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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 19, 1997
LOEWS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-6541 13-264102
(State of Incorporation) (Commission File (IRS Employer
Number) Identification
Number)
667 Madison Avenue
New York, New York 10021-8087
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 545-2000
ITEM 5. OTHER EVENTS.
On September 19, 1997, the Registrant completed the sale of
$1,150,000,000 principal amount of its 3 1/8% Exchangeable
Subordinated Notes due September 15, 2007 (the "Notes"),
including $150,000,000 principal amount of Notes to cover over-
allotments. The Notes are exchangeable into shares of common
stock, par value $.01 per share (the "Daimond Offshore Common
Stock"), of Diamond Offshore Drilling, Inc. ("Diamond Offshore")
from October 1, 1998 to September 15, 2007, subject to certain
blackout rights of Diamond Offshore contained in the Amendment
to the Registration Rights Agreement, dated as of September 16,
1997, between the Registrant and Diamond Offshore (the
"Registration Rights Agreement Amendment"). The Notes have been
issued pursuant to the terms, and subject to the conditions,
contained in the Indenture, dated as of December 1, 1985,
between the Registrant and The Chase Manhattan Bank (as
successor by merger to Manufacturers Hanover Trust Company),
as trustee (the "Trustee"), as supplemented by the First and
Second Supplemental Indentures, each dated as of February 18,
1997, between the Registrant and the Trustee, and as supplemented
by the Third Supplemental Indenture, dated as of September 19,
1997, between the Registrant and the Trustee (the "Third
Supplemental Indenture"). A copy of the Registration Rights
Agreement Amendment, the Third Supplemental Indenture and the final
Underwriting Agreement, dated as of September 16, 1997, between the
Registrant and Goldman, Sachs & Co., as Representative of the
Underwriters thereunder, are filed as exhibits hereto and are
incorporated by reference herein.
On September 23, 1997, the Registrant issued a press release
announcing the completion of the sale of the Notes and stating
that, at the time the sale of the Notes was consummated, the
Registrant owned approximately 50.3% of the outstanding Diamond
Offshore Common Stock. A copy of the press release is filed as
an exhibit hereto and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits. The following exhibits are filed as part
of this report:
1.1 Underwriting Agreement, dated as of
September 16, 1997, between the
Registrant and Goldman, Sachs & Co.
4.1 Third Supplemental Indenture, dated as
of September 19, 1997, between the
Registrant and The Chase Manhattan
Bank, as Trustee.
4.2 Amendment to Registration Rights
Agreement, dated as of September 16,
1997, between the Registrant and
Diamond Offshore Drilling, Inc.
99.1 Press Release, dated September 23, 1997
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: September 23, 1997
LOEWS CORPORATION
By: /s/ Peter W. Keegan
--------------------------------
Name: Peter W. Keegan
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT LIST
Exhibit
Number Description
1.1 Underwriting Agreement, dated as of September 16, 1997,
between the Registrant and Goldman, Sachs & Co.
4.1 Third Supplemental Indenture, dated as of September 19,
1997, between the Registrant and The Chase Manhattan
Bank, as Trustee.
4.2 Amendment to Registration Rights Agreement, dated as of
September 16, 1997, between the Registrant and Diamond
Offshore Drilling, Inc.
99.1 Press Release, dated September 23, 1997
Exhibit 1.1
LOEWS CORPORATION
(a Delaware corporation)
$1,000,000,000 aggregate principal amount
3-1/8% Exchangeable Subordinated Notes due 2007
UNDERWRITING AGREEMENT
September 16, 1997
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
Loews Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule
II hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), the principal amount of
its securities identified in Schedule I hereto (the "Securities"),
which may be senior or subordinated debt securities (the "Debt
Securities") or any combination thereof.
The Debt Securities will be issued in one or more series as
senior indebtedness (the "Senior Debt Securities") under an
indenture, dated as of March 1, 1986, between the Company and The
Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), as supplemented by a first supplemental indenture,
dated March 30, 1993, between the Company and the Trustee and a
second supplemental indenture, dated as of February 18, 1997,
between the Company and the Trustee (such Indenture, as
supplemented, is referred to as the "Senior Indenture"), or as
subordinated indebtedness (the "Subordinated Debt Securities")
under an indenture, dated as of December 1, 1985, between the
Company and the Trustee, as supplemented by a first supplemental
indenture, dated as of February 18, 1997, between the Company and
the Trustee, a second supplemental indenture, dated as of February
18, 1997, between the Company and the Trustee and a third
supplemental indenture, dated as of September 19, 1997, between
the Company and the Trustee (such Indenture, as supplemented, is
referred to as the "Subordinated Indenture," and collectively with
the Senior Indenture, the "Indentures," and each, an "Indenture").
Each series of Debt Securities may vary, as applicable, as to
title, aggregate principal amount, rank, interest rate or formula
and timing of payments thereof, stated maturity date, redemption
and/or repayment provisions, sinking fund requirements, conversion
provisions (and terms of the related Underlying Securities) and
any other variable terms established by or pursuant to the
applicable Indenture.
As used herein, "Securities" means the Senior Debt Securities
or Subordinated Debt Securities, or any combination thereof,
initially issuable by the Company and, if Securities are
convertible or exchangeable, "Underlying Securities" means the
securities (of the Company or another issuer) issuable upon
conversion or exchange of the Senior Debt Securities or
Subordinated Debt Securities, as applicable.
Schedule I hereto specifies the number or aggregate principal
amount, as the case may be, of Securities to be initially issued
(the "Initial Underwritten Securities"), whether such offering is
on a fixed or variable price basis and, if on a fixed price basis,
the initial offering price, the price at which the Initial
Underwritten Securities are to be purchased by the Underwriters,
the form, time, date and place of delivery and payment of the
Initial Underwritten Securities and any other material variable
terms of the Initial Underwritten Securities, as well as the
material variable terms of any related Underlying Securities. In
addition, if applicable, such Underwriting Agreement shall specify
whether the Company has agreed to grant to the Underwriters an
option to purchase additional Securities to cover overallotments,
if any, and the number or aggregate principal amount, as the case
may be, of Securities subject to such option (the "Option
Underwritten Securities"). As used herein, the term "Underwritten
Securities" shall include the Initial Underwritten Securities and
all or any portion of any Option Underwritten Securities.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(No. 333-22113) for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the Act (the "Act
Regulations"), and the Company has filed such post-effective
amendments thereto as may be required prior to the execution of
this Underwriting Agreement. Such registration statement (as so
amended, if applicable) has been declared effective by the
Commission and each Indenture has been duly qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Such registration statement (as so amended, if
applicable), including the information, if any, deemed to be a
part thereof pursuant to Rule 430A(b) of the Act Regulations (the
"Rule 430A Information") or Rule 434(d) of the Act Regulations
(the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus and the final
prospectus supplement relating to the offering of the Underwritten
Securities, in the form first furnished to the Underwriters by the
Company for use in connection with the offering of the
Underwritten Securities, are collectively referred to herein as
the "Final Prospectus"; provided, however, that all references to
the "Registration Statement" and the "Final Prospectus" shall also
be deemed to include all documents incorporated therein by
reference pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prior to the execution of this
Underwriting Agreement; provided further, that if the Company
files a registration statement with the Commission pursuant to
Rule 462(b) of the Act Regulations (the "Rule 462 Registration
Statement"), then, after such filing, all references to
"Registration Statement" shall also be deemed to include the Rule
462 Registration Statement; and provided further, that if the
Company elects to rely upon
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Rule 434 of the Act Regulations, then all references to "Final
Prospectus" shall also be deemed to include the final or
preliminary prospectus and the applicable term sheet or
abbreviated term sheet (the "Term Sheet"), as the case may be, in
the form first furnished to the Underwriters by the Company in
reliance upon Rule 434 of the Act Regulations, and all references
in this Underwriting Agreement to the date of the Final Prospectus
shall mean the date of the Term Sheet. A "Preliminary Prospectus"
shall be deemed to refer to any prospectus used before the
registration statement became effective and any prospectus that
omitted, as applicable, the Rule 430A Information, the Rule 434
Information or other information to be included upon pricing in a
form of prospectus filed with the Commission pursuant to Rule
424(b) of the Act Regulations, that was used after such
effectiveness and prior to the execution and delivery of this
Underwriting Agreement. For purposes of this Underwriting
Agreement, all references to the Registration Statement, Final
Prospectus, Term Sheet or Preliminary Prospectus or to any
amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"). Notwithstanding anything to the contrary in this
Underwriting Agreement, if any revised Term Sheet, Preliminary
Prospectus or Final Prospectus, as the case may be, shall be
provided to the Underwriters by the Company for use in connection
with the offering of the Securities which differs from the
prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule
424(b) of the Act Regulations), the terms "Term Sheet,"
"Preliminary Prospectus" or "Final Prospectus," as the case may
be, shall refer to such revised "Term Sheet," "Preliminary
Prospectus" or "Final Prospectus" from and after the time it is
first provided to the Underwriters for such use. Any reference
herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, Term Sheet, any Preliminary
Prospectus or the Final Prospectus, unless otherwise expressly
provided therein, shall be deemed to refer to and include the
filing of any document under the Exchange Act after the date of
this Underwriting Agreement, or the issue date of the Preliminary
Prospectus or the Final Prospectus, as the case may be, deemed to
be incorporated therein by reference.
All references in this Underwriting Agreement to financial
statements and schedules and other information which is
"contained," "included" or "stated" (or other references of like
import) in the Registration Statement, Final Prospectus or
Preliminary Prospectus shall be deemed to mean and include all
such financial statements and schedules and other information
which is incorporated by reference in the Registration Statement,
Final Prospectus or Preliminary Prospectus, as the case may be;
and all references in this Underwriting Agreement to amendments or
supplements to the Registration Statement, Final Prospectus or
Preliminary Prospectus shall be deemed to mean and include the
filing of any document under the Exchange Act which is
incorporated by reference in the Registration Statement, Final
Prospectus or Preliminary Prospectus, as the case may be.
1A. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter as of the date
hereof and as of the Closing Date that:
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(a) The Company meets the requirements for use of Form S-3
under the Act.
(b) This Underwriting Agreement has been duly authorized,
executed and delivered by the Company. The Indenture is
substantially in the form filed as an exhibit to the Registration
Statement at the time the Registration Statement became effective
(other than insofar as the Indenture has been modified by a
supplemental Indenture), and, has been duly authorized, executed
and delivered by the Company and constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except that (A) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally and (B) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
An Amendment to the Registration Rights Agreement, dated October
16, 1995, between the Company and Diamond Offshore Drilling, Inc.
("Diamond Offshore"), in the form of Exhibit A hereto, has been
duly authorized by the Company and, as of the Closing Date, will
be duly executed and delivered by the Company (as so amended, such
Registration Rights Agreement is referred to as the "Amended
Registration Rights Agreement").
(c) Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Act and no
stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been
issued under the Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. In
addition, each Indenture has been duly qualified under the Trust
Indenture Act.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto (including the filing of the Company's most recent Annual
Report on Form 10-K with the Commission (the "Annual Report on
Form 10-K")) became effective and as of the date hereof, the
Registration Statement, any Rule 462(b) Registration Statement and
any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the Act and the Act
Regulations and the Trust Indenture Act and the rules and
regulations of the Commission under the Trust Indenture Act (the
"Trust Indenture Act Regulations") and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. At the date of the Final
Prospectus, at the Closing Date and at each Date of Delivery, if
any, the Final Prospectus and any amendments and supplements
thereto did not and will not include an untrue statement
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of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the
Company elects to rely upon Rule 434 of the Act Regulations, the
Company will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties
in this subsection (c) shall not apply to (i) statements in or
omissions from the Registration Statement or the Final Prospectus
made in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of any Underwriter
expressly for use in the Registration Statement or the Final
Prospectus or (ii) that part of the Registration Statement which
shall constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Trustee.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Act,
complied when so filed in all material respects with the Act
Regulations and each Preliminary Prospectus and the Final
Prospectus delivered to the Underwriters for use in connection
with the offering of Underwritten Securities will, at the time of
such delivery, be identical to any electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(d) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Final
Prospectus as of the date hereof, when they became effective or at
the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder (the "Exchange Act Regulations").
(e) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Final Prospectus and to enter into and perform
its obligations under, or as contemplated under, this Underwriting
Agreement. The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of material property or the
conduct of material business, except where the failure to so
qualify or be in good standing would not result in a material
adverse change in the condition (financial or other), earnings,
business or properties of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the
ordinary course of business (a "Material Adverse Effect").
(f) The Underwritten Securities have been duly authorized by
the Company for issuance and sale pursuant to this Underwriting
Agreement. Such Underwritten
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Securities, when issued and authenticated in the manner provided
for in the applicable Indenture and delivered against payment of
the consideration therefor specified in this Underwriting
Agreement, will constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
or by general equitable principles, and except further as
enforcement thereof may be limited by (A) governmental authority
to limit, delay or prohibit the making of payments outside the
United States and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. Such Underwritten
Securities will be in the form contemplated by, and each
registered holder thereof is entitled to the benefits of, the
applicable Indenture.
(g) The Underwritten Securities being sold pursuant to this
Underwriting Agreement and each applicable Indenture, as of the
date of the Final Prospectus, will conform in all material
respects to the statements relating thereto contained in the Final
Prospectus. The Underwritten Securities will be in substantially
the form filed or incorporated by reference, as the case may be,
as an exhibit to the Registration Statement.
(h) The execution and delivery of this Underwriting
Agreement, each applicable Indenture, the Amended Registration
Rights Agreement, and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company in
connection with the transactions contemplated hereby or thereby or
in the Registration Statement and the Final Prospectus and the
consummation of the transaction contemplated herein and in the
Registration Statement and the Final Prospectus (including the
issuance and sale of the Underwritten Securities and the use of
the proceeds from the sale of the Underwritten Securities as
described under the caption "Use of Proceeds") and compliance by
the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and will
not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any agreements or instruments, nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries or
any applicable law, administrative regulation or administrative or
court decree which, in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
(i) The statements set forth in the Final Prospectus under
the captions "Description of Senior Debt Securities", "Description
of Subordinated Debt Securities", "Description of Preferred
Stock", "Description of Common Stock", "Description of the Notes"
and "Description of Diamond Offshore Capital Stock",
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insofar as they purport to constitute a summary of the terms of
the Securities, are accurate, complete and fair.
(j) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes.
1B. Representations and Warranties of Diamond Offshore.
Diamond Offshore represents and warrants to each Underwriter as of
the date hereof and as of the Closing Date that:
(a) Diamond Offshore's annual report on Form 10-K for
the fiscal year ended December 31, 1996 (the "Form 10-K"),
its definitive proxy statement on Schedule 14A filed with the
Commission on April 1, 1997, its quarterly reports on Form
10-Q for the quarters ended March 31, 1997 and June 30, 1997
and any current reports on Form 8-K filed by Diamond Offshore
subsequent to the Form 10-K are hereinafter referred to
collectively as the "Exchange Act Reports". The Exchange Act
Reports, when they were filed with the Commission, conformed
in all material respects to the applicable requirements of
the Exchange Act and the applicable rules and regulations of
the Commission thereunder, and did not, and on the date of
the Final Prospectus, will not, contain an untrue statement
of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. To
the extent that any statement made or omitted in the
Registration Statement, the Final Prospectus or any amendment
or supplement thereto are made or omitted in reliance upon
and in conformity with written information furnished to the
Company by Diamond Offshore expressly for use therein, such
Registration Statement did, and the Final Prospectus and any
further amendments or supplements to the Registration
Statement and the Final Prospectus will, when they become
effective or are filed with the Commission, as the case may
be, conform in all material respects to the requirements of
the Act and the Act Regulations and not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) Diamond Offshore has been duly incorporated and is
an existing corporation in good standing under the laws of
the State of Delaware, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the Final Prospectus; and Diamond Offshore is
duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure of
Diamond Offshore to be so qualified would not have a material
adverse effect on the business, operations or financial
condition of Diamond Offshore and its subsidiaries, taken as
a whole.
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(c) Each subsidiary of Diamond Offshore has been duly
incorporated and is an existing corporation in good standing
under the laws of the jurisdiction of its incorporation, with
power and authority (corporate and other) to own its
properties and conduct its business as described in the Final
Prospectus; and each subsidiary of Diamond Offshore is duly
qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires
such qualification, except where the failure of such
subsidiary to be so qualified would not have a material
adverse effect on the business, operations or financial
condition of Diamond Offshore and its subsidiaries, taken as
a whole; all of the issued and outstanding capital stock of
each subsidiary of Diamond Offshore has been duly authorized
and validly issued and is fully paid and nonassessable,
except where the failure of such capital stock to have been
so authorized and issued would not have a material adverse
effect on the business, operations or financial condition of
Diamond Offshore and its subsidiaries, taken as a whole; and
the capital stock of each subsidiary owned by Diamond
Offshore, directly or through subsidiaries, is owned free
from liens, encumbrances and defects, except where the
failure of Diamond Offshore to so own such capital stock
would not have a material adverse effect on the business,
operations, properties or financial condition of Diamond
Offshore and its subsidiaries, taken as a whole.
(d) The Amended Registration Rights Agreement has been
duly authorized by Diamond Offshore and, on the Closing Date,
will be duly executed and delivered by Diamond Offshore.
(e) The Underlying Securities deliverable upon exchange
of the Underwritten Securities and all other outstanding
shares of capital stock of Diamond Offshore have been duly
authorized and are validly issued, fully paid and
nonassessable; the Underlying Securities conform to the
description thereof contained in the Final Prospectus and,
when delivered in accordance with the terms of the related
Underwritten Securities, will conform to the description
thereof contained in the Final Prospectus as the same may be
amended or supplemented; and the stockholders of Diamond
Offshore have no preemptive rights with respect to the
Underlying Securities.
(f) Except as disclosed in the Final Prospectus, there
are no contracts, agreements or understandings between
Diamond Offshore and any person that would give rise to a
valid claim against Diamond Offshore or any Underwriter for a
brokerage commission, finder's fee or other like payment
relating to the issuance of the Underwritten Securities or
the exchange thereof for the Underlying Securities.
(g) Except for the Amended Registration Rights
Agreement, there are no currently effective contracts,
agreements or understandings between Diamond
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Offshore and any person granting such person the right to
require Diamond Offshore to file a registration statement
under the Act with respect to any securities of Diamond
Offshore owned or to be owned by such person or to require
Diamond Offshore to include such securities in any securities
being registered pursuant to any registration statement filed
by Diamond Offshore under the Act.
(h) The outstanding shares of common stock of Diamond
Offshore, including the Underlying Securities, are listed on
the New York Stock Exchange.
(i) No consent, approval, authorization, or order of,
or filing with, any governmental agency or body or any court
is required to be obtained by Diamond Offshore for the
consummation of the transactions contemplated by this
Underwriting Agreement or in connection with the exchange of
the Underwritten Securities for the Underlying Securities,
except such as have been (or, under the Amended Registration
Rights Agreement, will have been) obtained and made under the
Act and such as may be required under state securities laws.
(j) The execution, delivery and performance of the
Amended Registration Rights Agreement and this Underwriting
Agreement and compliance with the terms and provisions
thereof will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Diamond
Offshore or any of its subsidiaries is a party or by which
Diamond Offshore or any of its subsidiaries is bound, or to
which any of the property or assets of Diamond Offshore or
any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the charter or
bylaws of Diamond Offshore or any of its subsidiaries or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Diamond
Offshore or any of its subsidiaries or the property of
Diamond Offshore or any of its subsidiaries except, in each
case other than with respect to such charter or bylaws, which
conflict, breach or default or violation would not impair
Diamond Offshore's or any of its subsidiaries' ability to
perform the obligations hereunder or have any material
adverse effect upon the consummation of the transactions
contemplated hereby or any Underwriter.
(k) This Underwriting Agreement has been duly
authorized, executed and delivered by Diamond Offshore.
(l) Except as disclosed in the Exchange Act Reports or
the Final Prospectus and except for Permitted Liens, as such
term is defined below, Diamond Offshore and its subsidiaries
have good and marketable title to all offshore drilling rigs
described as being owned by them in the Exchange Act Reports
or the Final Prospectus, and good and marketable title to all
real property and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects
that would materially
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affect the value thereof, taken as a whole, or materially
interfere with the use made or to be made thereof by them;
and except as disclosed in the Exchange Act Reports or the
Final Prospectus, Diamond Offshore and its subsidiaries hold
any leased real or personal property under valid and
enforceable leases with no exceptions to such validity or
enforceability that would materially interfere with the use
made or to be made thereof by them. "Permitted Liens" means
(i) liens for taxes not yet due or liens that have not been
filed for taxes that are being contested in good faith and by
appropriate proceedings diligently prosecuted; (ii)
carriers', warehousemen's, mechanics', materialmen's,
repairmen's, maritime, statutory or other like liens arising
in the ordinary course of business that are not overdue for
more than 30 days or that are being contested in good faith
and by appropriate proceedings diligently prosecuted; (iii)
pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social
security legislation; and (iv) deposits to secure the
performance of bids, contracts in the ordinary course of
business (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds and performance bonds,
and other obligations of a like nature that are incurred in
the ordinary course of business.
(m) Diamond Offshore and its subsidiaries possess
adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to
conduct the business now operated by them in all material
respects and have not received any notice of proceedings
relating to the revocation or modification of any such
certificate, authority or permit that, if determined
adversely to Diamond Offshore or any of its subsidiaries,
would individually or in the aggregate have a material
adverse effect on Diamond Offshore and its subsidiaries taken
as a whole.
(n) No labor dispute with the employees of Diamond
Offshore or any subsidiary exists or, to the knowledge of
Diamond Offshore, is imminent that would reasonably be
expected to have a material adverse effect on Diamond
Offshore and its subsidiaries taken as a whole.
(o) Diamond Offshore and its subsidiaries own, possess
or can acquire on reasonable terms, adequate trademarks,
trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by
them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property
rights that, if determined adversely to Diamond Offshore or
any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on Diamond Offshore
and its subsidiaries taken as a whole.
(p) Except as disclosed in the Exchange Act Reports or
the Final Prospectus, neither Diamond Offshore nor any of its
subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or
body or any court,
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domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the
protection or restoration of the environment or human
exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws,
which violation, contamination, liability or claim would
individually or in the aggregate have a material adverse
effect on Diamond Offshore and its subsidiaries taken as a
whole; and Diamond Offshore is not aware of any pending
investigation which might lead to such a claim.
(q) There are no pending actions, suits or proceedings
against or affecting Diamond Offshore, any of its
subsidiaries or any of their respective properties except as
disclosed in the Exchange Act Reports or the Final
Prospectus, or as individually or in the aggregate do not now
have and, to the best knowledge of Diamond Offshore, are not
reasonably expected in the future to have a material adverse
effect on the condition (financial or other), business,
properties or results of operations of Diamond Offshore and
its subsidiaries taken as a whole, or would materially and
adversely affect the ability of Diamond Offshore to perform
its obligations under the Amended Registration Rights
Agreement or this Underwriting Agreement, or which are
otherwise material in the context of the sale of the
Underwritten Securities; and no such actions, suits or
proceedings are, to Diamond Offshore's knowledge, threatened
or contemplated.
(r) The financial statements included in the Exchange
Act Reports present fairly in all material respects the
financial position of Diamond Offshore and its consolidated
subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with
generally accepted accounting principles in the United States
applied on a consistent basis; any schedules included in the
Exchange Act Reports present fairly the information required
to be stated therein; and if pro forma financial statements
are included in the Exchange Act Reports, the assumptions
used in preparing the pro forma financial statements included
in the Exchange Act Reports provide a reasonable basis for
presenting the significant effects directly attributable to
the transactions or events described therein, the related pro
forma adjustments give appropriate effect to those
assumptions in all material respects, and the pro forma
columns therein reflect the proper application in all
material respects of those adjustments to the corresponding
historical financial statement amounts.
(s) Except as disclosed in the Exchange Act Reports,
since the date of the latest audited financial statements
included in the Exchange Act Reports there has been no
material adverse change, nor any development or event
involving a prospective material adverse change, in the
condition (financial or other), business, properties or
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results of operations of Diamond Offshore and its
subsidiaries taken as a whole, and there has been no dividend
or distribution of any kind declared, paid or made by Diamond
Offshore on any class of its capital stock.
(t) Diamond Offshore is not and, after giving effect to
the transactions contemplated by this Underwriting Agreement,
will not be (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate"
of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(u) Neither Diamond Offshore nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes.
(v) No consent or approval of any federal governmental
agency with respect to any federal maritime law matter is
required in connection with performance by Diamond Offshore
of its obligations under this Underwriting Agreement, and the
execution, delivery, and performance by Diamond Offshore and
the consummation of the transactions contemplated thereby
will not violate any existing federal maritime laws,
including, without limitation, the Shipping Act, 1916, as
amended, and the rules and regulations of the Maritime
Administration (MarAd) and the United States Coast Guard.
2. Purchase and Sale. Subject to the terms and conditions
and in reliance upon the representations and warranties set forth
herein, the Company agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from
the Company, at the purchase price set forth in Schedule I hereto
the principal amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule II hereto, except
that, if Schedule I hereto provides for the sale of Securities
pursuant to delayed delivery arrangements, the respective
principal amounts of Underwritten Securities to be purchased by
the Underwriters shall be as set forth in Schedule II hereto less
the respective amounts of Contract Securities (as hereinafter
defined) determined as provided below. Securities to be purchased
by the Underwriters are herein sometimes called the "Underwritten
Securities" and Securities to be purchased pursuant to Delayed
Delivery Contracts as hereinafter provided are herein called
"Contract Securities."
In addition, subject to the terms and conditions herein set
forth, the Company may grant, if so provided in Schedule I, an
option to the Underwriters, severally and not jointly, to purchase
up to the number or aggregate principal amount, as the case may
be, of the Option Underwritten Securities set forth therein at a
price per Option Underwritten Security equal to the price per
Initial Underwritten Security, less an amount equal to any
dividends or distributions declared by the Company and paid or
payable on the Initial Underwritten
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Securities but not payable on the Option Underwritten Securities.
Such option, if granted, will expire 30 days after the date of
this Underwriting Agreement, and may be exercised in whole or in
part from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and
distribution of the Initial Underwritten Securities upon notice by
the Representatives to the Company setting forth the number or
aggregate principal amount, as the case may be, of Option
Underwritten Securities as to which the several Underwriters are
then exercising the option and the time, date and place of payment
and delivery for such Option Underwritten Securities. Any such
time and date of payment and delivery shall be determined by the
Representatives, but shall not be later than seven full business
days after the exercise of said option, nor in any event prior to
the Closing Date, unless otherwise agreed upon by the
Representatives and the Company. If the option is exercised as to
all or any portion of the Option Underwritten Securities, each of
the Underwriters, severally and not jointly, will purchase that
amount which shall bear the same proportion to the total principal
amount of Option Underwritten Securities as the principal amount
of Securities set forth opposite the name of such Underwriter
bears to the aggregate principal amount of Securities set forth in
Schedule II hereto, except to the extent that you determine that
such reduction shall be otherwise than in such proportion and so
advise the Company in writing.
If so provided in Schedule I hereto, the Underwriters are
authorized to solicit offers to purchase Securities from the
Company pursuant to delayed delivery contracts ("Delayed Delivery
Contracts"), substantially in the form of Schedule III hereto but
with such changes therein as the Company may authorize or approve.
The Underwriters will endeavor to make such arrangements and, as
compensation therefor, the Company will pay to the
Representatives, for the account of the Underwriters, on the
Closing Date, the percentage set forth in Schedule I hereto of the
principal amount of the Securities for which Delayed Delivery
Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks,
insurance companies, pension funds, investment companies and
educational and charitable institutions. The Company will enter
into Delayed Delivery Contracts in all cases where sales of
Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise
agree, each such Delayed Delivery Contract must be for not less
than the minimum principal amount set forth in Schedule I hereto
and the aggregate principal amount of Contract Securities may not
exceed the maximum aggregate principal amount set forth in
Schedule I hereto. The Underwriters will not have any
responsibility in respect of the validity or performance of
Delayed Delivery Contracts. The principal amount of Securities to
be purchased by each Underwriter as set forth in Schedule II
hereto shall be reduced by an amount which shall bear the same
proportion to the total principal amount of Contract Securities as
the principal amount of Securities set forth opposite the name of
such Underwriter bears to the aggregate principal amount of
Securities set forth in Schedule II hereto, except to the extent
that you determine that such reduction shall be otherwise than in
such proportion and so advise the Company in writing; provided,
however, that, subject to Section 9 hereof, the total principal
amount of Securities to be purchased by all Underwriters shall be
the aggregate principal
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amount of Securities set forth in Schedule II hereto less the
aggregate principal amount of Contract Securities.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities shall be made at the office, on the date
and at the time specified in Schedule I hereto, which date and
time may be postponed by agreement between the Representatives and
the Company or as provided in Section 9 hereof (such date and time
of delivery and payment for the Underwritten Securities being
herein called the "Closing Date"). In addition, in the event that
the Underwriters have exercised their option, if any, to purchase
any or all of the Option Underwritten Securities, payment of the
purchase price for, and delivery of such Option Underwritten
Securities, shall be made at the location set forth on Schedule I,
or at such other place as shall be agreed upon by the
Representatives and the Company, as specified in the notice from
the Representatives to the Company.
Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the
Company, against delivery to the Representatives for the
respective accounts of the Underwriters of the Underwritten
Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account,
to accept delivery of, receipt for, and make payment of the
purchase price for, the Underwritten Securities which it has
severally agreed to purchase. The Representatives, individually
and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the
Underwritten Securities to be purchased by any Underwriter whose
funds have not been received by the Closing Date, as the case may
be, but such payment shall not relieve such Underwriter from its
obligations hereunder.
Certificates for the Underwritten Securities shall be
registered in such names and in such denominations as the
Representatives may request not less than two full business days
in advance of the Closing Date. The Company agrees to have the
Underwritten Securities available for inspection, checking and
packaging by the Representatives in New York, New York, not later
than 1:00 p.m. on the business day prior to the Closing Date.
4. Agreements. (a) The Company agrees with the several
Underwriters that:
(i) Until the earlier of (X) the termination of the
offering of the Underwritten Securities, and (Y) six months
from the date of this Underwriting Agreement, the Company
will not file any amendment (other than amendments resulting
from the filing of the documents incorporated by reference
pursuant to Item 12 of Form S-3 under the Act) of the
Registration Statement or the Final Prospectus unless the
Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or
supplement to which you reasonably object. The Company will
cause the Final Prospectus to be filed with the Commission
pursuant to Rule 424. The Company will promptly advise the
Representatives (A) when the Final Prospectus shall have been
filed with the Commission pursuant to
-14-
Rule 424, (B) when any amendment to the Registration
Statement relating to the Underwritten Securities shall have
become effective, (C) of any request by the Commission for
any amendment of the Registration Statement or amendment of
or supplement to the Final Prospectus or for any additional
information, (D) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding
for that purpose and (E) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Underwritten Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order and,
if issued, to obtain as soon as possible the withdrawal
thereof.
(ii) If, at any time when a prospectus relating to the
Underwritten Securities is required to be delivered under the
Act, any event occurs as a result of which, the Final
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or
supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject
to the first sentence of paragraph (a)(i) of this Section 4,
an amendment or supplement which will correct such statement
or omission or an amendment which will effect such
compliance.
(iii) The Company will comply with the Act and the Act
Regulations and the Exchange Act and the Exchange Act
Regulations so as to permit the completion of the
distribution of the Underwritten Securities as contemplated
in this Underwriting Agreement and in the Registration
Statement and the Final Prospectus. If at any time when the
Final Prospectus is required by the Act or the Exchange Act
to be delivered in connection with sales of the Underwritten
Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel
for the Underwriters or for the Company, to amend the
Registration Statement in order that the Registration
Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or to amend or supplement the Final Prospectus in
order that the Final Prospectus will not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement
the Final Prospectus in order to comply with the requirements
of the Act or the Act Regulations, the Company will promptly
prepare and file with the Commission, subject to Section
4(a)(i),
-15-
such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration
Statement or the Final Prospectus comply with such
requirements, and the Company will furnish to the
Underwriters, without charge, such number of copies of such
amendment or supplement as the Underwriters may reasonably
request.
(iv) The Company will make generally available to its
securityholders and to the Representatives not later than 90
days after the end of the 12-month period beginning at the
end of the current fiscal quarter of the Company an earnings
statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act
and Rule 158 under the Act.
(v) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto or
incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein), and each
amendment to the Registration Statement which shall become
effective on or prior to the Closing Date and, so long as
delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of any Preliminary
Prospectus and the Final Prospectus and any amendments
thereof and supplements thereto as the Representatives may
reasonably request and the Company hereby consents to the use
of such copies for purposes permitted by the Act. The
Company will pay the expenses of printing or other production
of all documents relating to the offering. The Final
Prospectus and copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be
identical to any electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(vi) The Company will arrange for the qualification of
the Underwritten Securities for sale under the laws of such
jurisdictions as the Representatives may reasonably
designate, will maintain such qualifications in effect so
long as required for the distribution of the Underwritten
Securities and will arrange for the determination of the
legality of the Underwritten Securities for purchase by
institutional investors; provided, however, the Company shall
not be obligated to file any general consent to service of
process under the laws of any such jurisdiction, subject
itself to taxation as doing business in any such
jurisdiction, or qualify to do business as a foreign
corporation in any such jurisdiction. The Company will pay
all reasonable expenses (including fees and disbursements of
counsel) in connection with such qualification (such
expenses, fees and disbursements not to exceed in the
aggregate $5,000).
(vii) The Company, during the period when the Final
Prospectus is required to be delivered under the Act or the
Exchange Act, will file all documents
-16-
required to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act within the time periods
required by the Exchange Act and the Exchange Act
Regulations.
(viii) During the period beginning from the date of the
Final Prospectus and continuing to and including the date 90
days after the date of the Final Prospectus, neither the
Company nor its subsidiaries will offer, sell, contract to
sell or otherwise dispose of any shares of the Underlying
Securities or any securities of Diamond Offshore or the
Company which are substantially similar to the Underwritten
Securities or the Underlying Securities or which are
convertible into or exchangeable for the Underlying
Securities or securities which are substantially similar to
the Underwritten Securities or shares of the Underlying
Securities (the "lock-up restriction") without the prior
written consent of the Representatives (other than (i)
pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or exchangeable
securities outstanding, on the date of the Final Prospectus
or (ii) the issuance of securities registered on Form S-4
issued in connection with an acquisition, merger or similar
transaction, in which event an acquiror of such securities
who is, or would by virtue of such acquisition be, an
affiliate of the issuer, agrees to the foregoing lock-up
restriction for the remainder of the 90-day period), except
for the Underwritten Securities offered in connection with
the offering.
(ix) The Company will keep available at all times such
number of shares of Underlying Securities sufficient to
enable the Company to satisfy its obligations under the terms
of the Underwritten Securities.
(x) The Company will use reasonable efforts to cause
its ownership of shares of the common stock, par value $.01
per share, of Diamond Offshore ("Diamond Offshore Common
Stock") not to be less than 50% of the issued and outstanding
shares of Diamond Offshore Common Stock at the Closing Date.
(b) Diamond Offshore agrees with the several Underwriters
that:
(i) Diamond Offshore shall cooperate with the Company
to effect compliance with the covenants and agreements set
forth in Sections (4)(a)(i),(ii) and (iii).
(ii) Until the termination of the offering of the
Underwritten Securities and the Underlying Securities,
Diamond Offshore will file all documents required to be filed
with the Commission pursuant to Sections 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange
Act and the Exchange Act Regulations.
(iii) During the period beginning from the date of the
Final Prospectus and
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continuing to and including the date 90 days after the date
of the Final Prospectus, neither Diamond Offshore nor its
subsidiaries will offer, sell, contract to sell or otherwise
dispose of any shares of the Underlying Securities or any
securities of Diamond Offshore or the Company which are
substantially similar to the Underwritten Securities or the
Underlying Securities or which are convertible into or
exchangeable for the Underlying Securities or securities
which are substantially similar to the Underwritten
Securities or shares of the Underlying Securities (the "lock-
up restriction") without the prior written consent of the
Representatives (other than (i) pursuant to employee stock
option plans existing, or on the conversion or exchange of
convertible or exchangeable securities outstanding, on the
date of the Final Prospectus or (ii) the issuance of
securities registered on Form S-4 issued in connection with
an acquisition, merger or similar transaction, in which event
an acquiror of such securities who is, or would by virtue of
such acquisition be, an affiliate of the issuer, agrees to
the foregoing lock-up restriction for the remainder of the
90-day period), except for the Underwritten Securities
offered in connection with the offering.
(iv) Diamond Offshore hereby covenants with the
Underwriters that it shall comply with all its obligations
under the Amended Registration Rights Agreement, including
without limitation all provisions relating to the timely
filing with (and the declaration of effectiveness by) the
Commission of a shelf registration statement in respect of
the Underlying Securities.
5. Offering by the Underwriters. It is understood that the
several Underwriters propose to offer the Underwritten Securities
for sale to the public as set forth in the Final Prospectus.
6. Payment of Expenses. The Company agrees with the
Underwriters that it will pay or cause the payment on its behalf
of all expenses incident to the performance of its obligations
under this Underwriting Agreement, including (a) the preparation,
printing, filing and mailing of the Registration Statement as
originally filed and of each amendment thereto; (b) the printing
of this Underwriting Agreement, any applicable Indentures and any
blue sky and legal investment surveys and any other documents in
connection with the offering, purchase, sale and delivery of the
Underwritten Securities; (c) the preparation, issuance, and
delivery to the Underwriters of the certificates for the
Underwritten Securities and any related Underlying Securities, any
certificates for the Underwritten Securities or such Underlying
Securities, to the Underwriters, including any transfer taxes and
any stamp or other duties payable upon the sale, issuance or
delivery of the Underwritten Securities to the Underwriters; (d)
the fees and disbursements of the Company's counsel and
accountants; (e) the qualification of the Securities under state
securities laws in accordance with this Underwriting Agreement,
including filing fees and the fee and disbursements of your
counsel in connection therewith and in connection with the
preparation of the blue sky and legal investment surveys in
accordance with Section 4(a)(vi); (f) the printing and delivery to
you of copies of the Registration Statement as
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originally filed and of each amendment thereto, of the Preliminary
Prospectuses, and of the Final Prospectus and any amendments or
supplements thereto; (g) the costs of preparing the Securities;
(h) the fees, if any, of the National Association of Securities
Dealers, Inc. and the New York Stock Exchange; (i) the fees and
expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture; (j) if
the Company determines to request rating of the Underwritten
Securities by particular rating agencies, any fees payable in
connection with such rating of the Underwritten Securities by such
rating agencies; and (k) the fees and expenses incurred, if any,
in connection with the listing of the Underwritten Securities.
Diamond Offshore agrees with the Underwriters that it will pay or
cause the payment on its behalf of all expenses incident to the
performance of its obligations under this Underwriting Agreement.
It is understood that the Company and Diamond Offshore have
separately agreed between themselves as to their respective
responsibilities to pay expenses in the Amended Registration
Rights Agreement. The Underwriters agree to make a payment to the
Company in lieu of reimbursement of expenses incurred in
connection with the offering and sale of the Underwritten
Securities.
7. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten
Securities shall be subject to the accuracy of the representations
and warranties on the part of the Company and Diamond Offshore
contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed
prior to the Closing Date (including the filing of any document
incorporated by reference therein), as of the date of the filing
by Diamond Offshore of any document under the Exchange Act and the
Exchange Act Regulations, and as of the Closing Date, to the
accuracy of the statements of the Company and Diamond Offshore
made in any certificates pursuant to the provisions hereof, to the
performance by each of the Company and Diamond Offshore of its
obligations hereunder and to the following additional conditions:
(a) The Registration Statement, including any Rule
462(b) Registration Statement, has become effective under the
Act and no stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall
have been instituted or threatened, and any request on the
part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel
to the Underwriters. A prospectus containing information
relating to the description of the Underwritten Securities
and any related Underlying Securities, the specific method of
distribution and similar matters shall have been filed with
the Commission in accordance with Rule 424(b) (or any
required post-effective amendment providing such information
shall have been filed and declared effective in accordance
with the requirements of Rule 430A), or, if the Company has
elected to rely upon Rule 434 of the Act Regulations, a Term
Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) The Company shall have furnished to the
Representatives the opinion of Barry
-19-
Hirsch, General Counsel for the Company, dated the Closing
Date, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under
the laws of Delaware, with full corporate power and
authority to own, lease and operate its properties and
conduct its business as described in the Final
Prospectus and to enter into and perform its obligations
under, or as contemplated under, the Underwriting
Agreement, and is duly qualified to do business as a
foreign corporation and is in good standing under the
laws of each jurisdiction which requires such
qualification wherein it owns or leases material
properties or conducts material business where the
failure to be in good standing or so qualified would
result in a Material Adverse Effect;
(ii) each of Lorillard, Inc., CNA Financial
Corporation and Diamond Offshore (each a "Subsidiary"
and together the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate
power and authority to own its properties and conduct
its business as described in the Final Prospectus, and
is duly qualified to do business as a foreign
corporation and is in good standing under the laws of
each jurisdiction which requires such qualification
wherein it owns or leases material properties or
conducts material business where the failure to be in
good standing or so qualified would have a Material
Adverse Effect;
(iii) all the outstanding shares of capital stock of
each Subsidiary that are owned by the Company have been
duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set
forth in the Final Prospectus, all outstanding shares of
capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned
subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after
due inquiry, any other security interests, claims, liens
or encumbrances;
(iv) the Underwritten Securities conform in all
material respects to the description thereof contained
in the Final Prospectus;
(v) the Underwritten Securities have been duly
authorized by the Company for issuance and sale pursuant
to the Underwriting Agreement. The Underwritten
Securities, when issued and authenticated in the manner
provided for in the applicable Indenture and delivered
against payment of the consideration therefor specified
in the Underwriting Agreement, will constitute valid and
legally binding obligations of the Company, enforceable
against the Company in accordance with their terms,
except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors'
rights generally or by general equitable principles, and
except
-20-
further as enforcement thereof may be limited by
governmental authority to limit, delay or prohibit the
making of payments outside the United States. The
Underwritten Securities are in the form contemplated by,
and each registered holder thereof is entitled to the
benefits of, the applicable Indenture;
(vi) the applicable Indenture has been duly
authorized, executed and delivered by the Company and
(assuming due authorization, execution and delivery
thereof by the applicable Trustee) constitutes a valid
and legally binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors'
rights generally or by general equitable principles;
(vii) the Amended Registration Rights Agreement has
been duly authorized, executed and delivered by the
Company;
(viii) there is no pending or, to the best knowledge
of such counsel, threatened action, suit or proceeding
before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of
its subsidiaries, of a character required to be
disclosed in the Registration Statement which is not
adequately disclosed in the Final Prospectus, and there
is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Final Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
and the statements included or incorporated in the Final
Prospectus describing any legal proceedings or material
contracts or agreements relating to the Company fairly
summarize such matters in all material respects;
(ix) the Registration Statement and any amendments
thereto have become effective under the Act; to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended,
has been issued, no proceedings for that purpose have
been instituted or threatened, and the Registration
Statement, the Final Prospectus and each amendment
thereof or supplement thereto as of their respective
effective or issue dates (other than the financial
statements and other financial and statistical
information contained therein as to which such counsel
need express no opinion) complied as to form in all
material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules
thereunder; and such counsel has no reason to believe
that the Registration Statement, or any amendment
thereof, at the time it became effective and at the date
of this Underwriting Agreement, contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading or that
the Final Prospectus, as amended or supplemented, as of
its date and as of the date hereof, includes any untrue
statement of a material fact or omits to state a
material
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fact necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading;
(x) this Underwriting Agreement has been duly
authorized, executed and delivered by the Company;
(xi) no consent, approval, authorization or order
of any court or governmental agency or body is required
for the consummation by the Company of the transactions
contemplated herein or in the Delayed Delivery
Contracts, except such as have been obtained under the
Act and such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and
distribution of the Underwritten Securities by the
Underwriters and such other approvals (specified in such
opinion) as have been obtained;
(xii) neither the issue and sale of the Underwritten
Securities, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of
the terms hereof or of any Delayed Delivery Contracts
will conflict with, result in a breach of, or constitute
a default under the Restated Certificate of
Incorporation or By-laws of the Company or the terms of
any indenture or other agreement or instrument known to
such counsel and to which the Company is a party or
bound, or any order or regulation known to such counsel
to be applicable to the Company of any court, regulatory
body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company; and
(xiii) the Company is not now, and upon the sale of
the Underwritten Securities to be sold by it hereunder
and application of the net proceeds from such sale as
described in the Final Prospectus under "Use of
Proceeds" will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as
amended.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction
other than the corporate laws of the State of Delaware and the
laws of the State of New York or the United States, to the extent
deemed proper and specified in such opinion, upon the opinion of
other counsel of good standing believed to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters
of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials.
(c)(I) The Representatives shall have received an opinion,
dated such Closing Date, of Weil, Gotshal & Manges LLP, counsel to
Diamond Offshore, to the effect that:
(i) Diamond Offshore is a corporation duly organized,
validly existing and in
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good standing under the laws of the State of Delaware, and
has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as
described in the Final Prospectus;
(ii) all of the outstanding shares of Diamond Offshore
Common Stock (including the Underlying Securities) have been
duly authorized and validly issued, are fully paid and non-
assessable, are free of any preemptive rights pursuant to law
or Diamond Offshore's Restated Certificate of Incorporation
and conform as to legal matters in all material respects to
the description thereof contained in the Final Prospectus;
(iii) Diamond Offshore has all requisite corporate power
and authority to execute and deliver each of the Underwriting
Agreement and the Amended Registration Rights Agreement and
to perform its obligations thereunder. The execution,
delivery and performance of each of the Underwriting
Agreement and the Amended Registration Rights Agreement have
been duly authorized by all necessary corporate action on the
part of Diamond Offshore. Each of the Underwriting Agreement
and the Amended Registration Rights Agreement has been duly
executed and delivered by Diamond Offshore;
(iv) the execution, delivery and performance by Diamond
Offshore of each of the Underwriting Agreement and the
Amended Registration Rights Agreement and the compliance by
Diamond Offshore with the provisions of each of the
Underwriting Agreement and the Amended Registration Rights
Agreement and the consummation of the transactions
contemplated thereby will not conflict with, constitute a
default under or result in a breach or violation of (a) any
of the terms, conditions or provisions of the Restated
Certificate of Incorporation or Amended By-Laws, as amended,
of Diamond Offshore, (b) any New York, Texas, Delaware
corporate or federal law or regulation (other than federal
and state securities or blue sky laws, as to which such
counsel need express no opinion in this sentence, and the
Shipping Act, 1916, as amended, as to which such counsel need
express no opinion), or (c) any judgment, writ, injunction,
decree, order or ruling of any federal or state court or
governmental authority binding on Diamond Offshore or any of
it properties which remains unsatisfied and unperformed on
the Closing Date and of which such counsel is aware, except
in each case other than with respect to clause (a), any such
conflict, default, breach or violation as would not impair
Diamond Offshore's ability to perform its obligations under
the Underwriting Agreement or the Amended Registration Rights
Agreement or have any material adverse effect upon the
consummation of the transactions contemplated by the
Underwriting Agreement or the Amended Registration Rights
Agreement;
(v) no consent, approval, waiver, license, order or
authorization or other
-23-
action by or filing with any New York, Texas, Delaware
corporate or federal governmental agency, body or court is
required in connection with the execution and delivery by
Diamond Offshore of the Underwriting Agreement or the Amended
Registration Rights Agreement, or for the consummation by
Diamond Offshore of the transactions contemplated thereby,
except for filings and other action required pursuant to
federal and state securities or blue sky laws, as to which
such counsel need express no opinion, or the Shipping Act,
1916, as amended, as to which such counsel need express no
opinion, and those already obtained and made under the Act or
the Delaware General Corporation Law ("DGCL");
(vi) Diamond Offshore is not (A) an "investment company"
or an entity "controlled" by an "investment company" under
the Investment Company Act, as amended, and the rules and
regulations promulgated by the Commission thereunder (the
"Investment Company Act") or (B) a "holding company" or a
"subsidiary company" or an "affiliate" of a holding company
within the meaning of the Public Utility Holding Company Act
of 1935, as amended, and the rules and regulations
promulgated by the Commission thereunder (the "Holding
Company Act") (in rendering such opinion, such counsel may
assume that the Company (x) is not and is not controlled by
an "investment company" under the Investment Company Act and
(y) is not a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company under the Holding Company
Act);
(vii) the statements in the Final Prospectus under the
caption "Description of Diamond Offshore Capital Stock",
insofar as they constitute descriptions of Diamond Offshore
Common Stock or refer to statements of laws or legal
conclusions under the DGCL, constitute fair summaries thereof
in all material respects. The statements in the Final
Prospectus under the caption "The Company and Relationship
with Diamond Offshore", insofar as they constitute
descriptions of the Amended Registration Rights Agreement,
constitute fair summaries thereof in all material respects;
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other
representatives of the Company and Diamond Offshore, independent
public accountants for Diamond Offshore, representatives of the
Underwriters and representatives of counsel for the Underwriters,
at which conferences the contents of the Registration Statement
and the Final Prospectus and related matters were discussed, and,
although such counsel has not independently verified and is not
passing upon and assumes no responsibility for the accuracy,
completeness or fairness of such statements contained in the
Registration Statement or the Final Prospectus, such counsel shall
advise you, on the basis of the foregoing that no facts have come
to such counsel's attention which lead such counsel to believe
that
-24-
the Final Prospectus, as of the date of the Underwriting Agreement
or as of such Closing Date contained or contains an untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it
being understood that such counsel need only express such views in
respect of information relating to Diamond Offshore that is
included in the Final Prospectus and need express no opinion as to
the financial statements and related notes or the other financial,
statistical and accounting data stated or omitted in the Final
Prospectus);
(c)(II) The Representatives shall have received an opinion,
dated such Closing Date, of the Vice President and General Counsel
of Diamond Offshore, to the effect that:
(i) Diamond Offshore is duly qualified to transact
business as a foreign corporation in good standing in all
jurisdictions other than the State of Delaware in which its
ownership or lease of property or the conduct of its business
requires such qualification, except those jurisdictions where
the failure to be so qualified would not have a material
adverse effect on the business, operations or financial
condition of Diamond Offshore and its subsidiaries taken as a
whole;
(ii) all of the issued and outstanding shares of capital
stock of each subsidiary of Diamond Offshore listed on
Schedule III hereto (each, a "DO Subsidiary" and collectively
the "DO Subsidiaries") are owned, directly or indirectly, of
record and beneficially by Diamond Offshore, free and clear
of all liens, claims, limitations on voting rights, options,
security interests and other encumbrances and have been duly
authorized, validly issued, and are fully paid and
nonassessable, except to the extent that any such liens,
claims, limitations, options, security interests and other
encumbrances, individually or in the aggregate, would not
have a material adverse effect on the business, operations or
financial condition of Diamond Offshore and its subsidiaries,
taken as a whole;
(iii) each DO Subsidiary is a corporation, duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each DO
Subsidiary is duly qualified to transact business and is in
good standing as a foreign corporation in each state listed
by such DO Subsidiary's name on Schedule III hereto, such
states being the only states in which each DO Subsidiary is
required to be qualified, except where the failure to be so
qualified would not have a material adverse effect on the
business, operations or financial condition of Diamond
Offshore and its subsidiaries, taken as a whole;
(iv) no consent or approval of any federal governmental
agency with respect to any federal maritime law matter is
required in connection with performance by Diamond Offshore
of its obligations under the Underwriting Agreement or the
Amended Registration Rights Agreement; and the execution,
delivery, and
-25-
performance by Diamond Offshore and the consummation of the
transactions contemplated thereby will not violate any
existing federal maritime laws, including, without
limitation, the Shipping Act, 1916, as amended, and the rules
and regulations of the Maritime Administration (MarAd) and
the United States Coast Guard; and
(v) there is no pending or, to the best knowledge of
such counsel, threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving Diamond Offshore or any DO Subsidiary of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Final
Prospectus; and the statements included or incorporated in
the Final Prospectus describing any legal proceedings
relating to Diamond Offshore fairly summarize such matters in
all material respects.
In rendering such opinion, such Vice President and General
Counsel may rely as to the incorporation of Diamond Offshore, the
authorization, execution and delivery of the Underwriting
Agreement and the Amended Registration Rights Agreement and all
other matters acceptable to the Representatives upon an opinion of
counsel satisfactory to the Representatives, a copy of which shall
be delivered concurrently with the opinion of such Vice President
and General Counsel.
The Representatives shall have also received an opinion,
dated such Closing Date, of Nabarro Nathanson, special English
counsel to Diamond Offshore, to the effect that each of Diamond
Offshore Limited and Diamond Offshore (UK) Limited, each of which
is a subsidiary of Diamond Offshore incorporated under the laws of
the United Kingdom, (i) is duly incorporated and validly exists
under the laws of England and Wales and (ii) has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as now carried on.
(d) The Representatives shall have received from each of
Mayer, Brown & Platt, Andrews & Kurth L.L.P., and Sullivan &
Cromwell, counsel for the Underwriters, such opinions, dated the
Closing Date, with respect to the incorporation of the Company and
of Diamond Offshore, the validity of the Indenture, the Securities
and the Underlying Securities, the Registration Statement, the
Final Prospectus and other related matters as the Representatives
may reasonably require, and the Company and Diamond Offshore shall
have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives
a certificate of a Co-Chairman of the Board, the President or a
Vice President, and the principal financial or accounting officer
of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus and this Underwriting
Agreement and that:
-26-
(i) the representations and warranties of the Company
in this Underwriting Agreement are true and correct in all
material respects on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Company's quarterly report on Form
10-Q for the quarter ended June 30, 1997, there has been no
Material Adverse Effect, except as set forth in the Final
Prospectus.
(f) Diamond Offshore shall have furnished to the
Representatives a certificate, dated the Closing Date, of the
President, any Senior Vice President, the Treasurer or any Vice
President and a principal financial or accounting officer of
Diamond Offshore in which such officers, to the best of their
knowledge after reasonable investigation, shall state that the
representations and warranties of Diamond Offshore in this
Underwriting Agreement are true and correct, that Diamond Offshore
has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to
such Closing Date, and that, subsequent to the date of the most
recent financial statements in the Exchange Act Reports, there has
been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of
operations of Diamond Offshore and its subsidiaries taken as a
whole except as set forth in or contemplated by the Final
Prospectus or as described in such certificate.
(g) At the Closing Date, the Company's independent
accountants shall have furnished to the Representatives a letter
or letters (which may refer to letters previously delivered to the
Representatives), dated as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and
the Exchange Act and the respective applicable published rules and
regulations thereunder, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them
and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated in
the Registration Statement and the Final Prospectus and
reported on by them comply in form in all material respects
with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the amounts included
or incorporated in the
-27-
Registration Statement and the Final Prospectus in response
to Item 301 of Regulation S-K and of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but
not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and committees of the
Company and the Subsidiaries; and inquiries of certain
officials of the Company who have responsibility for
financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to the
date of the most recent audited financial statements
incorporated in the Registration Statement and the Final
Prospectus, nothing came to their attention which caused them
to believe that:
(1) the amounts in the unaudited Selected
Consolidated Financial Data and Capitalization, if any,
included in the Registration Statement and the Final
Prospectus and the amounts included or incorporated in
the Registration Statement and the Final Prospectus in
response to Item 301 of Regulation S-K, do not agree
with the corresponding amounts in the audited financial
statements from which such amounts were derived;
(2) any unaudited financial statements included or
incorporated in the Registration Statement and the Final
Prospectus do not comply as to form in all material
respects with applicable accounting requirements and
with the published rules and regulations of the
Commission with respect to financial statements included
or incorporated in quarterly reports on Form 10-Q under
the Exchange Act; and said unaudited financial
statements are not stated (except as permitted by Form
10-Q) in conformity with GAAP applied on a basis
substantially consistent with that of the audited
financial statements included or incorporated in the
Registration Statement and the Final Prospectus; or
(3) with respect to the period subsequent to the
date of the most recent financial statements included or
incorporated in the Registration Statement and the Final
Prospectus, there were any changes, at a specified date
not more than five business days prior to the date of
the letter, in the long-term debt of the Company and its
subsidiaries or capital stock of the Company or
decreases in the stockholders' equity of the Company and
its subsidiaries as compared with the amounts shown on
the most recent consolidated balance sheet included or
incorporated in the Registration Statement and the Final
Prospectus, or for the period from the date of the most
recent financial statements included or incorporated in
the Registration Statement and the Final Prospectus to
such specified date there were any decreases, as
compared with the corresponding period in the preceding
year, in total revenues, or in total or per share
amounts of income before income taxes or of net income,
of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such
letter, in which
-28-
case the letter shall be accompanied by an explanation
by the Company as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
the Company) set forth in the Registration Statement and the
Final Prospectus and in Exhibit 12 to the Registration
Statement, including the information included or incorporated
in Items 1, 6, and 7 of the Company's annual report on Form
10-K, incorporated in the Registration Statement and the
Final Prospectus, or in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included or
incorporated in the Company's quarterly reports on Form 10-Q
or in any Form 8-K, incorporated in the Registration
Statement and the Final Prospectus, agrees with the
accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Registration Statement and the Final
Prospectus in this paragraph (g) are to such documents as
amended and supplemented at the date of the letter.
(h) At the Closing Date, Diamond Offshore's independent
accountants shall have furnished to the Representatives a letter
or letters (which may refer to letters previously delivered to the
Representatives), dated as of the Closing Date, with respect to
such matters and in such form as the Representatives reasonably
request.
In addition, except as provided in Schedule I hereto, at the
time this Underwriting Agreement is executed, each of the
Company's and Diamond Offshore's independent public accountants
shall have furnished to the Representatives a letter or letters,
dated the date of this Underwriting Agreement, in form and
substance satisfactory to the Representatives, to the effect set
forth above in paragraphs (g) and (h) of this Section 7.
(i) Since the respective dates as of which information is
given in the Final Prospectus as amended prior to the date of this
Underwriting Agreement there shall not have been any change in the
capital stock or long-term debt of the Company or Diamond Offshore
or any of their respective subsidiaries or any change, or any
development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders'
equity or results of operations of the Company, Diamond Offshore
and their respective subsidiaries, otherwise than as set forth or
contemplated in the Final Prospectus as amended prior to the date
of this Underwriting Agreement, the effect of which is in the
judgment of the Representatives so material and adverse as to make
it impracticable or inadvisable to proceed with the public
offering or the delivery of the Underwritten Securities on the
terms and in the manner contemplated in the Final Prospectus as
first amended or supplemented relating to the Underwritten
Securities;
-29-
(j) On or after the date of this Underwriting Agreement, no
downgrading shall have occurred in the rating accorded the
Company's or Diamond Offshore's debt securities or preferred stock
by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act;
(k) On or after the date of this Underwriting Agreement
there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the Company's or Diamond
Offshore's securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities declared by
either Federal or New York State authorities; or (iv) the outbreak
or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war,
if the effect of any such event specified in this clause (iv) in
the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of
the Underwritten Securities on the terms and in the manner
contemplated in the Final Prospectus as first amended or
supplemented relating to the Underwritten Securities;
(l) the Underwritten Securities shall have been approved for
listing, subject only to official notice of issuance, on the New
York Stock Exchange;
(m) the Amended Registration Rights Agreement shall have
been duly executed and delivered by each of the Company and
Diamond Offshore;
(n) In the event that the Underwriters are granted an over-
allotment option by the Company and the Underwriters exercise
their option to purchase all or any portion of the Option
Underwritten Securities, the representations and warranties of the
Company and of Diamond Offshore contained herein and the
statements in any certificates furnished by the Company or Diamond
Offshore hereunder shall be true and correct as of each Closing
Date, and, at the relevant Closing Date, the Representatives shall
have received:
(i) A certificate, dated such Closing Date, of a Co-
Chairman of the Board, the President or a Vice President of
the Company and the principal financial officer or accounting
officer of the Company, confirming that the certificate
delivered at the Closing Date pursuant to Section 7(e) hereof
remains true and correct as of such Closing Date.
(ii) A certificate, dated such Closing Date, of the
President, any Senior Vice President, the Treasurer or any
Vice President and a principal financial or accounting
officer of Diamond Offshore, confirming that the certificate
delivered at the Closing Date pursuant to Section 7(f) hereof
remains true and correct as of such Closing Date.
-30-
(iii) The opinion of the General Counsel for the Company,
dated the Closing Date, relating to the Option Underwritten
Securities and otherwise to the same effect as the opinion
required by Section 7(b) hereof.
(iv) The opinion of Weil, Gotshal & Manges LLP, dated
the Closing Date, relating to the Option Underwritten
Securities and otherwise to the same effect as the opinion
required by Section 7(c)(I) hereof.
(v) The opinion of the Vice President and General
Counsel of Diamond Offshore, dated the Closing Date, relating
to the Option Underwritten Securities and otherwise to the
same effect as the opinion required by Section 7(c)(II)
hereof.
(vi) The opinions of the counsel for the Underwriters,
dated the Closing Date, relating to the Option Underwritten
Securities and otherwise to the same effect as the opinions
required by Section 7(d) hereof.
(vii) A letter from the Company's independent
accountants, in form and substance satisfactory to the
Representatives and dated such Closing Date, substantially in
the same form and substance as the letter furnished to the
Representatives pursuant to Section 7(g) hereof, except that
the "specified date" on the letter furnished pursuant to this
paragraph shall be a date not more than three business days
prior to such Closing Date.
(viii) A letter from Diamond Offshore's independent
accountants, in form and substance satisfactory to the
Representatives and dated such Closing Date, substantially in
the same form and substance as the letter furnished to the
Representatives pursuant to Section 7(h) hereof, except that
the "specified date" on the letter furnished pursuant to this
paragraph shall be a date not more than three business days
prior to such Closing Date.
(o) Prior to the Closing Date, each of the Company and
Diamond Offshore shall have furnished to the Representatives such
further information, certificates and documents as the
Representatives may reasonably request.
(p) The Company shall have accepted Delayed Delivery
Contracts in any case where sales of Contract Securities arranged
by the Underwriters have been approved by the Company.
If any of the conditions specified in this Section 7 shall
not have been fulfilled in all material respects when and as
provided in this Underwriting Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Underwriting
Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the
-31-
Representatives and their counsel, this Underwriting Agreement and
all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company in
writing or by telephone or telecopy confirmed in writing.
8. Reimbursement of Underwriters' Expenses. If the sale of
the Underwritten Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, or because of any
refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, or
because of the termination of this Underwriting Agreement under
Section 11, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred
by them in connection with the proposed purchase and sale of the
Underwritten Securities; such obligation of the Company to
reimburse the Underwriters shall serve as the exclusive remedy of
the Underwriters with respect to the Company.
9. Indemnification. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Final Prospectus as amended or
supplemented and any other prospectus relating to the Securities,
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by
such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Final Prospectus as amended or
supplemented and any other prospectus relating to the Securities,
or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by
any Underwriter of Underwritten Securities through the
Representatives expressly for use in the Final Prospectus as
amended or supplemented relating to such Securities.
(b) Diamond Offshore will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary
Prospectus, any preliminary
-32-
prospectus supplement, the Registration Statement, the Final
Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was made (i) in any Exchange Act Report that
has been included in any current report on Form 8-K filed by the
Company and (ii) under the headings "Diamond Offshore", "Price
Range of Diamond Offshore Common Stock and Dividend Policy" and
"Description of Diamond Offshore Capital Stock" in any Preliminary
Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Final Prospectus as amended or
supplemented and any other prospectus relating to the Securities,
or any such amendment or supplement; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by
such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained
in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Final Prospectus as
amended or supplemented and any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Final Prospectus as
amended or supplemented and any other prospectus relating to the
Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly
for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such
subsection, except to the extent a defense or counterclaim has
been foreclosed. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it
determines, jointly with any other
-33-
indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any
legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior
written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise
or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action 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.
(e) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified
party under subsection (a), (b) or (c) above in respect of any
losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such several proportions as are
appropriate to reflect the relative benefits received by each of
the Company and Diamond Offshore, severally, on the one hand and
the Underwriters of the Underwritten Securities on the other from
the offering of the Underwritten Securities to which such loss,
claim, damage or liability (or action in respect thereof) relates.
If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (d)
above and a defense or counterclaim has been foreclosed, then each
indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative
fault of the Company and Diamond Offshore on the one hand and the
Underwriters of the Underwritten Securities on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and Diamond
Offshore, severally, on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total
net proceeds from such offering (before deducting expenses)
received by each of the Company and Diamond Offshore, severally,
bear to the total underwriting discounts and commissions received
by such Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company and Diamond Offshore on the one hand or such
Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, Diamond Offshore
and the Underwriters
-34-
agree that it would not be just and equitable if contribution
pursuant to this subsection (e) were determined by pro rata
allocation (even if the Underwriters 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 subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in
this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the applicable
Underwritten Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any
damages which such Underwriter 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 Act)
shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of
the Underwriters of Underwritten Securities in this subsection (e)
to contribute are several in proportion to their respective
underwriting obligations with respect to such Securities and not
joint.
(f) The obligations of the Company and Diamond Offshore
under this Section 9 shall be in addition to any liability which
the Company and Diamond Offshore may otherwise have and shall
extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act;
and the obligations of the Underwriters under this Section 9 shall
be in addition to any liability which the respective Underwriters
may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning
of the Act.
10. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the
Underwritten Securities agreed to be purchased by such Underwriter
or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its obligations under
this Underwriting Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective
proportions which the amount of Underwritten Securities set forth
opposite their names in Schedule II hereto bears to the aggregate
amount of Underwritten Securities set forth opposite the names of
all the remaining Underwriters) the Underwritten Securities which
the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate
amount of Underwritten Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Underwritten Securities set forth in
Schedule II hereto, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to
purchase any, of the Underwritten Securities, and if such
nondefaulting Underwriters do not purchase all the Underwritten
Securities, this Underwriting Agreement will terminate without
liability to any
-35-
nondefaulting Underwriter or the Company. In the event of a
default by any Underwriter as set forth in this Section 10, the
Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that
the required changes in the Registration Statement and the Final
Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Underwriting Agreement shall
relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
11. Termination and Liabilities. (a) This Underwriting
Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Underwritten Securities,
if after the date of this Underwriting Agreement and prior to such
time there has occurred a development or event of the kind
specified in Section 7(i), 7(j) or 7(k).
(b) If this Underwriting Agreement is terminated pursuant to
this Section 11, such termination shall be without liability of
any party to any other party except as provided in Sections 6 and
8 hereof, and provided further that Sections 1A, 1B, 9 and 12
hereof shall survive such termination and remain in full force and
effect.
12. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities
and other statements of the Company or its officers and of the
Underwriters set forth in or made pursuant to this Underwriting
Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the
Company or any of the officers, directors or controlling persons
referred to in Section 9 hereof, and will survive delivery of and
payment for the Underwritten Securities.
13. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the
Representatives, will be mailed, delivered, sent by or telegraphed
and confirmed to them, at the address specified in Schedule I
hereto; or, if sent to the Company, will be mailed, delivered or
confirmed telecopy at 667 Madison Avenue, New York, New York
10021, attention of the Corporate Secretary; or, if sent to
Diamond Offshore, will be mailed, delivered or confirmed telecopy
at 15415 Katy Freeway, Houston, Texas 77094, attention of the
Corporate Secretary.
14. Successors. This Underwriting Agreement will inure to
the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 8 hereof, and no other
person will have any right or obligation hereunder.
15. Applicable Law. This Underwriting Agreement will be
governed by and construed in accordance with the laws of the State
of New York.
16. Counterparts. This Underwriting Agreement may be signed
in various counterparts
-36-
which together shall constitute one and the same instrument.
-37-
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate
hereof, whereupon this letter and your acceptance shall represent
a binding agreement among the Company, Diamond Offshore and the
Underwriter.
Very truly yours,
LOEWS CORPORATION
By: /s/ Peter W. Keegan
--------------------------
Its: Senior Vice President
--------------------------
DIAMOND OFFSHORE
DRILLING, INC.
By: /s/ Robert E. Rose
--------------------------
Its: President and CEO
--------------------------
The foregoing Agreement (including
all Schedules and Exhibits hereto)
is hereby confirmed and accepted as
of the date specified in Schedule I
hereto.
/s/ Goldman, Sachs & Co.
--------------------------
(Goldman, Sachs & Co.)
For itself and the other several
Underwriters, if any, named in
Schedule II to the foregoing
Agreement.
-38-
SCHEDULE I
Underwriting Agreement dated September 16 , 1997
Representatives: Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
The Underwritten Securities shall have the following terms:
Title: 3-1/8% Exchangeable Subordinated Notes due 2007
Rank: Subordinated Debentures
Aggregate principal amount: $1,000,000,000 (plus up to
$150,000,000 aggregate principal
amount of Option Underwritten
Securities)
Currency of payment: U.S. Dollar
Interest rate or formula: 3-1/8% per annum
Interest payment dates: March 15 and September 15
Regular record dates: March 1 and September 1
Stated maturity date: September 15, 2007
Redemption: In whole or in part at option of Company, on or
after September 15, 2002
Exchange provisions: Exchangeable into shares of the
Underlying Securities at any time from
and including October 1, 1998 and prior
to the close of business on September 15,
2007, unless previously redeemed or
repurchased, at an exchange rate of
15.3757 shares per $1,000 principal
amount of Underwritten Securities,
subject to adjustment and to certain
Company rights.
Underlying Securities: Common stock, par value $.01 per share,
of Diamond Offshore.
Listing requirements: List the Underwritten Securities and the
Underlying Securities on the New York
Stock Exchange
Fixed or Variable Price Offering: Fixed Price Offering
If Fixed Price Offering, initial public
offering price per share: 100%
of the principal amount, plus accrued interest,
if any, from September 19, 1997.
Purchase price: 98.00% of principal amount, plus accrued
interest, if any, from September 19, 1997.
Form: Global Security
Closing date and location: September 19, 1997
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Delayed Delivery Arrangements: NONE.
Modification of items to be covered by the letter from the
Company's independent accountants delivered pursuant to Section
5(e) at the time this Underwriting Agreement is executed: NONE.
-2-
SCHEDULE II
Principal Amount of
Underwriters Securities to be Purchased
Goldman, Sachs & Co.................... $1,000,000,000
Total................................ $1,000,000,000
SCHEDULE III
State of States
Subsidiary Incorporation Qualified
1. Diamond Offshore Company DE TX, LA
2. Diamond Offshore General Company DE TX
3. Diamond Offshore Guardian Company DE TX
4. Diamond Offshore Southern Company DE TX
5. Diamond Offshore Management DE TX, LA
...Company
6. Diamond Offshore (USA) Inc. DE TX, LA
7. Diamond Offshore Alaska Inc. DE TX
8. Diamond Offshore Atlantic Inc. DE TX
9. Diamond Offshore (Mexico) Company DE TX
10. Diamond Offshore Drilling Services, DE TX, LA
Inc.
11. Diamond Offshore International DE TX
Corporation
12. Diamond Offshore Enterprises, Inc. DE TX
13. Cumberland Maritime Corporation DE TX
14. Diamond Offshore Team Solutions, DE TX, LA
Inc.
15. Diamond Offshore Finance Company DE TX
16. Diamond Offshore Perforadora, Inc. DE TX
17. Diamond Offshore Development Company DE TX
18. Diamond Offshore (Indonesia), Inc. DE TX
19. Diamond Offshore Drilling (Overseas) DE TX
Inc. (f/k/a Diamond Offshore
Champion Inc.)
20. Diamond Offshore Exploration DE TX
(Bermuda) Limited
21. Arethusa Off-Shore Company DE TX, LA
22. Concord Drilling Limited DE TX
23. Saratoga Drilling Limited DE TX
24. Yorktown Drilling Limited DE TX
25. Scotian Drilling Limited DE TX
26. Heritage Drilling Limited DE TX
27. Sovereign Drilling Limited DE TX
28. Miss Kitty Drilling Limited DE TX
29. Neptune Drilling Limited DE TX
30. Whittington Drilling Limited DE TX
31. Yatzy Drilling Limited DE TX
32. Winner Drilling Limited DE TX
33. Lexington Drilling Limited DE TX
-4-
EXHIBIT A
[FORM OF AMENDMENT TO REGISTRATION RIGHTS AGREEMENT]
-5-
Exhibit 4.1
THIS THIRD SUPPLEMENTAL INDENTURE, dated as of
September 16, 1997, is between LOEWS CORPORATION, a Delaware
corporation (the "Company"), and THE CHASE MANHATTAN BANK, a
New York corporation, successor by merger to Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company, as
trustee (herein called the "Trustee").
PRELIMINARY STATEMENT
The Company and the Trustee have entered into an
Indenture dated as of December 1, 1985 and a First and Second
Supplemental Indenture thereto, each dated as of February 18,
1997 (such Indenture, as supplemented is herein called the
"Indenture").
Capitalized terms used but not otherwise defined
herein, shall have the meanings given them in the Indenture.
Section 201 of the Indenture permits the form of the
Debt Securities of any series to be established pursuant to an
indenture supplemental to the Indenture.
Section 301 of the Indenture permits the terms of the
Debt Securities of any series to be established in an indenture
supplemental to the Indenture.
Section 901(6) of the Indenture provides that a
supplemental indenture may be entered into by the Company and
the Trustee without the consent of any Holders of Debt
Securities to establish the form and terms of Debt Securities
of any series as permitted by Sections 201 and 301. In
accordance with the terms of Sections 901(6) of the Indenture,
the Company has, by Board Resolution, authorized this Third
Supplemental Indenture. The Trustee has determined that this
Third Supplemental Indenture is in form satisfactory to it.
All things necessary to make this Third Supplemental
Indenture a valid agreement of the Company and the Trustee and
a valid amendment of and supplement to the Indenture have been
done.
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises, it is
mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Debt Securities of the series to
be created hereby, as follows:
1. Definitions.
For all purposes of the Indenture and this Third
Supplemental Indenture, with respect to the Securities of the
series created hereby, except as otherwise expressly provided
or unless the context otherwise requires:
The "Average Market Value" of the Diamond Offshore
Common Stock on any date of computation means the arithmetic
average of the daily volume weighted average price of the
Diamond Offshore Common Stock, as reported on the New York
Stock Exchange Consolidated Tape, or if the Diamond Offshore
Common Stock is not then listed on the New York Stock Exchange,
as reported by the principal securities exchange or interdealer
quotations system on which the Diamond Offshore Common Stock is
then traded, for the 30-Trading Day period ending two Trading
Days prior to such date of computation as computed by the
Quotation Agent.
The "Average Market Value Amount" per $1,000
principal amount of Notes means the greater of (A) $1,000 and
(B) the product of (i) the then-prevailing Exchange Rate and
(ii) the Average Market Value of the Diamond Offshore Common
Stock as of the date of computation.
"Cash Distribution" means the distribution by Diamond
Offshore to all holders of Diamond Offshore Common Stock of
cash, other than any cash that is distributed upon a merger or
consolidation to which Section 4.11 of this Third Supplemental
Indenture applies or as part of a distribution referred to in
paragraph (4) of Section 4.4 of this Third Supplemental
Indenture.
"Closing Price" of the Diamond Offshore Common Stock
on any date means the price, as of the close of business on
such date, of the Diamond Offshore Common Stock, as reported on
the New York Stock Exchange Consolidated Tape, or if the
Diamond Offshore Common Stock is not then listed on the New
York Stock Exchange, as reported by the principal securities
exchange or interdealer quotation system on which the Diamond
Offshore Common Stock is then traded.
"common stock" includes any stock of any class of
capital stock which has no preference in respect of dividends
or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
issuer thereof and which is not subject to redemption by the
issuer thereof.
"Determination Date" means, in the case of a dividend
or other distribution, including the issuance of rights,
options or warrants, to shareholders, the date fixed for the
determination of shareholders entitled to receive such dividend
or other distribution and, in the case of a tender offer, the
last time that tenders could have been made pursuant to such
tender offer.
-2-
"Diamond Offshore" means Diamond Offshore Drilling,
Inc., a Delaware corporation and a Subsidiary of the Company.
"Diamond Offshore Common Stock" means the Common
Stock, $.01 par value per share, of Diamond Offshore authorized
at the date of this instrument as originally executed. Subject
to the provisions of Section 4.11 of this Third Supplemental
Indenture, shares issuable on exchange of Notes shall include
only shares of Common Stock or shares of any class or classes
of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any
time there shall be more than one such resulting class, the
shares so issuable on exchange of Notes shall include shares of
all such classes, and the shares of each such class then so
issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all
such classes resulting from all such reclassifications.
"Excess Purchase Payment" means the excess, if any,
of (i) the amount of cash plus the fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) of any non-
cash consideration required to be paid with respect to one
share of Diamond Offshore Common Stock acquired or to be
acquired in a tender offer made by Diamond Offshore or any
subsidiary of Diamond Offshore for all or any portion of the
Diamond Offshore Common Stock over (ii) the current market
price per share as defined in Section 4.4(7) for purposes of
Section 4.4(6).
"Exchange Rate" has the meaning set forth in Section
4.1 of this Third Supplemental Indenture.
"Market Capitalization" means, with respect to a
specified date, the product of (i) the current market price per
share (determined as provided in paragraph (7) of Section 4.4
of this Third Supplemental Indenture) of the Diamond Offshore
Common Stock as of such date times (ii) the number of shares of
Diamond Offshore Common Stock outstanding on such date.
"Notes" means any Debt Securities of the series of
Debt Securities entitled "3_% Exchangeable Subordinated Notes
due 2007" created by this Third Supplemental Indenture.
"Quotation Agent" means the Trustee and its
successors or substitutes.
"Trading Day" means any day on which the Diamond
Offshore Common Stock (i) is not suspended from trading on the
principal securities exchange or interdealer quotation system
on which it is traded at the close of business and (ii) has
traded at least once on such principal securities exchange or
interdealer quotation system.
2. Form of Notes.
-3-
2.1. The Notes shall be in the form set forth in
this Section.
2.2. Form of Face of Notes.
[IF THE SECURITY IS A GLOBAL SECURITY, THEN INSERT --
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("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
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
LOEWS CORPORATION
3_% EXCHANGEABLE SUBORDINATED NOTE DUE 2007
No. _____________ $_____
CUSIP NO. - ________________
LOEWS CORPORATION, a corporation duly organized and
existing under the laws of Delaware (herein called the
"Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to _______________, or
registered assigns, the principal sum of _____________ Dollars
($_____) on September 15, 2007 and to pay interest thereon,
from September 19, 1997, or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, semi-annually on March 15 and September 15 in each year,
commencing March 15, 1998, at the rate of 3_% per annum, until
the principal hereof is due, and at the rate of 3_% per annum
on any overdue principal and premium, if any, and, to the
extent permitted by law, on any overdue interest. The interest
so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be
the March 1 or September 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
Except as otherwise provided in the Indenture, any such
interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular
Record Date and may either be
-4-
paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Company, notice whereof shall be
given to Holders of Notes not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided
in the Indenture. Payment of the principal of (and premium, if
any, on) this Note shall be made upon the surrender of this
Note at the office or agency of the Company as may be
designated by it for such purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United
States of America as at the time of payment shall be legal
tender for the payment of public and private debts, or at such
other offices or agencies as the Company may designate.
Payment of interest on this Note may be made by check mailed to
the address of the Person entitled thereto as such address
shall appear in the Security Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof
by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this Note
to be duly executed under its corporate seal.
Dated:
LOEWS CORPORATION
By:______________________
Name:
Title:
Attest:
________________________
Name:
Title:
-5-
2.3 Form of Reverse of Note.
This Note is one of a duly authorized issue of debt
securities of the Company designated as its "3_% Exchangeable
Subordinated Notes due 2007" (herein called the "Notes"),
limited in aggregate principal amount to $1,150,000,000, issued
and to be issued under an Indenture, dated as of December 1,
1985, as supplemented by a First and Second Supplemental
Indenture, each dated as of February 18, 1997, and a Third
Supplemental Indenture dated as of September 16, 1997 (herein
called the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee (herein called the "Trustee"), which
term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Indebtedness
and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered.
The Notes are subject to redemption upon not less
than 30 nor more than 60 days' notice by mail, at any time on
or after September 25, 2002, as a whole or in part, at the
election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount) if redeemed
during the 12-month period beginning September 15 of the years
indicated:
Year Redemption Price
2002......................................... 101.5625%
2003......................................... 101.2500%
2004......................................... 100.9375%
2005......................................... 100.6250%
2006......................................... 100.3125%
and on September 15, 2007 at a Redemption Price equal to 100%
of the principal amount, together in the case of any such
redemption with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such
Notes, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture.
Subject to and upon compliance with the provisions of
the Indenture, and subject to the Company's rights to suspend
exchanges and to elect cash settlement as set forth below, the
Holder of this Note is entitled at any time on or after October
1, 1998 and before the close of
-6-
business on September 15, 2007 (or, in case this Note or a
portion hereof is called for redemption, then in respect of
this Note or such portion hereof, as the case may be, from
October 1, 1998 until and including, but (unless the Company
defaults in making the payment due upon redemption) not after,
the close of business on the Redemption Date)) to exchange this
Note (or any portion of the principal amount hereof that is an
integral multiple of $1,000), into fully paid and nonassessable
shares (calculated as to each exchange to the nearest 1/100 of
a share) of Common Stock, $.01 par value per share ("Diamond
Offshore Common Stock" of Diamond Offshore Drilling, Inc.
("Diamond Offshore") at the rate of 15.3757 shares of Diamond
Offshore Common Stock for each $1,000 principal amount of Note
(or at the current adjusted rate if an adjustment has been made
as provided in the Indenture) by surrender of this Note, duly
endorsed or assigned to the Company or in blank to the Company
at the office or agency of the Company in the Borough of
Manhattan, The City of New York or at any other office or
agency of the Company maintained for such purpose, accompanied
by written notice to the Company that the Holder hereof elects
to exchange this Note (or if less than the entire principal
amount hereof is to be exchanged, specifying the portion hereof
to be exchanged) and, in case such surrender shall be made
during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the
opening of business on such Interest Payment Date, also
accompanied by payment in New York Clearing House (next day)
funds (or other funds acceptable to the Company) of an amount
equal to the interest payable on such Interest Payment Date on
the principal amount of this Note then being exchanged,
provided that, if this Note or any portion hereof has been
called for redemption on a Redemption Date occurring during the
period from the close of business on any Regular Record Date
next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date and is surrendered for
exchange during such period, then the Holder of this Note who
exchanges this Note or any portion hereof during such period
will be entitled to receive the interest accruing on the
principal amount of this Note or such portion thereof so
called for redemption and then being exchanged from the
Interest Payment Date next preceding the date of such exchange
to such succeeding Interest Payment Date and shall not be
required to pay such interest upon surrender of this Note for
exchange. Subject to the provisions of the preceding sentence,
no payment or adjustment is to be made on exchange for interest
accrued hereon from the Interest Payment Date next preceding
the day of exchange, or for dividends on the Diamond Offshore
Common Stock issued on exchange hereof. Interest payable on
any Interest Payment Date in respect of this Note or any
portion hereof surrendered for exchange on or after such
Interest Payment Date shall be paid to the Holder of such Note
as of the Regular Record Date next preceding such Interest Payment
Date, notwithstanding the exercise of the right of exchange.
No fractions of shares or scrip representing fractions of
shares will be issued on exchange, but instead of any
fractional interest, the Company shall pay a cash adjustment as
provided in the Indenture or, at its option, the Company shall
round up to the next higher whole share.
The Exchange Rate is subject to adjustment as
provided in the Indenture. The Indenture also provides that in
case of certain consolidations or mergers to which Diamond
-7-
Offshore is a party or the conveyance, transfer, sale or lease
of all or substantially all of the properties and assets of
Diamond Offshore, the Indenture shall be amended, without the
consent of any Holders of Notes, so that this Note, if then
Outstanding, will be exchangeable thereafter, during the period
this Note shall be exchangeable as specified above, only into
the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance,
transfer, sale or lease (including any Diamond Offshore Common
Stock retainable) by a holder of the number of shares of
Diamond Offshore Common Stock into which this Note could have
been exchanged immediately prior to such consolidation, merger,
conveyance, transfer, sale or lease (assuming such holder of
Diamond Offshore Common Stock failed to exercise any rights of
election and received per share the kind and amount received
per share by a plurality of non-electing shares and further
assuming, if such consolidation, merger, conveyance, transfer,
sale or lease is prior to October 1, 1998 that this Note was
exchangeable immediately prior to the time of such occurrence
at the initial Exchange Rate specified above as adjusted from
the original issue date of the Notes to such time as provided
in the Indenture). No adjustment in the Exchange Rate will be
made until such adjustment would require an increase or
decrease of at least one percent of such rate, provided that
any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any
subsequent adjustment.
The Company may at any time suspend the right of
exchange attaching to the Notes, by giving one business day's
notice of such suspension to the Trustee (which notice may be
given by Diamond Offshore on behalf of the Company), provided
that, (i) the total period during which such right of exchange
is suspended shall not exceed 90 consecutive days at any one
time or a total of 120 days in any 12-month period; and (ii) no
such suspension may be in effect during the 14-day period
preceding any Redemption Date or the final maturity date of the
Notes. In addition, the right of Holders to exchange will be
suspended if the Company has irrevocably elected to pay in cash
the Average Market Value Amount in respect of all Notes
delivered for exchange prior to a Redemption Date or the final
maturity date in respect of the Notes.
At any time prior to September 2, 2007, and unless
the Company shall have previously elected in connection with a
call for redemption or at maturity to pay in cash the Average
Market Value Amount upon any exchange prior to the applicable
Redemption Date or final maturity date, as set forth below, the
Company may elect to make a cash settlement in respect of any
Note surrendered for exchange by delivering notice thereof to
the tendering Holder not more than five Trading Days after such
Note is surrendered for exchange. Such cash settlement shall
be in an amount, per $1,000 principal amount of Notes delivered
for exchange, equal to the greater of (A) $1,000 and (B) the
product of (i) the then-prevailing Exchange Rate and (ii) the
average of the Closing Price of the Diamond Offshore Common
Stock on the five Trading Days commencing two Trading Days
after delivery by the Company of such notice to such Holder.
The Company will pay such cash settlement amount as promptly as
practicable
-8-
after the completion of such five Trading Day period.
The Company may elect, in connection with a
redemption of Notes or the final maturity of the Notes, to
satisfy its obligations to Holders who elect to exchange their
Notes for Diamond Offshore Common Stock by cash payment of the
Average Market Value Amount. If the Company makes such an
election, Holders of Notes will no longer be entitled to
receive Diamond Offshore Common Stock in exchange for their
Notes. The Company may make such an election, in respect of
any Notes to be redeemed on a Redemption Date or repaid on the
final maturity date, by giving an irrevocable notice thereof to
the Holders not later than the 35th Trading Day prior to such
Redemption Date or final maturity date, in which case the
Company will be obligated to pay the Average Market Value
Amount in respect of all Notes to be redeemed or repaid on such
Redemption Date or final maturity date to Holders who elect to
exchange their Notes for Diamond Offshore Common Stock. If
such notice is delivered in connection with a Redemption Date,
it shall be required to be given not later than 35 Trading Days
prior to the Redemption Date.
[IF NOT A GLOBAL SECURITY INSERT -- In the event of
redemption or exchange of this Note in part only, a new Note or
Notes for the unredeemed or unexchanged portion hereof will be
issued in the name of the Holder hereof.]
[IF A GLOBAL SECURITY INSERT -- In the event of a
deposit or withdrawal of an interest in this Note (including
upon an exchange, transfer, redemption or exchange of this Note
in part only), the Security Registrar, upon receipt of notice
of such event from the Depositary's custodian for this Note,
shall make an adjustment on its records to reflect an increase
or decrease of the Outstanding principal amount of this Note
resulting from such deposit or withdrawal, as the case may be.]
The indebtedness evidenced by this Note is, to the
extent and in the manner provided in the Indenture, subordinate
and subject in right of payment to the prior payment in full of
all Senior Indebtedness of the Company, and this Note is issued
subject to such provisions of the Indenture with respect
thereto. Each Holder of this Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his behalf to take such action as
may be necessary or appropriate to effectuate the subordination
so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes.
If an Event of Default shall occur and be continuing,
the principal of all the Notes may be declared due and payable
in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights under
the Indenture of the Holders of Debt Securities issued
thereunder at any time by the
-9-
Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Outstanding Debt Securities
affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in principal
amount of the Notes at the time Outstanding, on behalf of the
Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued in exchange herefor
or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note or such other Note.
No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and premium, if any, and interest on
this Note at the times, places and rate, and in the coin or
currency, herein prescribed or to exchange this Note for
Diamond Offshore Common Stock or cash as and when provided in
the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of Notes is
registrable on the Note Register upon surrender of a Note for
registration of transfer at the office or agency of the Company
in the Borough of Manhattan, The City of New York, and at such
other offices or agencies as the Company may designate, duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar
duly executed by, the Holder thereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Notes are exchangeable
for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to recover any tax or other
governmental charge payable in connection therewith.
Prior to due presentation of a Security for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name such Note is registered, as the owner thereof for
all purposes, whether or not such Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected
by notice to the contrary.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN
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ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
2.4 Form of Trustee's Certificate of Authentication.
This is one of the Notes referred to in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________
Authorized Signatory
2.5 Form of Exchange Notice.
EXCHANGE NOTICE
The undersigned Holder of this Note hereby
irrevocably exercises the option to exchange this Note, or any
portion of the principal amount hereof (which is an integral
multiple of $1,000) below designated, into shares of Common
Stock of Diamond Offshore Drilling, Inc. in accordance with the
terms of the Indenture (including the rights of the Company to
elect cash settlement) referred to in this Note, and directs
that such shares, together with a check in payment for any
fractional share, or a check in payment of the appropriate cash
settlement amount, if applicable, and any Notes representing any
unexchanged principal amount hereof, be delivered to and, in the
case of shares, be registered in the name of the undersigned
unless a different name has been indicated below. If such shares
of Common Stock or Notes are to be registered in the name of a
Person other than the undersigned, the undersigned will pay all
transfer taxes and other governmental charges payable with respect
thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Note.
Dated: ____________________
________________________
Signature
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If shares or Notes are to be If only a portion of the Notes
registered in the name of a is to be exchanged, please
Person other than the Holder, indicate:
please print such Person's
name and address: 1. Principal amount to be
exchanged:
$_____________
_____________________________
Name 2. Principal amount and
denomination of Notes
representing unexchanged
principal amount to be
issued:
_____________________________
Address
Amount: $________
Denominations: $_________
_____________________________ (any integral multiple of
Social Security or other $1,000)
Taxpayer Identification
Number, if any
Signature must be guaranteed by an eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations
and credit unions) with membership in an approved signature
medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if cash or Common Stock is to be
delivered other than to, and in the name of, the registered
Holder.
[Signature Guarantee]
3. Title and Terms.
There shall be a series of Debt Securities designated
as the "3_% Exchangeable Subordinated Notes due 2007" of the
Company. Their Stated Maturity shall be September 15, 2007 and
they shall bear interest at the rate of 3_% per annum, from
September 19, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as
the case may be, payable semi-annually on March 15 and
September 15, commencing March 15, 1998 until the principal
thereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any
Interest Payment Date will be paid to the Person in whose name
the Notes (or one or more Predecessor Securities) are registered
at the close of business on the Regular Record Date for such
interest, which shall be the March 1 or
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September 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Third Supplemental
Indenture is limited to $1,150,000,000, except for Notes
authenticated and delivered upon registration or transfer of,
or in exchange for, or in lieu of, other Notes pursuant to
Section 304, 305, 306, 906 or 1107 of the Indenture.
The Notes shall be redeemable at the option of the
Company and exchangeable into shares of Diamond Offshore Common
Stock at the option of the Holder, subject to the Company's
right to suspend exchanges and to elect cash settlement
(including by payment of the Average Market Value Amount in
connection with a redemption of Notes or final maturity of the
Notes), in each case in accordance with the terms set forth in
the form of Note and in this Third Supplemental Indenture.
The Securities of this series shall not be subject to
a sinking fund.
The Notes of this series are not subject to
defeasance at the option of the Company pursuant to Article
Fifteen of the Indenture.
4. Exchange of Notes.
4.1 Exchange Privilege and Exchange Rate; Suspension
of Exchanges; Cash Settlement.
Subject to and upon compliance with the provisions of
this Section, at the option of the Holder thereof, any Note or
any portion which is $1,000 or an integral multiple thereof may
be exchanged into fully paid and nonassessable shares
(calculated as to each exchange to the nearest 1/100th of a
share) of Diamond Offshore Common Stock at the Exchange Rate,
determined as hereinafter provided, in effect at the time of
exchange. Such exchange right shall commence on October 1,
1998 and shall expire at the close of business on September 15,
2007. In case a Note or portion thereof is called for
redemption at the election of the Company, such exchange right
in respect of the Note, or portion thereof, so called shall
expire at the close of business on the Redemption Date unless
the Company defaults in making the payment due upon redemption.
The rate at which shares of Common Stock shall be
delivered upon exchange (herein called the "Exchange Rate")
shall be initially 15.3757 shares of Diamond Offshore Common
Stock for each $1,000 principal amount of Notes. The Exchange
Rate shall be adjusted in certain instances as provided in this
Section 4.
The Company may at any time suspend the right of
exchange attaching to the
-13-
Notes, by giving one business day's notice of such suspension
to the Trustee (which notice may be given by Diamond Offshore
on behalf of the Company), provided that, (i) the total period
during which such right of exchange is suspended shall not
exceed 90 consecutive days at any one time or a total of 120
days in any 12-month period; and (ii) no such suspension may be
in effect during the 14-day period preceding any Redemption
Date or the final maturity date of the Notes. In addition, the
right of Holders to exchange will be suspended if the Company
has irrevocably elected to pay in cash the Average Market Value
Amount in respect of all Notes delivered for exchange prior to
Redemption Date or final maturity date in respect of the Notes,
as provided in the Notes.
At any time prior to September 2, 2007, and unless
the Company shall have previously elected in connection with a
call for redemption or at maturity to pay in cash the Average
Market Value Amount upon any exchange prior to the applicable
Redemption Date or final maturity date, as set forth below, the
Company may elect to make a cash settlement in respect of any
Note surrendered for exchange by delivering notice thereof to
the tendering Holder not more than five Trading Days after such
Note is surrendered for exchange. Such cash settlement shall
be in an amount, per $1,000 principal amount of Notes delivered
for exchange, equal to the greater of (A) $1,000 and (B) the
product of (i) the then-prevailing Exchange Rate and (ii) the
average of the Closing Price of the Diamond Offshore Common
Stock on the five Trading Days commencing two Trading Days
after delivery by the Company of such notice to such Holder.
The Company will pay such cash settlement amount as promptly as
practicable after the completion of such five Trading Day
period.
4.2. Exercise of Exchange Privilege.
In order to exercise the exchange privilege, the
Holder of any Note to be exchanged shall surrender such Note,
duly endorsed or assigned to the Company or in blank, at any
office or agency of the Company maintained for that purpose
pursuant to Section 4.7 of this Third Supplemental Indenture,
accompanied by a duly signed exchange notice substantially in
the form provided in Section 2.5 of this Third Supplemental
Indenture, stating that the Holder elects to exchange such Note
or, if less than the entire principal amount thereof is to be
exchanged, the portion thereof to be exchanged. Each Note
surrendered for exchange (in whole or in part) during the
period from the close of business on any Regular Record Date
next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date shall (except in the
case of any Note or portion thereof which has been called for
redemption on a Redemption Date occurring within such period)
be accompanied by payment in New York Clearing House (next day)
funds (or other funds acceptable to the Company) of an amount
equal to the interest payable on such Interest Payment Date on
the principal amount of such Note (or portion thereof, as the
case may be) being surrendered for exchange. The interest so
payable on any Interest Payment Date with respect to any Note
(or portion thereof, if applicable) which has been called for
redemption on a Redemption Date occurring during the period
from the close of
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business on the Regular Record Date next preceding such
Interest Payment Date to the opening of business on such
Interest Payment Date, which Note (or portion thereof, if
applicable) so called for redemption is surrendered for
exchange (in whole or in part) prior to such Redemption Date,
shall be paid upon such exchange to the Holder of such Note
(or portion thereof) as of the exchange date in an amount
equal to the interest that would have been payable on the
principal amount of such Note (or portion thereof) so called
for redemption and being exchanged if such principal amount
had been exchanged as of the close of business on such Interest
Payment Date. The interest so payable on any Interest Payment
Date in respect of any Note (or portion thereof, as the case
may be) which has not been called for redemption on a Redemption
Date occurring during the period from the close of business on
the Regular Record Date next preceding such Interest Payment Date
to the opening of business on such Interest Payment Date, which
Note (or portion thereof, as the case may be) not so called for
redemption is surrendered for exchange (in whole or in part)
during such period, shall be paid to the Holder of such Note as
of such Regular Record Date. Interest payable on any Interest
Payment Date in respect of any Note surrendered for exchange on
or after such Interest Payment Date shall be paid to the Holder
of such Note as of the Regular Record Date next preceding such
Interest Payment Date, notwithstanding the exercise of the right
of exchange. Except as provided in this paragraph, no cash payment
or adjustment shall be made upon any exchange on account of any
interest accrued from the Interest Payment Date next preceding the
exchange date in respect of any Note (or part thereof, as the
case may be) surrendered for exchange, or on account of any
dividends on the Diamond Offshore Common Stock issued upon
exchange.
Notes shall be deemed to have been exchanged
immediately prior to the close of business on the day of
surrender of such Notes for exchange in accordance with the
foregoing provisions, and at such time the rights of the
Holders of such Notes as Holders shall cease, and the Person or
Persons entitled to receive the Diamond Offshore Common Stock
issuable upon exchange shall be treated for all purposes as the
record holder or holders of such Diamond Offshore Common Stock
at such time. Within five Trading Days of the exchange date,
the Company shall issue and deliver to the Trustee, for
delivery to the Holder, a certificate or certificates for the
number of full shares of Diamond Offshore Common Stock issuable
upon exchange, together with payment in lieu of any fraction of
a share, if any, as provided in Section 4.3 of this Third
Supplemental Indenture.
In the case of any Note which is exchanged in part
only, upon such exchange the Company shall execute and the
Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Company, a new Note or Notes of
authorized denominations in an aggregate principal amount equal
to the unexchanged portion of the principal amount of such
Note.
4.3. Fractions of Shares.
No fractional shares of Diamond Offshore Common Stock
shall be delivered upon
-15-
exchange of any Note or Notes. If more than one Note shall be
surrendered for exchange at one time by the same Holder, the
number of full shares which shall be issuable upon exchange
thereof shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof)
so surrendered. Instead of any fractional share of Diamond
Offshore Common Stock which would otherwise be issuable upon
exchange of any Note or Notes (or specified portions thereof),
the Company shall calculate and pay a cash adjustment in
respect of such fraction (calculated to the nearest 1/100th of
a share) in an amount equal to the same fraction of the Closing
Price at the close of business on the day of exchange (or, if
such day is not a Trading Day, on the Trading Day immediately
preceding such day), or at the Company's option, the Company
shall round up to the next higher whole share.
4.4. Adjustment of Exchange Rate.
The Exchange Rate shall be subject to adjustments
from time to time as follows:
(1) In case Diamond Offshore shall pay or make a
dividend or other distribution on Diamond Offshore Common Stock
exclusively in Diamond Offshore Common Stock or shall pay or make
a dividend or other distribution on any other class of capital
stock of Diamond Offshore which dividend or distribution includes
Diamond Offshore Common Stock, the Exchange Rate in effect at the
opening of business on the day next following the Determination Date
of such dividend or other distribution shall be increased by dividing
such Exchange Rate by a fraction of which the numerator shall be the
number of shares of Diamond Offshore Common Stock outstanding
at the close of business on such Determination Date and the
denominator shall be the sum of such number of shares and the
total number of shares constituting such dividend or other
distribution, such increase to become effective immediately
after the opening of business on the day next following such
Determination Date. For the purposes of this paragraph (1),
the number of shares of Diamond Offshore Common Stock at any
time outstanding shall not include shares held in the treasury
of Diamond Offshore but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of
shares of Diamond Offshore Common Stock.
(2) Subject to the last sentence of paragraph (8) of
this Section, in case Diamond Offshore shall pay or make a
dividend or other distribution on Diamond Offshore Common Stock
consisting exclusively of, or shall otherwise issue to all holders
of Diamond Offshore Common Stock, rights, warrants or options
entitling the holders thereof to subscribe for or purchase shares
of Diamond Offshore Common Stock at a price per share less than the
current market price per share (determined as provided in
paragraph (7) of this Section 4.4) of the Diamond Offshore
Common Stock on the Determination Date, the Exchange Rate in effect
at the opening of business on the day following such Determination
Date shall be increased by dividing such Exchange Rate by a fraction
of which the numerator shall be the number of shares of Diamond
Offshore Common Stock outstanding at the close of business on such
Determination Date plus the number of shares of Diamond
Offshore Common Stock which the aggregate of the
-16-
offering price of the total number of shares of Diamond
Offshore Common Stock so offered for subscription or purchase
would purchase at such current market price and the denominator
shall be the number of shares of Diamond Offshore Common Stock
outstanding at the close of business on such Determination Date
plus the number of shares of Diamond Offshore Common Stock so
offered for subscription or purchase, such increase to become
effective immediately after the opening of business on the day
following such Determination Date. For the purposes of this
paragraph (2), the number of shares of Diamond Offshore Common
Stock at any time outstanding shall not include shares held in
the treasury of Diamond Offshore but shall include shares
issuable in respect of scrip certificates issued in lieu of
fractions of shares of Diamond Offshore Common Stock.
(3) In case outstanding shares of Diamond Offshore
Common Stock shall be subdivided into a greater number of
shares of Diamond Offshore Common Stock, the Exchange Rate in
effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be
proportionately increased, and, conversely, in case outstanding
shares of Diamond Offshore Common Stock shall each be combined
into a smaller number of shares of Diamond Offshore Common
Stock, the Exchange Rate in effect at the opening of business
on the day following the day upon which such combination
becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes
effective.
(4) Subject to the last sentence of this paragraph (4)
and to the last sentence of paragraph (8) of this Section, in case
Diamond Offshore shall, by dividend or otherwise, distribute to all
holders of Diamond Offshore Common Stock evidences of its
indebtedness, shares of any class of capital stock, securities,
cash or property (excluding any rights, warrants or options referred
to in paragraph (2) of this Section 4.4, any dividend or distribution
paid exclusively in cash and any dividend or distribution referred to
in paragraph (1) of this Section 4.4), the Exchange Rate shall be
increased so that the same shall equal the rate determined by
dividing the Exchange Rate in effect immediately prior to the
effectiveness of the Exchange Rate increase contemplated by
this paragraph (4) by a fraction of which the numerator shall
be the current market price per share (determined as provided
in paragraph (7) of this Section) of the Diamond Offshore
Common Stock on the date of such effectiveness less the fair
market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and
described in a Board Resolution and shall, in the case of
securities being distributed for which prior thereto there is
an actual or when-issued trading market, be no less than the
value determined by reference to the average of the closing
prices in such market over the period specified in the
succeeding sentence), on the date of such effectiveness, of the
portion of the evidences of indebtedness, shares of capital
stock, securities, cash and property so distributed applicable
to one share of Diamond Offshore Common Stock and the
denominator shall be such current market price per share of the
Diamond Offshore Common Stock, such increase to become
-17-
effective immediately prior to the opening of business on the
day next following the later of (a) the date fixed for the
payment of such distribution and (b) the date 20 days after the
notice relating to such distribution is given pursuant to
Section 4.6 (such later date of (a) and (b) being referred to
as the "Reference Date"). For purposes of this paragraph (4),
any dividend or distribution that includes shares of Diamond
Offshore Common Stock or rights, warrants or options to
subscribe for or purchase shares of Diamond Offshore Common
stock shall be deemed instead to be (a) a dividend or
distribution of the evidences of indebtedness, cash, property,
shares of capital stock or securities other than such shares of
Diamond Offshore Common Stock or such rights, warrants or
options (making any Exchange Rate increase required by this
paragraph (4)) immediately followed by (b) a dividend or
distribution of such shares of Diamond Offshore Common Stock or
such rights, warrants or options (making any further Exchange
Rate increase required by paragraph (1) or (2) of this Section
4.4, except (i) the Reference Date of such dividend or
distribution as defined in this paragraph (4) shall be
substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution", "the date fixed for the determination of
stockholders entitled to receive such rights, warrants or
options" and "the date fixed for such determination" within the
meaning of paragraphs (1) and (2) of this Section 4.4 and (ii)
any shares of Diamond Offshore Common Stock included in such
dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination"
within the meaning of paragraph (1) of this Section 4.4).
(5) In case Diamond Offshore shall, by dividend or
otherwise, make a Cash Distribution in an aggregate amount
that, combined together with (i) the aggregate amount of any
other Cash Distributions made within the 12 months preceding
the date of payment of such distribution in respect of which no
adjustment pursuant to this paragraph (5) has been made and
(ii) any Excess Purchase Payment made within the 12 months
preceding the date of such distribution and in respect of which
no adjustment has been made pursuant to paragraph (6) of this
Section 4.4, exceeds 12.5% of Diamond Offshore's Common Stock
Market Capitalization on the Determination Date for such Cash
Distribution, then, and in each such case, immediately after
the close of business on the Determination Date for such Cash
Distribution, the Exchange Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Exchange
Rate in effect immediately prior to the close of business on
such Determination Date by a fraction (a) the numerator of
which shall be equal to the current market price per share
(determined as provided in paragraph (7) of this Section) of
the Diamond Offshore Common Stock on such Determination Date
less an amount equal to the quotient of (1) the amount of such
excess (over 12.5% of Diamond Offshore's Common Stock Market
Capitalization as described above) divided by (2) the number
of shares of Diamond Offshore Common Stock outstanding on such
Determination Date and (b) the denominator of which shall be
equal to the current market price per share (determined as
provided in paragraph (7) of this Section 4.4) of the Diamond
Offshore Common Stock on such Determination Date.
(6) In case Diamond Offshore or any subsidiary of
Diamond Offshore shall make
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an Excess Purchase Payment in an aggregate amount that,
combined together with (i) the aggregate amount of any other
Excess Purchase Payments made by Diamond Offshore or any
subsidiary of Diamond Offshore within the 12 months preceding
such Excess Purchase Payment in respect of which no adjustment
pursuant to this paragraph (6) has been made and (ii) the
aggregate amount of any Cash Distributions made within the 12
months preceding such Excess Purchase Payment in respect of
which no adjustment pursuant to paragraph (5) of this Section
4.4 has been made, exceeds 12.5% of Diamond Offshore's Market
Capitalization as of the Determination Date, then, and in each
such case, immediately prior to the opening of business on the
day after the tender offer in respect of which such Excess
Purchase Payment is to be made expires, the Exchange Rate shall
be adjusted so that the same shall equal the rate determined by
dividing the Exchange Rate in effect immediately prior to the
close of business on the Determination Date for such tender
offer by a fraction (a) the numerator of which shall be equal
to (A) the product of (I) the number of shares of Diamond
Offshore Common Stock outstanding (including any tendered
shares) at such Determination Date multiplied by (II) the
current market price per share (determined as provided in
paragraph (7) of this Section) of the Diamond Offshore Common
Stock less (B) the amount of such excess (over 12.5% of Diamond
Offshore's Common Stock Market Capitalization as described above)
and (b) the denominator of which shall be equal to the product of
(X) the current market price per share of the Diamond Offshore
Common Stock (determined as provided in paragraph (7) of this
Section 4.4) as of such Determination Date multiplied by (Y) the
number of shares of Diamond Offshore Common Stock outstanding
(including any tendered shares) as of the Determination Date
less the number of all shares validly tendered and not
withdrawn as of the Determination Date.
(7) For the purpose of any computation under this
paragraph and paragraphs (2), (4) and (5) of this Section 4.4,
the current market price per share of Diamond Offshore Common
Stock on any date in question shall be deemed to be the average
of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading
Days before, and ending not later than, the date in question;
provided, however, that (i) if the "ex" date (as hereinafter
defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the
Exchange Rate pursuant to paragraph (1), (2), (3), (4), (5) or
(6) above ("Other Event") occurs on or after the 20th Trading
Day prior to the date in question and prior to the "ex" date
for the issuance or distribution requiring such computation
(the "Current Event"), the Closing Price for each Trading Day
prior to the "ex" date for such Other Event shall be adjusted
by dividing such Closing Price by the same fraction by which
the Exchange Rate is so required to be adjusted as a result of
such Other Event, (ii) if the "ex" date for any Other Event
occurs after the "ex" date for the Current Event and on or
prior to the date in question, the Closing Price for each
Trading Day on and after the "ex" date for such Other Event
shall be adjusted by dividing such Closing Price by the
reciprocal of the fraction by which the Exchange Rate is so
required to be adjusted as a result of such Other Event, (iii)
if the "ex" date for any Other Event occurs on the "ex" date
for the Current Event, one of those events shall be deemed for
purposes of clauses (i) and (ii) of this proviso to have an
"ex" date occurring prior to the "ex" date for the other event,
and (iv) if the "ex" date for the
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Current Event is on or prior to the date in question, after
taking into account any adjustment required pursuant to clause
(ii) of this proviso, the Closing Price for each Trading Day on
or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value on the date in
question (as determined in good faith by the Board of Directors
in a manner consistent with any determination of such value for
purposes of paragraph (4) or (5) of this Section 4.4, whose
determination shall be conclusive and described in a Board
Resolution) of the portion of the rights, warrants, options,
evidences of indebtedness, shares of capital stock, securities,
cash or property being distributed applicable to one share of
Diamond Offshore Common Stock. For the purpose of any
computation under paragraph (6) of this Section 4.4, the
current market price per share of Diamond Offshore Common Stock
on any date in question shall be deemed to be the average of
the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the
date in question, (ii) the date of commencement of the tender
or exchange offer requiring such computation and (iii) the date
of the last amendment, if any, of such tender or exchange offer
involving a change in the maximum number of shares for which
tenders are sought or a change in the consideration offered,
and ending not later than the date of the Expiration Time of
such tender or exchange offer (or, if such Expiration Time
occurs before the close of trading on a Trading Day, not later
than the Trading Day immediately preceding the date of such
Expiration Time); provided, however, that if the "ex" date for
any Other Event (other than the tender or exchange offer
requiring such computation) occurs on or after the Commencement
Date and on or prior to the date of the Expiration Time for the
tender or exchange offer requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date for
such Other Event shall be adjusted by dividing such Closing
Price by the same fraction by which the Exchange Rate is so
required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (i) when used
with respect to any issuance or distribution, means the first
date on which the Diamond Offshore Common Stock trades regular
way on the relevant exchange or in the relevant market from
which the Closing Price was obtained without the right to
receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of Diamond
Offshore Common Stock, means the first date on which the
Diamond Offshore Common Stock trades regular way on such
exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when
used with respect to any tender or exchange offer means the
first date on which the Diamond Offshore Common Stock trades
regular way on such exchange or in such market after the
Expiration Time of such tender or exchange offer.
(8) The reclassification of Diamond Offshore Common
Stock into securities other than Diamond Offshore Common Stock
(other than any reclassification upon a consolidation or merger
to which Section 4.11 of the Supplemental Indenture applies)
shall be deemed to involve (a) a distribution of such
securities other than Diamond Offshore Common Stock to all
holders of Diamond Offshore Common Stock (and the effective
date of such reclassification shall be deemed to be the
Determination Date), and (b) a subdivision or
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combination, as the case may be, of the number of shares of
Diamond Offshore Common Stock outstanding immediately prior to
such reclassification into the number of shares of Diamond
Offshore Common Stock outstanding immediately thereafter (and
the effective date of such reclassification shall be deemed to
be "the day upon which such subdivision becomes effective" or
"the day upon which such combination becomes effective", as the
case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph
(3) of this Section 4.4). Rights or warrants issued by Diamond
Offshore to all holders of Diamond Offshore Common Stock
entitling the holders thereof to subscribe for or purchase
shares of Diamond Offshore Common Stock, which rights or
warrants (i) are deemed to be transferred with such shares of
Diamond Offshore Common Stock, (ii) are not exercisable and
(iii) are also issued in respect of future issuances of Diamond
Offshore Common Stock, in each case in clauses (i) through
(iii) until the occurrence of a specified event or events
("Trigger Event"), shall for purposes of this Section 4.4 not
be deemed issued until the occurrence of the earliest Trigger
Event.
(9) Diamond Offshore may make such increases in the
Exchange Rate, in addition to those required by paragraphs (1),
(2), (3), (4), (5) and (6) of this Section, as it considers to
be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(10) No adjustment in the Exchange Rate shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Exchange Rate; provided,
however, that any adjustments which by reason of this paragraph
(10) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
4.5 Notice of Adjustments of Exchange Rate.
Whenever the Exchange Rate is adjusted as provided in
Section 4.4 of this Third Supplemental Indenture:
(1) the Company shall compute the adjusted Exchange
Rate in accordance with Section 4.4 and shall prepare a
certificate signed by either the chief financial officer,
the treasurer or the controller of the Company setting
forth the adjusted Exchange Rate and showing in reasonable
detail the facts upon which such adjustment is based, and
such certificate shall promptly be filed with the Trustee
and at each office or agency maintained for the purpose of
exchange of Notes pursuant to Section 4.7 of this Third
Supplemental Indenture; and
(2) a notice stating that the Exchange Rate has been
adjusted and setting forth the adjusted Exchange Rate
shall forthwith be prepared, and as soon as practicable
after it is prepared, such notice shall be provided by the
Company to the Trustee and to all Holders. Unless and
until the Trustee receives such notice, it need not
inquire into whether any
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adjustment of the Exchange Rate is required and may assume
that no such adjustment has been, or is required to be,
made.
4.6. Notice of Certain Corporate Action.
In case:
(a) Diamond Offshore shall declare a dividend (or
any other distribution) on Diamond Offshore Common Stock
payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any
adjustment pursuant to Section 4.4 of this Third
Supplemental Indenture; or
(b) Diamond Offshore shall authorize the granting to
the holders of Diamond Offshore Common Stock of rights,
options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other
rights; or
(c) of any reclassification of Diamond Offshore
Common Stock, or of any consolidation, merger or share
exchange to which Diamond Offshore is a party and for
which approval of any shareholders of Diamond Offshore is
required, or of the conveyance, sale, transfer or lease of
all or substantially all of the assets of Diamond
Offshore; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of Diamond Offshore; or
(e) Diamond Offshore or any subsidiary of Diamond
Offshore shall commence a tender offer for all or a
portion of the outstanding shares of Diamond Offshore
Common Stock (or shall amend any such tender offer);
then the Company shall cause to be filed with the Trustee and
at each office or agency maintained for the purpose of
conversion of Notes pursuant to Section 4.7 of this Third
Supplemental Indenture, and shall cause to be provided to all
Holders, by the later of (i) as soon as reasonably practicable
after the Company has become aware of such matter or (ii) at
least 20 days (or 10 days in any case specified in clause (a)
or (b) above) prior to the applicable record, expiration or
effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of
Diamond Offshore Common Stock of record to be entitled to such
dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such
reclassification, consolidation, merger, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it
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is expected that holders of Diamond Offshore Common Stock of
record shall be entitled to exchange their shares of Diamond
Offshore Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, sale, lease, dissolution, liquidation or
winding up. Neither the failure to give such notice or the
notice referred to in the following paragraph nor any defect
therein shall affect the legality or validity of the
proceedings described in clauses (a) through (e) of this
Section 4.6.
The preceding paragraph to the contrary
notwithstanding, the Company shall cause to be filed at each
office or agency maintained for the purpose of exchange of
Notes pursuant to Section 4.7 of this Third Supplemental
Indenture, and shall cause to be provided to all Holders,
notice of any tender offer by Diamond Offshore or any
subsidiary of Diamond Offshore for all or any portion of the
Diamond Offshore Common Stock at or about the time that such
notice of tender offer is provided to the public generally.
4.7. Maintenance of Office or Agency.
The Company will maintain in the Borough of
Manhattan, The City of New York an office or agency where Notes
may be surrendered for exchange and where notices and demands
to or upon the Company in respect of the Notes and the
Indenture may be served. The Company will 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 surrenders may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such surrenders.
The Company may also from time to time designate one
or more other offices or agencies (in or outside the Borough of
Manhattan, The City of New York) where the Notes may be
presented or surrendered for such purpose 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
purpose. The Company will 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.
4.8 Taxes on Exchanges.
Except as provided in the next sentence, the Company
will pay any and all taxes and duties that may be payable in
respect of the delivery of shares of Diamond Offshore Common
Stock pursuant hereto. The Company shall not, however, be
required to pay any tax or duty which may be payable in respect
of any transfer involved in the delivery of shares of Diamond
Offshore Common Stock in a name other than that of the Holder
of the Note or Notes
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to be exchanged, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to
the Company the amount of any such tax or duty, or has
established to the satisfaction of the Company that such tax or
duty has been paid.
4.9. Covenant as to Diamond Offshore Common Stock.
The Company agrees that all shares of Diamond
Offshore Common Stock which may be delivered upon exchange of
Notes, upon such delivery, will have been duly authorized and
validly issued and will be fully paid and nonassessable and,
except as provided in Section 4.8 of this Third Supplemental
Indenture, the Company will pay all taxes, liens and charges
with respect to the issue thereof.
4.10. Cancellation of Exchanged Notes.
All Notes delivered for exchange shall be delivered
to the Trustee to be canceled by or at the direction of the
Trustee, which shall dispose of the same as provided in Section
309 of the Indenture.
4.11. Provision in Case of Consolidation, Merger or
Sale of Assets of Diamond Offshore.
In case of any consolidation of Diamond Offshore with
any other Person, any merger of Diamond Offshore into another
Person or of another Person into Diamond Offshore (other than a
merger which does not result in any reclassification, exchange,
exchange or cancellation of outstanding shares of Diamond
Offshore Common Stock) or any conveyance, sale, transfer or
lease of all or substantially all of the properties and assets
of Diamond Offshore, the Company shall execute and deliver to
the Trustee a supplemental indenture providing that the Holder
of each Note then Outstanding shall have the right thereafter,
during the period such Note shall be exchangeable, to exchange
such Note only into the kind and amount of Notes, cash and
other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (including any Diamond
Offshore Common Stock retainable) by a holder of the number of
shares of Diamond Offshore Common Stock of the Company into
which such Note might have been exchanged immediately prior to
such consolidation, merger, conveyance, sale, transfer or
lease, (a) assuming such holder of Diamond Offshore Common
Stock (i) is not a Person with which Diamond Offshore
consolidated, into which Diamond Offshore merged or which
merged into Diamond Offshore or to which such conveyance, sale,
transfer or lease was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii)
failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is
not the same for each share of Diamond Offshore
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Common Stock held immediately prior to such consolidation,
merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised
("Non-electing Share"), then for the purpose of this Section
4.11 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by the holders of each Non-electing Share
shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-electing Shares), and (b)
further assuming that, if such consolidation, merger,
conveyance, transfer, sale or lease occurs before the first
date on which Notes may be exchanged as provided herein, such
Note was exchangeable immediately prior to the time of such
occurrence at the initial Exchange Rate as adjusted from the
original issue date of the Notes to such time as provided
herein. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date
of such supplemental indenture, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
Section 4. The above provisions of this Section 4.11 shall
similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases. Notice of the
execution of such a supplemental indenture shall be given by
the Company to the Holder of each Note promptly upon such
execution. In this paragraph, "securities of the kind
receivable" upon such consolidation, merger, conveyance,
transfer, sale or lease by a holder of Diamond Offshore Common
Stock means securities that, among other things, are registered
and transferable under the Securities Act, and listed and
approved for quotation in all securities markets, in each case
to the same extent as such securities so receivable by a holder
of Diamond Offshore Common Stock.
Neither the Trustee nor any Paying Agent shall be
under any responsibility to determine the correctness of any
provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or
other securities or property or cash receivable by Holders upon
the exchange of their Notes after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in
relying upon, an Opinion of Counsel with respect thereto, which
the Company shall cause to be furnished to the Trustee upon
request.
4.12. Responsibility of Trustee for Exchange
Provisions.
The Trustee, subject to the provisions of Section 601
of the Indenture, shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts
exist which may require any adjustment of the Exchange Rate, or
with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in
making the same, or whether a supplemental indenture need be
entered into. The Trustee, in such capacity and subject to the
provisions of Section 601 of the Indenture, shall not be
accountable with respect to the validity or value (or the kind
or amount) of any Diamond Offshore Common Stock, or of any
other securities or property or cash, which may at any time be
issued or delivered upon the exchange of any Note; and it or
-25-
they do not make any representation with respect thereto. The
Trustee, in such capacity and subject to the provisions of
Section 601 of the Indenture, shall not be responsible for any
failure of the Company to make or calculate any cash payment or
to issue, transfer or deliver any shares of Diamond Offshore
Common Stock or share certificates or other securities or
property or cash upon the surrender of any Note for the purpose
of conversion; and the Trustee, subject to the provisions of
Section 601 of the Indenture, shall not be responsible for any
failure of the Company to comply with any of the covenants of
the Company contained in this Section.
4.13. Registration.
The Company will use its best efforts to effect or
cause to be effected all registrations with, and obtain all
approvals by, all governmental authorities that may be
necessary under any United States Federal or state law
(including the Securities Act, the Exchange Act and state
securities and Blue Sky laws) for the shares of Diamond
Offshore Common Stock issuable upon conversion of Notes to be
lawfully issued and delivered as provided herein, and
thereafter freely transferrable.
5. Miscellaneous.
(a) The Trustee accepts the trusts created by the
Indenture, as supplemented by this Third Supplemental
Indenture, and agrees to perform the same upon the terms and
conditions of the Indenture, as supplemented by this Third
Supplemental Indenture.
(b) The recitals contained herein shall be taken as
statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Third
Supplemental Indenture.
(c) All covenants and agreements in this Third
Supplemental Indenture by the Company or the Trustee shall bind
its respective successors and assigns, whether so expressed or
not.
(d) In case any provisions in this Third
Supplemental Indenture 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.
(e) Nothing in this Third Supplemental Indenture,
express or implied, shall give to any Person, other than the
parties hereto and their successors under the Indenture and the
Holders of the Notes, any benefit or any legal or equitable
right, remedy or claim under the Indenture.
(f) If any provision hereof limits, qualifies or
conflicts with a provision of the
-26-
Trust Indenture Act of 1939, as may be amended from time to
time, that is required under such Act to be a part of and
govern this Third Supplemental Indenture, the latter provision
shall control. If any provision hereof modifies or excludes
any provision of such Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Third
Supplemental Indenture as so modified or excluded, as the case
may be.
(g) This Third Supplemental Indenture shall be
governed by and construed in accordance with the laws of the
State of New York.
(h) All provisions of this Third Supplemental
Indenture shall be deemed to be incorporated in, and made a
part of, the Indenture; and the Indenture, as supplemented by
this Third Supplemental Indenture, shall be read, taken and
construed as one and the same instrument. The provisions of
this Third Supplemental Indenture shall, subject to Section
5(f) hereof, supercede the provisions of the Indenture to the
extent the Indenture is inconsistent herewith.
_________________________
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Trustee have
caused this Supplemental Indenture to be duly executed by their
respective officers thereunto duly authorized and the seal of
the Company and the Trustee duly attested to be hereunto
affixed all as of the day and year first above written.
LOEWS CORPORATION
[SEAL] By: /s/ Peter W. Keegan
----------------------------
Its: Vice President
THE CHASE MANHATTAN BANK
[SEAL] By: /s/ Ronald J. Halleran
----------------------------
Its: Second Vice President
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 18th day of September, 1997, before me
personally came Ronald J. Halleran to me known, who, being by
me duly sworn, did depose and say that he resides at New York,
New York; that he is a Second Vice President of THE CHASE
MANHATTAN BANK, one of the banking corporations described
herein and that executed the above instrument; that he knows
the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
the Board of Directors of said corporation and that he signed
his name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal the day and year of this certificate
first above written.
[NOTARIAL SEAL] /s/ Kin Yu Lee
-----------------------------
Notary Public
Kin Yu Lee
Notary Public, State of New York
No. 01LE6031199
Qualified in New York County
Commission Expires Aug. 1, 1998
-29-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 18th day of September, 1997, before me
personally came Peter Keegan to me known, who, being by
me duly sworn, did depose and say that he resides at New York,
New York; that he is a Vice President of LOEWS CORPORATION, the
corporations described herein and that executed the above
instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal;
that it was so affixed by the Board of Directors of said
corporation and that he signed his name thereto by order of the
Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal the day and year of this certificate
first above written.
[NOTARIAL SEAL] /s/ Debra D. Karam
-------------------------
Notary Public
Debra D. Karam
Notary Public, State of New York
No. 4886691
Qualified in Nassau County
Commission Expires May 18, 1998
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Exhibit 4.2
LOEWS CORPORATION
667 Madison Avenue
New York, NY 10021-8087
Diamond Offshore Drilling, Inc.
15415 Katy Freeway
Houston, TX 77094
Attention: Richard L. Lionberger
Vice President, General Counsel and Secretary
Gentlemen:
Reference is made to the Registration Rights
Agreement dated October 16, 1995 (the "Agreement") between you
(the "Company") and the undersigned ("Loews"). Capitalized
terms used and not otherwise defined herein are used with
meanings given thereto in the Agreement.
1. Demand Registration. This letter constitutes
Loews's written request (being the first of three such requests
to which Loews is entitled) pursuant to Section 2.1 of the
Agreement that the Company prepare and file, and use its best
efforts to cause to become effective as soon as practicable
(but not later than September 30, 1998), one or more
registration statements under the Act for a continuous offering
by Loews of shares of Registerable Common Stock under Rule 415
promulgated by the Commission under the Act (the "Registration
Statement"). The shares of Registerable Common Stock covered
by this request will underlie a proposed issuance by Loews of
its Exchangeable Notes due 2007 ("Exchangeable Notes") through
a public offering of such notes to be underwritten by Goldman,
Sachs & Co. (the "Note Offering"). Loews expects to price the
Note Offering on or about September 16, 1997 at which time
Loews will advise the Company of the exact number of shares of
Registerable Common Stock to be covered by this request and the
Registration Statement.
2. The Registration Statement.
(i) Notwithstanding Section 5(h) of the
Agreement, the Company agrees to keep effective the
Registration Statement until the first to occur of (A)
September 15, 2007 and (B) such time as no Exchangeable Notes
remain outstanding.
(ii) Loews agrees that the Company may, by
giving one business day's written notice to Loews, and the
trustee and the exchange agent for the Exchangeable Notes
(which notice shall specify that it is given on behalf of Loews
under the indenture for the Exchangeable Notes (the
"Indenture")), defer filing the Registration Statement to a
date later than September 30, 1998, or, at any time and from
time to time after the Registration Statement has been filed
and declared effective, require Loews to suspend use of any
resale prospectus or prospectus supplement included in the
Registration Statement (A) for a reasonable period of time, but
not in excess of ninety (90) days, if the Company (x) is at
such time conducting or about to conduct an underwritten public
offering of its securities for its own account and the Board of
Directors of the Company determines in good faith that such
offering would be materially adversely affected by such use, or
(y) would, in the opinion of the Company's counsel, be required
to disclose in such Registration Statement information not
otherwise then required by law to be publicly disclosed and, in
the good faith judgment of the Board of Directors of the
Company, such disclosure would reasonably be expected to
adversely affect any material business transaction or
negotiation in which the Company is then engaged or (B) for any
period during which the Company has notified Loews and the
exchange agent for the Exchangeable Notes of the occurrence of
an event requiring the preparation of a supplement to the
resale prospectus included in the Registration Statement or an
amendment to the Registration Statement so that, as thereafter
delivered to holders of the Exchangeable Notes exchanging such
notes for shares of Registerable Common Stock, such prospectus
will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
as promptly as practicable make available to Loews any such
supplement or amendment. Notwithstanding the foregoing, such
suspensions of use of any such resale prospectus or prospectus
supplement shall not be in effect for more than 120 days in any
twelve-month period.
(iii) Loews further agrees that the
provisions of paragraph (ii) above shall apply to any future
request for registration made by Loews under Section
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2.1 of the Agreement if such request relates to a "shelf"
registration requested to be filed by the Company pursuant to
Rule 415 promulgated under the Act.
3. Underwriting Agreement. Pursuant to Section
5(1) of the Agreement, the Company agrees to enter into the
underwriting agreement, in the form attached hereto as Exhibit
"A".
4. Limitations on Suspension Periods.
Notwithstanding the provisions of Section 2(ii) hereof, the
Company agrees with Loews that it will not suspend the use of
any resale prospectus or prospectus supplement included in the
Registration Statement (i) during the 14-day period preceding
the final maturity date of the Exchangeable Notes or, subject
to compliance by Loews with the provisions of this Section 4,
during the 14-day period preceding any Redemption Date (as
defined in Loews's prospectus supplement for the Exchangeable
Notes (the "Prospectus Supplement")) with respect to the
Exchangeable Notes. Loews agrees not to give notice under the
Indenture to the holders of Exchangeable Notes of any proposed
optional redemption at any time when use of any such prospectus
or prospectus supplement has been suspended by the Company in
accordance with this letter. Prior to giving notice under the
Indenture to the holders of Exchangeable Notes of any proposed
optional redemption, Loews agrees to provide the Company with
at least three full Trading Days' (as defined in the Prospectus
Supplement) written notice (or such shorter period as the
Company may agree) of such proposed optional redemption (the
"Redemption Notice"). On or before the close of business on
the third Trading Day following actual receipt by the Company
of the Redemption Notice, the Company will notify Loews if the
Company elects to suspend the use of any resale prospectus or
prospectus supplement pursuant to Section 2(ii) above. If the
Company elects to suspend use of any resale prospectus or
prospectus supplement, the Company will effect such suspension
promptly and Loews will not give notice of any proposed
optional redemption until the suspension period has terminated
or expired.
5. Effect Hereof. This letter agreement
constitutes an amendment to the Agreement pursuant to Section
12.5 thereof and the general provisions of such agreement apply
to this letter agreement (except the notice provisions hereof
will control over Section 12.7 thereof in the event of any
inconsistency). As amended hereby, the Agreement is hereby
confirmed to be and remain in full force and effect.
If this letter correctly sets forth our mutual
understanding regarding the amendment to the Agreement proposed
to be effected hereby, please so indicate by
-3-
executing each copy hereof, whereupon this letter shall
constitute an agreement between us to amend the Agreement, and
otherwise as set forth above.
LOEWS CORPORATION
By: /s/ Barry Hirsch
------------------------
Name: Barry Hirsch
Title: Sr. Vice President
Agreed and accepted
this 16th day of September, 1997
DIAMOND OFFSHORE DRILLING, INC.
By: /s/ Richard L. Lionberger
-----------------------------
Name: Richard L. Lionberger
Title: Vice President
-4-
Exhibit 99.1
Contact: Peter W. Keegan
Senior Vice President
(212) 521-2950
FOR IMMEDIATE RELEASE
LOEWS CORPORATION ANNOUNCES COMPLETION
OF EXCHANGEABLE SUBORDINATED NOTES OFFERING
NEW YORK, September 23, 1997 -- Loews Corporation (NYSE:LTR)
announced that on September 19, 1997 it completed the sale of
$1,150,000,000 principal amount of its 3 1/8% Exchangeable Subordinated
Notes due September 15, 2007 (NYSE:LTR 07). The transaction included
the sale of $150,000,000 of principal amount of Notes to cover over-
allotments. The Notes are exchangeable into shares of Diamond Offshore
Drilling, Inc. (NYSE:DO) common stock from October 1, 1998 to
September 15, 2007 at a price of $65.04 per Diamond Offshore share.
The managing underwriter for the offering was Goldman, Sachs & Co.
At the time the sale of the Notes was consummated, Loews
owned 70,100,000 shares of Diamond Offshore common stock constituting
approximately 50.3% of the outstanding shares, including the
approximately 17,682,000 shares into which the Notes are exchangeable.
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