Registration Rights Agreement.......................................... E-1
iv
7
INDENTURE dated as of June 26, 1998 between National-Oilwell, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 67/8% Senior
Notes due 2005 (the "Initial Notes") and the 67/8% Senior Notes due 2005, Series
B issued in the Exchange Offer (the "Exchange Notes" and, together with the
Initial Notes, the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and CEDEL that apply to such transfer or exchange.
"Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means any day other than a Legal Holiday.
"CEDEL" means Cedel Bank, societe anonyme.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on a consolidated balance sheet of the Company, less applicable
reserves and other properly deductible
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items and after deducting therefrom (a) all current liabilities (other than
liabilities that, by their terms, are extendible or renewable at the option of
the obligor to a date 12 months or more after the date on which such current
liabilities are determined) and (b) all goodwill, trade names, trademarks,
patents, copyrights, unamortized debt discount and expense and other like
intangibles, all in accordance with generally accepted accounting principles
consistently applied.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequester or similar official under the Bankruptcy Code.
"Default" means any event that is or with the passage of time or the
giving of notice (or both) would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.6 hereof, in the form
of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Global Notes issued, the Person
specified in Section 2.3 hereof as the Depositary with respect to the Notes, and
any and all successors thereto appointed as depositary hereunder and having
become such pursuant to the applicable provision of this Indenture.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means notes registered under the Securities Act that
are issued under Section 2.6 hereof in exchange for the Notes pursuant to the
Exchange Offer.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Global Note Legend" means the legend set forth in Section 2.6(g)(ii)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.
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"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.1, 2.6(b)(iv), 2.6(d)(iv)
or 2.6(f) hereof.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantees
or obligations the full faith and credit of the United States is pledged.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof or pledging assets to secure), of
all or any part of any indebtedness.
"Holder" means a Person in whose name a Note is registered.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor," as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Initial Notes" means the $150,000,000 in aggregate principal amount of
the Notes initially authenticated and delivered under the Indenture on the Issue
Date.
"Interest Payment Date" shall have the meaning assigned to it in the
Notes as contemplated by Section 2.1 hereof.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under the Indenture.
"Legal Holiday" a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any property or asset, any mortgage,
pledge, lien, encumbrance, charge or security interest of any kind in respect of
such property or asset, whether
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or not filed, recorded or otherwise perfected under applicable law, but
excluding agreements to refrain from granting Liens.
"Make-Whole Premium" means an amount, with respect to any Note (or
portion thereof) to be redeemed pursuant to Article III hereof, equal to the
excess, if any, of (a) the sum of the present values, calculated as of the
Redemption Date, of (i) each interest payment that, but for such redemption,
would have been payable on the Note (or portion thereof) being redeemed on each
Interest Payment Date occurring after the Redemption Date (excluding any accrued
interest for the period prior to the Redemption Date) and (ii) the principal
amount that, but for such redemption, would have been payable at the final
maturity of the Note (or portion thereof) being redeemed; over (b) the principal
amount of the Note (or portion thereof) being redeemed. The present values of
interest and principal payments referred to in clauses (i) and (ii) above will
be determined in accordance with generally accepted principles of financial
analysis. Such present values will be calculated by discounting the amount of
each payment of interest or principal from the date that each such payment would
have been payable, but for the redemption, to the Redemption Date at a discount
rate equal to the Treasury Yield (as defined below) plus 20 basis points. The
Make-Whole Premium will be calculated by an independent investment banking
institution of national standing appointed by the Company; provided, that if the
Company fails to make such appointment at least 45 days prior to the Redemption
Date, or if the institution so appointed is unwilling or unable to make such
calculation, such calculation will be made by Merrill Lynch & Co. or if such
firm is unwilling or unable to make such calculation, by an independent
investment banking institution of national standing appointed by the Trustee (in
any such case, an "Independent Investment Banker"). For purposes of determining
the Make-Whole Premium, "Treasury Yield" means a rate of interest per annum
equal to the weekly average yield to maturity of United States Treasury Notes
that have a constant maturity that corresponds to the remaining term to maturity
of the Notes, calculated to the nearest 1/12th of a year (the "Remaining Term").
The Treasury Yield will be determined as of the third business day immediately
preceding the applicable Redemption Date. The weekly average yields of United
States Treasury Notes will be determined by reference to the most recent
statistical release published by the Federal Reserve Bank of New York and
designated "H.15(519) Selected Interest Rates" or any successor release (the
"H.15 Statistical Release"). If the H.15 Statistical Release sets forth a weekly
average yield for United States Treasury Notes having a constant maturity that
is the same as the Remaining Term, then the Treasury Yield will be equal to such
weekly average yield. In all other cases, the Treasury Yield will be calculated
by interpolation, on a straight-line basis, between the weekly average yields on
the United States Treasury Notes that have a constant maturity closest to and
greater than the Remaining Term and the United States Treasury Notes that have a
constant maturity closest to and less than the Remaining Term (in each case as
set forth in the H.15 Statistical Release). Any weekly average yields as
calculated by interpolation will be rounded to the nearest 1/100th of 1%, with
any figure of 1/200% or above being rounded upward. If weekly average yields for
United States Treasury Notes are not available in the H.15 Statistical Release
or otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
"Non-U.S. Person" means a person who is not a U.S. Person.
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"Note Custodian" means the Trustee, as custodian with respect to the
Global Notes, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, any Assistant Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, that meets the requirements of Section 10.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.5 hereof. The counsel may be an employee of or counsel to the Company or any
Subsidiary of the Company.
"Participant" means, with respect to DTC, Euroclear or CEDEL, a Person
who has an account with DTC, Euroclear or CEDEL, respectively (and, with respect
to DTC, shall include Euroclear and CEDEL).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Liens" means:
(a) any Lien on any property hereafter acquired (including
acquisition through merger or consolidation) or constructed by the Company or a
Restricted Subsidiary and created contemporaneously with, or within twelve
months after, such acquisition or the completion of construction to secure or
provide for the payment of all or any part of the purchase price of such
property or the cost of construction thereof, as the case may be; or
(b) statutory liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other similar Liens
arising in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings; or
(c) Liens existing on property at the time of acquisition by
the Company or a Restricted Subsidiary; or
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(d) Liens existing on the property or on the outstanding
shares or indebtedness of any Person at the time it becomes a Restricted
Subsidiary; or
(e) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or a Restricted
Subsidiary; or
(f) Liens on property of the Company or a Restricted
Subsidiary in favor of the United States of America or any State thereof or any
foreign government, or any department, agency or instrumentality or political
subdivision of any thereof, to secure partial, progress, advance or other
payments pursuant to any contract or statute; or
(g) Liens existing on property owned by the Company or any of
its Subsidiaries on the date of this Indenture or provided for pursuant to
agreements existing on the date of the Indenture; or
(h) Liens created pursuant to the creation of trusts or other
arrangements funded solely with cash, cash equivalents or other marketable
investments or securities of the type customarily subject to such arrangements
in customary financial practice with respect to long-term or medium-term
indebtedness for money borrowed, the sole purpose of which is to make provisions
for the retirement or defeasance, without prepayment of indebtedness; or
(i) any extensions, renewals or replacements (or successive
extensions, renewals or replacements) in whole or in part of a Lien referred to
in the foregoing clauses (a) through (h) above; provided, however, that the
principal amount of Secured Debt secured thereby shall not exceed the principal
amount outstanding at the time of such extension, renewal or replacement, and
that such extension, renewal or replacement shall be limited to the property
which secured the Lien so extended, renewed or replaced and additions to such
property.
"Person" means (a) any form of business entity, association, grouping,
trust or other form now or hereafter permitted by the laws of any state of the
United States of America or any foreign government or utilized by businesses in
the conduct of their activities and (b) a natural person, as the context may
require.
"Principal Property" means any real property, manufacturing plant,
office building, warehouse or other physical facility, or any other like
depreciable asset of the Company or of any Restricted Subsidiary, whether owned
at the date of this Indenture or thereafter acquired that in the opinion of the
Board of Directors of the Company is of material importance to the total
business conducted by the Company and its Restricted Subsidiaries, as a whole;
provided, however, that any such property shall not be deemed a Principal
Property if such property does not have a fair value in excess of 5% of the
total assets included on a consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied.
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"Private Placement Legend" means the legend set forth in Section
2.6(g)(i) hereof to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institution buyer" as defined in Rule 144A.
"Redemption Date" has the meaning assigned to it in Section 3.1.
"Redemption Price" has the meaning assigned to it in Section 3.1.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 26, 1998, by and among the Company and the other
parties named on the signature pages thereof, attached hereto as Exhibit E, as
such agreement may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Remaining Term" has the meaning assigned to it in the definition of
"Make-Whole Premium."
"Responsible Officer," when used with respect to the Trustee, means any
officer, including, without limitation, any vice president, assistant vice
president, assistant treasurer or assistant secretary within the corporate trust
department of the Trustee (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to particular corporate trust matter, any other officer or employee to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
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"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Period" means the 40-day distribution compliance period as
set forth in Regulation S.
"Restricted Subsidiary" means (a) any currently existing Subsidiary
whose principal assets and business are located in the United States or Canada,
and (b) any Subsidiary that is designated by the Company to be a Restricted
Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means the Global Note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 144A.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"Sale and Leaseback Transaction" means the sale or transfer by the
Company or a Restricted Subsidiary of any Principal Property owned by it with
the intention of taking back a lease on such property.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means indebtedness for money borrowed by the Company or
a Restricted Subsidiary, and any other indebtedness of the Company or a
Restricted Subsidiary, on which interest is paid or payable (other than
indebtedness owed by a Restricted Subsidiary to the Company, by a Restricted
Subsidiary to another Restricted Subsidiary or by the Company to a Restricted
Subsidiary), that in any such case is secured by (a) any Lien on any Principal
Property of the Company or a Restricted Subsidiary or (b) a Lien on any shares
of stock or indebtedness of a Restricted Subsidiary that owns a Principal
Property. The amount of Secured Debt at any time outstanding shall be the amount
then owing thereon by the Company or a Restricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of indebtedness, including the Notes, the date on which
such payment of interest or principal was scheduled to be paid in the original
documentation governing such indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the Company, or the Company and one or more Subsidiaries, or any one or
more Subsidiaries, directly or indirectly own voting securities entitling any
one or more of the Company and its Subsidiaries to elect a majority of the
directors, either at all times, or so long as there is no default or contingency
which permits the holders of any other class or classes of securities to vote
for the election of one or more directors, (b) any partnership of which the
Company, or the Company and one or more of its Subsidiaries, or any one or more
Subsidiaries, is at the date of determination, a general or limited partner of
such partnership, but only if the Company and its Subsidiaries are entitled to
receive more than 50% of the assets of such partnership upon dissolution or more
than 50% of the profits of such partnership, or (c) any other Person (other than
a corporation or partnership) in which the Company, or the Company and one or
more Subsidiaries, or any one or more Subsidiaries, directly or indirectly, at
the date of determination thereof, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.3 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
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SECTION 1.2 Other Definitions.
DEFINED IN
TERM SECTION
-----------------------------------------------------------
"Covenant Defeasance".......................... 8.5
"DTC".......................................... 2.3
"Event of Default"............................. 6.1
"Defeasance"................................... 8.4
"Paying Agent"................................. 2.3
"Registrar".................................... 2.3
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:
"indenture securities" means the Notes;
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the statements and
pronouncements of the Financial Accounting Standards Board and such other
statements by such other entities as have been approved by a significant segment
of the accounting profession, which are applicable at the date of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
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(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The Notes will mature on July 1, 2005 and will bear interest at the
rate per annum of 67/8%, payable semiannually on January 1 and July 1 of each
year, commencing January 1, 1999, to the Person in whose name the Note (or any
predecessor Note) is registered at the close of business on the preceding
December 15 or June 15, as the case may be. The Notes will be subject to
redemption prior to maturity pursuant to Article III of this Indenture. The
interest rate accruing on the Initial Notes is subject to increase upon the
occurrence of certain events as provided in the Registration Rights Agreement.
The Notes are senior unsecured obligations of the Company and rank pari
passu in right of payment with all other unsecured and unsubordinated
indebtedness of the Company.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of
Exhibit A-1 or A-2 attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 attached
hereto (but without the Global Note Legend and without the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a
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Global Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee, the Depositary or the Note Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by
Section 2.6 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the nominee of the Depository for credit to the accounts of
designated agents holding on behalf of Euroclear or CEDEL, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated after the 40-day distribution compliance period
applicable to the Initial Notes has expired under Regulation S and upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and CEDEL certifying that
they have received certification of nonUnited States beneficial ownership of
100% of the aggregate principal amount of the Regulation S Temporary Global Note
(except to the extent of any beneficial owners thereof who acquired an interest
therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.6(b) hereof), and (ii) an Officers' Certificate
from the Company stating that the applicable Restricted Period has terminated.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interests as
hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of CEDEL shall be applicable
to transfers of beneficial interests in the Regulation S Temporary Global Note
and the Regulation S Permanent Global Notes that are held by members of, or
Participants, in DTC through Euroclear or CEDEL.
SECTION 2.2 Execution and Authentication.
Two Officers (at least one of whom shall be the Chief Executive
Officer, the Chief Finance Officer or the Treasurer) shall sign the Notes for
the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
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A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate the Initial Notes for original issue on the Issue Date of
up to $150,000,000 aggregate principal amount of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed $150,000,000
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency within the City and
State of New York where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall promptly notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, or interest or premium, if any, on, the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent,
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it shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.5 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall provide to a Responsible Officer of the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary for the Global Notes or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 90 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion notifies the Trustee in writing that it elects to cause issuance of
the Notes in certificated form; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Company for Definitive Notes prior to
the expiration of the Restricted Period. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.11
hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a
Global Note or any portion thereof, pursuant to Section 2.7 or 2.11 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.6(a); however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.6(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer set
forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global
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Notes also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs as
applicable:
(i) Transfer of Beneficial Interests in the Same
Global Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Restricted Period transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred
only to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests (other than a transfer of a
beneficial interest in a Global Note to a Person who takes delivery
thereof in the form of a beneficial interest in the same Global Note),
the transferor of such beneficial interest must deliver to the
Registrar (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase or (B) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (1) above; provided that (x) no transfer or exchange of
a beneficial interest in a Global Note for a Definitive Note shall be
effective under clause (B) hereof unless permitted by Applicable
Procedures of the Depositary, (y) in no event shall Definitive Notes be
issued upon the transfer or exchange of beneficial interests in the
Regulation S Temporary Global Note prior to (1) the expiration of the
Restricted Period and (2) the receipt by the Registrar of any
certificates required pursuant to Rule 903 under the Securities Act and
(z) beneficial interests in a Global Note may be exchanged for
Definitive Notes only upon at least 20 days prior written notice given
to the Trustee by or on behalf of the Depositary in accordance with
Applicable Procedures. Upon an Exchange Offer by the Company in
accordance with Section 2.6(f) hereof, the requirements of this Section
2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer
or exchange of
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beneficial interests in Global Notes contained in this Indenture, the
Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.6(h) hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Note. A beneficial interest in any Restricted Global
Note may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of clause (ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in
the form of a beneficial interest in the Rule 144A Global
Note, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in Item
(1) thereof; or
(B) if the transferee will take delivery in
the form of the Regulation S Temporary Global Note or the
Regulation S Permanent Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in Item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in
a Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
clause (ii) above and:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such
beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for a beneficial interest in
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an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in
Item (1)(a) thereof;
(2) if the holder of such
beneficial interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in
Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in accordance
with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
beneficial interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for
Definitive Notes.
(i) If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in Item (2)(a) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in Item (1)
thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the
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Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in Item (2)
thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(a) thereof;
(E) if such beneficial interest is being
transferred to an Institutional Accredited Investor or in
reliance on any other exemption from the registration
requirements of the Securities Act, in either case other than
those listed in subparagraphs (B) through (D) above, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by Item (3) thereof, if applicable;
(F) if such beneficial interest is being
transferred to the Company or any of its subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (3)(b) thereof; or
(G) if such beneficial interest is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.6(h) hereof, and the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)
shall be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall make available for delivery such
Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.6(c)(i)(A) and (C)
hereof, a beneficial interest in the Regulation S Temporary Global Note
may not be (A) exchanged for a Definitive Note prior to the expiration
of the Restricted Period or (B) transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to the
conditions set forth in clause (A) above or unless the transfer is
pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.
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(iii) Notwithstanding 2.6(c)(i) hereof, a holder of a
beneficial interest in a Restricted Global Note may exchange such
beneficial interest for an Unrestricted Definitive Note or may transfer
such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such
beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Definitive Note that
does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in Item (1)(b) thereof;
(2) if the holder of such
beneficial interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a Definitive Note that does
not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company, to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note,
then, upon satisfaction of the conditions set forth in Section
2.6(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced
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accordingly pursuant to Section 2.6(h) hereof, and the Company shall
execute and the Trustee shall authenticate and make available for
delivery to the Person designated in the instructions a Definitive Note
in the appropriate principal amount. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.6(c)(iv)
shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall make
available for delivery such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.6(c)(iv)
shall not bear the Private Placement Legend. A beneficial interest in
an Unrestricted Global Note cannot be exchanged for a Definitive Note
bearing the Private Placement Legend or transferred to a Person who
takes delivery thereof in the form of a Definitive Note bearing the
Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted
Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a certificate
from such Holder in the form of Exhibit C hereto, including
the certifications in Item (2)(b) thereof;
(B) if such Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in Item (1)
thereof;
(C) if such Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (2) thereof;
(D) if such Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(a) thereof;
(E) if such Definitive Note is being
transferred to an Institutional Accredited Investor or in
reliance on any other exemption from the registration
requirements of the Securities Act, in either case other than
those listed in
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subparagraphs (B) through (D) above, a certificate in the form
of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by Item (3)
thereof, if applicable;
(F) if such Definitive Note is being
transferred to the Company or any of its subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (3)(b) thereof; or
(G) if such Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(c) thereof,
the Trustee shall cancel the Definitive Note, increase or cause to be increased
the aggregate principal amount of, in the case of subparagraph (A) above, the
appropriate Restricted Global Note and, in the case of subparagraph (B) above,
the 144A Global Note, and, in the case of subparagraph (C) above, the Regulation
S Global Note.
(ii) A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such
Definitive Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in Item (1)(c) thereof;
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(2) if the Holder of such
Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the
certifications in Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act,
that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Definitive Notes
are being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.6(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause
to be increased the aggregate principal amount of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
(iv) If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall
issue and, upon receipt of an authentication order in accordance with
Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.6(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.6(e).
(i) Restricted Definitive Notes may be transferred to
and registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
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(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in Item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904 of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in Item (2) thereof; and
(C) if the transfer will be made to an
Institutional Accredited Investor or pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by Item (3)
thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged
by the Holder thereof for an Unrestricted Definitive Note or
transferred to a Person or Persons who take delivery thereof in the
form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such
Restricted Definitive Notes proposes to exchange such Notes
for an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in Item (1)(d) thereof;
(2) if the Holder of such
Restricted Definitive Notes proposes to transfer such Notes to
a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such Holder
in the form of Exhibit B hereto, including the certifications
in Item (4) thereof; and
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(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act,
that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Restricted
Definitive Note is being exchanged or transferred in
compliance with any applicable blue sky securities laws of any
State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note. Upon receipt of a request for such
a transfer, the Registrar shall register the Unrestricted Definitive
Notes pursuant to the instructions from the Holder thereof.
Unrestricted Definitive Notes cannot be exchanged for or transferred to
Persons who take delivery thereof in the form of a Restricted
Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of (A) an authentication order in accordance with Section 2.2
hereof and (B) an Opinion of Counsel opining as to the enforceability of the
Exchange Notes, the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as defined
in Rule 144) of the Company and accepted for exchange in the Exchange Offer or
(ii) Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
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REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES (1) NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR ANY
PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH NATIONAL- OILWELL, INC.
(THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), EXCEPT
(A) TO THE COMPANY OR A SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS RELATING TO RESTRICTIONS ON TRANSFER OF THE NOTE
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR IN AN "OFFSHORE
TRANSACTION" WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, AND (2) THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR
SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT
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IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (2)
AN INSTITUTIONAL ACCREDITED INVESTOR, (3) A NON-U.S. PERSON AND IS ACQUIRING THE
NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES
ACT OR (4) IT IS A PERSON ELIGIBLE TO BE TRANSFERRED THIS NOTE IN ACCORDANCE
WITH CLAUSE (F) OF THE FOREGOING SENTENCE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any
Global Note or Definitive Note issued pursuant to subparagraph
(b)(iv), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
of this Section 2.6 (and all Notes issued in exchange therefor
or substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear
a legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO ARTICLE 2 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
Additionally, for so long as DTC is the Depositary with respect to the
Global Note, such Global Note shall also bear a legend in substantially the
following form:
"UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE), TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
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INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in substantially
the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or canceled in whole and not in part, each such Global Note shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee, the Note Custodian or the Depositary at the direction of the Trustee,
to reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note, by
the Trustee, the Note Custodian or by the Depositary at the direction of the
Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges in accordance with the other provisions of this Indenture,
the Company shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes upon the Company's order or at the
Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.7 and 9.5 hereof).
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(iii) The Registrar shall not be required to register
the transfer or exchange of any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Global Notes and Definitive Notes issued
upon any registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue,
to register the transfer of or to exchange Notes during a period
beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of Notes for redemption under Section 3.3
hereof and ending at the close of business on the day of such mailing,
(B) to register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.2
hereof.
(viii) All certifications, certificates and Opinions
of Counsel required to be submitted to the Registrar pursuant to this
Section 2.6 to effect a transfer or exchange may be submitted by
facsimile.
(ix) Each Holder of a Note agrees to indemnify the
Company and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Note in violation of
any provision of this Indenture and/or applicable United States federal
or state securities law.
(x) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Note (including any
transfers between or among Depositary participants or beneficial owners
of interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the
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terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
SECTION 2.7 Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. An indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8 Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether
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the Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes that a Responsible Officer of the Trustee actually knows are
so owned shall be so disregarded.
SECTION 2.10 Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11 Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Notes to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company shall promptly notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13 CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that
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reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE III
REDEMPTION
SECTION 3.1 Redemption at the Option of the Company.
The Notes are redeemable prior to the Stated Maturity of principal,
at the option of the Company, at any time in whole or from time to time in part,
upon the delivery of the notices provided in Sections 3.2 and 3.4 hereof, on any
date prior to the Stated Maturity of principal selected by the Company (the
"Redemption Date") at a price equal to 100% of the principal amount thereof plus
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) plus the
Make-Whole Premium, if any (the "Redemption Price"). In no event will the
Redemption Price ever be less than 100% of the principal amount of the Notes
plus accrued interest to the Redemption Date.
SECTION 3.2 Notice to the Trustee.
If the Company elects to redeem Notes pursuant to this Article III, it
shall notify the Trustee of the Redemption Date and principal amount of the
Notes to be redeemed. The Company shall so notify the Trustee at least 45 days
before the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee) by delivering to the Trustee an Officers' Certificate stating that such
redemption will comply with the provisions of this Indenture and of the Notes.
Any such notice may be canceled at any time prior to the mailing of such notice
of such redemption to any Holder and shall thereupon be void and of no effect.
SECTION 3.3 Selection of Notes To Be Redeemed.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the outstanding Notes not previously called for redemption,
pro rata, by lot or by such other method as the Trustee shall deem fair and
appropriate and that may provide for the selection for redemption of portions
(equal to the minimum authorized denomination for Notes or any integral multiple
thereof) of the principal amount of Notes of a denomination larger than the
minimum authorized denomination or of the principal amount of Global Notes.
The Trustee shall promptly notify the Company and the Registrar in
writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
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For purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
of the Notes redeemed or to be redeemed only in part, to the portion of the
principal amount thereof which has been or is to be redeemed.
SECTION 3.4 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at the address of such Holder
appearing in the register of Notes maintained by the Registrar.
All notices of redemption shall identify the Notes to be redeemed
(including CUSIP numbers) and shall state:
(1) the Redemption Date;
(2) the Redemption Price (excluding
the amount of any Make-Whole Premium, if any);
(3) that, unless the Company
defaults in making the redemption payment, interest on Notes
called for redemption ceases to accrue on and after the
redemption date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption
Price upon surrender to the Paying Agent of the Notes
redeemed;
(4) if any Note is to be redeemed
in part, the portion of the principal amount thereof to be
redeemed and that on and after the redemption date, upon
surrender for cancellation of such Note to the Paying Agent, a
new Note or Notes in the aggregate principal amount equal to
the unredeemed portion thereof will be issued without charge
to the Holder;
(5) that Note called for redemption
must be surrendered to the Paying Agent to collect the
Redemption Price and the name and address of the Paying Agent;
(6) the CUSIP number, if any,
relating to such Notes.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company.
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SECTION 3.5 Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Paying Agent, such Notes called for redemption shall be paid at
the Redemption Price, but interest installments whose maturity is on or prior to
such Redemption Date will be payable on the day payment of such interest is due
to the Holders of record at the close of business on the relevant record dates
specified pursuant in Section 2.1 hereof and the Notes.
SECTION 3.6 Deposit of Redemption Price.
On or prior to 10:00 a.m., New York City time, on any Redemption Date,
the Company shall deposit with the Trustee or the Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money in same day funds sufficient to pay
the Redemption Price of, including (except if the Redemption Date shall be a
date interest is due under the Notes) accrued and unpaid interest if any, on,
the Notes or portions thereof which are to be redeemed on that date, other than
Notes or portions thereof called for redemption on that date which have been
delivered by the Company to the Trustee for cancellation.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price, interest on the Notes
to be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment, and the Holders of such
Notes shall have no further rights with respect to such Notes except for the
right to receive the Redemption Price upon surrender of such Notes. If any Notes
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal, premium, if any, and, to the extent lawful, accrued
and unpaid interest thereon shall, until paid, bear interest from the Redemption
Date at the rate applicable to such Notes.
SECTION 3.7 Notes Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Note to be redeemed in part,
the Company shall execute and the Trustee shall authenticate and make available
for delivery to the Holder of such Note without service charge a new Note or
Notes, and of any authorized denomination as requested by such Holder in
aggregate principal amount equal to, and in exchange for, the unredeemed portion
of the principal of the Note so surrendered that is not redeemed.
SECTION 3.8 Purchase of Notes.
The Company and any Affiliate of the Company may at any time purchase
or otherwise acquire Notes in the open market or by private agreement. Such
acquisition shall not operate as or be deemed for any purpose to be a redemption
of the indebtedness represented by such Notes. Any Notes purchased or acquired
by the Company may be delivered to the Trustee and, upon such
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delivery, the indebtedness represented thereby shall be deemed to be satisfied.
Section 2.9 shall apply to all Notes so delivered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on, the Notes on the dates and in the manner provided in the
Notes and this Indenture. Principal and interest, if any, shall be considered
paid on the date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. New York City Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
interest rate applicable to the Notes is subject to increase upon the occurrence
of certain events as provided in the Registration Rights Agreement.
The Company shall pay interest on overdue principal at the rate borne
on the Notes to the extent lawful; it shall pay on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
SECTION 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
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The Company hereby designates the office of the Trustee at 101 Barclay
Street, Floor 21 West, New York, New York 10286, as one such office or agency of
the Company in accordance with Section 2.3 hereof.
SECTION 4.3 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the knowledge of the signers thereof a
Default or Event of Default, specifying all such Defaults or Events of Defaults
(as applicable) and the nature and status thereof.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or Default, an Officers' Certificate setting forth the
details of such Event of Default or Default and the action which the Company
proposes to take with respect thereto.
SECTION 4.4 Corporate Existence.
Subject to Article 5, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.5 SEC Reports; Financial Statements.
(a) The Company shall file with the Trustee, within 15 days
after it files the same with the SEC, copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing) as the SEC may by rules and regulations prescribe that the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the provisions of TIA Section
314(a).
(b) If the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall furnish to all
Holders of the Rule 144A Global Note or Holders that qualify as QIB's who have
elected to take physical delivery of a Restricted Definitive Note, and
prospective purchasers who are acquiring a Restricted Definitive Note or a
beneficial
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interest in the Rule 144A Global Note as a QIB in accordance with Rule 144A,
promptly upon their request, the information required to be delivered pursuant
to clause (d)(4) of Rule 144A.
(c) Delivery of such reports, information and documents to the
Trustee under this Section 4.5 is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants under this
Article IV (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.6 Limitation on Liens.
So long as any of the Notes are outstanding, the Company shall not at
any time create, incur, assume or guarantee, and shall not cause, suffer or
permit a Restricted Subsidiary to create, incur, assume or guarantee, any
Secured Debt without making effective provision (and the Company covenants that
in such case it will make or cause to be made such effective provision) whereby
the Notes then outstanding and any other indebtedness of or guaranteed by the
Company or any Restricted Subsidiary then entitled thereto, subject to
applicable priorities of payment, shall be secured, by such Lien equally and
ratably with any and all other obligations and indebtedness thereby secured, so
long as such other obligations and indebtedness shall be so secured; provided,
that if any such Lien securing such Secured Debt ceases to exist, such equal and
ratable security for the benefit of the Holders of Notes shall automatically
cease to exist without any further action; provided, further, that if such
Secured Debt is expressly subordinated to the Notes, the Lien securing such
subordinated Secured Debt shall be subordinate and junior to the Lien securing
the Notes with the same relative priority as such Secured Debt shall have with
respect to the Notes; and provided further, that the foregoing covenants shall
not be applicable to the Secured Debt that is secured by Permitted Liens.
Notwithstanding the foregoing provisions of this Section 4.6, the
Company and its Restricted Subsidiaries may, without equally and ratably
securing the Notes, create, incur, assume or guarantee Secured Debt not
otherwise permitted or excepted if the sum of (a) the amount of such Secured
Debt plus (b) the aggregate value of Sale and Leaseback Transactions (excluding
Sale and Leaseback Transactions identified in (a) through (d) of Section 4.7),
does not exceed 10% of Consolidated Net Tangible Assets (as shown in the
quarterly consolidated balance sheet of the Company most recently published
prior to the date of creation, incurrence, assumption or guarantee).
SECTION 4.7 Limitation on Sale and Leaseback Transactions.
The Company will not, nor will it permit any of its Restricted
Subsidiaries to, engage in a Sale and Leaseback Transaction, unless: (a) such
Sale and Leaseback Transaction occurs within one year from the date of
completion of the acquisition of the Principal Property subject thereto or the
date of the completion of construction, development or substantial repair or
improvements, or commencement of full operations, on such Principal Property,
whichever is later, (b) the Sale and Leaseback Transaction involves a lease for
a period, including renewals, of not more than three
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years, (c) the Company or such Restricted Subsidiary would be entitled to incur
Secured Debt secured by a Lien on the Principal Property subject thereto in a
principal amount equal to or exceeding the net sale proceeds from such Sale and
Leaseback Transaction without equally and ratably securing the Notes pursuant to
Section 4.6, or (d) the Company or such Restricted Subsidiary, within a one-year
period after the Sale and Leaseback Transaction, applies or causes to be applied
an amount not less than the net sale proceeds from such Sale and Leaseback
Transaction to (i) the redemption of the Notes or the prepayment, repayment,
reduction or retirement of any indebtedness of the Company or any of its
subsidiaries that ranks pari passu with the Notes or (ii) the expenditure or
expenditures for Principal Property used or to be used in the ordinary course of
business of the Company or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, the Company may, and may permit each of
its Restricted Subsidiaries, to, effect any Sale and Leaseback Transaction that
is not excepted by clauses (a) through (d) (inclusive) of the above paragraph,
provided that, after giving effect thereto and the application of proceeds, if
any, received by the Company or any its Restricted Subsidiaries as a result
thereof, the net sale proceeds from such Sale and Leaseback Transaction,
together with the aggregate principal amount of all Secured Debt then
outstanding (other than the Notes) secured by Liens upon Principal Property
(which are not Permitted Liens) would not exceed 10% of the Consolidated Net
Tangible Assets (as shown in the quarterly consolidated balance sheet of the
Company most recently published prior to the date the Sale and Leaseback
Transaction is effected).
ARTICLE V
SUCCESSORS
SECTION 5.1 Consolidation, Merger, or Sale of Assets.
The Company may (a) consolidate with or merge into, or (b) sell,
convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to, any Person, provided that (i) in the case of
any such consolidation or merger, the Company is the continuing entity or, if
the Company is not the continuing entity, the continuing entity is a Person
organized and validly existing under the laws of the United States, any
political subdivision thereof or any State thereof and assumes by supplemental
indenture all of the Company's obligations on the Notes and under the Indenture,
and (ii) after giving effect to the transaction no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall exist. Upon a disposition of assets described in clause (b) of
the preceding sentence, the Company will be released from any further liability
under the Notes and the Indenture.
SECTION 5.2 Successor Corporation Substituted.
Upon any consolidation or merger, transfer or lease of its properties
and assets substantially as an entirety in accordance with Section 5.1 hereof,
the successor corporation formed by such consolidation with, or into which the
Company is merged or to which such conveyance, transfer or
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lease of its properties and assets is made shall succeed to, and be substituted
for (so that from and after the date of such consolidation or merger, or
conveyance transfer or lease of its property and assets substantially as an
entirety, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.
An "Event of Default" occurs hereunder with respect to the Notes if:
(a) the Company defaults in the payment when due of principal
of or Make-Whole Premium, if any, on, the Notes;
(b) the Company defaults in payment when due of interest on
the Notes and such default continues for a period of 30 days;
(c) the Company or any of its Restricted Subsidiaries fails to
observe or perform any covenant of the Company (other than the covenants
described in clauses (a) or (b) above) in the Notes or this Indenture for 60
days after notice to the Company by the Trustee or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding;
(d) indebtedness of the Company or any Subsidiary is not paid
when due within the applicable grace period, if any, or is accelerated by the
holders thereof and, in either case, the principal amount of such unpaid or
accelerated indebtedness exceeds $20 million;
(e) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, when taken together, would constitute a Significant
Subsidiary:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of
its creditors.
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(f) a court of competent jurisdiction enters an order or
decree under the Bankruptcy Code that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, when taken
together, would constitute a Significant Subsidiary, in an involuntary
case;
(ii) appoints a Custodian of the Company or any of
its Significant Subsidiaries or any group of Subsidiaries that, when
taken together, would constitute a Significant Subsidiary, or for all
or substantially all of the property of the Company or any group of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any of
its Significant Subsidiaries or any group of Subsidiaries that, when
taken together, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.2 Acceleration.
If any Event of Default (other than an Event of Default specified in
clauses (e) or (f) of Section 6.1) shall occur and be continuing, either the
Trustee or the Holders of at least 25% of the then outstanding Notes by notice
to the Company may declare the principal amount of the Notes to be due and
payable immediately. If an Event of Default specified in clauses (e) or (f) of
Section 6.1 shall occur, the principal amount of all the then outstanding Notes
will automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the then outstanding
Notes, by written notice to the Trustee, may rescind and annul such acceleration
and its consequences if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived pursuant to the terms of this
Indenture.
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any and
accrued and unpaid interest, if any, on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right
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or remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.4 Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the
outstanding Notes may on behalf of the Holders of all of the Notes waive any
past default hereunder and its consequences, except a Default:
(a) in the payment of the principal of or any premium or
interest on any Note, or
(b) in respect of any other covenant or provision hereof
which, under Section 9.2 hereof, cannot be modified or amended without the
consent of the Holder of each outstanding Note.
Upon any such waiver, such Default or Event of Default shall cease to
exist and shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
SECTION 6.5 Control by Majority.
Subject to Section 7.2(f) hereof, Holders of a majority in principal
amount of the then outstanding Notes (together as a single class) may direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
SECTION 6.6 Limitation on Suits.
A Holder of a Note may institute any proceeding with respect to the
Indenture, or for the appointment of a receiver or a trustee, or for any other
remedy thereunder with respect to this Indenture or the Note only if:
(a) the Holder of a Note has previously given to the Trustee
written notice of a continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal amount
of the Notes make a written request to the Trustee to institute a proceeding or
pursue a remedy as trustee;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense to be incurred in compliance with such request;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
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(e) during such 60-day period the Holders of a majority in
principal amount of the Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all of such Holders.
SECTION 6.7 Rights of Holders of Notes to Receive Payment and Institute
Proceedings.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, and premium, if any, and
interest on, the Note on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired, affected or limited in any way
(including by any limitation set forth in Section 6.6 hereof) without the
consent of the Holder of each Note affected thereby.
SECTION 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, and premium, if any, and interest remaining unpaid on, the Notes
and interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.9 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on,
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and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting any Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all compensation, expense, and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of the Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the cost of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
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ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man 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 need perform only those duties that
are specifically set forth in this Indenture and the TIA and no others,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee. To the extent of any conflict between
the duties of the Trustee hereunder and under the TIA, the TIA shall
control.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) Subject to Section 7.1(b) hereof, the Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities (including fees and expenses
of its agents and counsel) that might be incurred by it in compliance with such
request or direction.
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(g) The Trustee, in its individual or other capacity, may make
loans to, accept deposits from, and perform services for, the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not the Trustee, including, without limitation, as a lender under the
Company's Senior Credit Facility.
(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture.
(i) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder.
SECTION 7.3 Individual Rights of Trustee.
The Trustee, any Paying Agent, any authenticating agent or registrar in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
SECTION 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, or interest or premium, if any, on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
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SECTION 7.6 Reports by Trustee to Holders of the Notes.
Within 60 days after each June 15 beginning with the June 15 following
the date of this Indenture, and for so long as the Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange or delisted therefrom.
SECTION 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
parties shall agree from time to time. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities, claims, damages or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.7) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability, claim, damage or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to any of the Notes on all money or property
held or collected by the Trustee, except that held
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in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under the
Bankruptcy Code.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.8 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof,
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under the Bankruptcy
Code;
(c) a custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may, at the expense of the Company, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may, at the expense of the Company, petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has, or is the subsidiary of a bank holding company that
has, a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
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ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon delivery of a written request of an Officer
of the Company to the Trustee cease to be of further effect with respect to the
Notes (except as to any surviving rights of registration of transfer or exchange
of Notes herein expressly provided for), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when
(a) either
(i) all such Notes theretofore authenticated and
delivered (other than (1) such Notes which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.7
and (2) such Notes for whose payment money or Government Securities
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, as provided in Section 8.9) have been delivered to the
Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to
the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their
final Stated Maturity within one year,
and the Company, in the case of (A) or (B) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose an amount of
money or Government Securities sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date of such
deposit (in the case of such Notes which have become due and payable) or to the
Stated Maturity of the principal of the Notes;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company with respect to such Notes; and
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(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Notes have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to the Notes, the obligations of the Company to the Trustee under
Section 7.7 hereof, and, if money or Government Securities shall have been
deposited with the Trustee pursuant to subclause (ii) of clause (b) of this
Section, the obligations of the Company or Trustee under Section 8.2 hereof and
Section 8.9 shall survive.
SECTION 8.2 Application of Trust Money.
Subject to the provisions of Section 8.9, all money and Government
Securities deposited with the Trustee pursuant to Section 8.1 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes
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 any premium and
interest for whose payment such money or Government Securities has been
deposited with the Trustee.
SECTION 8.3 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.4 or 8.5 hereof be applied to all outstanding Notes, upon
compliance with the conditions set forth in this Article VIII.
SECTION 8.4 Defeasance and Discharge.
In addition to discharge of the Indenture pursuant to Section 8.1
hereof, the Company shall be deemed to have paid and discharged the entire
indebtedness on all the Notes on the date of the deposit referred to in clause
(a) of Section 8.6 hereof, and the provisions of this Indenture with respect to
the Notes shall no longer be in effect, (except as to (1) the rights of Holders
of such Notes to receive, solely from the trust fund described in Section 8.6
hereof and as more fully set forth in such Section, payments in respect of the
principal of and any premium and interest on such Notes when payments are due
(other than by acceleration), (2) the Company's obligations with respect to such
Notes under Sections 2.4, 2.6, 2.7, 2.10, 4.2 and 8.9 hereof, and (3) the
rights, powers, trusts, obligations, duties and immunities of the Trustee
hereunder), and the Trustee, at the expense of the Company, upon written request
of an Officer of the Company, shall execute proper instruments acknowledging the
same, if the applicable conditions set forth in Section 8.6 hereof are satisfied
("Defeasance"). For this purpose, such Defeasance means that the Company (and
any other obligor of the Notes) shall be deemed to have paid and discharged the
entire indebtedness represented by the Notes, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 8.7 hereof and the rights
and obligations referred to in clauses (1) through (3) (inclusive) of this
Section 8.4, and to have satisfied all its other obligations under such Notes
and this Indenture insofar
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as such Notes are concerned. Subject to compliance with this Article, the
Company may exercise its option (if any) to have this Section applied to any
Notes notwithstanding the prior exercise of its option (if any) to have Section
8.5 hereof applied to such Notes.
SECTION 8.5 Covenant Defeasance.
The Company shall be released on the date of the deposit referred to in
clause (a) of Section 8.6 hereof from its obligations under Sections 4.6, 4.7
and 5.1 hereof, inclusive, on and after the date the applicable conditions set
forth in Section 8.6 hereof are satisfied ("Covenant Defeasance"); and the
occurrence of any event specified in clause (c) of Section 6.1 hereof (with
respect to any of Sections 4.6, 4.7 and 5.1 hereof, inclusive), shall be deemed
not to be or result in an Event of Default, in each case with respect to the
Notes. For this purpose, such Covenant Defeasance means that, with respect to
the Notes (i) the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section, whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any Section to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or Event of Default under Section 6.1 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby, and (ii) such Notes shall thereafter be deemed to
be not "Outstanding" for the purposes of any request, demand, authorization,
direction, notice, waiver, consent or declaration or other action of Holders
(and the consequences of any therefor) in connection with such specified
covenants, but shall continue to be deemed Outstanding for all other purposes
hereunder.
SECTION 8.6 Conditions to Defeasance or Covenant Defeasance.
The following shall be the applicable conditions to the application of
Section 8.4 or Section 8.5 hereof to any Notes, as the case may be:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 7.10 hereof and agrees to comply with the
provisions of this Article 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 benefits of the Holders of such Notes, (A) money in
an amount, or (B) Government Securities 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, in each case sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certificate thereof delivered to the Trustee, to pay the principal of
and any premium and interest on such Notes on the Stated Maturity of the
principal of the Notes in accordance with the terms of this Indenture and such
Notes.
(b) In order to have Section 8.4 hereof apply to any Notes, as
the case may be, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (A) the
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Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case (A) or (B) to
the effect that, and based thereon such opinion shall confirm that, the Holders
of such Notes will not recognize gain or loss for federal income tax purposes as
a result of such deposit and Defeasance and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit and Defeasance had not occurred.
(c) In order to have Section 8.5 hereof apply to any Notes, as
the case may be, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Notes will not recognize gain or
loss for federal income tax purposes as a result of such deposit and Covenant
Defeasance and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit
and Covenant Defeasance had not occurred.
(d) No Default or Event of Default with respect to such Notes
or any other Notes shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in clauses (e) of (f) of
Section 6.1 hereof, at any time on or prior to the 90th day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied with respect to such specified events until after such 90th day).
(e) Such Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound.
(f) The Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to avoidance under Section 547 of the Bankruptcy Code
or any successor provision thereof.
(g) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others.
(h) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.7 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.8 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee or other qualifying
trustee (solely for purposes of this Section and Section 8.9 hereof, the Trustee
and any such other trustee are referred to collectively as the "Trustee")
pursuant to Section 8.6 hereof in respect of any Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Notes for the payment or redemption of which
such finds have been deposited with the Trustee, of all sums due and to become
due thereon in respect of principal and any premiums and interest, but money so
held in trust need not be segregated from other funds except to the extent
required by law.
Anything in this Article to the contrary notwithstanding, the Trustee
or the Paying Agent, as applicable, shall promptly return, deliver or pay to the
Company from time to time upon Company request any money or Government
Securities held by it as provided in Section 8.6 hereof with respect to any
Notes which, at any time, are in excess of the amount thereof which would then
be required to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to such Securities. The provisions of Section 8.8 hereof shall
apply to any money held by the Trustee or any Paying Agent under this Article
that remains unclaimed for two years after the Stated Maturity of the Notes for
which money or Government Securities have been deposited pursuant to Section 8.6
hereof.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Securities deposited
pursuant to this Article 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 outstanding Notes.
SECTION 8.8 Repayment to Company.
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 and
interest, if any, on, any Note and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on its written request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
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notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.9 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. dollars or
non-callable Government Securities in accordance with Section 8.4 or 8.5 hereof,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.4 or 8.5 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.4 or 8.5 hereof,
as the case may be; provided, however, that, if the Company makes any payment of
principal of, or premium, if any, or interest on, any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 Without Consent of Holders of Notes.
Notwithstanding Section 9.2 hereof, the Company and the Trustee may
amend or supplement this Indenture or the Notes without the consent of Holders
of the Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations
to the Holders of any of the Notes in the case of a merger, consolidation or
sale of assets of the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any such Holder in any material respect; or
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA or to allow any
guarantor to guarantee the Notes.
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Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
9.6 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.2 With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a tender offer or exchange offer for the Notes),
and, subject to Sections 6.4 and 6.7 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, or premium, if any, or interest on, the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
a Responsible Officer of the Trustee of the documents described in Section 9.6
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a nonconsenting
Holder):
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(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any such Note;
(b) reduce the principal amount of, or any interest on, any
such Note;
(c) reduce the amount of principal of any such Note payable
upon acceleration of the Stated Maturity thereof;
(d) change the place or currency of payment of principal of,
or interest on, any such Note;
(e) impair the right to institute suit for the enforcement of
any payment on or with respect to any such Note;
(f) reduce the percentage in principal amount of such Note,
the consent of whose Holders is required for modification or amendment of the
Indenture;
(g) reduce the percentage in principal amount of such Note
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults;
(h) modify such provisions with respect to modification and
waiver;
(i) waive, reduce or modify a Make-Whole Premium payable with
respect to any Note called for redemption; or
(j) make any change in Section 6.4 or 6.7 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.3 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
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SECTION 9.5 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company, in
exchange for all Notes, may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6 Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise. The Company may not sign an amendment or
supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1 hereof) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.7 Record Dates.
Except as otherwise provided in this Indenture or the Notes, the
Company will be entitled to set any day as a record date for the purpose of
determining the Holders of Notes entitled to give or take any direction, notice,
consent, waiver or other action under the Indenture. Pursuant to Section 6.10,
the Trustee also will be entitled to set a record date for certain action by
Holders of Notes. If a record date is set for any action to be taken by Holders
of the Notes, such action may be taken only by persons who are Holders of the
Notes on the record date. To be effective, such action must be taken by Holders
of the requisite principal amount of the Notes within a specified period
following the record date. For any particular record date, this period will be
180 days or such shorter period as may be specified by the Company (or the
Trustee, if it sets the record date), and may be shortened or lengthened (but
not beyond 180 days) from time to time.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
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SECTION 10.2 Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056
Telecopier No.: (713) 960-5237
Attention: Chief Financial Officer
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopier No.: 212-815-5915
Ref: National-Oilwell, Inc.
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
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If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.3 Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 10.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she
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 satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
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SECTION 10.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.7 No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator,
partner, member of stockholder of the Company, or of any member, partner or
stockholder of any such entity, as such, shall have any liability for any
obligation of the Company under the Notes, this Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the SEC that such a waiver is against public policy.
SECTION 10.8 Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE
AND THE NOTES.
SECTION 10.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10 Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.11 Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 10.12 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures Page(s) Follow]
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SIGNATURES
Dated as of June 26, 1998
Company:
NATIONAL-OILWELL, INC.
By: /s/ Steven W. Krablin
-------------------------------------
Steven W. Krablin, Vice President and
Chief Financial Officer
Trustee:
THE BANK OF NEW YORK
By: /s/ Remo J. Reale
-------------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
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EXHIBIT A-1
(FACE OF NOTE)
CUSIP:______________
6 7/8% SENIOR NOTES DUE 2005, [SERIES B]*
No.__________ $150,000,000
NATIONAL-OILWELL, INC.
promises to pay to
or registered assigns, the principal sum of
Dollars on July 1, 2005.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
NATIONAL-OILWELL, INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
The Bank of New York
as Trustee
By: Dated:
------------------------------
Authorized Signatory
- - - ----------
* This bracketed language should appear only in Exchange Notes.
A1-1
70
(Back of Note)
6 7/8% Senior Notes due 2005, [Series B]*
[Insert the Global Note Legend, if applicable,
pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable,
pursuant to the provisions of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. National-Oilwell, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 6
7/8% per annum, from June 26, 1998 until maturity [and shall pay any additional
interest payable on the principal amount of this Note pursuant to Section 2.5 of
the Registration Rights Agreement referred to below.]** The Company will pay
interest semi-annually in arrears on January 1 and July 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be January 1, 1999. The Company shall pay
interest on overdue principal and premium, if any, from time to time as provided
in Section 2.12 of the Indenture at the rate borne on the Notes; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) from time to time as provided in Section 2.12 of the Indenture at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the December 15 or June 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium, if any, and interest at the office or agency of the
Company maintained for such purpose within the City and State of New York, or,
at the option of the Company, payment of interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest and premium, if any, on, all
Global Notes and all other Notes the Holders of which shall have provided wire
transfer instructions to the Company or the Paying Agent. Such payment shall be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
- - - ----------
* This bracketed language should appear in Exchange Notes only.
** Omit this bracketed language in Exchange Notes.
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3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of June 26, 1998 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $150,000,000 in
aggregate principal amount.
5. Optional Redemption.
The Notes are redeemable prior to their Stated Maturity, at the option
of the Company, at any time in whole or from time to time in part, on any date
prior to their final Stated Maturity selected by the Company (the "Redemption
Date") at a price equal to 100% of the principal amount thereof plus 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) plus the Make-Whole Premium (as
defined in the Indenture), if any (the "Redemption Price"). In no event will the
Redemption Price ever be less than 100% of the principal amount of the Notes
plus accrued interest to the Redemption Date.
6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the Redemption Date, interest ceases to accrue on Notes or portions
thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15
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72
days before the mailing of a notice of redemption of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions in Article 2 of the Indenture in a manner that does not
materially adversely affect any Holder, to provide for the assumption of the
Company's obligations to Holders of the Notes in case of a merger, consolidation
or sale of assets in accordance with Article 5 of the Indenture, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the Indenture
of any such Holder in any material respect, or to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA or to allow any guarantor to guarantee the Notes.
11. Defaults and Remedies. Events of Default include: (a) default in
the payment when due of principal of, or Make-Whole Premium, if any, on, the
Notes; (b) default in the payment when due of interest on the Notes and such
default continues for a period of 30 days; (c) failure by the Company or any of
its Restricted Subsidiaries to observe or perform any other covenant (other than
the covenants described in (a) and (b) above) in the Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding; (d) failure by
the Company or any Subsidiary to pay indebtedness when due within the applicable
grace period, if any, or the acceleration of such indebtedness by the holders
thereof and, in either case, the principal amount of such unpaid or accelerated
indebtedness exceeds $20 million; or (e) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries as
specified in Section 6.1 of the Indenture. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes by notice to the Company may declare all the Notes to
be due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, the
principal amount of all then outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal, premium, if any, or interest) if it determines that withholding
notice is in their interest. The Holders of a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may on behalf of
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the Holders of all of the Notes waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest or premium, if any, on, or the principal of,
the Notes or in respect of any other covenant or provision of the Indenture
which, under Section 9.2 of the Indenture, cannot be modified without the
consent of the Holder of each outstanding Note. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. A director, officer, employee,
incorporator, partner, member or stockholder of the Company or any Subsidiary of
the Company, as such, shall not have any liability for any obligations of the
Company under the Notes, 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 a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
14. Authentication. This Note shall not be valid until authenticated by
the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and CUSIP numbers will be used in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
[17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 26, 1998, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").]**
- - - ----------
** Omit this bracketed language in Exchange Notes.
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The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture [and/or the Registration Rights Agreement.]**
Requests may be made to the principal office of the Company, attention Chief
Financial Officer.
- - - ----------
** Omit this bracketed language in Exchange Notes.
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- - - --------------------------------------------------------------------------------
Date:
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE
- - - --------------------------------------------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as
may be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
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76
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL
NOTE***
The following exchanges of a part of this Global Note for an interest
in another Note, or exchanges of a part of another Note for an interest in this
Global Note, have been made:
PRINCIPAL AMOUNT
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE SIGNATURE OF
DECREASE IN INCREASE IN FOLLOWING SUCH AUTHORIZED
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR SIGNATORY OF NOTE
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN
- - - ---------------- ------------------- ------------------- ------------------- -----------------
- - - ----------
*** This should be included only if the Note is a Global Note.
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EXHIBIT A-2
(FACE OF REGULATION S TEMPORARY GLOBAL NOTE)
CUSIP/CINS: U6366C AA 3
6 7/8% Senior Notes due 2005
No.:______ $___________________
NATIONAL-OILWELL, INC.
promises to pay to
or registered assigns, the principal sum of
Dollars on July 1, 2005.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15.
NATIONAL-OILWELL, INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
The Bank of New York
as Trustee
By: Dated:
------------------------------
Authorized Signatory
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(BACK OF REGULATION S TEMPORARY GLOBAL NOTE)
6 7/8% SENIOR NOTES DUE 2005
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES (1) NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR
TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED
BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR ANY PREDECESSOR OF THIS
SECURITY) AND THE LAST DAY ON WHICH NATIONAL-OILWELL, INC. (THE "COMPANY") OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY
APPLICABLE LAWS (THE
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"RESALE RESTRICTION TERMINATION DATE"), EXCEPT (A) TO THE COMPANY OR A
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS RELATING TO
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), (E) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR IN AN "OFFSHORE TRANSACTION" WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (2) THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER
AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER
HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, (2) AN INSTITUTIONAL ACCREDITED INVESTOR, (3) A NON-U.S. PERSON AND
IS ACQUIRING THE NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (4) IT IS A PERSON ELIGIBLE TO BE TRANSFERRED THIS
NOTE IN ACCORDANCE WITH CLAUSE (F) OF THE FOREGOING SENTENCE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
Capitalized terms used herein shall have the meanings assigned to them
in the indenture referred to below unless otherwise indicated.
A2-3
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1. Interest. National-Oilwell, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
67/8% per annum, from June 26, 1998 until maturity [and shall pay any additional
interest payable on the principal amount of this Note pursuant to Section 2.5 of
the Registration Rights Agreement referred to below.]** The Company will pay
interest semi-annually in arrears on January 1 and July 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be January 1, 1999. The Company shall pay
interest on overdue principal and premium, if any, from time to time as provided
in Section 2.2 of the Indenture at the rate borne on the Notes; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) from time to time as provided in Section 2.2 of the Indenture at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the December 15 or June 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium, if any, and interest at the office or agency of the
Company maintained for such purpose within the City and State of New York, or,
at the option of the Company, payment of interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of, and interest and premium on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
- - - ----------
** Omit this bracketed language if the Note is an Exchange Note.
A2-4
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4. Indenture. The Company issued the Notes under an Indenture dated as
of June 26, 1998 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $150,000,000 in
aggregate principal amount.
5. Optional Redemption. The Notes are redeemable prior to their final
Stated Maturity, at the option of the Company, at any time in whole or from time
to time in part, on any date prior to their Stated Maturity selected by the
Company (the "Redemption Date") at a price equal to 100% of the principal amount
thereof plus 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) plus
the Make-Whole Premium (as defined in the Indenture), if any (the "Redemption
Price") . In no event will the Redemption Price ever be less than 100% of the
principal amount of the Notes plus accrued interest to the Redemption Date.
6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the Redemption Date, interest, if any, cease to accrue on Notes or
portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before
the mailing of a notice of redemption of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
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Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions in Article 2 of the Indenture in a manner that does not
materially adversely affect any Holder, to provide for the assumption of the
Company's obligations to Holders of the Notes in case of a merger, consolidation
or sale of assets in accordance with Article 5 of the Indenture, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the Indenture
of any such Holder in any material respect, or to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA or to allow any guarantor to guarantee the Notes.
11. Defaults and Remedies. Events of Default include: (a) default in
the payment when due of principal of, or Make-Whole Premium, if any, on, the
Notes; (b) default in the payment when due of interest on the Notes and such
default continues for a period of 30 days; (c) failure by the Company or any of
its Restricted Subsidiaries to observe or perform any other covenant (other than
the covenants described in (a) and (b) above) in the Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding; (d) failure by
the Company or any Subsidiary to pay indebtedness when due within the applicable
grace period, if any, or the acceleration of such indebtedness by the holders
thereof and, in either case, the principal amount of such unpaid or accelerated
indebtedness exceeds $20 million; or (e) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries as
specified in Section 6.1 of the Indenture. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes by notice to the Company may declare all the Notes to
be due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, the
principal amount of all then outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal, premium, if any, or interest) if it determines that withholding
notice is in their interest. The Holders of a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may on behalf of
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83
the Holders of all of the Notes waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest or premium, if any, on, or the principal of,
the Notes or in respect of any other covenant or provision of the Indenture
which, under Section 9.2 of the Indenture, cannot be modified without the
consent of the Holder of each outstanding Note. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. A director, officer, employee,
incorporator, partner, member or stockholder of the Company or any Subsidiary of
the Company, as such, shall not have any liability for any obligations of the
Company under the Notes, 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 a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
14. Authentication. This Note shall not be valid until authenticated by
the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and CUSIP numbers will be used in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
17. [Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 26, 1998, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").]**
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture [and/or the Registration Rights Agreement.]**
Requests may be made to the principal office of the Company, attention Chief
Financial Officer.
- - - ----------
** Omit this bracketed language in the Exchange Notes.
A2-7
84
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- - - --------------------------------------------------------------------------------
(Insert assignee's social security number or tax identification number)
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- - - --------------------------------------------------------------------------------
Date:
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE
- - - --------------------------------------------------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the
Registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.
A2-8
85
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY
GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Note, or of other Restricted Notes for an
interest in this Regulation S Temporary Global Note, have been made:
PRINCIPAL AMOUNT
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE SIGNATURE OF
DECREASE IN INCREASE IN FOLLOWING SUCH AUTHORIZED
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR SIGNATORY OF NOTE
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN
- - - ---------------- ------------------- ------------------- ------------------- -----------------
A2-9
86
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056
Telecopier No.:(713) 960-5237
Attention: Chief Financial Officer
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: 6 7/8% Senior Notes due 2005
Reference is hereby made to the Indenture, dated as of June 26, 1998
(the "Indenture"), between National-Oilwell, Inc., as issuer (the "Company") and
The Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
____________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such in such Note[s] specified in Annex A hereto, in
the principal amount of $__________ in such Note[s] or interests (the
"Transfer"), to ____________________ (the "Transferee"), as further specified in
Annex A hereto. In connection with the Transfer, the Transferor hereby certifies
that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE RULE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement
B-1
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Legend printed on the Rule 144A Global Note and/or the Definitive Note and in
the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL
NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
(1) for Transfers being effected in accordance with Rule 903, the transaction is
executed in, on or through a physical trading floor of an established foreign
securities exchange that is located outside the United States or (2) for
Transfers being effected in accordance with Rule 904, the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(a) or Rule 904(a) of Regulation S under the Securities Act and (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Permanent Global Note,
the Regulation S Temporary Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE
144A OR REGULATION S. The Transfer is being effected in compliance with the
transfer restrictions applicable to beneficial interests in Restricted Global
Notes and Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
B-2
88
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor or pursuant to another exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or
Rule 904 and the Transferor hereby certifies that the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) if the Transfer is to an
Institutional Accredited Investor, a certificate executed by the Transferee in
the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certificate) to the effect that such Transfer is in compliance with the
Securities Act (provided that an Opinion of Counsel need not be furnished in
respect of Transfers of a principal amount of Notes of $250,000 or more at the
time of Transfer to an Institutional Accredited Investor who furnishes the
certificate set forth in (1) above). Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i)
The Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule 144,
Rule 903 or Rule 904 and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any State of the
B-3
89
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
- - - ---------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
Dated:
B-4
90
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (A) OR (B)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP __________), or
(ii) [ ] Regulation S Global Note (CUSIP
_________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP __________), or
(ii) [ ] Regulation S Global Note (CUSIP
__________), or
(iii) [ ] Unrestricted Global Note (CUSIP
__________); or
(b) [ ] a Restricted Definitive Note.
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
91
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056
Telecopier No.:(713) 960-5237
Attention: Chief Financial Officer
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: 6 7/8% Senior Notes due 2005
Reference is hereby made to the Indenture, dated as of June 26, 1998
(the "Indenture"), between National-Oilwell, Inc., as issuer (the "Company"),
and The Bank of New York, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
____________________ (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] in an exchange transaction specified herein,
in the principal amount of $__________ in such Note[s] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
C-1
92
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficiary interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the
C-2
93
[CHECK ONE]
[ ] 144A Global Note [ ] Regulation S Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------------
[Insert Name of Owner]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Dated:_______________, _____
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EXHIBIT D
FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056
Telecopier No.:(713) 960-5237
Attention: Chief Financial Officer
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: National-Oilwell, Inc. 6 7/8% Senior Notes due 2005
Reference is hereby made to the Indenture, dated as of June 26, 1998
(the "Indenture"), between National-Oilwell, Inc., as issuer (the "Company") and
The Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $___________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. we are an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act (an "institutional accredited investor");
2. (i)(A) any purchase of the Notes by us will be for our own account or
for the account of one or more other institutional accredited investors
or as fiduciary for the account of one or more trusts, each of which is
an "accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section
3(a)(2) of the Securities Act, or a "savings and loan association" or
other institution described in Section 3(a)(5)(A) of the Securities Act
that is acquiring Notes as fiduciary for the account of one or more
institutions for which we exercise sole investment discretion;
D-1
95
3. in the event that we purchase any Notes, we will acquire Notes having
a minimum purchase price of not less than $250,000 for our own account
and for each separate account for which we are acting;
4. we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Notes;
5. we are not acquiring the Notes with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any State of the United States or any other
applicable jurisdictions, provided that the disposition of our property
and the property of any accounts for which we are acting as fiduciary
shall remain at all times within our control;
6. we have received a copy of the Offering Memorandum relating to the
offering of the Notes and acknowledge that we have had access to such
financial and other information, and have been afforded the opportunity
to ask such questions of representatives of the Company and receive
answers thereto, as we deem necessary in connection with our decision
to purchase the Notes; and
7. (vii)(a) we are not an employee benefit plan or other arrangement that
is subject to the Employee Retirement Income Security Act of 1974, as
amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended, or an entity whose underlying assets include assets of such a
plan or arrangement (pursuant to 29 C.F.R. Section 2510.3-101 or
otherwise), and we are not purchasing (and will not hold) the Notes on
behalf of, or with the assets of, any such plan, arrangement or entity;
or (b) our purchase and holding of the Notes are completely covered by
the full exemptive relief provided by U.S. Department of Labor
Prohibited Transaction Class Exemption 96-23, 95-60, 91-38, 90-1 or
84-14.
We understand that the Notes are being offered in a
transaction not involving any public offering within the meaning of the
Securities Act and that the Notes have not been registered under the Securities
Act, and we agree, on our own behalf, and on behalf of each account for which we
acquire any Notes, that if in the future we decide to resell or otherwise
transfer such Notes, such Notes will not be offered, sold or otherwise
transferred prior to (x) the date that is two years (or such shorter period of
time as permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder) after the later of the original issue date hereof (or any
predecessor of this Note) and the last day on which National-Oilwell, Inc. (the
"Company") or any affiliate of the Company was the owner of the Note (or any
predecessor of this security) and (y) such later date, if any, as may be
required by applicable laws (the "Resale Restriction Termination Date"), except
(a) to the Company or a subsidiary thereof, (b) pursuant to an effective
registration statement under the Securities Act, (c) for so long as the Note is
eligible for resale pursuant to Rule 144A under the Securities Act ("Rule
144A"), to a person it reasonably believes is a "qualified institutional buyer"
as defined in Rule 144A that is acquiring the Note for its own account or for
the account of a qualified institutional buyer to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) to an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) (an "institutional accredited investor") that, prior to such
transfer, furnishes to the trustee a signed letter containing certain
representations relating to restrictions on transfer of
D-2
96
the Note (the form of which letter can be obtained from the Trustee), (e)
pursuant to offers and sales to non-U.S. Persons that occur in an "offshore
transaction" within the meaning of Regulation S under the Securities Act, or (f)
pursuant to another available exemption from the registration requirements of
the Securities Act; provided that the Company, the Trustee, the transfer agent
and the registrar shall have the right prior to any such offer, sale or transfer
(i) pursuant to clause (c), (d), (e) or (f) to require the delivery of an
opinion of counsel, certification and/or other information satisfactory to each
of them, and (ii) in each of the foregoing cases, to require that a certificate
of transfer in the form appearing on the Note is completed and delivered by the
transferor to the Trustee. We further agree to provide any person purchasing any
of the Notes other than pursuant to clause (b) above from us a notice advising
such purchaser that resales of the Notes are restricted as stated above. We
understand that the registrar and transfer agent for the Notes will not be
required to accept for registration of transfer any Notes, except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that any
Notes that we receive in the form of physical certificates will bear a legend
reflecting the substance of this paragraph.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
You and the Company 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 proceedings or official inquiry
with respect to the matters covered hereby.
-----------------------------------------
[Insert Name of Accredited Investor]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Dated:_______________, _____
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EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
[Omitted. Filed as Exhibit 4.2 to the Registration Statement]
E-1
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EXHIBIT 4.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 26, 1998
AMONG
NATIONAL-OILWELL, INC.
AS
ISSUER,
AND
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
AS
INITIAL PURCHASERS
================================================================================
2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into this 26th day of June, 1998, among NATIONAL-OILWELL, INC., a
Delaware corporation (the "Company"), and MERRILL LYNCH & CO., MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED ("Merrill"), CHASE SECURITIES INC. and
MORGAN STANLEY & CO. INCORPORATED (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement,
dated June 26, 1998, among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of an aggregate of $150,000,000 principal amount of the
Company's 6 7/8% Senior Notes due 2005 (the "Securities"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company has
agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors and, unless the context
otherwise requires, its subsidiaries.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company, provided, however, that
such depositary must have an address in the Borough of Manhattan, in
the City of New York.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section
2.1 hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2.1 hereof.
3
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on
another appropriate form), and all amendments and supplements to such
registration statement, including the Prospectus contained therein,
all exhibits thereto and all documents incorporated by reference
therein.
"Exchange Period" shall have the meaning set forth in Section
2.1 hereof.
"Exchange Securities" shall mean the 6 7/8% Senior Notes due
2005, Series B issued by the Company under the Indenture containing
terms identical to the Securities in all material respects (except for
references to certain interest rate provisions, restrictions on
transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the
Exchange Offer.
"Holder" shall mean an Initial Purchaser, for so long as it
owns any Registrable Securities, and each of its successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the
Securities, dated as of June 26, 1998, between the Company, as issuer,
and The Bank of New York, as trustee, as the same may be amended,
supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the
meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of the then- outstanding Registrable
Securities; provided, however, that whenever the consent or approval
of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or any
subsidiary of the Company shall be disregarded in determining whether
such consent or approval was given by the Holders of such required
percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase
Securities Inc. and Morgan Stanley & Co. Incorporated and any other
broker-dealer which makes a market in the Securities and exchanges
Registrable Securities in the Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented
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by any prospectus supplement, including any such prospectus supplement
with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and
by all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) such Securities have been sold to the public pursuant to Rule 144
(or any similar provision then in force, but not Rule 144A) under the
1933 Act, (iii) such Securities shall have ceased to be outstanding or
(iv) the Exchange Offer is consummated (except in the case of
Securities purchased from the Company and continued to be held by an
Initial Purchaser).
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. (the "NASD")
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws and
compliance with the rules of the NASD (including reasonable fees and
disbursements of one firm of legal counsel for any underwriters or
Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities and any filings with the
NASD), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto
relating to the performance of and compliance with this Agreement,
(iv) all fees and expenses incurred in connection with the listing, if
any, of any of the Registrable Securities or the Exchange Securities,
as the case may be, on any securities exchange or exchanges, (v) all
rating agency fees, (vi) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, (vii) the
fees and expenses of the Trustee, and any escrow agent or custodian,
(viii) the reasonable fees and disbursements of one firm of legal
counsel selected by the Majority Holders to represent the Holders of
Registrable Securities in connection with a Shelf Registration and
(ix) any fees and expenses of any special experts retained by the
Company in connection with any Registration Statement, but excluding
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a
Holder.
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement,
and all amendments and supplements to any such Registration
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Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all
material incorporated or deemed to be incorporated by reference
therein.
"Securities" shall have the meaning set forth in the preamble.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency or governmental body performing the functions
currently performed by the United States Securities and Exchange
Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of
Section 2.2 of this Agreement which covers all of the Registrable
Securities on an appropriate form under Rule 415 under the 1933 Act,
or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
2. Registration Under the 1933 Act.
2.1 Exchange Offer. The Company shall
(A) prepare and, as soon as practicable but not later than 90 days following
the Closing Date, file with the SEC an Exchange Offer Registration Statement on
an appropriate form under the 1933 Act with respect to a proposed Exchange
Offer and the issuance and delivery to the Holders, in exchange for the
Registrable Securities, of a like principal amount of Exchange Securities, (B)
use its reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the 1933 Act within 150 days of the
Closing Date, (C) use its reasonable best efforts to keep the Exchange Offer
Registration Statement effective until the closing of the Exchange Offer and
(D) use its reasonable best efforts to cause the Exchange Offer to be
consummated not later than 180 days following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder (a) is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer
tendering Registrable Securities acquired directly from the Company for its own
account, (c) acquired the Exchange Securities in the ordinary course of such
Holder's business and (d) has no arrangements or understandings with any person
to participate in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from and after their
receipt without any limitations or restrictions under the registration
requirements of the
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1933 Act and without material restrictions under the securities laws of a
substantial proportion of the several states of the United States.
In connection with the Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a
period of not less than 30 calendar days after the date notice
thereof is mailed to the Holders (or longer if required by applicable
law) (such period referred to herein as the "Exchange Period");
(c) utilize the services of the Depositary for the
Exchange Offer;
(d) permit Holders to withdraw tendered Registrable
Securities at any time prior to 5:00 p.m. (Eastern Standard Time), on
the last business day of the Exchange Period, by sending to the
institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Registrable Securities delivered for exchange, and
a statement that such Holder is withdrawing his election to have such
Securities exchanged;
(e) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but
will not retain any rights under this Agreement (except in the case of
certain rights retained by the Initial Purchasers and Participating
Broker-Dealers as provided herein); and
(f) otherwise comply in all material respects with all
applicable laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer,
Company shall:
(i) accept for exchange all Registrable Securities duly
tendered and not validly withdrawn pursuant to the Exchange Offer in
accordance with the terms of the Exchange Offer Registration Statement
and the letter of transmittal which shall be an exhibit thereto;
(ii) deliver or cause to be delivered all Registrable
Securities so accepted for exchange to the Trustee for cancellation;
and
(iii) cause the Trustee promptly to authenticate and
deliver Exchange Securities to each Holder of Registrable Securities
so accepted for exchange in a principal amount equal to the principal
amount of the Registrable Securities of such Holder so accepted for
exchange.
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Interest on each Exchange Security will accrue from the day
after the last date on which interest was paid on the Registrable Securities
surrendered in exchange therefor or, if no interest has been paid on the
Registrable Securities, from the date of original issuance. The Exchange Offer
shall not be subject to any conditions, other than (i) that the Exchange Offer,
or the making of any exchange by a Holder, does not violate applicable law or
any applicable interpretation of the staff of the SEC, (ii) the due tendering
of Registrable Securities in accordance with the Exchange Offer, (iii) that
each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and that at the time of the
consummation of the Exchange Offer it shall have no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the 1933 Act) of the Exchange Securities and shall have made such
other representations as may be reasonably necessary under applicable SEC
rules, regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available, (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or
before any governmental agency with respect to the Exchange Offer, (v) that
there shall not have been adopted or enacted any law, statute, rule or
regulation, (vi) that there shall not have been declared by United States
federal or New York state authorities a banking moratorium, (vii) that trading
on the New York Stock Exchange or generally in the United States
over-the-counter market shall not have been suspended by order of the SEC or
any other governmental authority and (viii) such other conditions as may be
reasonably acceptable to Merrill Lynch, in each of clauses (iv) through (viii),
which, in the Company's judgment, would reasonably be expected to impair the
ability of the Company to proceed with the Exchange Offer. The Company shall
inform the Initial Purchasers of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
2.2 Shelf Registration. (i) If, because of any changes
in law, SEC rules or regulations or applicable interpretations thereof by the
staff of the SEC, the Company is not permitted to effect the Exchange Offer as
contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange
Offer Registration Statement is not declared effective within 150 days
following the Closing Date or the Exchange Offer is not consummated within 180
days after the Closing Date, (iii) if a Holder is advised by counsel that it
is not permitted by Federal securities laws or SEC policy to participate in the
Exchange Offer or does not receive Exchange Securities that are fully tradeable
pursuant to the Exchange Offer without restriction or limitation as to holding
period or volume or (iv) upon the request of the Initial Purchasers acquiring a
majority of the initial aggregate principal amount of the Registrable
Securities (but only with respect to any Registrable Securities which the
Initial Purchasers acquired directly from the Company)then in case of each of
clauses (i) through (iv) the Company shall, at their cost:
(a) As promptly as practicable, file with the SEC, and
thereafter shall use its reasonable best efforts to cause to be
declared effective as promptly as practicable but no later than 210
days after the Closing Date, a Shelf Registration Statement relating
to the offer
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and sale of the Registrable Securities by the Holders from time to
time in accordance with the methods of distribution elected by the
Majority Holders participating in the Shelf Registration and set forth
in such Shelf Registration Statement.
(b) Use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
of two years from the Closing Date, or for such shorter period that
will terminate when all Registrable Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto, (ii) cease
to be outstanding or (iii) become freely tradeable without restriction
or limitation as to holding period or volume; provided, however, that
the Company shall not be obligated to keep the Shelf Registration
Statement effective if (A) any event occurs or facts are discovered
which make any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which require the
making of any changes in such Registration Statement or Prospectus in
order to make the Statements therein not misleading; (B) the Company
determines, in its reasonable judgment, upon advice of counsel, as
authorized by a resolution of its Board of Directors, that the
continued effectiveness and useability of the Shelf Registration
Statement would (x) require the disclosure of material information,
which the Company has a bona fide business reason for preserving as
confidential, or (y) interfere with any financing, acquisition,
corporate reorganization or other material transaction involving the
Company or any of its subsidiaries, and provided further, that the
failure to keep the Shelf Registration Statement effective and usable
for offers and sales of Registrable Securities for such reasons shall
last no longer than 45 days in any 12-month period (whereafter a
Registration Default, as hereinafter defined, shall occur), and (B)
the Company thereafter complies as promptly as reasonably practicable
with the requirements of Section 3(k) hereof, if applicable. Any such
period during which the Company is excused from keeping the Shelf
Registration Statement effective and usable for offers and sales of
Registrable Securities is referred to herein as a "Suspension Period";
a Suspension Period shall commence on and include the date that the
Company gives notice to the Holders that the Shelf Registration
Statement is no longer effective or the prospectus included therein is
no longer usable for offers and sales of Registrable Securities as a
result of the application of the proviso of the foregoing sentence and
shall end on the earlier to occur of (1) the date on which each seller
of Registrable Securities covered by the Shelf Registration Statement
either receives the copies of the supplemented or amended prospectus
contemplated by Section 3(k) hereof or is advised in writing by the
Company that use of the prospectus may be resumed and (2) the
expiration of 45 days in any 12-month period during which one or more
Suspension Periods has been in effect. The Company shall extend the
relevant period referred to above during which it is required to keep
affective the Shelf Registration Statement (or the period during which
Participating Broker-Dealers are entitled to use the prospectus
included in the Exchange Offer Registration Statement in connection
with the resale of the Exchange Securities, as the case may be) by the
number of days during the period from and including the date of the
giving of such notice to and including the date which is the earlier
to occur as described in the preceding sentence.
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(c) Notwithstanding any other provisions hereof, use
their reasonable best efforts to ensure that (i) any Shelf
Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any supplement thereto complies in all
material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, 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 not
misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or
amend the Shelf Registration Statement, as required by Section 3(b) below, and
to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
2.3 Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2.1 or 2.2.
Each Holder shall pay all underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
2.4 Effectiveness. (a) The Company will be deemed not
to have used its reasonable best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if the Company
voluntarily takes any action that would, or omits to take any action which
omission would, result in any such Registration Statement not being declared
effective or in the holders of Registrable Securities covered thereby not being
able to exchange or offer and sell such Registrable Securities during that
period as and to the extent contemplated hereby, unless such action is required
by applicable law.
(b) An Exchange Offer Registration Statement pursuant to
Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court, such Registration Statement will be deemed not to have remained
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
2.5 Interest. The Indenture executed in connection
with the Securities will provide that in the event that either (a) the Exchange
Offer Registration Statement is not filed with
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The Commission on or prior to the 90th calendar day following the Closing Date,
(b) the Exchange Offer Registration Statement has not been declared effective
on or prior to the 150th calendar day following the Closing Date, (c) the
Exchange Offer is not consummated on or prior to the 180th calendar day
following the Closing Date, (d) a required Shelf Registration Statement is not
declared effective on or prior to the 210th calendar day following the Closing
Date or (e) the Exchange Offer Registration Statement or Shelf Registration
Statement is filed and declared effective but shall thereafter be withdrawn by
the Company or becomes subject to an effective stop order suspending the
effectiveness of such registration statement, except as specifically permitted
by Section 2.2(b) hereof, without being succeeded immediately by an additional
registration statement filed and declared effective (each such event referred
to in clauses (a) through (e) above, a "Registration Default"), the interest
rate borne by the Securities shall be increased by one- quarter of one percent
(0.25%) per annum following such Registration Default, with an aggregate
maximum increase in the interest rate equal to one-quarter of one percent
(0.25%) per annum; provided, however, that if the Exchange Offer Registration
Statement is not declared effective on or prior to the 150th calendar day
following the Closing Date and the Company shall request holders of Securities
to provide information for inclusion in the Shelf Registration Statement, then
Securities owned by Holders who do not deliver such information to the Company
or who do not provide comments on the Shelf Registration Statement when
requested by the Company will not be entitled to any such increase in the
interest rate for any day after the 180th day following the Closing Date.
Following the cure of all Registration Defaults, the accrual of such additional
interest will cease and the interest rate will revert to the original rate.
2.6 Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Company acknowledges
that any failure by the Company to comply with their obligations under Sections
2.1 and 2.2 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may, to
the extent permitted by law, obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2.1 and Section
2.2 hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration
Statement, within the relevant time period specified in Section 2, on
the appropriate form under the 1933 Act, which form (i) shall be
selected by the Company, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof, (iii) shall comply as to form in all
material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required
by the SEC to be filed therewith or incorporated by reference therein,
and (iv) shall comply in all respects with the
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requirements of Regulation S-T under the 1933 Act, and use their
reasonable best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary under applicable law to keep such Registration Statement
effective for the applicable period; and cause each Prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the 1933 Act and
comply with the provisions of the 1933 Act applicable to them with
respect to the disposition of all securities covered by each
Registration Statement during the applicable period to the extent
allowed by law and reasonably practicable to the Company with the
intended method or methods of distribution by the selling Holders
thereof;
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities, at least five business days prior to
filing, that a Shelf Registration Statement with respect to the
Registrable Securities is being filed and advising such Holders that
the distribution of Registrable Securities will be made in accordance
with the method selected by the Majority Holders participating in the
Shelf Registration; (ii) furnish to each Holder of Registrable
Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment
or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits in order to
facilitate the public sale or other disposition of the Registrable
Securities; and (iii) hereby consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its reasonable best efforts to register or
qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions as any Holder of
Registrable Securities covered by a Registration Statement and the
managing underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable each such Holder and underwriter to consummate the
disposition in each such jurisdiction of such Registrable Securities
owned by such Holder, provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any action
which would subject it to general service of process or taxation in
any such jurisdiction where it is not then so subject;
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(e) notify promptly each Holder of Registrable Securities
under a Shelf Registration or any Participating Broker-Dealer who has
notified the Company that it is utilizing the Exchange Offer
Registration Statement as provided in paragraph (f) below and, if
requested by such Holder or Participating Broker-Dealer, confirm such
advice in writing promptly (i) when a Registration Statement has
become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the SEC
or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any,
relating to such sale cease to be true and correct in all material
respects, (v) of the happening of any event or the discovery of any
facts during the period a Shelf Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires
the making of any changes in such Registration Statement or Prospectus
in order to make the statements therein not misleading and (vi) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities or the
Exchange Securities, as the case may be, for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;
(f) (A) in the case of the Exchange Offer
Registration Statement (i) include in the Exchange Offer Registration
Statement a section entitled "Plan of Distribution" which section
shall be reasonably acceptable to the Initial Purchasers, and which
shall contain a summary statement of the positions taken or policies
made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that holds Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial
owner (as defined in Rule l3d-3 under the Exchange Act) of Exchange
Securities to be received by such broker-dealer in the Exchange Offer,
whether such positions or policies have been publicly disseminated by
the staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers and its counsel, represent the
prevailing views of the staff of the SEC, including a statement that
any such broker-dealer who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such
Exchange Securities, (ii) furnish to each Participating Broker-Dealer
who has delivered to the Company the notice referred to in Section
3(e), without charge, as many copies of each Prospectus included in
the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (iii) hereby
consents to the use of the Prospectus forming part of the
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Exchange Offer Registration Statement or any amendment or supplement
thereto, by any person subject to the prospectus delivery requirements
of the SEC, including all Participating Broker-Dealers, in connection
with the sale or transfer of the Exchange Securities covered by the
prospectus or any amendment or supplement thereto, and (iv) include in
the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of
Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer" and
(y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act and
(B) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, the Company shall use its
reasonable best efforts to cause to be delivered at the request of an
entity representing the Participating Broker-Dealers (which entity
shall be Merrill Lynch or another Initial Purchaser) (A) a "cold
comfort" letter addressed to the Participating Broker-Dealers from the
Company's independent certified public accountants with respect to the
Prospectus in the Exchange Offer Registration Statement in the form
existing on the last date for which exchanges are accepted pursuant to
the Exchange Offer and (B) an opinion of counsel to the Company
addressed to the Participating Broker-Dealers in substantially the
form attached hereto as Exhibit A relating to the Exchange Securities;
and
(g) (i) in the case of an Exchange Offer, furnish to one
firm of legal counsel for the Initial Purchasers and (ii) in the case
of a Shelf Registration, furnish to one firm of legal counsel for the
Holders of Registrable Securities copies of any comment letters
received from the SEC or any other request by the SEC or any state
securities authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement
as soon as practicable and provide prompt notice to one firm of legal
counsel for the Holders of the withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, and each underwriter, if any,
without charge, at least one conformed copy of each
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Registration Statement and any post-effective amendment thereto,
including financial statements and schedules (without documents
incorporated therein by reference or any exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in
such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing
of any sale of Registrable Securities;
(k) in the case of a Shelf Registration, upon the Company
becoming aware of the occurrence of any event or the discovery of any
facts, each as contemplated by Section 3(e)(v) hereof, use their
reasonable best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers
of the Registrable Securities or Participating Broker-Dealers, such
Prospectus will not contain at the time of such delivery any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee
with a certificate or certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for
deposit with the Depositary and consistent with the procedures to be
used by the Depositary;
(m) unless the Indenture, as it relates to the Exchange
Securities or the Registrable Securities, as the case may be, has
already been so qualified, use its reasonable best efforts to (i)
cause the Indenture to be qualified under the Trust Indenture Act of
1939 (the "TIA") in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be, (ii)
cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for the Indenture to be so qualified
in accordance with the terms of the TIA and (iii) execute, and use its
reasonable best efforts to cause the Trustee to execute, all 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 so qualified in a timely manner;
(n) in the case of a Shelf Registration, take all
customary and appropriate actions reasonably required (including those
reasonably requested by the Majority Holders) in order to expedite or
facilitate the disposition of the Registrable Securities registered
thereby. If requested as set forth below, the Company agrees that it
will in good faith negotiate the terms
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of an underwriting agreement, which shall be in form and scope as is
customary for similar offerings of debt securities with similar credit
ratings (including, without limitation, representations and warranties
to the underwriters) and shall otherwise be reasonably satisfactory to
the Company and the managing underwriters; and:
(i) if requested by the managing underwriters,
obtain opinions of counsel to the Company (which counsel shall be
reasonably satisfactory to the managing underwriters) addressed to
such underwriters, covering the matters customarily covered in
opinions requested in underwritten sales of securities in the form
agreed upon by such counsel and counsel to the managing underwriters;
(ii) if requested by the managing underwriters,
obtain a "cold comfort" letter and an update thereto not later than
two weeks after the date of the original letter (or if not available
under applicable accounting pronouncements or standards, a single
"procedures" letter and a single update thereto) from the Company's
independent certified public accountants addressed to the underwriters
named in the underwriting agreement and use its reasonable best
efforts to have such letter addressed to the selling Holders of
Registrable Securities (provided, however, that such letter need not
be addressed to any Holders to whom, in the reasonable opinion of the
Company's independent certified public accountants, addressing such
letter is not permissible under applicable accounting standards), such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" (or "procedures") letters to
underwriters in connection with similar underwritten offerings; and
(iii) deliver such documents and certificates as
may be reasonably requested and as are customarily delivered in
similar underwritten offerings.
Notwithstanding anything herein to the contrary, the
Company shall have no obligation to enter into any underwriting
agreement or permit an underwritten offering of Registrable Securities
unless a request therefor shall have been received from the Majority
Holders within ten business days of the date of the notice from the
Company as required by Section 3(c). In the case of such a request
for an underwritten offering, the Company shall provide reasonable
advance written notice to the Holders of all Registrable Securities of
such proposed underwritten offering. Such notice shall (A) offer each
such Holder the right to participate in such underwritten offering
(but may indicate that whether or not all Registrable Securities are
included will be at the discretion of the underwriters), (B) specify a
date, which shall be no earlier than ten business days following the
date of such notice, by which such Holder must inform the Company of
its intent to participate in such underwritten offering and (C)
include the instructions such Holder must follow in order to
participate in such underwritten offering;
(o) in the case of a Shelf Registration, and to
the extent customary in connection with a "due diligence"
investigation for an offering of debt securities with a similar credit
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rating to that of the Registrable Securities, make available
for inspection by representatives appointed by the Majority
Holders and any underwriters participating in any disposition
pursuant to a Shelf Registration Statement and one firm of
legal counsel retained for all Holders participating in such
Shelf Registration, and one firm of legal counsel to the
underwriters, if any, all financial and other records,
pertinent corporate documents and properties of the Company
reasonably requested by any such persons, and cause the
respective officers, directors, employees, and any other
agents of the Company to supply all information reasonably
requested by any such representative, underwriter or counsel
in connection with a Registration Statement, and make such
representatives of the Company available for discussion of
such documents as shall be reasonably requested by the Initial
Purchasers; provided, however, that, if any such records,
documents or other information relates to pending or proposed
acquisitions or dispositions, or otherwise relates to matters
reasonably considered by the Company to constitute sensitive
or proprietary information, the Company need not provide such
records, documents or information unless the foregoing parties
enter into a confidentiality agreement in customary form and
reasonably acceptable to such parties and the Company;
(p) (i) in the case of an Exchange Offer
Registration Statement, a reasonable time prior to the filing
of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer
Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to Merrill Lynch
and make such changes in any such document prior to the filing
thereof as Merrill Lynch may reasonably request and, except as
otherwise required by applicable law, not file any such
document in a form to which Merrill Lynch on behalf of the
Holders of Registrable Securities shall reasonably object, and
make the representatives of the Company available for
discussion of such documents as shall be reasonably requested
by Merrill Lynch; and
(ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration
Statement, any Prospectus forming a part thereof, any
amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document
to Merrill Lynch, one firm of legal counsel appointed by the
Majority Holders to represent the Holders participating in
such Shelf Registration, the managing underwriters of an
underwritten offering of Registrable Securities, if any, and
make such changes in any such document prior to the filing
thereof as Merrill Lynch, such one firm of legal counsel for
the Holders, such managing underwriters or their counsel may
reasonably request and not file any such document in a form to
which Merrill Lynch, such one firm of legal counsel for the
Holders, such managing underwriters or their counsel may
reasonably object and make the representatives of the Company
available for discussion of such document as shall be
reasonably requested by Merrill Lynch, such one firm of legal
counsel for the Holders, such managing underwriters or their
counsel.
(q) in the case of a Shelf Registration, use its
reasonable best efforts to cause the Registrable Securities to
be rated by the appropriate rating agencies, if so requested
by the
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Majority Holders, or if requested by the Majority Holders, or
by the managing underwriters of an underwritten offering of
Registrable Securities, if any, unless the Exchange Securities
or the Registrable Securities, as the case may be, are already
so rated or unless the Company has obtained such ratings for
its long-term debt securities generally;
(r) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section
11(a) of the 1933 Act and Rule 158 thereunder;
(s) cooperate and assist in any filings required
to be made with the NASD and, in the case of a Shelf
Registration, in the performance of any due diligence
investigation by any managing underwriter and its counsel
(including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and
regulations of the NASD); and
(t) upon consummation of an Exchange Offer,
obtain a customary opinion of counsel to the Company addressed
to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer, and which
includes an opinion that (i) the Company has duly authorized,
executed and delivered the Exchange Securities and the related
indenture, and (ii) each of the Exchange Securities and
related indenture constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms (with customary
exceptions).
In the case of a Shelf Registration Statement, the Company may
(as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Securities to furnish
to the Company such information regarding the Holder and the proposed
distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees and in the case of the Exchange Offer Registration Statement,
each Participating Broker-Dealer agrees that, (i) upon receipt of any
notice from the Company of the happening of any event or the discovery
of any facts, each of the kind described in Section 3(e)(v) hereof or
(ii) the Company determines, in its reasonable judgment, upon advice
of counsel, as authorized by a resolution of its Board of Directors,
that the continued effectiveness and usability of the Shelf
Registration Statement would (x) require the disclosure of material
information, which the Company has a bona fide business reason for
preserving as confidential, or (y) interfere with any financing,
acquisition, corporate reorganization or other material transaction
involving the Company or any of its subsidiaries, such Holder or
Participating Broker-Dealer, as the case may be, will forthwith
discontinue disposition of Registrable Securities pursuant to such
Registration Statement until the receipt by such Holder or
Participating Broker-Dealer, as the case may be, of (A) in the case of
clause (i) above, the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by
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the Company, such Holder will deliver to the Company (at its expense)
all copies in its possession of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice,
or (B) in the case of clause (ii) above, notice in writing from the
Company that such Holder may resume disposition of Registrable
Securities pursuant to such Registration Statement. If the Company
shall give any such notice described in clause (i) above to suspend
the disposition of Registrable Securities pursuant to a Registration
Statement as a result of the happening of any event or the discovery
of any facts, each of the kind described in Section 3(e)(v) hereof,
the Company shall be deemed to have used its best efforts to keep
such Registration Statement effective during such period of suspension
provided that the Company shall use its reasonable best efforts to
file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to such Registration Statement
and shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of
such notice to and including the date when the Holders shall be
entitled to resume such dispositions pursuant to this paragraph.
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage
such offering will be selected by the Company and shall be acceptable
to the Majority Holders. No Holder of Registrable Securities may
participate in any underwritten offering hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms
of such underwriting arrangements.
(4) Indemnification; Contribution.
(a) The Company shall indemnify and hold harmless the
Initial Purchasers, each Holder, (in its capacity as a
participant in any Exchange Offer or Shelf Registration
transaction), each Participating Broker-Dealer, each Person
who participates as an underwriter (any such Person being an
"Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material
fact contained in any Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order
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to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 4(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) subject to Section 4(c) below, against any and all
expense whatsoever, as incurred (including the fees and disbursements
of counsel chosen by Merrill Lynch, or in the event that Merrill Lynch
is not an indemnified party, by a majority of the indemnified
parties), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity agreement in this subsection 4(a) shall
not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission made in reliance upon and in
corconformity with written information furnished to the Company by the Initial
Purchasers, such Holder or underwriter expressly for use in a Registration
Statement (or any amendment the thereto) or any Prospectus (or any amendment or
supplement thereto).
(b) Each Holder severally, but not jointly, agrees to
indemnify and hold harmless the Company, the Initial Purchasers, each
Underwriter and the other selling Holders, and each of their
respective directors and officers, and each Person, if any, who
controls the Company, the Initial Purchasers, any Underwriter or any
other selling Holder within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in
Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions,
made in the Shelf Registration Statement (or any amendment thereto) or
any Prospectus included therein (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); provided, however, that no such
Holder shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
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(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any
event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In case any
such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that
it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the defendants in
any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it
and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by
such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under
this Section 4 for any legal or other expenses, subsequently incurred
by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it
being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this
Section 4, representing the indemnified parties under such paragraph
(a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel reasonably
satisfactory to the indemnified party or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of
such action effected by such indemnified party without the consent of
the indemnifying party. No indemnifying party shall, without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4
hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all
liability arising out of such litigation,
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investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by
Section 4(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at
any time an indemnified party shall have requested in good faith an
indemnifying party to reimburse the indemnified party for specified
fees and expenses of counsel (the "Requested Expenses"), an
indemnifying party shall not be liable for any settlement of the
nature contemplated by Section 4(a)(ii) that is effected without its
consent (after satisfaction of each of the conditions set forth in the
immediately preceding sentence) if, prior to the date of such
settlement, such indemnifying party determines in good faith that the
Requested Expenses are not reasonable, reimburses such indemnified
party in accordance with such request for the portion of the Requested
Expenses it considers to be reasonable and provides written notice to
the indemnified party substantiating the fact that the unpaid balance
of the Requested Expenses is unreasonable.
(e) If the indemnification provided for in this Section 4
is applicable by its terms but is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by
such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the Company on the one
hand, the Holders on another hand and the Initial Purchasers on
another hand with respect to the statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.
The relative fault of the Company on the one hand, the Holders
on another hand, and the Initial Purchasers on another hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Holders or
the Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Holders and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 4
were determined by pro rata allocation (even if the Initial Purchasers 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 above
in this
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Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities sold by it were offered exceeds
the amount of any damages which such Initial Purchaser 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 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each person, if any, who
controls an Initial Purchaser or Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Initial Purchaser or Holder, and each director of the
Company, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The Initial Purchasers' respective
obligations to contribute pursuant to this Section 4 are several in proportion
to the principal amount of Securities set forth opposite their respective names
in Schedule A to the Purchase Agreement and not joint.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company covenants that they will file the reports required to be
filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and
the rules and regulations adopted by the SEC thereunder. If the Company ceases
to be so required to file such reports, the Company covenants that it will upon
the request of any Holder of Registrable Securities (a) make publicly available
such information as is necessary to permit sales pursuant to Rule 144 under the
1933 Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will
take such further action as any Holder of Registrable Securities may reasonably
request and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
1933 Act within the limitation of the exemptions provided by (i) Rule 144 under
the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A
under the 1933 Act, as such Rule may be amended from time to time or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon the request
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of any Holder of Registrable Securities, the Company will deliver to such
Holder a written statement as to whether it has complied with such
requirements.
5.2 No Inconsistent Agreements. The Company has
not entered into and will not after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
5.3 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 unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure. Notwithstanding anything in this Agreement to
the contrary, this Agreement may be amended, modified or supplemented, and
waivers and consents to departures from the provisions hereof may be given, by
written agreement signed by the Company and Merrill Lynch to the extent that
any such amendment, modification, supplement, waiver or consent is, in their
reasonable judgment, necessary or appropriate to comply with applicable law
(including any interpretation of the staff of the SEC) or any change therein.
5.4 Notices. All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand delivery, registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current address
given by such Holder to the Company by means of a notice given in accordance
with the provisions of this Section 5.4, which address initially is the address
set forth in the Purchase Agreement with respect to the Initial Purchasers and
(b) if to the Company, initially at the Company's address set forth in the
Purchase Agreement, and thereafter at such other address of which notice is
given in accordance with the provisions of this Section 5.4.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; four
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without
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limitation and without the need for an express assignment, subsequent Holders;
provided that nothing herein shall be deemed to permit any assignment, transfer
or other disposition of Registrable Securities in violation of the terms of the
Purchase Agreement and provided, further, that Holders of Registrable
Securities may not assign their rights under this Agreement except in
connection with the permitted transfer of Registrable Securities and then only
insofar as relates to such Registrable Securities. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled
to receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial
Purchasers (even if the Initial Purchasers are not Holders of Registrable
Securities) shall be third party beneficiaries to the agreements made hereunder
between the Company, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the extent they
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder. Each Holder of Registrable Securities shall be a
third party beneficiary to the agreements made hereunder between the Company,
on the one hand, and the Initial Purchasers, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder.
5.7 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.
5.8 Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.10 Severability. In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be affected or impaired
thereby.
-23-
25
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
NATIONAL-OILWELL, INC.
By: /s/ Steven W. Krablin
------------------------------
Name: Steven W. Krablin
Title: Vice President
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Rosser C. Newton
--------------------------------------
Rosser C. Newton,
Vice President
-24-
26
Exhibit A
FORM OF OPINION OF COUNSEL
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Chase Securities Inc.
Morgan Stanley & Co. Incorporated
and any other Participating Broker-Dealers
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as counsel for National-Oilwell, Inc., a Delaware
corporation (the "Company"), in connection with the sale by the Company to the
Initial Purchasers (as defined below) of $150,000,000 aggregate principal
amount of 6 7/8 % Senior Notes due 2005 (the "Securities") of the Company
pursuant to the Purchase Agreement dated June 23, 1998 (the "Purchase
Agreement") among the Company, and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Chase Securities Inc. and Morgan Stanley & Co.
Incorporated (collectively, the "Initial Purchasers") and the filing by the
Company of an Exchange Offer Registration Statement (the "Registration
Statement") in connection with an Exchange Offer to be effected pursuant to the
Registration Rights Agreement (the "Registration Rights Agreement"), dated
June 26, 1998, among the Company, and the Initial Purchasers. This opinion is
furnished to you pursuant to Section 3(f)(B) of the Registration Rights
Agreement. Unless otherwise defined herein, capitalized terms used in this
opinion that are defined in the Registration Rights Agreement are used herein
as so defined.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering this opinion, as
to all matters of fact relevant to this opinion, we have relied upon the
representations and warranties of the Company set forth in the Purchase
Agreement and the statements set forth in certificates of public officials and
officers of the Company, without making any independent investigation or
inquiry with respect to the completeness or accuracy of such representations,
warranties or statements.
Based on and subject to the foregoing, we are of the opinion that the
Exchange Offer Registration Statement and the Prospectus (other than the
financial statements, notes or schedules thereto and other financial data and
supplemental schedules included or incorporated by reference
-25-
27
therein or omitted therefrom, any reserve data included therein and the Form
T-1, as to which such counsel need express no opinion), comply as to form in
all material respects with the requirements of the 1933 Act and the applicable
rules and regulations promulgated under the 1933 Act.
In addition to the foregoing opinion, we have participated in the
preparation of the Exchange Offer Registration Statement and Prospectus
included therein and, although we are not passing upon, and do not assume
responsibility for the accuracy, completeness or fairness of, any portion of
the Exchange Offer Registration Statement and such Prospectus (relied to a
large extent as to factual matters upon certificates of officers and directors
of the Company), nothing has come to our attention that causes us to believe
that, at the date it became effective, the Exchange Offer Registration
Statement (other than the financial statements and schedules and the notes
thereto and other financial data included therein, the reserve data included
therein and the Form T-1, as to which we make no statement) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that such Prospectus (other than the financial statements and schedules and the
notes thereto and other financial data included therein, as to which we make no
statement) as of the date hereof includes an untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
The foregoing opinion and comment are is limited in all respects to
federal laws of the United States, the Delaware General Corporation Law and New
York law. The foregoing opinion and comment are rendered only with respect to
laws, rules, and regulations which are presently in effect and applicable court
rulings and orders which have been published and are generally available and
which are normally applicable to transactions such as the exchange of the
Registrable Securities for the Exchange Securities as described in the Exchange
Offer Registration Statement. The foregoing opinion and comment are given as
of the date hereof, and we undertake no duty to advise you as to any changes of
law or fact which come to our attention after the date hereof. This letter is
strictly limited to the opinions expressly set forth herein and is not to be
read as applying by implication or otherwise to any other matter in connection
with the Purchase Agreement or the Registration Rights Agreement other than the
sale by Participating Broker- Dealers of the Securities as described in the
Registration Rights Agreement.
This opinion is being furnished to you solely for your benefit in
connection with the transactions contemplated by the Registration Rights
Agreement, and may not be used for any other purpose or relied upon by any
person other than you. Except with our prior written consent, the opinions
herein expressed are not to be used, circulated, quoted or otherwise referred
to in connection with any transactions other than those contemplated by the
Registration Rights Agreement by or to any other person.
Very truly yours,
-26-
1
EXHIBIT 5
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Tel: (215) 963-5000
Fax: (215) 963-5299
August 21, 1998
National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056
Re: National-Oilwell, Inc. Amendment No. 1 on Form S-4 to Registration
Statement on Form S-3 (Registration No. 333-53717)
Ladies and Gentlemen:
We have acted as counsel to National-Oilwell, Inc., a Delaware corporation (the
"Company"), in connection with the filing by the Company of Amendment No. 1 on
Form S-4 to Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), with the Securities
and Exchange Commission. The Registration Statement registers under the Act the
proposed issuance of up to $150,000,000 aggregate principal amount of the
Company's 6 7/8% Senior Notes due 2005, Series B (the "Exchange Notes") in
exchange for the Company's outstanding 6 7/8% Senior Notes due 2005 (the "Old
Notes"). The Exchange Notes are issuable, and the Old Notes were issued, under
an Indenture dated as of June 26, 1998 (the "Indenture") between the Company and
The Bank of New York, as Trustee (the "Trustee").
In rendering the opinion set forth below, we have reviewed (a) the Registration
Statement, (b) the Indenture, (c) the Certificate of Incorporation and Bylaws of
the Company as amended to date, (d) certain records of the corporate proceedings
of the Company, and (e) such records, documents, statutes and decisions as we
have deemed relevant. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with the original of all documents submitted to us as copies
thereof.
Our opinion set forth below is limited to the Delaware General Corporation Law
and the laws of the State of New York. We have assumed for purposes of this
opinion that the Indenture was duly authorized, executed and delivered by the
Trustee, that the Indenture is a legal, valid and binding obligation of the
Trustee, and that the Trustee has the requisite organizational and legal power
and authority to perform its obligations under the Indenture.
Based upon the foregoing, and subject to the effectiveness of the Registration
Statement under the Act and the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, we are of the opinion that when the Exchange
Notes are duly executed, attested, issued and delivered by duly authorized
officers of the Company and the Exchange Notes are duly authenticated by the
Trustee, all in accordance with the terms of the Indenture, against surrender
and cancellation of an identical principal amount of Old Notes, the Exchange
Notes will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent conveyances and
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law).
1
EXHIBIT 12
NATIONAL-OILWELL, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT FOR RATIO)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31, YEAR ENDED AUGUST 31,
---------------- --------------- -------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT RATIOS)
EARNINGS:
Income (loss) before income taxes 71,643 32,260 82,482 16,718 12,196 (6,709) 6,061
Interest expense 2,933 2,422 5,078 9,741 64 215 506
Amortization of debt costs 50 114 191 1,281 -- -- --
Estimated interest portion of rental expense 325 360 720 840 64 48 48
------ ------ ------ ------ ------ ------ ------
EARNINGS 74,951 35,156 88,471 28,580 12,324 (6,446) 6,615
FIXED CHARGES:
Interest expense 2,933 2,422 5,078 9,741 64 215 506
Amortization of debt costs 50 114 191 1,281 -- -- --
Estimated interest portion of rental expense 325 360 720 840 64 48 48
------ ------ ------ ------ ------ ------ ------
TOTAL FIXED CHARGES 3,308 2,896 5,989 11,862 128 263 554
RATIO OF EARNINGS TO FIXED CHARGES 22.7 12.1 14.8 2.4 96.3 --(1) 11.9
- - - ----------
(1) Additional income before income taxes necessary to attain a ratio of 1.0
would have been $6.7 million.
1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of
National-Oilwell, Inc. for the registration of $150,000,000 principal amount of
6 7/8% Senior Notes due 2005, Series B and to the incorporation by reference
therein of our report dated February 5, 1998 with respect to the consolidated
financial statements of National-Oilwell, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1997 filed with the Securities and
Exchange Commission. We also consent to the incorporation by reference of our
report dated January 31, 1996 with respect to the consolidated financial
statements of National-Oilwell, a general partnership, and subsidiaries (the
predecessor) for the year ended December 31, 1995 also incorporated by reference
in its Annual Report (Form 10-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Houston, Texas
August 21, 1998
1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of
National-Oilwell, Inc. for the registration of $150,000,000 principal amount of
6 7/8% Senior Notes due 2005, Series B and to the incorporation by reference
therein of our report dated November 1, 1996, except as to Note 1 which is as of
September 25, 1997, with respect to the consolidated financial statements of
National-Oilwell, Inc. for the year ended August 31, 1995 and the three months
ended November 30, 1995 included in its Annual Report (Form 10-K) for the year
ended December 31, 1997 filed with the Securities and Exchange Commission.
We also consent to the incorporation by reference of our report dated
October 21, 1997 with respect to the consolidated financial statements of Dreco
Energy Services Ltd. for the twelve months ended November 30, 1996 included in
the Annual Report (Form 10-K) of National-Oilwell, Inc. for the year ended
December 31, 1997 filed with the Securities and Exchange Commission.
/s/ COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants
Edmonton, Alberta
August 21, 1998
1
EXHIBIT 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) [ ]
--------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------------------------
NATIONAL-OILWELL, INC.
(Exact name of obligor as specified in its charter)
Delaware 76-0475815
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
5555 San Felipe
Houston, Texas 77056
(Address of principal executive offices) (Zip code)
----------------------
6-7/8% Senior Notes due 2005, Series B
(Title of the indenture securities)
================================================================================
2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- - - --------------------------------------------------------------------------------
Name Address
- - - --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form
T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 21st day of July, 1998.
THE BANK OF NEW YORK
By: /s/MICHAEL CULHANE
------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-4-
